A record 40% of homes that changed hands in January were bought by cash buyers, figures showed today.
The proportion of properties that are sold to people who do not need a mortgage has more than doubled during the past five years, according to the Council of Mortgage Lenders (CML).
Just 18.7% of sales were made to people who did not need to borrow money to fund their purchase in June 2005, the first month for which figures are available, but by January this year the level had soared to 40%.
The CML attributed the increase in the proportion of cash buyers to the current problems in the mortgage market, which have led to a steep fall in net lending from £108 billion in 2007, before the credit crunch struck, to just £8.4 billion last year.
It said as the number of people buying a property with a mortgage declined due to the lower lending levels, the proportion of sales that went to cash buyers had increased.
It added that the number of cash buyers had remained broadly unchanged, at 22,267 in April 2005 and 21,825 in January this year, although there are considerable monthly fluctuations.
A CML spokeswoman said: "The number of cash purchases has not changed very much. Property transactions are lower than a few years ago, so cash purchases account for a higher proportion of sales than previously."
The group does not hold data on who these cash buyers are, but it said the majority were likely to be older people who had paid off their mortgage and were now trading down to a smaller home, either to release equity or live in a property of a more manageable size.
It said others were likely to be people, such as entrepreneurs, who had been successful enough to accumulate sufficient cash to trade up the property ladder without the need for a mortgage.
Overseas buyers are also thought to account for some cash purchasers, particularly in certain areas of the country, such as London, as people who live abroad look to take advantage of the weakness of sterling.
The current north/south divide in the property market has been attributed in part to the fact that cash buyers tend to be concentrated in more affluent southern regions, meaning demand in these areas has remained stronger than in northern ones, despite the problems many people face in getting a mortgage.
The figures come as the British Bankers' Association said the number of mortgages approved for house purchase rose to an eight-month high of 31,660 in March.
But despite the improvement, the number is still down on the 35,124 mortgages for house purchase that were in the pipeline in March last year, while it is significantly below the 70,000 to 80,000 approvals a month that are considered to be consistent with a stable housing market.
* The CML based the figures on the difference between the number of property transactions recorded by HM Revenue & Customs each month and the number of mortgages advanced by its members. The proportion of cash buyers is based on a rolling three-month average.Reuse content