The overall volume of property transactions may be lower than the heightened activity of the last couple of years but ask any prospective homebuyer whether it’s easy to secure the purchase of a new home and you’ll be met with a short shrift.
The market continues to be characterised by the number of potential buyers exceeding the number of sellers. According to Propertymark, there are an average of 29 buyers for every available property on the market, and while recent trends indicate that this number may be falling slightly, the odds are still stack heavily in favour of those selling rather than those buying.
Consequently, Rightmove says the average asking price of property coming to market has hit it sixth consecutive record of £369,968, up 0.4% in the month. As a result, Rightmove has revised its full-year 2022 house price forecast up from 5% growth to 7% despite cooling market, as it says, “record low stock volumes struggle to recover enough to meet buyer demand”.
This dynamic is supported by recent research from Market Financial Solutions, which found that gazumping is taking place in more than half (51%) of property transactions in London.
When vendors have such a significant upper hand, they also have the ability to choose exactly whom it is they sell to. With this in mind, selling to a cash buyer who is able to move with immediate effect is far preferable to selling to someone who first has to sell their current property and must rely on every transaction in the chain going through successfully in order to have the required funds.
Cash buyers don’t hold much interest for mortgage brokers, but you could put your clients in the advantaged position of a cash buyer, even if they have a property to sell.
At Brightstar Financial, we are seeing a rise in demand for regulated bridging finance from brokers working with clients who are regular home movers that want to give themselves the best possible chance of securing the next home of their dreams by having the funds immediately available to secure a transaction, even before they have sold their current property.
By taking a bridging loan on either the property being sold or purchased, or both (depending on the transaction), home movers can release the capital they need to purchase their next home, which means they are in a better position to gain an advantage against other buyers and potentially even negotiate a purchase price. This approach may even give movers the time they need to maximise the price on the property they are selling, which could in some circumstances potentially offset the cost of the short-term borrowing.
The exit route in such a transaction would be the eventual sale of the property and, with regulated bridging loans available up to 12 months, this should provide plenty of time to tidy up the loose ends.
If you have clients who are looking to move home and want to give themselves the best chance of securing the best property, and you are unfamiliar with the bridging market, the best approach is to partner with an expert in this sector who can identify the most appropriate solution and secure the best outcome for the customer.
Jo Logan is a bridging and development finance specialist at Brightstar Financial