First time buyers turn to private money

Reports indicate that more first time buyers are paying in cash, often funded by their parents.

17:13 09 August 2004

Reports indicate that more first time buyers are paying in cash, often funded by their parents.

For example, at Lane Fox estate agents, over half of all properties sold last year were paid for in cash, with prices ranging from 500,000 to 9 million.

"Fifty-three per cent of our buyers paid purely in cash," Lulu Egerton told the Telegraph. " I have just sold a flat to a couple from Cheshire who wanted to buy something for their 21-year-old daughter. They told me they didn't know much about Kensington and Chelsea; all they knew is that their daughter would want to be near Harrods.

"They paid 2.7 million for a two-bedroom flat, all in cash."

In another example first time buyer James Prior, 25, secured a 175,000 property with the help of a 40,000 deposit from his father.

"I couldn't have bought anything without Dad's money," he commented. "He had read in the paper about somebody else who had bought a flat in the development with the help of their parents and decided that he would like to help.

"It is a joint investment."

Many commentators maintain that current house purchases are much less funded by mortgages than they were when property was cheap in the mid-1990s or at the height of the late 1980s property boom.

According to James Hyman of Cluttons estate agents, a growing number of buyers are cash buyers looking for long-term investments.

"I recently sold two properties, one at 2.4 million and one at 1.7 million, both bought by investors for cash. Much of my business is in selling flats for around 300,000 to cash buyers looking for a long-term investment.

"Few buy with a large mortgage," he added.