Cash buyers are a more important driver of the housing market than they were a decade ago, according to Nationwide.
Figures from the building society indicate the share of cash transactions increased significantly from around 20 per cent in 2005 in 2006, and has remained around the 35 per cent mark since 2008.
Yet Nationwide said it was interesting that the share of cash transactions has not fallen back as the economy has recovered, which it said was partly due to a modest increase in mortgage market activity.
Demographics is also playing a role in boosting the number of cash transactions, with the ageing UK population meaning the proportion of people who own their home outright has increased.
This means when these people move home, they are more likely to do so using cash rather than having to take on a loan.
Nationwide expected house prices to continue to nudge up this year, prompted by the low cost of borrowing and the dearth of homes on the market.
Rather than declining, the building society expected house prices to jump by around 2 per cent this year.
This comes despite the uncertainty around the British economy.
Robert Gardner, Nationwide's chief economist, said: “The outlook is uncertain, but we, along with most other forecasters, expect the UK economy to slow through 2017 as heightened uncertainty weighs on business investment and hiring.”
Consumer spending, which has been a key engine of growth, is also likely to be affected by rising inflation in the months ahead due to the weaker pound.
According to Nationwide’s monthly house price index, there was a modest change in growth in February, rising by 4.5 per cent, which is only slightly higher than the 4.3 per cent recorded in January.
The average house price for last month stood at £205,846 last month, up from the £205,240 posted in January.
Recent data suggested the UK economy has continued to perform relatively strongly, expanding by a healthy 0.7 per cent quarter-on-quarter.
Jeremy Leaf, north London estate agent and a former Rics residential chairman, said: “Although there is not much change in Nationwide's figures, stability in the housing market is welcome at the moment with so much talk of rising and falling prices and seasonal changes.
“Most of our buyers and sellers are trying to get on with business in a 'steady as she goes' manner rather than worrying too much about the future.”
Mr Leaf said he has noticed an “encouraging” increase in first-time buyer demand for smaller properties.
He said this was driven by the levelling of the playing field with investors and cash buyers who are more reluctant to take on new properties due to imminent tax obligations.
Jonathan Harris, director of mortgage broker Anderson Harris, said February was a busy month for the mortgage market, with his business seeing an uptick in new enquiries from buyers keen to get on with the business of moving.
“Article 50 will come whether we like it or not and buyers and sellers who need to move are mostly carrying on regardless, assuming they can find a property to move to.”
Mr Harris said: “While the proportion of cash buyers may be higher than it was a decade ago, the vast majority of people still need a mortgage and are taking advantage of the fact that rates are so low.
“What’s more, lenders seem keen to lend and that competition should lead to the continuation of cheap rates through the spring.”
katherine.denham@ft.com
