Market Insight - February 2017
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Cashing in

London sellers doubled their money
Londoners who sold their homes in 2016 made an average profit of more than £256,000 over the purchase price, more than doubling their money.

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On average there was a 8 year gap between buying and selling, making the average annual profit £90,000. Property prices in London have of course outstripped those in the rest of the country, but to put this into context the average profit made by London homeowners adds up to more than the average house price in England. The current average cost of an English house is £234,000, meaning that the profit on a London sale could fund a second home – with £22,000 change.

The average profit per year also hits home the pace of price rises in London. On average London buyers have stayed in their homes for less time so boosting further the annual profit made.

Taking London out of the equation, sellers across England and Wales made an average profit of 65% - about £71,000 between buying and selling. The typical gap between transactions is eight years, making the average annual profit almost £9,000.

Sellers in the East and South-East of England also made strong cash gains, totalling on average £104,000 in eastern England and £120,000 in the South-East.

The data demonstrate the wealth gains made by home movers able to take advantage of a rising market since the 2008 financial crisis. But on the other side of the coin it illustrates the increasing difficulty for first time buyers in London and the widening differential between London and the rest of the country.

Indeed there are still parts of the country where sellers have made a loss on sale. Despite rising prices across the whole of England and Wales, in parts of the country these have not been sufficient to outweigh the fall in prices caused by the financial crash. Across the whole country, one in 10 vendors made a loss on their home sale in 2016.

The effect of more rapid house price growth in London has been to encourage demand out to the suburbs. That has in turn led to faster price growth in these outer areas, fuelled both by buyers who cannot afford to buy in the capital and by householders using the additional gains on sale of their London home to buy larger homes further out of the city.

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"The average profit made by London homeowners adds up to more than the average house price in England."

 

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