Cash is king when it comes to buying property, according Nationwide Building Society.
The UK’s second biggest home loans provider says a record high of nearly four out of 10 homes were purchased without the need for a mortgage in the first quarter of this year.
Of the 295,100 property sales in the UK with a value of £40,000 or above in first three months of 2015, 38% were cash deals.
It is often reported that overseas buyers seeking a safe haven for their money are paying cash for luxury property in sought-after areas of prime central London, such as Belgravia, Knightsbridge and Mayfair.
While we acknowledge that about 60% of multi-million pound property sales in prime central London involve overseas investors completing cash deals, Nationwide’s data reveals that nearly 50% of cash buyers picked up property in north-east England, while in 2013 the second highest proportion of cash transactions was in south-west England.
On the other hand, only 24% of residential property sales in London were cash deals.
Robert Gardner, chief economist at Nationwide, says this can be explained by the fact the cost of homes in north-east England is comparatively low compared with the rest of the country.
The high level of cash deals in south-west England might be down to a larger number of older buyers, who already owned their homes outright, moving to another, possibly smaller property without the need for a mortgage, he adds.
This analysis supports government data that shows the total number of residential homes with a value of £40,000 or above bought by non-UK residents in the first three months of 2015 was just 29,020 – less than 10% of all property purchases.
The majority of those transactions took place outside prime central London.
In the third quarter of 2014, just 748 residential homes changed hands in the prime central London property market.
And the latest data suggests that while property for sale in Belgravia and other exclusive areas of the capital is attracting a far higher level of interest than when the market went into hibernation in the months before the general election in May, the number of completed deals remains 32% lower than a year ago.
Driving the recovery
Cash is certainly driving the recovery of property sales in prime central London. As we highlighted last month, Scottish bus tycoon Sir Brian Souter used his personal wealth to secure a near-£8m deal for a Grade II-listed Belgravia townhouse just days after the general election.
We believe Sir Brian secured a great deal. Pent-up demand for luxury homes in central London combined with economic and political turbulence in China and the Middle East means forecasts of price rises of up to 7% this year appear conservative.
The prime residential property market in London is driven by the UK being viewed as having a stable political and legal framework and this city being able to offer overseas investors a high quality of life.
Confidence in London has returned and interest rates among overseas investors is said to be at an all-time high. If you are considering selling or letting your property or seeking friendly, knowledgeable advice, contact Best Gapp today. As a Belgravia estate agent, chartered surveyor and property valuer that has been offering an unrivalled service to clients since 1900, we are committed to achieving the best price for your central London property.