Cash home buys at record high - Nationwide

The figure for homes bought without a mortgage represents a record high, the Nationwide building society said.

The data revealed 38 per cent of properties were sold to cash buyers, with low interest rates encouraging investment in bricks and mortar.

It was also reported that stricter lending rules had been squeezed bank lending in recent years, further driving cash sales.

The record breaking figures were unveiled by the building society as it also revealed that that UK house prices in May were 4.6 per cent higher than a year ago –although this marked a slowdown from the 5.2 per cent annual rate of increase recorded the previous month.

Nationwide said this marked a resumption of a “gradual downward trend” in annual price growth which had begun last summer.

However, prices in May were up 0.3 per cent compared with April, taking the average price of a property to £195,166.

The proportion of cash transactions - without the need for a mortgage - leapt in the immediate aftermath of the financial crisis.

Tighter credit conditions and unemployment drove the increase at this time, according to Robert Gardner, chief economist at the Nationwide. These elements would not have had the same effect on cash transactions.

Last year, the average proportion of cash buyers was 36 per cent, which then moved up to the new record level of 38 per cent in the first quarter of this year.

Figures published by the Bank of England suggests that the peak is unlikely to be extended, owing to a pick-up in mortgage lending.

The number of mortgage approvals for house purchases rose to a 14-month high in April, Bank data showed on Tuesday.