Proportion of homes bought with cash reaches lowest level on record

The proportion of homes in the UK bought with cash fell to 29.6% in the first half of 2018, according to estate agents Hamptons International, 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 the UK were bought without a mortgage.

In H1 2018, 113,490 homes were cash purchases, totalling £25.3 billion in value according to Land Registry – the lowest level in five years.

And 21% less than the number of purchases in H1 2017 (144,350) which totalled £31.2 billion in value.

In Scotland, 31% of home purchases were made in the first six months of this year without a mortgage.

Hamptons said the downward trend in the proportion of homes bought with cash reflects a drop off in investor and developer purchases.

Hamptons International Research using Countrywide data, shows that in H1 2018 investors accounted for one in four (24%) of cash purchases, down from one in three (32%) 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.

Conversely, 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.

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.

According to Land Registry figures the South West has the highest proportion of cash buyers, 37% in H1 2018, while London has the lowest.

Cash buyers purchased one in five (21%) of homes in the capital in H1 2018 spending £4.15 billion.

But the proportion of homes bought with cash in London has also reached the lowest point on record, down from a peak of 27.1% in H1 2009. In London the average home bought with cash cost £503,560, more than double the average spent in the South West (£249,220).

West Somerset has the highest proportion of homes bought with cash (61%) with an average price of £223,760. East Lindsey (57%), West Dorset (56%) and North Norfolk (55%) follow.

Kensington and Chelsea bucks the London trend in fifth place with 54% of homes bought with cash in H1 2018 with an average purchase price of £1,353,740.

Aneisha Beveridge, head of research, Hamptons International, said: “The proportion of homes purchased with cash has fallen to the lowest level on record. Today less than a third of homes are bought with cash. Housing affordability has a role to play in the decline, as does the drop off in investor activity.

“Cash buyers have historically tended to be older generations downsizing by cashing in on equity gained from past house price growth. But recent slower price growth and higher stamp duty bills on new purchases have contributed to fewer downsizers, and as a result, fewer cash buyers. “But not all cash buyers are older generations looking to downsize.

“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 (24%) in H1 2018, down from one in three (32%) in H1 2007.”

Share icon
Share this article: