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Cash purchases make up a third of all property sales
Downsizers account for a huge chunk of homes paid for in cash
A massive one third of all property transactions in 2014 were paid for in cash, with the remaining two-thirds funded by mortgages, according to trade body the Council of Mortgage Lenders.
This is higher than during the peak of the market in 2007, when a quarter of all purchases were made in cash. Both the number and proportion of cash transactions has grown. In 2014, the number of transactions surpassed pre-crash levels and the proportion of cash purchases was at its highest level post-war.
Regional split
The South West has the highest proportion of cash buyers in any region of England and Wales at 40%. On the flipside, London has the lowest proportion of cash transactions at 27%. Apart from those two regions, there is a fairly similar split between how a transaction is financed across other regions, with roughly a third of purchases made in cash.
The average price of a property transaction in the second quarter of 2014 stood at roughly £258,000 for England and Wales. Transactions financed by cash were on average £255,000 while transactions funded by a mortgage were just under £260,000. The small difference between the two is down to the mix of properties, as cash buyers are more like to purchase flats, while buyers with a mortgage favour semi-detached properties.
Who’s buying with cash?
A survey by YouGov into the conveyancing sector this year shows that nearly three out of four respondents who used cash to buy a property said the money came from the sale of another residential property, suggesting that older homeowners who own a property outright are selling it in order to purchase another with cash.
Other cash buyers cited savings and inheritance as the other two most common ways of financing their transaction.
The vast majority of cash buyers were aged 55 and over, and were downsizing or moving to a property of about the same value.
According to the CML this behaviour is typical of people at or close to retirement, who are moving to more suitable accommodation. An increasing older population means that there is likely to be more cash transactions of this kind in the future.
