Once again, British buyers made up more than two thirds of all purchasers in our markets. Their share rose to this level from 54% in mid 2013 and has stabilised. Asian buyers now make up only around 7% of all purchasers, whereas back in early 2013, they accounted for 25% of the market. There are no significant differences between our markets in the national origin of buyers.
There are indications that Asian buyers in particular have a sense that UK tax policies are being specifically designed to discourage overseas buyers from the market. This, combined with a concern that there may be more such policies in the pipeline, flat prices and low rental returns, is suppressing demand.
The proportion of buyers relying entirely on capital resources to fund their home purchase has fallen from 46% in 2014, to 29% this year. It has not been this low since 2012. The biggest shift has been to buyers borrowing more than half the value of the property – this group made up 41% in 2014 and 54% in 2015.
Despite the well-publicised new stricter lending rules, buyers in our markets did not encounter too much difficulty in securing loans. In fact bank valuations to support lending are generally in line with sale prices agreed. Cheap finance became far more widely available to equity-rich buyers over the last year and this is likely to have driven the increase in mortgage debt amongst affluent purchasers. Banks have competed aggressively with each other offering low interest rates, modest arrangement fees and promises of faster offers. Mortgages of £1 million or more are now mainstream for high street as well as private banks.
The age profile of buyers in our markets has been fairly consistent over the past three years with the over 40s being the most likely buyers. This year however, there has been a marked increase in younger buyers below 30 from 12% in 2014 to 19% in 2015.
It is hard to work out what has changed here. It is not a first time buyer market and mortgage finance has not become easier. It may be that parents are supporting these purchases and as price growth has subsided, these more cautious buyers have taken the opportunity to buy. The fact that the proportion of buyers identified as ‘parents buying for their children’ (and in an older age group) has risen from 8% to 11% supports the notion that the increase in young buyers could also be underwritten by parental capital.
35% of purchases in 2015 were buy to let investments. That is a return to the levels recorded in 2012 and 2013 and reverses the dip to 28% in 2014. The proportion of buyers identifying as first time buyers shot up to 11% this year – more than twice the level of the two preceding years but in line with the increase in younger buyers and parental-support.
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