For the majority of buyers, the amount they plan to spend on their new home hasn’t changed.
More than half, or 54% of respondents, said that there would be no effect, and that they plan to use the same source of funding, while 7.8% plan to spend the same overall, but are likely to reduce the amount they borrow for the purchase, dipping deeper into their equity pots to fund their purchase.
However, recent interest rates rises and the increased cost of living have also started to impact buyer budgets in some areas of the market.
Almost a third, 29% of prospective buyers, 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 first-time buyers and 44% of those who are looking to upsize.
Cohorts that reported as being least impacted were downsizers, with two-thirds keeping both their budget and funding the same, and those moving outside of London.
The net balance of people who are more committed to move in the next three months has fallen to -1.7%, while a net balance of 7.1% feel more committed to move in the next year, compared with 22% in April 2022, the research found.
However, the survey showed that sentiment remains more positive for the medium term, with a net balance of 15% stating that they are more committed to moving in the next two years, which is on par with last autumn, Savills said.
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, the research shows.
But not all buyers are deterred by the tougher economic outlook, with some buyer groups increasingly committed to their moves.
These included those looking to downsize, relocate or those who are currently living in regional parts of the UK.
The lack of stock remains an issue with 54% of buyers highlighting property supply as “significantly inhibiting their ability” to make a purchase.
This is only slightly down from 63% in April.
This issue is most pronounced at the top end of the market with 88% looking to purchase a property above £1m hindered by a lack of suitable properties, according to the research.
Frances McDonald, research analyst at Savills, said: “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.
“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.”
https://www.estateagenttoday.co.uk/breaking-news/2022/9/property-buyers-reducing-budgets-amid-cost-of-living-crunch-savills
