Could a Slower Property Market Create New Opportunities for Investors?
- Ashley Elkin (MRICS)
- 35 minutes ago
- 5 min read
With asking prices falling, sellers becoming more negotiable and activity slowing across parts of the UK property market, could current conditions be creating new opportunities for investors?
The UK residential property market has entered a period of increased caution, with recent figures pointing towards falling asking prices, fewer transactions and growing negotiating power for buyers.
According to recent Rightmove data reported by The Guardian, the average asking price of newly listed homes fell by 2% in August, representing the largest August decline in eight years. London experienced an even sharper fall of 4.4%, while the number of homes available for sale in the capital has reportedly reached its highest level in 16 years.
For sellers, the current environment presents clear challenges. For investors and purchasers who are able to move quickly, however, a changing market could also be creating opportunities.
A Property Market Facing Increased Caution
Property professionals are seeing the effects of a quieter residential sales market first-hand.
With fewer properties completing, there is less recent transactional evidence available for valuers to use when assessing properties.
Valuers typically rely heavily on comparable sales when determining market value. When transaction volumes fall, establishing an accurate current value can become more challenging, potentially leading to increasingly cautious valuations.
At the same time, aborted transactions and properties remaining on the market for longer can provide further indications of weakening demand.
The effects are not necessarily being felt equally across every part of the market. London, for example, has experienced particularly significant pressure, with flats and leasehold properties proving more difficult to sell in some areas.
Buyers Are Negotiating Harder
As market conditions have shifted, so too has the balance of negotiating power between buyers and sellers.
Recent figures reported by The Guardian show that the average landlord purchasing a property in July paid 88.7% of its original asking price.
More than half of investor offers were reportedly at least 10% below the asking price, with more than a quarter of those offers ultimately accepted by sellers.
For investors, this demonstrates just how different the current purchasing environment has become.
Sellers who may previously have received significant interest in their property could now find themselves considering fewer offers, potentially making them more receptive to negotiations from credible purchasers.
For investors with capital available, this could create opportunities to acquire properties at prices that may not have been achievable when competition was stronger.
Cash Buyers Have an Advantage
One group particularly well positioned to benefit from current conditions is cash buyers.
When sellers are looking for greater certainty, the ability to proceed quickly without relying on lengthy mortgage processes can become an extremely attractive proposition.
At the same time, lenders have become increasingly cautious around credit risk, while valuation uncertainty can add further complexity to property transactions.
As a result, purchasers who can demonstrate speed, certainty and the ability to complete could find themselves in a considerably stronger negotiating position.
But being a cash buyer isn't necessarily the only way to achieve this.
Having access to the right property finance, and understanding which lenders have an appetite for a particular transaction, can also be crucial when an opportunity arises.
Could Your Money Go Further in Today's Property Market?
A slowing property market doesn't necessarily mean investors need to stop investing.
For the right purchaser, periods of uncertainty can create opportunity.
Properties that may previously have attracted considerable competition could now have fewer interested buyers. Sellers who once had little reason to negotiate may be more receptive to offers. And properties could potentially be secured at substantial discounts to their original asking prices.
For investors with cash available, or access to appropriate property finance, this could mean their money has the potential to stretch further.
Rather than viewing the current market solely through the lens of falling asking prices and reduced activity, experienced investors may therefore be looking closely at where opportunities are beginning to emerge.
And for those able to identify the right property at the right price, access to specialist finance could make a significant difference.
Funding Below-Market-Value Property Purchases
Securing a property at a significant discount can be attractive, but it can also introduce additional considerations when arranging finance.
Not every lender approaches below-market-value (BMV) property purchases in the same way.
Individual lenders can have very different criteria regarding how they assess the purchase price, property valuation and the amount they are prepared to lend. This becomes particularly important in a market where valuers and lenders are already exercising increased caution.
This is where having access to a broad lending market can make a significant difference.
At Approved Finance Group, our Property Finance team has access to a large and diverse range of property lenders, including lenders that are able to consider the purchase of below-market-value properties.
For qualifying BMV transactions, we can also access lenders that may be able to provide funding of up to 100% of the property purchase price, subject to the valuation, lender criteria and individual circumstances of the transaction.
This can be particularly valuable when a property is being purchased at a significant discount to its market value. Depending on the lender's criteria and the valuation of the property, investors may be able to reduce the amount of their own capital required to complete the purchase.
This could allow investors to retain more of their available cash for refurbishment works, development costs, future acquisitions or other investment opportunities.
Rather than relying on the criteria of a single lender, our team can assess the circumstances surrounding an individual transaction and identify lenders whose appetite and lending criteria are suited to the opportunity.
For investors who have identified a property available at an attractive discount, this combination of access to BMV-friendly lenders, the potential to achieve up to 100% of the purchase price and the ability to move quickly could put them in a strong position to take advantage of opportunities in the current market.
Helping Investors Move Quickly When Opportunities Arise
In the current market, price isn't the only consideration for sellers.
Certainty and speed can also carry significant weight.
Cash purchasers naturally have an advantage in this respect, but investors with the right finance arrangements behind them may also be able to put themselves in a strong position to proceed.
Whether that's through bridging finance, buy-to-let finance, commercial mortgages or another specialist property funding solution, having access to an experienced broker and a wide lending panel can help investors understand their options and move quickly when the right opportunity presents itself.
At Approved Finance Group, we work closely with property investors, developers and landlords to understand the individual requirements of each transaction before approaching lenders with the appropriate appetite.
With access to a diverse lending panel, our Property Finance team can look beyond traditional lending routes and explore solutions tailored to more complex or time-sensitive property transactions.
Opportunity in an Uncertain Market
Nobody can predict with certainty where property prices will move next.
The UK property market also varies considerably between regions and property types, meaning current conditions shouldn't simply be interpreted as every property suddenly representing a bargain.
What is clear, however, is that the balance of the market is changing.
Greater stock levels, reduced competition, more cautious valuations and increasingly motivated sellers are creating a different environment for purchasers.
For some investors, that could present opportunities that simply weren't available when competition was stronger and properties were selling more quickly.
And when those opportunities involve properties being purchased significantly below their previous asking price or market value, access to lenders with an appetite for below-market-value transactions, including lenders potentially able to fund up to 100% of the purchase price, could prove particularly valuable.
If you've identified a property investment opportunity and want to understand the funding options available, speak to the Approved Property Finance team today.
The market may be challenging, but for the right investor, that challenge could create opportunity.
