Cash is king in the housing market, with 34% of the homes sold so far this year across Great Britain being bought by a cash buyer, the highest proportion since 2017. While this is partly due to cash purchaser numbers remaining more resilient, the uplift has predominantly been driven by higher loan rates, which have squeezed mortgaged buyers out of the market.
The share of homes bought in cash this year is 2% higher than in 2022 and 4% greater than in 2021, when mortgage rates were very low.
Interestingly, however, it’s quite clear that the uplift in cash purchases has been concentrated in more affluent areas. Although a record 51% of properties under £100,000 have been purchased in cash this year, the increase in cash buyers is most noticeable at the top end of the market. This is partly a consequence of where higher rates have hit hardest, with many mortgaged households now struggling to use leverage to upsize in this part of the market.
So far this year, 40% of homes costing £500,000 to £1m were bought in cash, a 7% increase on 2022’s figure. For £1m-plus properties, the share purchased in cash has risen by 5% to 35%.
A record 78% of cash buyers across Great Britain this year didn’t have a home to sell to fund their cash purchase. This is the highest share since we started recording the data in 2009 and demonstrates the huge sway cash buyers currently hold in the market.
In London, which has the highest property prices nationally, the share of homes bought in cash year to date has risen to 22%, from 18% last year and 15% in 2021. In the Southeast of England, the share has increased from 30% in 2022 to 34%. However, cash buyers are most common in Wales, where 49% of homes sold in 2023 were bought without a mortgage, 1% higher than last year.
However, as mortgage rates continue to decline, it’s likely to unlock some of the moves from priced-out households who are reliant on finance. This will weigh on the share of homes bought by a cash buyer. That said, with mortgage rates set to stay higher than many have been accustomed to over the last decade, it’s likely that cash will remain a more important feature of the market than it did before rates started to rise, particularly as households nearing the end of their term downsize to become mortgage-free.
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