Buyers are willing to pay more for a home before it hits the market
The latest data from Hamptons has shown a rise in the number of off-market sales, which has primarily been driven by growth in non-prime markets.
During the first five months of the year, a record 23% of London homes changed hands without being openly marketed, a rise from 20% in 2021.
But today, a higher proportion of homes are now sold discreetly in prime country markets (24%) than in London - 59% of off-market sales are now outside the capital.
With 10% of homes sold off-market nationally, the absolute numbers are running above 2015 levels.
According to Hamptons, this extension into both country and non-prime markets has primarily been driven by a lack of stock, and a seller’s ability to secure a higher price in a competitive market, rather than privacy concerns.
The residential estate agent company noted that buyers are increasingly willing to pay a premium for a home before it hits the market, to fend off the competition.
In the five years running up to the start of the pandemic, the average home sold off-market achieved £1.2 million.
“Selling off-market has become an increasingly established sales strategy over the last five years. The first generation of off-market sellers were those people primarily concerned about the privacy of their home, keen to ensure it wasn’t exposed to anyone who wasn’t serious about buying it,” Aneisha Beveridge, head of research at Hamptons, said.
“While these sellers still make up around half of homes launched off-market, they were joined in 2016 by central London homeowners keen to minimise their digital footprint in what was an increasingly tough market.”
The growth in off-market transactions has increasingly been driven by lower-priced properties. So far this year, the average discreetly marketed home was sold for £858,000, down from £979,000 in 2021.
Hamptons said off-market sellers achieved record prices on the back of buyers looking to secure deals in stock-starved markets.
“Post-pandemic, selling off-market has increasingly been driven by sellers keen to avoid wider marketing and limiting the number of buyers through their doors. And this strategy has paid off. Buyers have been willing to pay a premium to secure their home off-market and prevent sellers from marketing the property openly to other interested parties where competition is rife,” Beveridge said.
This year, homes marketed discreetly have achieved a higher proportion of their asking price than their counterparts which were more widely marketed.
The average off-market home sold in 2022 achieved 99.5% of its asking price, surpassing the 2014 record of 98.0%, which was set in a strong prime central London market.
Meanwhile, similar homes marketed to a wider audience have achieved an average 99.1% of their initial asking price so far this year, also a record.
These record prices are being achieved despite shorter marketing periods. The average home sold away from the glare of the open market took an average of 42 days to find a buyer, compared to 65 days for a similar prime home that didn’t start life off-market.
The average time to sell across the whole of the market in May stood at 26 days, up from 24 days in May 2021. The longer time taken to sell an off-market home reflects the increased length of time it takes to find buyers purchasing in the prime market.
Typically, homes spend two to four weeks being quietly marketed, before either a buyer is found, or it is launched on the open market to reach a wider audience.
With more off-market properties securing a sale quickly, fewer homes are then being advertised more widely later down the road. Just over a quarter, or 26%, of homes marketed discreetly came on to the open market this year, down from 38% pre-pandemic in 2019.
“It is likely that we are reaching peak off-market sales levels. With the number of homes on the market forecast to rise later in the year, buyers are likely to be more cautious about paying a premium in the face of an increasing amount of choice. If this happens, off-market sales may retreat back into their prime heartlands,” Beveridge said.
