Quarter of house sales now paid for fully in cash
New property buying trend has emerged as prices continue to fall and mortgage lending declines
Up to one in four house sales is now being conducted solely in cash, industry figures have said.
In some areas outside Dublin, cash sales now account for half of transactions, yet these are often excluded from official figures.
Expats, foreigners and retired couples with savings, combined with the increased difficulty in getting a mortgage, has seen a significant rise in the proportion of sales now being done in ready cash.
The number of house sales has plummeted since the near total collapse of the property market in 2006 with prices down by more than 52 per cent nationally, according to the latest Daft.ie survey.
Edward Carey of the Society of Chartered Surveyors told the Sunday Independent that those with cash were able to drive prices down because of their ability to close the deal quickly. "I would say a quarter of deals at present are being done in cash," he said. "With so few transactions going through, those looking to pay cash are distorting the market. They are able to drag the prices down, which pulls down average figures."
In the third quarter of 2011, a total of €623m in mortgages was drawn down, down almost 90 per cent on peak levels in 2006.
The Central Bank is working on the basis of a 55 per cent slippage in house prices between 2007 and 2013, but last week's reports from both Daft.ie and MyHome.ie show that values have already fallen by roughly that figure.
Mr Carey cited a recent sale he conducted of an apartment in which an Eastern European couple with little or no English paid entirely in cash.
"They showed up to the apartment and insisted on paying the full amount in cash. They had worked hard, saved up to pay for it," he said.
According to property sellers across Ireland contacted by the Sunday Independent, retired couples looking to trade down were another significant group now engaging in non-mortgage purchases.
"They have life savings, decent pensions and if they are trading down they don't need a mortgage," said Mr Carey.
Irish expats in the UK and the US have also been searching out sales of distressed properties.
The house price index launched by the Government does not include houses bought for cash, despite this accounting for so many sales.
Auctioneers said there were many black holes in the Government's measures to index and stabilise the housing market.
The index does not reveal actual house prices nor will it measure price trends among cash buyers.
Fintan McNamara, chief executive of the Institute of Professional Auctioneers and Valuers, said that cash buyers now accounted for a greater proportion of the market because prices had fallen.
"Because of how banks are being so selective about whom they will lend to, cash buyers are now in pole position," he said.