Research by mortgage broker, Henry Dannell, based on government statistics for February 2021 to January 2022, shows that cash buyer purchases made just over £9.66bn in value. It notes that sellers will often opt for a cash buyer due to the generally quicker transaction timeline.
The average price paid in cash also climbed 3.7 per cent, versus 4.1 per cent for mortgaged homebuyers year-on-year. This amounted to a difference of £25,599 on average across the city.
The average price of a property in the UK was £278,436 in March 2022, compared to the average property in London costing £523,666, according to the latest government statistics.
Cash buyers pay a premium
In a third of London boroughs cash buyers are paying more on average than those who are supported by a mortgage.
In Westminster, cash buyers are paying almost £64,000 more – a seven per cent price premium on borrowers.
In Merton, cash buyers are forking out £32,000 more, with cash buyers also paying £24,000 more in Islington, £13,000 more in Newham, £6,000 more in Southwark and Waltham Forest.
Tower Hamlets and City of London set cash buyers back an extra £4,000, while Ealing costs an extra £3,000, Hounslow, £1,000, and Camden saw a bank breaking £50 premium.
London cash buyer numbers are increasing
The number of cash buyers has also increased at a greater rate than the number of mortgage buyers in a third of London boroughs.
In Haringey, the number of cash purchases went up 61 per cent, compared to a 21 per cent increase in mortgage buyer transactions, with Sutton, Kingston, Enfield, Havering, Harrow, Croydon, Barnet, Richmond, Camden and Bromley also seeing a greater increase in cash buyer activity versus those buying with a mortgage.
According to the UK House Price Index, London house prices have climbed by 4.8 per cent annually, the lowest rate of growth of all UK regions.
Geoff Garrett, director of Henry Dannell, said: “Although mortgage-backed homebuyers continue to account for the majority of London market activity, cash buyers are certainly playing their part.
“This is fairly unusual given the fact that a cash buyer will usually secure a better price due to their more preferable position, especially when you consider the London market has largely underperformed for the duration of the pandemic and we’re only now seeing signs of a revival.
“However, many savvy homebuyers have taken advantage of this market lull over the last year and have struck while the iron is hot. In doing so, they’ve been prepared to pay a fair price to secure a purchase, with a view on long-term appreciation, rather than an initial saving on the purchase price.”