The proportion of homes in England and Wales bought with cash fell by nearly a third in the first half of the year – the lowest level on record, new research has revealed.
Cash purchases of homes fell 29.6% between January and the end of June, according to estate agents Hamptons International.
In total, 113,490 homes were purchased with cash, totalling £25.3 billion.
This was 21% less than the number of purchases in the first half of 2017 when 144,350 cash purchases were made for £31.2 billion.
The South West has the highest proportion of cash buyers with 37% of homes purchased with cash in the first half of the year, while London has the lowest level at 21%.
West Somerset has the highest proportion of homes bought with cash at 61% with an average price of £223,760. It was followed by East Lindsey (57%), West Dorset (56%) and North Norfolk (55%).
Kensington and Chelsea bucks the London trend in fifth place with 54% of homes bought with cash in the first half of 2018 with an average purchase price of £1.3 million.
Hamptons says the downward trend in the proportion of homes bought with cash reflects a drop off in investor and developer purchases.
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A house sale can often fall through for a number of reasons. A buyer in the chain can change their mind or they might drop out because the have not been able to get a mortgage from a lender.
If you can secure a buyer that is willing to make a cash purchase it can often prevent these situations arising. This is because a cash buyer can purchase a property as soon as all the surveys and legal aspects of the sale have been completed, whereas someone selling an existing property can take a lot longer.
Using data from Countrywide, Hamptons says investors accounted for one in four - 24% - cash purchases in the first half of the year, down from 32% in the same period in 2007.
Developers accounted for just 2% of the homes bought with cash in the first half of 2018, down from 6% in the same period in 2007.
Aneisha Beveridge, head of research at Hamptons International, says that the decline is being driven by housing affordability and a drop off in investor activity.
She says: “Cash buyers have historically tended to be older generations downsizing by cashing in on equity gained from past house price growth.
"But recent slower price growth and higher stamp duty bills on new purchases have contributed to fewer downsizers, and as a result, fewer cash buyers.
Ms Beveridge adds that not all cash buyers are older generations looking to downsize.
"Shifting investor sentiment has also contributed to the fall in cash buyers. Increased taxation for landlords and the prospect of weaker future gains has meant that investors accounted for just one in four cash buyers.”
Top 10 Cash Buyer Hotspots (January to June 2018)
% of cash sales
Average cash purchase price
Kensington And Chelsea
Isle of Wight
Argyll and Bute