In H1 2018, the proportion of homes in England and Wales bought with cash fell to 29.6%, according to the latest research released by Hamptons International.
This is the lowest level since the company’s records began.
Hamptons International’s records started in H1 2007 when 33.6% of homes were purchased with cash and peaked in H2 2008 when 37.8% of homes in England and Wales were bought without a mortgage.
The proportion of cash buyers purchasing homes to live in has increased. In H1 2018, 69% of homes bought with cash were purchased to live in, 14% more than in H1 2007.
Conversely, hhe report showed that in H1 2018 investors accounted for one in four of cash purchases, down from one in three in H1 2007 and peaked at 43% in H1 2008. The same goes for developers who purchased just 2% of the homes bought with cash in H1 2018, down from 6% in H1 2007.
The average investor purchasing with cash spends 31% less on a property than a cash buyer purchasing a home to live in, £162,860 compared to £235,480.
Regional overview
The South West has the highest proportion of cash buyers with 37% of homes purchased with cash in H1 2018, whilst London has reached the lowest point on record at 21%, down from a peak of 27.1% in H1 2009.
Cash buyers purchased one in five of homes in the capital in H1 2018 spending £4.15bn.
In London the average home bought with cash cost £503,560, more than double the average spent in the South West of £249,220.
West Somerset has the highest proportion of homes bought with cash, 61%, with an average price of £223,760, following by East Lindsey (57%), West Dorset (56%) and North Norfolk (55%).
Aneisha Beveridge, head of research of Hamptons International, said that cash buyers have historically tended to be older generations downsizing by cashing in on equity gained from past house price growth.
She added: “However, recent slower price growth and higher stamp duty bills on new purchases have contributed to fewer downsizers, and as a result, fewer cash buyers.
“Shifting investor sentiment has also contributed to the fall in cash buyers. Increased taxation for landlords and the prospect of weaker future gains has meant that investors accounted for just one in four cash buyers in H1 2018, down from one in three in H1 2007.”
