Surge in cash-buyers

Surge in cash-buyers

Cash buyers are driving the housing recovery with levels at their highest since 2008.

Hamptons International estimates up to 70 per cent of the 20,000 additional property sales recorded by HMRC in the first half of 2013 can be attributed to cash buyers.

Research carried out by Hamptons International shows that cash buyers accounted for more than a third of all sales in the first half of 2013, with 140,000 sales made to cash buyers out of a total of 400,000 transactions.

This is an increase of 11 per cent from the same period in 2012, translating into 13,600 extra cash sales across England & Wales.

The data also showed that the growth in cash buyer demand is strongest in the sub £500,000 price brackets, which Hamptons says indicates that the bulk of new cash buyers are investors and downsizers.

That view is reinforced by the fact that the cash buyer rate is higher among one and two bedroom properties than larger ones.

By comparison, the increase in the number of mortgages for house purchase remains small, at just three per cent, over the same period.

This increase of cash buyers is not spread evenly across the country, however, and the highest proportion was in the South West, with 39 per cent of purchases made over the last 12 months being cash sales, against an average 33 per cent across England and Wales.

Hamptons again uses the data to attribute the rise in cash-buyers to investors and downsizers, as the South West has both the highest rate of owner occupation in England and the highest proportion of older age groups in its population and the highest number of cash buyers purchasing one and two bedroom properties than anywhere else in England and Wales.

At the other end of the spectrum, London has the smallest proportion of cash buyers, at only 24 per cent, which Hamptons International says is a reflection of the high cost of housing in the capital.

Johnny Morris, Head of Research at Hamptons International, said:

‘Cash buyers have been at the vanguard of the housing market recovery in recent months, with the number of cash buyers increasing at a faster rate than those purchasing with a mortgage.

‘The increase in numbers of first time and cash buyers without a property to sell has meant fewer homes coming to the market.

‘Low levels of stock have been a factor driving rapid price increases, particularly in the South of England. Until we see more owners moving home, who have properties to sell as well as buy; the shortage of homes for sale is likely to continue. The result being that 2014 looks to remain, resolutely a sellers’ market.’

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