Cash homebuyers play an important part in the housing market. Cash homebuyers do not require bank financing and so are not constrained by down valuations and other stipulations lenders dictate. In addition, some properties are simply not mortgageable and need to be bought with cash at least from the outset.
Cash homebuyers and current oil prices
Many media outlets are speaking of the fallen oil prices that have gripped the global economy like an anaconda on its prey. But how does this situation relate to cash homebuyers. The relationship between plummeting oil prices and cash homebuyers are very much linked. Cash homebuyers do not require a mortgage, and so do not rely on bank valuations or lending requirements to dictate the price they can pay for a property.
It is well understood that the rise in UK property prices has been due to foreign investment. Much of this foreign investment has come from countries whose economies are highly oil dependent. As a result, the falling oil prices risk creating a situation where people from these countries will not be able to afford to pay large sums of money for the property.
A blip in the market?
Similar to the recession of 2008, market go up, and markets go down. Many economists are speculating about whether the drop in oil prices is due to a simple blip in the markets. Regardless of how long the oil prices stay low, there is a question about whether fallen oil prices will discourage cash homebuyers.
Oil-rich countries owe a lot of their wealth to the price of oil, and the fact that they have this important resource naturally available to them. However, if the price of oil remains low, then there is a risk that people from these countries will not want to buy foreign property while they wait for the oil prices to improve.
There is no way of knowing what will happen to the current oil prices. However, the fact remains that the markets go up and down, and so, we all have to wait and see what happens.
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