Cash Buyers Helping to Drive Forward Property Market Recovery in UK

This article by the Property Wire on October 9th, 2013 reveals the large part of cash buyers in driving the recovery in the UK's property market.

Cash buyers are driving a large part of the property market recovery in the UK, much more than buyers with a mortgage, according to new research from residential property services company Hamptons International.
 
In the first half of this year, more than a third, 35%, of house sales in England and Wales were made by cash buyers. This represents an increase of 11% compared with the same period in 2012 and the number of people buying with cash today is at its highest point since 2008.

At a time when mortgage availability is improving and confidence in the property market is returning, Hamptons International’s research suggests that the number of cash buyers in 2013 has grown at a much faster rate than mortgages.

Of the additional 20,000 property sales in the first half of 2013 compared with the same time last year, Hamptons International estimates that 70% can be attributed to cash buyers with a 13,600 or 11% increase in cash sales and just 6,300 or 3% increase in mortgaged sales.

‘Contrary to popular belief, much of the recovery in house sales in recent months has been driven by increased cash buyer activity rather than simply increases to mortgage lending,’ said Johnny Morris, head of research at Hamptons International.

‘While there is no doubt that increased mortgage activity helps to improve sentiment and increase liquidity in the market, the growth of cash buyers in the market has overtaken that of mortgage buyers,’ he added.

The South West has the highest proportion of cash buyers at 39% in the last 12 months compared with an average of 33% across England and Wales. By contrast, London on average has the smallest proportion at just 24% although this figure rises to 60% in Prime Central London.  The average price of a house in the South West is £173,000, in London is £386,000 and in prime central London is £935,000.

‘Many cash buyers are downsizers planning to take advantage of the capital locked away in their properties. The South West has both the highest rate of owner occupation in England and the highest proportion of older age groups in its population,’ explained Morris.

‘London on the other hand, has the highest property values in the country and while cash transactions in prime central London are more commonplace than anywhere else in the country, less than seven per cent of London sales over the last 12 months happened in this market,’ he added.

Article Source: http://www.propertywire.com/news/europe/uk-property-cash-buyers-201310098328.html