Cash purchases on the housing market were still relatively high between January and March 2015, according to Nationwide Building Society estimates.
The share of cash purchases was at an all-time high of 38 per cent in the first quarter of this year, the data showed.
Robert Gardner, chief economist at Nationwide, comments:
“Continued healthy demand from cash buyers has helped to support transaction levels in recent quarters, since mortgage lending has remained relatively subdued. For example, in Q1 2015 overall housing transactions were down by around 5% compared with Q1 2014, while mortgage completions were around 11% lower.
“Though the 38% share was a record, it was only modestly above the average of 36% prevailing in 2014. The significant rise in the share of cash transactions occurred in the wake of the financial crisis, where a tightening in credit conditions and a deterioration in the labour market limited the number of people able to buy with a mortgage (developments which would have had much less of an impact on cash buyers).
“The low interest rate environment is likely to have supported the flow of cash into other asset classes in recent years, including UK residential property.”
London’s transactions pattern surprises
Commenting on developments on the market in the capital, Gardner says:
“Interestingly, the data suggests that the share of cash purchases in London is not out of line with the rest of the UK. On the surface, this may seem surprising, given the greater involvement of investors (domestic and overseas) in the London property market.
“A limiting factor may be that house prices in the capital are over twice as high as the rest of the UK (£408,780 versus £188,566 in Q1 2015 on our measure).”
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