Average home sale profits drop 9%

Some post-pandemic movers had second thoughts about their home last year, the data suggests, showing 8% of 2023 sellers had purchased in in 2021.  

This group were more likely to sell a home in the suburbs or countryside, making a £56,000 or 23% average gross profit.

The research, by Hamptons, also found that slower house price growth in London over the past few years has meant that in percentage terms, sellers in Wales are now making bigger gains than Londoners.

In 2023, the average home in Wales sold for 53% more than its purchase price, surpassing the London average of 51% which has been falling for at least the last five years, Hamptons said.

Overall, 88% of London sellers sold their home in 2023 for more than they initially paid, Hamptons said.

However, just 72% of those who bought in 2016 and sold in 2023 made money on their home.  Most of these sellers owned homes in Prime Central London, where the average property still costs less than it did when the market peaked in 2016.

Despite this, higher property prices mean that Londoners continue to make the biggest gains in cash terms.  The average Londoner sold their home last year for £204,190 more than they paid for it, having bought it 9.5 years ago.

Sellers in the North East continued to make the smallest gains in both cash and percentage terms.  The average household who sold in 2023 achieved £40,410 or 33% more than they initially paid.

While 98% of Londoners who bought in 2007 and sold in 2023 made a profit on their home, just 59% of sellers in the North East made a gain, Hamptons said.

Yet the nature of the house price cycle means that those who bought in the North East between 2014 and 2022 were more likely to sell their home in 2023 at a profit compared to those who bought in London.

Aneisha Beveridge, head of research at Hamptons, said: “Despite falling house prices last year, 93% of households still sold their home for more than they paid, netting themselves just over £100k on average.  These proceeds are mostly reinvested back into the housing market and go towards the purchase of another home, so they’re rarely realised in cash terms.  However, the numbers illustrate how the scale of historic price growth sheltered movers last year, freeing up cash to cover moving costs.

“Double-digit house price increases since Covid have meant households moving within two years can achieve a higher price than they paid.  Historically these are people moving due to a change in circumstances.  However, the spike in the share of households moving within two years goes beyond that and suggests an unwinding of ’the race for space’.  Most of these sellers are selling larger homes in the country, often in favour of a move back to the suburbs or city.

“Households rarely move when they’re faced with the prospect of selling their home for less than they paid.  Generally, the chances of selling at a loss peak within the first few years of ownership.  But for some Londoners, that stretches back to when parts of the market peaked in 2016. 

“Many households who bought a home between 2014 and 2016, predominantly in prime central London, face selling at a loss which has reduced sales numbers over the last few years.  However, we expect prices to start rising in London later this year which may start to unlock some of these moves.”