Property sellers made average gains of more than £110,000 over the past year, according to the latest research from Savills.
Sellers in Engalnd and Wales made average gains of £110,331 in the year to May 2021, which worked out to be a year-on-year profit increase of £15,587, as the stamp duty holiday and so-called ‘race for space’ pushed house price growth to a record high.
The analysis, which matched sales recorded by the Land Registry to the point of purchase, shows that the strongest sale activity came from those selling in the three to seven-year period of ownership – 38.3%. Those sellers made an average profit of £54,310.
By contrast, sellers who bought their home at the bottom of the market in 2009 made an average profit of £144,076. This is more than sellers who bought at any point in the five years prior – since 2003.
House price gain vs. length of hold, across England & Wales
|Length of hold||Year to May-21||Year to May-20||Difference|
|0 – 5 years||£40,498||£36,094||+£4,404|
|0 –10 years||£68,254||£59,764||+£8,490|
|0 –15 years||£79,302||£66,361||+£12,941|
|0 –20 years||£93,558||£80,927||+£12,630|
|0 -25 years||£110,331||£94,744||+£15,587|
Source: Savills analysis of Land Registry data
“Whether the reason for selling was to use the money to upsize, relocate, or to release equity to fund a better retirement, sellers at all stages of life have significantly profited from listing their home over the last year, as the property market ramped up in response to the unique impact that subsequent lockdowns had on demand to move,” commented Lucian Cook, head of residential research at Savills.
“Most of the equity has been ploughed back into the housing market, as sellers have looked to buy a property that better meets their new needs. An increase in the numbers of people moving around the five-year period of ownership reflects how demand has been driven by those looking to trade up the ladder, taking advantage of the low-interest rate environment.”
The research shows that sellers in the South East experienced the largest gains on the year. In this region, sellers made an average £141,538 – £18,739 more than the year prior.
While sellers in London made the most amount of money from their sale last year, profiting on average £244,903, the increase in that profit was the lowest for any region rising by just £5,301. By contrast sellers in the South West of England saw their profit increase by 3.5 times that number, as buyers sought a better lifestyle and space, above accessibility to employment markets.
“London sellers have been significant drivers of demand in the regional housing markets over the past year,” added Cook. “While they have been able to take advantage of housing wealth they’ve accumulated over a number of years, they have had to remain pretty realistic about the value of their existing home as demand for property shifted away from the capital for a period of time.”
|Original Purchase Price||Average Sale Price||Gain on sale||% uplift||Year on year change in gains|
|Yorks & Humber||£155,653||£218,531||£62,878||40%||+£11,660|
|East of England||£241,282||£368,143||£126,861||53%||+£13,230|
Source: Savills analysis of Land Registry data
Detached properties garner the largest gains
A significant surge in demand for larger homes throughout the pandemic has meant that detached properties made their owners more profit over the 12-month period, more than any other property type. Those who purchased their detached property in the last 25-years made an average £166,586 – an average 56% uplift on the original purchase price, and £22,588 more than the same time last year.
With less demand for smaller properties in urban locations, those selling flats experienced the smallest increase in profit, at an average of just £950 on the year. However, sellers still made on average £68,897 – a 31% uplift on the original purchase price.
Lucian Cook continued: “The value of detached properties has grown strongly over the last year as buyers sought a lifestyle shift towards locations and properties which offered greater availability of private outdoor space, and dedicated space to work from home.
“Larger homeowners in re-location hotspots and the wider commuter belt, in particular, have profited from selling up over the past year. Even so, our latest buyer survey suggests there remains unmet demand for this type of home.
“Conversely, the flats market has lagged behind in terms of growth, especially for those with no outside space. But, with cities slowly evolving back to their former selves, we do expect demand to pick up next year as the market begins to rebalance.”
Savills recently upgraded its 2021 UK house price forecasts to reflect the unique market conditions. The firm now expects average UK house price growth of 9.0% across the whole year. A lower level of growth of 3.5% is expected in 2022, with the market expected to experience a soft landing, given a shortage of stock available to buy and low mortgage costs.