0:04 AM, 9th January 2023, About 9 months ago
Despite a slowing market and a recent drop in prices, it has been revealed that house sellers are racking up more than £100k in profit for the first time.
The figures from Hamptons show that for 94% of sellers who sold up last year, they sold for more than they had paid – and they had owned the property for just 8.9 years, on average.
The firm says that the average seller in England and Wales who had bought their home within the last 20 years made a record gross profit of £108,000.
That’s up from £96,220 in 2021.
Aneisha Beveridge, the head of research at Hamptons, said: “Soaring house price growth has boosted the money homeowners have made when they sell.
“House price gains are primarily driven by two factors – the length of time people have owned and the point at which they bought and sold in the house price cycle.”
She added: “2022’s record breaking gains were boosted by Covid-induced changes, with a rising share of sales coming from larger family homes that were typically bought before the financial crisis.
“However, most of these profits are never seen by sellers as they are reinvested back into the housing market when they make their next purchase which has also increased in value.”
Ms Beveridge went on to say that house price growth hasn’t been distributed equally.
For example, flat owners have seen weaker price growth and are nearly four times as likely to sell at a loss compared to someone selling a house.
Typically, these are first-time buyers and second steppers who have bought in the last five years and have accrued less equity in their homes, and it is this and higher mortgage rates that limits their ability to cash in and trade up.
Ms Beveridge: “While there are a number of uncertainties weighing on the market, even if prices do fall this year, it’s likely that over 90% of sellers will still sell at a profit.
“The other 10% will mostly be flat owners who bought in the last five or so years.”
Hamptons says that of the 173 local authorities in England and Wales where the average homeowner made a six-figure profit when selling their home – 87% of them are in the South of England.
The real estate firm points out that slower house price growth in London over the last few years has meant that in percentage terms, Welsh sellers are now making bigger gains than Londoners – 59% versus 57%.
The increase in the amount of profit being made is being driven by more households selling larger homes which, usually, have been owned for longer.
However, London is the only region where the average household gain was more than £100k in every Local Authority during 2022 – and in 17 boroughs, the seller’s profit was more than £200k.
Across the capital, the average seller sold their home for £219,110 or 57% more than they bought it for, having owned it for an average of 9.3 years.
Sellers in Kensington and Chelsea saw the biggest gains, with the average household selling their home for £684,510 more than they paid for it 10.4 years ago.
Elmbridge is the only non-London local authority that sits within the top 10 and it is where the average seller sold their home for £298,500 more than they paid for it, putting it in fifth place.