The property market has seen a significant uptick in recent months and according to residential property services company, Hamptons International, the number of cash buyers in the market could be driving a large part of the recovery.
According to its recent report, the number of cash buyers purchasing property in England and Wales is now at its highest point since 2008. Around 35% of house sales completed in the first half of 2013 were made by a cash buyer, an increase of 11% when compared with 2012.
Mortgage sales were up just 3% in comparison and the report revealed that, in the first six months of the year, cash buyers dominated around 70% of the property sales market.
Head of research at Hamptons International, Johnny Morris, said: “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.
“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.”
On average, the smallest proportion of cash buyers were in London, with just 24% using cash to purchase a property. Although, figures differ within the capital, with prime central London housing 60% of cash buyers. In the South West of England, around 39% of purchasers in the past year were cash buyers. The average for England and Wales as a whole is 33%.
Johnny Morris said: “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.”
Figures revealed that the rate of cash buyers is also growing faster than the number of those purchasing with a mortgage. However, with the second phase of the Government’s Help to Buy scheme brought forward and now underway, it’s likely that the UK property market will see an increase in mortgage buyers in the second half of the year which will help the housing market recovery to continue into 2014.
Julie is a law graduate who qualified with Price Waterhouse in 1994. Julie joined Smith & Williamson in 1997 and became a partner in 2001. With Mike Stevenson, Julie set up Middleton Partners offices in Salisbury and Southampton, both of which are now part of Begbies Traynor.
Julie is a member of the Insolvency Practitioners Association and is a Fellow of The Association of Business Recovery Professionals. Julie deals with all aspects of Corporate Recovery and turnaround work and takes all form of personal insolvency appointments.