Cash buyers at all-time high
In the first quarter of 2015 mortgage completions fell by 11% while housing transactions as a whole fell by 5%.
The highest proportion of cash purchases took place in the North East, followed by the South West and Wales.
Cash buyers in London were roughly at the UK average despite the high involvement of investors in the London property market.
Robert Gardner, Nationwide’s chief economist, said: “Though the 38% share was a record, it was only modestly above the average of 36% prevailing in 2014.
“The significant rise in the share of cash transactions occurred in the wake of the financial crisis, where a tightening in credit conditions and a deterioration in the labour market limited the number of people able to buy with a mortgage.”
Annual house price growth fell to 4.6% in May, down from 5.2% to April – with prices reaching £195,166.
Rob Weaver, head of investments, property crowdfunding platform Property Partner, said: “The ongoing slowdown in the annual pace of house price growth is good, not bad, news.
“A year or two ago prices were rising at an unsustainable rate and if that had continued, things would have unravelled just as quickly. The kind of growth we are seeing at present is positive without being disproportionate.
“For house prices to consistently converge with earnings growth, however, may be asking a lot given the systemic lack of supply. And although the percentage of cash purchases has reached an all-time high, that level may well fall given this week’s strong mortgage approvals data.
“2015 is not going to be a 2014 in terms of house price growth but with low interest rates and living costs, and strong employment, it’s certainly not going to underperform.”
Charlie Wells, managing director of buying agency Prime Purchase, added: “Now that we have the Conservative government in place, the housing market is livelier than before the general election because it has certainty. At the upper end at least, there is relief that there will be no mansion tax or changes to non-dom status.
“But the problem is stock levels: there is not a lot of property on the market. Vendors who have been sitting on their hands because of election uncertainty are not yet making the decision to sell up.
“Vendors may be waiting until the summer is out of the way and planning on selling in the autumn when everyone is back from their holidays so it may be too early to tell whether this situation will change.
“But with interest rates so low, where else would you put your cash to earn the same returns? Property is about the best investment for your money right now and even with annual house-price growth dipping slightly, it’s still doing a lot better than the alternatives.”