Cash sales for homes reach low of 29.6%: Hamptons

Cash sales for home purchases have dropped to 29.6 per cent, which Hamptons International says is the lowest level since its records began in 2007.

The figure is for the first six months of 2018 when 113,490 homes were purchased with cash, to a total value of £25.3 bn.

Hampton International states this is 21 per cent lower than the same period in 2017 when 144,350 cash sales were made, coming to £3.2 bn.

In terms of regional distribution, the estate and letting agent says the highest level of cash buyers were in the South West, with 37 per cent of homes purchased with cash in the first half of this year, while London had the lowest level at 21 per cent.

Hamptons International puts the drop in cash purchases down to fewer investor and developer purchases.

Using data from the Countrywide Group, it says investors accounted for one in four, 24 per cent, of cash purchases in the first half of this year, down from 32 per cent in the same period in 2007.

Developers purchased 2 per cent of the homes bought with cash for the first six months of this year, down from 6 per cent over the same period in 2007.

Hamptons International head of research, Aneisha Beveridge, says lower price growth is one contributor to the falling level of cash purchases:

The proportion of homes purchased with cash has fallen to the lowest level on record. Today less than a third of homes are bought with cash. Housing affordability has a role to play in the decline, as does the drop off in investor activity.

Cash buyers have historically tended to be older generations downsizing by cashing in on equity gained from past house price growth. But recent slower price growth and higher stamp duty bills on new purchases have contributed to fewer downsizers, and as a result, fewer cash buyers.”

Beveridge also says property investments have become less appealing:

Shifting investor sentiment has also contributed to the fall in cash buyers. Increased taxation for landlords and the prospect of weaker future gains has meant that investors accounted for just one in four cash buyers, 24 per cent, in H1 2018, down from one in three, 32 per cent, in H1 2007.”

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