Almost 60 per cent of house purchases were by cash buyers in 2013 and 2014, according to a research paper by the Central Bank.

It said that the number of cash transactions in the market had now returned to levels seen in the early 2000s.

The report said the increase in the share of cash buyers over the past couple of years reflected a number of factors, including the fall in the number of mortgages drawn down and low levels of residential construction.

The authors estimated that the current volumes of cash-only sales were “not entirely out of step with equivalent volumes in the early 2000s, albeit that cash buyers in prior years were operating in a more competitive, vibrant market”. They found that 23,000 properties were bought for cash in 2013 and 29,000 in 2014.

While cash buyers had increased as a proportion of total transactions, the report said this also reflected the reduction in the volume of mortgage-based transactions.

In total, the authors – Dermot Coates and Joe McNeill of the Central Bank and Brendan Williams of UCD – estimated that there were over 150,000 transactions at the peak of the market in 2006, falling to 25,000 in 2010. The total rose to around 50,000 in 2014. This still represented only around 2 per cent of the total housing stock – around half the turnover of 4 per cent in a normally functioning market.

Lump sums

The report’s authors noted the composition of the cash-buyer cohort had changed.

The term cash buyer can potentially include older households opting to downsize, private investors using property as an alternative to low-yield deposits and those in receipt of pension lump sums.

“Whilst it is true that cash sales have been a feature of this market for many years, in more recent times we have seen a greater role being played by institutional and international investors including acquisitions by speculative international asset management groups,” said the report.

“This change will also have implications for cross-border funding flows into Ireland.”