Buyers hit by Cost of Living crisis

An insight into the changing sales market suggests the cost of living crisis is biting buyers - some of whom may remain renting instead.

A survey of over 1,000 prospective buyers undertaken by Savills last month reveals that commitment to move has also fallen, at least in the short term.

But the agency says sentiment remains more positive for the medium and long term.

Those looking to enter the market or extend borrowing are, unsurprisingly the most cautious when asked about commitment to move within the next six months. This caution is most keenly expressed by those looking to upsize and those in the market for more discretionary purchases such as a second home or an investment opportunity.

Over half of buyers say a lack of stock is significantly inhibiting their ability to purchase a property. Savills says this issue is most pronounced at the top end of the market with no fewer than 88 per cent looking to purchase a property above £1 million hindered by a lack of suitable properties.

Recent interest rates rises and the increased cost of living have started to impact buyer budgets in some areas of the market. Almost a third of prospective purchasers surveyed stated that they have reduced their budgets in response to these factors.

This is most true for those more reliant on borrowing – including half of those wanting to take the first step onto the property ladder, and 44 per cent of those who are looking to upsize.

“Despite transactions remaining robust over the summer months, there’s now certainly less urgency in the market, with rising costs of debt impinging on the budgets of those most reliant on a mortgage. Increased costs of living are also making buyers much more conscious when it comes to how much they are willing to spend,” comments Frances McDonald, research analyst at Savills.

“Ultimately, in the short term, the market will be predominately driven by home owner need, rather than lifestyle influences which drove the market during the pandemic. Especially now that lockdowns are fading into distant memory.

“As a result, after more than two years of runaway house price growth, sellers will need to become much more realistic when it comes to pricing their home, especially as more stock comes onto the market.

“As and when inflation has been tamed, the cost of debt eases and we see a pick-up in both domestic and global economic growth, we can expect price growth to return to these markets, particularly given the strength of buyers’ underlying commitment to move over the medium term.”

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