By Marc Shoffman
Data from the buying agent shows 66% of clients have bought with cash this year, compared with 34% in 2022.
Most clients are from the UK, US and West Africa.
Camilla Dell, managing partner and founder of Black Brick said: “It has been an interesting year for the prime central London (PCL) property market. The increase in the volume of clients we are looking after this year compared to last year demonstrates the value that buyers are placing on having a professional to represent their interests in a challenging market.
“We have seen a dramatic increase in cash buyers, with the number of cash buyers doubling year on year. This demonstrates that for many high-net-worth buyers, the use of finance is discretionary. The pivot to cash was inspired by interest rates, which jumped from 0% in 2021 to 5.25 per cent today. When interest rates were low even some very wealthy high net worth buyers used mortgage finance, mainly because it was a simple way of protecting themselves from inheritance tax which is only charged on the equity you own in a property.
“Now clients, particularly younger people, are rethinking that strategy. Older clients who are more concerned about legacy planning are also reverting to cash deals and using jumbo life insurance policies to help protect their heirs from massive future tax bills.
“The rise in investment buyers is also an interesting trend. For cash buyers, the buy to let market is still compelling as a long-term hold and with rents having risen significantly and forecast to rise a further 18% over the next five years, this sector continues to attract investment, particularly from corporate buyers.”
Dell has also noticed a lack of appetite from clients wanting to do any work to a property with most preferring to buy a property that is turn-key or in excellent condition due to the high costs of renovation.
She added: “Looking to ahead next year, the market is likely to stay subdued because of continued higher interest rates and the looming general election, however PCL remains a desirable, safe place to buy, particularly for those seeking long term capital growth.
“As a global city it is not surprising that Black Brick’s client list represents buyers from every continent on earth.”