Is Buoyancy Beginning To Come Back In House Sales Uk Amongst Companies That Buy Houses

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Is Buoyancy Beginning To Come Back In House Sales Uk Amongst Companies That Buy Houses

Thursday, October 9th, 2008    Subscribe To Our Feed

We closely monitor House Sales UK, and it’s highly interesting to note that most of the Companies that buy houses are not showing any signs of being too anxious about whether or not they can speedily sell all the houses they can get hold of. But, they do seem to be very anxious to make sure that anyone wanting to sell a property knows how to find them as easily as possible, and more significantly, sees their “We buy Homes” message as often as possible.

I believed that those Companies that buy houses who happen to be highly geared will, on the one hand be seeking to cut their borrowings, and so wouldn’t be seeking to buy much in the present economic environment. On the other hand, if they are fortunate enough to bank and borrow from one of the triple A Banks (the ones who source most of their funds for lending from their own depositors), then it seems rational that those banks would be quite anxious only to lend out their funds to their own dependable account holders with whom they have a good relationship and financial understanding. After all, the Banks are thoroughly disinclined or unable of lending to each other during the present economic environment.

Companies that buy homes who are not so highly geared will most likely have the opposite problem. If they don’t buy houses at least as fast as, or preferably faster than they sell them, they may soon end up with seriously large bank balances. They would then end up having to face the problem of risking their cash in Bank Deposits where only the first fifty thousand pounds would be secured by a government guarantee.

All of the above is a likely explanation for the sustained eagerness of Companies that buy houses continuing to do just that. But could it also be because these firms consider that we are near enough to the bottom of the trough in House Sales UK Prices?

After all, Companies that buy houses typically pay about 80% of the market price of a property, so if they consider that we’re within 10% to 20% of the base of the trough, and they especially do not want to run the risk of keeping large cash deposits in the bank, wouldn’t it make more sense for them to keep shouting “We buy Homes” and buying up all the houses that come their way?

Then they just need to wait until the market is back on the rise before making as concerted an effort in sales as in purchasing. After all they may, in the meantime, accept any sales which come along. I know that in their situation, if I was certain that my interpretation of the market was spot on, I wouldn’t be in any panic to turn property into cash unless I was getting the absolute full value I’d attached to it. Especially if I’d bought at 20% under current valuation, and the trough looked like bottoming out at just about that very point.

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