Buyer Profiles H1 2022
Almost half (44%) of the buyers who bought through our offices so far this year have been aged under 40 but, perhaps more surprisingly has the sharp uptick in older buyers aged 60 and above which has shifted from 3% in 2021 to 17% in the first half of 2022.
We would characterise these as affluent professionals who are in a position to make choices. They may have relocated to rural or coastal locations but would like access to the culture and vitality of city life and often these will be second homes, or a return to the city which will include travel overseas for parts of the year.
When we compare the age structure of buyers in Half 1 2022 with the longer-term average (2015-H12022), there is also a sharp fall of buyers under 30. However, whilst it is too early to call a trend it is a notable change, on Q1 2022 it was 10% versus an average of 18% over the longer term.
Younger buyers, if they have the means, do have an opportunity to buy at relatively favourable prices but the threat of emerging interest rate rises this year will be a deterrent to this group who will often be pushing their affordability to the limits. At the moment, rents are rising much faster than prices which in some senses encourages first time buyers but there are significant threats which young buyers will be wary of too.
Buying an apartment to use as a pied-a-terre accounted for 17% of all sales in the first half of 2022 – that is double the long-term trend and significantly higher than in 2021 (9%). The other category which was surprisingly high this year, given their absence in recent years, is buy to let which made up 21% of all purchases. First time buyers, on the other hand, were far less active in the first six months of this year, down from 31% in 2021 to just 14%.
Although the category ‘parents buying for children’ only makes up 3% of purchases this time, it is common for the first time buyers in our markets to have had parental help with their deposit. This is an increasingly common way for families to pass money down through the generations. Owner occupation only became widespread in the UK in the post-war decades and as their children inherit, the next generation is often the beneficiary.
Only 10% of buyers had previously lived in the local area although another 46% had lived elsewhere in Greater London. Almost three quarters of the people who bought homes through our offices in Half 1 2022, were British. That is significantly more than 2021, when they accounted for 58% but closely in line with the norm for our markets at around 70%.
European buyers are an important segment of the market and they made up 17%, with the balance from the Far East (7%) and Middle East (3%).
It is heartening to note that overseas nationals continue to commit their lives and their capital to London, despite the challenges this city has faced – as have so many cities across the world. With unrest in eastern Europe, we would normally expect the UK, and London in particular, to be seen as a safe haven for international capital. To date, we have not seen a strong return of overseas buyers and the 2% surcharge (additional stamp duty for overseas buyers) will be a deterrent, nevertheless, at current pricing, we believe London will be looked upon as an attractive proposition.
In most years there is a spread of loan to value ratios in our markets but in the first half of 2022, all our buyers had a deposit of at least 50% and over a third were defined as ‘cash buyers’. There are several possible explanations: savings were accumulated during Covid; parents passing on capital to children; people who sold and rented with the express intention of being ‘cash buyers’.