The proportion of homes bought with cash has fallen to a record low in the first half of 2019, according to newly published research from Hamptons International.
The agency found that the proportion of mortgage free homes bought in Britain fell to
28% in this period, the lowest level since records began in 2007.
This figure was significantly lower than the 36% peak of cash purchases recorded in 2009. Since 2017, the proportion of homes purchased mortgage-free has fallen a further 5%.
There was a fall in cash sales across every region of Britain, though the biggest decrease was seen in the West Midlands, where the number of cash-bought homes fell 9% since 2017.
London followed with a 7% drop in cash buyers, while Scotland fared better with only a 1% decrease since 2017.
The South West had the highest proportion of mortgage free sales. Some 34% of homes in this region were bought with cash in the first half of 2019. London had the lowest regional proportion of cash sales at 19%.
West Somerset was the region with the highest proportion of cash buyers. 58% of homes were purchased without a mortgage in the first half of 2019, which is still a 7% decline from the amount of homes purchased in this same period in 2017.
Kensington and Chelsea was the only London borough to feature in the top 10 of areas with mortgage free purchases. 53% of homes in the borough were purchased with cash in the first half of 2019 at an average price of £1.26m.
Land Registry data showed that the average home bought with cash in the first half of 2019 cost £217,810, whilst in London, the average home bought with cash cost £489,820.
Research also revealed that cash purchases went towards smaller properties in 2019. In 201, 18% of cash buyers purchased a four-bedroom home, but in 2019 this fell to 16%.
Meanwhile, the cash purchase of two-bedroom properties rose from 32% to 34% in the past two years.
The report also found that in 2009, investors made up 32% of cash buyers. Some 10 years later, only 24% of purchases have been bought as buy-to-let. In the first half of 2019, 68% of homes bought with cash were purchased by homeowners, up from 61% in 2009. 5% of cash buyers were second homeowners.
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.”
She added: “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.”