Cash buyers abandon London in search of a home
New data from Hamptons International has shown that the proportion of cash buyers from London purchasing a home in the capital has fallen by 14% since 2010.
According to the report, in Q3 2016, 42% of London cash buyers bought a home in the capital, falling from 56% in 2010 and 43% in 2015. Nationally, 78% of cash buyers in Q3 2016 bought in the same region they came from – a 4% fall from 2010.
With less than half of Londoners buying with cash choosing to buy in the city, it makes London stand out from the rest of the country. Nationally 78% of cash buyers bought in the region they came from. In the North, 83% of cash buyers bought in the same location, a 9% increase from 2010, while in the West Midlands 76% did, a 6% increase.
As house prices have grown, the ability for many to be able buy homes debt-free has reduced, as has the yield on any property bought to rent out. And with lower expectations of future capital growth in London, those buying with cash are looking further afield.
In 2010, the East of England, was the most popular choice for London cash buyers after the capital; 19% of Londoners buying with cash bought there. But this proportion has fallen by 7% since to just 12% in Q3 2016. Compared with last year, the proportion has fallen by 2%.
Fionnuala Earley, Director of Residential Research at Hamptons International said: “The number of cash buyers in Great Britain fell by 5% broadly in line with the overall change in all transactions. But they are still an important part of the market, accounting for 30% of all transactions.
There are signs that the behaviour of cash purchasers is changing. In 2010 82% of cash buyers in Great Britain bought within their home region, but this fell to 78% by 2016. With the exception of the North and West Midlands regions, cash buyers are increasingly looking further afield, particularly those in London. Less than half of London based cash buyers now buy in the capital.
High house prices and lower expectations of future price growth, along with lower yields for those buying to rent out, suggests they are searching out better value for money. That is especially true for higher value or second homes where the effects of higher stamp duties are taking their toll.”