Dip in average gains likely due to slight house price declines last year
Sellers across the UK reported smaller gains in 2023 compared to the previous year when house prices reached their peak, figures from residential estate agent Hamptons revealed.
Still, the average household in England and Wales, which had purchased a property within the last two decades, sold it in 2023 for an average of £102,650 more than the initial purchase price, marking the second-highest figure on record.
The total uplift in value for 2023 sellers collectively reached £103 billion, even though the average gross profit saw a decrease of £10,300, or 9%, compared to those who sold in 2022.
Hamptons’ research also showed that a significant 93% of households successfully sold their properties in 2023 for more than the purchase price, with an average ownership duration of 8.9 years. In percentage terms, the average seller in England and Wales last year achieved a 48% gain, down from the 54% reported in 2022.
The dip in average gains was attributed to slight house price declines in the past year and a trend of more households moving home sooner. The average ownership duration for 2022 sellers was nine years.
This decline was notably influenced by a surge in households selling after just two years of ownership. In 2023, 8% of households that sold a home had purchased it in 2021, compared to 5% of 2022 sellers and 6% of 2019 sellers who had bought two years prior to those years.
Despite modest price decreases, these households still realized profits. On average, vendors who bought in 2021 sold their homes in 2023 for £56,170, or 23%, more than the initial purchase.
Across all regions, sellers experienced a decline in gains in percentage terms from 2022 to 2023. However, slower house price growth in London since 2016 has led to sellers in Wales surpassing Londoners in gains. In 2023, the average home in Wales sold for 53% more than the purchase price, surpassing the London average of 51%, which has been declining for at least the last five years.
The top 15 areas with the most significant gains are a mix of Outer London suburbs and areas that have witnessed significant development over the last decade, such as Bristol, Trafford, and Manchester.
Barking and Dagenham lead the list, where the average household sold their home in 2023 for 74% more than the initial purchase, with an average ownership duration of 11 years. Three regions in Wales also feature in the top 15, benefitting from strong recent house price growth. In 2019, nine London Boroughs were part of the top 15 list, which has reduced to three in 2023.
“Despite falling house prices last year, 93% of households still sold their home for more than they paid, netting themselves just over £100,000 on average,” Aneisha Beveridge (pictured), head of research at Hamptons, commented. “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.”
Beveridge stressed that households rarely move when they are 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,” she said. “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.”
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