The proportion of mortgage free house purchases has crashed to a record low after falling by 5% over the past two years to 28%. According to the latest research by Hamptons International, every region in Great Britain recorded a fall in cash sales over the last two years.
The West Midlands recorded the biggest decrease in the proportion of homes bought with cash at -9%, followed by London with a fall of 7%. Scotland recorded the smallest fall, with the proportion of homes bought mortgage free decreasing 1% since 2017.
The South West remains the region with the highest proportion of cash sales; 34% of homes were purchased with cash in H1 2019.
In West Somerset, more than half (58%) of homes in the local authority were purchased without a mortgage in H1 2019, 7% less than in H1 2017. West Somerset was followed by Ceredigion (57%), Torridge (53%), West Dorset (53%) and North Norfolk (53%).
Meanwhile London had the lowest proportion of cash sales – just 19%, which is 8% lower than 2009 when cash buyers in the capital peaked.
Ten years ago buy-to-let investors accounted for 32% of cash buyers, but during the first half of 2019 only 24% of cash purchases were bought as a buy-to-let. The majority (68%) of homes bought with cash this year were purchased by homeowners wanting to live in the property.
Aneisha Beveridge, head of research at Hamptons International said, “The proportion of homes bought with cash has fallen to the lowest level on record. Although transactions have fallen this year, cash purchases decreased even further. Just 28% of homes were bought without a mortgage in H1 2019, significantly lower than the peak of 36% recorded 10 years ago.
“The fall in cash purchases not only reflects tighter affordability, but also a decrease in activity amongst downsizers, the group of people most likely to have built up enough equity to purchase property with cash. It also reflects a drop off in the number of homes bought by investors, many of whom used cash to purchase their properties.”