Cash buyers take biggest share of house sales in eight years

THE share of cash purchases in the property market has risen to its highest level in eight years as soaring mortgage costs eat into borrowers’ buying power.

Almost 40pc of purchases have been completed using cash so far in January, the highest monthly share since December 2014, when 41pc of buyers were mortgage-free.

In contrast, 29pc of sales were cash purchases during the month of January in 2021 and 2022, according to analysis by estate agency Hamptons.

Huge interest rate rises throughout last year have given cash buyers an even bigger advantage over those relying on a mortgage.

The average two-year fixed-rate mortgage has more than doubled since January 2022, rising from 2.38pc to 5.51pc this week, according to analyst Moneyfacts. Higher borrowing costs have reduced borrowers’ buying power, making it harder for them to compete with cash purchases.

David Fell, of Hamptons, said: “There has been a spike in cash buyers over the last three months, returning to levels not seen in eight years. A drop off in mortgaged buyer numbers, particularly from fewer first-time buyers, has contributed to the rise in cash purchases.”

Cash buyers have the biggest sway in Wales, where more than half of purchases are made without a mortgage. More than 50pc of purchases in the country across the second half of October, whole of November and December and first half of January were completed using cash, compared with 46pc in the same three-month period in 2021.

Carol Peett, of West Wales Property Finders, a buying agent, said many cash buyers in Wales were returning having lived in London or the South East, where house prices are higher, and a sale had given them enough equity to purchase without a mortgage.

Ms Peett said: “We can definitely secure a better price than those with mortgages as the sale is more likely to complete.”

The North West of England had the second highest share of cash buyers over the past three months, with 45pc of sales completed without a mortgage.

‘We can definitely secure a better price than those with mortgages as the sale is more likely to complete’