Press Release: Lending improves lessening London's reliance on cash
Thu 04 Aug 2011
Mortgage finance conditions have begun to loosen for property buyers in parts of London, according to estate agent Marsh & Parsons. In the first six months of 2011, 27% of purchases in prime London were made by cash buyers compared to 33% in the final half of 2010.
In June, 30% of property purchases in prime London were made by cash buyers, a decrease from the 45% a year ago.* However, cash purchases still make up 61% of sales in the most expensive central prime areas.
The change in the wider prime market has not been triggered by a drop in cash buyer numbers. In fact, there were marginally more cash buyers buying properties in the first half of 2011 compared with the final half of 2010. However, Marsh & Parsons report that the number of sales to buyers with mortgage finance increased by 34% over the same period.Peter Rollings, CEO of estate agent Marsh & Parsons, comments: "The proportional drop in cash sales owes more to a resurgence in the prime mortgage market than falling cash buyer numbers. International buyers are still taking advantage of the relative weakness of the pound, and with bonuses back on the cards, many city professionals have been looking to invest some of the 14bn that financial services firms paid out last year.
"However, it is encouraging that lenders are doing more in order to lend to prime buyers with substantial deposits. Property prices in London continue to rise and top-end borrowers need greater loans to access more of the market. Many of those who would have been cash buyers three years ago are much taken with the great mortgage deals on offer at present and are appreciative of the extra finance to top up their budgets for the same tier of property. If banks and building societies retain this greater will to lend, this segment of the market will continue to flourish."
Despite the proportional decrease in cash sales, Londons market remains more strongly driven by cash buyers than the rest of the country. Cash buys accounted for 24% of property purchases in Britain in April 2011, compared to 29% in London during the same month.**
Cash buys as a proportion of all property purchases nationally and in prime London
Peter Rollings continues: "The shortage of mortgage funding on offer is by far and away the biggest hurdle to the UK housing markets recovery, stifling demand from many buyers. This has placed a lid on house price growth outside the capital
"The situation in London is different. Despite the improvement in high value lending, there are still many more cash buyers active than in the national market. They softened the blow of the downturn on Londons prime market and have contributed to steady growth in activity and house prices in the last two years. With lending to prime buyers improving, and cash buyers remaining active especially in the most expensive central prime markets like Chelsea and Kensington London will continue to pull further and further away from the wider national housing market."
*Wider London figures taken from Marsh & Parsons' prime property data from branches in Balham & Clapham, Barnes, Battersea, Brook Green, Chelsea, Clapham, Fulham, Holland Park, Kensington, Little Venice, Mayfair, North Kensington, Notting Hill, Pimlico & Westminster.
**London figures derived from Marsh & Parsons June data. National from house purchase mortgage approval numbers (CML) and latest transaction data from Land Registry, ros.gov.uk.
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For further information please contact:
The Wriglesworth Consultancy
Dan Pike / Neil Mackwood
0207 427 1430 / 0207 427 1400
Marsh & Parsons has been part of the London property scene since 1856. The sales and lettings agent has 15 offices situated in prime positions across central, west and south London. They have an intimate and extensive knowledge of the area.
Marsh & Parsons are an independent and professional firm with a 'can-do' attitude covering all aspects of residential property. They aim to establish individual relationships with clients through a business built on energy, agility, professionalism and knowledge. Their business aim is to be the agent who not only understands the local area around their offices better than any other agent, but also to be at the heart of the community.