Mortgage broker Henry Dannell reveals latest on London's property cash buyers
While cash buyers have only accounted for less than a fifth of London property sales in the last 12 months, mortgage brokerage Henry Dannell said they are helping drive house price growth in a third of boroughs in an otherwise struggling London property market.
Its research revealed that the average price paid in cash has climbed by 3.7% over the past year versus 4.1% for homes purchased by mortgage homebuyers.
Cash buyers, over the last 12 months, have accounted for just 18% of all London property transactions. Their purchases totalled just shy of £10 billion in value, only a fifth of the total value of homes sold across London during this time.
Read more: London sellers least likely to find cash buyers.
However, in no less than a third of London boroughs, cash buyers are paying more on average than those purchasing with the support of a mortgage.
In Westminster, cash buyers are paying almost £64,000 more, equating to a 7% price premium versus homes purchased by mortgaged homebuyers.
In Merton, cash buyers are forking out £32,000 more, with cash buyers also paying more in Islington (£24,000), Newham (£13,000), Southwark (£6,000), Waltham Forest (£6,000), Tower Hamlets (£4,000), City of London (£4,000), Ealing (£3,000), Hounslow (£1,000), and Camden (£50).
And although cash transactions may account for a more marginal proportion of market activity, over the last year, the number of cash buyers has also increased at a greater rate than the number of mortgage buyers in a third of London boroughs.
In Haringey, the number of cash purchases has climbed by 61% compared to a 21% increase in mortgage buyer transactions, with Sutton, Kingston, Enfield, Havering, Harrow, Croydon, Barnet, Richmond, Camden and Bromley also seeing a greater increase in cash buyer activity versus those buying with a mortgage.
“Although mortgage-backed homebuyers continue to account for the majority of London market activity, cash buyers are certainly playing their part. While they account for just a fifth of the total value of homes sold, they’re also driving house price performance in no less than a third of all London boroughs,” Geoff Garrett, director at Henry Dannell, commented.
This is fairly unusual, Garrett said, given the fact that a cash buyer will usually secure a better price due to their more preferable position, especially considering that the London market has largely underperformed for the duration of the pandemic and is only starting to show signs of a revival recently.
Read more: London property market – international interest returns.
“Many savvy homebuyers have taken advantage of this market lull over the last year and have struck while the iron is hot. In doing so, they’ve been prepared to pay a fair price to secure a purchase, with a view on long-term appreciation, rather than an initial saving on the purchase price,” he added.
