Flat owners four times more likely to sell at a loss

Although most property sellers in the past year made a substantial gain, a new analysis shows that flat sellers - many of them landlords - are four times more likely than house sellers to make a loss.

Aneisha Beveridge, head of research at lettings agency Hamptons, says: “Soaring house price growth has boosted the money owners 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.  

“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.

“But house price growth hasn’t been distributed equally. Flat owners, in particular, have seen weaker price growth and are nearly four times as likely to sell at a loss compared to someone selling a house.”

Beveridge says that despite the uncertainties weighing on the housing market right now, and even if prices do fall, it’s likely that over 90 per cent of sellers will still sell at a profit.  

But she then warns: “The other 10 per cent will mostly be flat owners who bought in the last five or so years. The shift away from recent mortgaged owners selling cheaper homes towards older, more affluent owners selling more expensive homes also looks set to push up gains among sellers again this year.”

Hamptons says that the average seller in England and Wales who sold in 2022 having bought within the last 20 years made a record gross profit of £108,000.

There are now 173 local authorities in England and Wales where the average homeowner made a six-figure gain when selling their home 87 per cent of which are in the South of England. In percentage terms, Welsh sellers are now making bigger gains than Londoners.

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