Buying property with cash is increasingly becoming the norm outside of the capital, a study by UK mortgage broker SPF.co.uk has revealed.
It’s likely higher mortgage rates have something to do with the shift, making it increasingly rewarding to buy with cash rather than pay a mortgage.
In Inverclyde in Scotland for example, over half (50.1%) of sales were made with cash in 2023, up from 36% in 2013. The average house price is £123,000, with first-time buyers paying £100,000 on average for their first properties as of April 2024.
Hart in Hampshire has also seen a 26.1% increase of cash buyers in 10 years. In 2023, there were 379 properties bought in cash according to the Land Registry, equalling 33.5% of all property sales. The average property costs £467,000 – a huge 63% above the national average (£285,000 as of December 2023).
Mark Harris, chief executive of SPF.co.uk’s Private Clients, said: “Outside London, there has been a growing trend of cash purchases post-pandemic, perhaps due to the savings some people were able to build up during Covid and choosing to use these rather than opt for more expensive borrowing.
“That said, cash sales overall have decreased, with ONS data showing 186,000 sales in England last year, down from 254,000 in 2013, which may be down to higher property prices and the elevated cost-of-living, leaving people with less disposable cash.
“With properties in London and the south-east costing significantly more than elsewhere, they tend to be unaffordable for certain cash buyers such as retirees who prefer to own outright.
“Economic uncertainties and market fluctuations have also made investors more cautious, driving them away from the capital.
“Additionally, the shift to remote working for many has further encouraged people to live outside major cities, with investors looking at alternative regions.”
The third largest increase was in Solihull in the West Midlands where cash sales have taken up 35.8% of all properties last year compared to 28.6% in 2013, resulting in a 25.4% rise overall. Currently, the ONS reports a property here costs, on average, £337,000, a 47% rise above nearby Birmingham’s average price (£228,000).
At the other end of the study, Harlow in Essex experienced the most significant decrease in the proportion of cash purchases between the two years, with a 44.9% fall.
According to ONS data, Harlow’s average house costs £309,000. In 2013, cash purchases comprised 26.3% of all house properties, but in 2023 this fell to just 14.5%.
