Cash buyers account for one-third of property transactions
The vast majority of cash buyers are aged 55 and over, new research shows.
The number of people paying in cash for properties in England and Wales has increased, according to new analysis published by the Council of Mortgage Lenders (CML).
The total volume of cash buyers rose to around one-third of transactions, fuelled largely by older purchasers who are selling off their large homes for significantly more money than they paid for them. In turn, they are acquiring smaller units with cash, leaving them mortgage-free.
The research by CML shows that in the region of three-quarters of cash purchases were funded by the sale of another property. Most of the rest are paid for from savings or an inheritance.
Cash buying increased across many parts of England and Wales, with the average value of a cash transaction almost identical to one funded by a mortgage.
The largest proportion of purchases funded by cash is in the South West, while the smallest proportion is in London, reflecting the fact that property prices in the capital are significantly higher than the national average.
London and the South West were the only parts of the country where the average property acquired for cash is more expensive than one funded by a mortgage.
Within the capital, there are stark differences between boroughs. The proportion of cash purchases in outer boroughs is much lower than the national average. In central London, cash transactions are small in number – but they are high in value and account for a larger proportion of purchases overall.
Separate research by Hamptons International last month also found that pensioners, or ‘last-time buyers’, were driving cash purchases.
“Tighter credit criteria have undoubtedly affected the proportion of cash sales over time. So too have rising house prices by allowing people to downsize or move to a cheaper area without a mortgage more easily,” said Fionnuala Earley (left), Hamptons Director of Residential Research.
“Higher prices may also have allowed some increase in cash buying as mortgage holders raise finance on an existing property to purchase property for family or as investments,” she added.
