According to analysis by property agency Hamptons, a record-breaking 73% of property buyers in 2022 so far have been chain-free.
The research conducted by the property agency shows, that chain-free are preferred over buyers who have a house to sell. A remarkable 61% of sellers this year have chosen a buyer who was not in a chain over a buyer with a house to sell.
Housing chains, where two or more homeowners rely on the sale of their own property to fund their onward purchase, are an important part of the housing market, as they allow people to move up or down the property ladder.
However, while in 2010 only 65% of buyers were chain-free, so far this year they represent 73% of all buyers.
Why Are Chain-Free Buyers Preferred?
Because a buyer that is not in a chain can proceed quicker than a buyer who has to sell their house first, the former has always been seen as a better option to speed up the sale. This type of buyer also reduces the chance that the sale false through.
However, in a fast-paced market, where properties sell as quickly as 33 days, according to the latest House Price Index by Rightmove, and demand outstrips supply, a buyer who is not in a chain has an even bigger advantage.
Not only did 61% of sellers this year accept an offer from a chain-free buyer over a buyer with a house to sell, but a whopping 80% of sellers accepted an offer from a buyer who wasn’t in a chain if they matched the offer from a buyer who did.
As a comparison, back in 2016, only 60% of sellers did the same thing.
Furthermore, sellers were prepared to accept an offer that was on average 2.5% lower from a chain-free buyer to guarantee a quicker and smoother sale.
In a fast-paced market such as today, over three-quarters of sellers had multiple offers on the table to choose from. And given chain-free buyers tend to complete quicker and sales are less likely to fall through, they are fast becoming the preferred option for sellers.Aneisha Beveridge, Head of Research at Hamptons
Why Are So Many Buyers Without A Chain?
Hamptons suggests that this increase in chain-free byers is driven by an increased number of first-time buyers and investors. With a whopping 26% of homes being purchased by first timers, up from 24% in 2021, and 14% by investors, up from 12% in the previous year.
Many movers also decided to temporarily move into rented accommodation, to break the chain and put themselves into a better position. A trend that has started in 2021, where 69% of all buyers were chain-free.
At the same time, the number of buyers who are owner-occupiers, who need to sell their house before they can purchase another, has fallen from 30% in 2021 to 27% in 2022, which is an all-time low. This number has been falling for a decade though.
One particular group of owner-occupiers has seen a notable fall, people who need to sell their house for a cash purchase, typically people looking to downsize. This group fell from 24% in 2020 to 22% in 2021 and 19% so far this year.
Which Region Has The Highest Number Of Chain-Free Buyers?
Hamptons looked at all regions in England and their research showed, that in all but two areas, the number of chain-free buyers has increased and are dominating.
Only London and the North East have fewer chain-free buyers than in the previous year. In these two regions, the market is slower and sellers get fewer offers. As a result, the number of buyers who are not in a chain fell by 1%, rather than increase as it did in other regions.
This direct correlation between a fast market and the number of buyers without a chain seems to suggest, that a seller’s market where demand outstrips supply favours chain-free buyers.
Not only because they are more attractive to sellers, but also because it puts off movers with a house to sell, as they find it difficult to compete with these competitors, which exacerbates the problems of low housing stock.
How This Affects The Housing Market
The main issue with such a high number of chain-free buyers is that the houses they buy are not replaced by houses that are sold. As a result, so far in 2022, for every 10 homes that are sold, only three of those buyers add a home to sell on the market.
This then means that the lack of stock increases, as we are seeing at the moment.
The biggest impact this high number of chain-free buyers has is on buyers who rely on selling their house to purchase their new home. They find this market the most challenging, as they are not seen as favourable buyers and are unable to compete with their chain-free counterparts.