A record 23% of the London homes that changed hands in the first five months of 2022 were sold off-market, against 21% last year, highlighting how this way of selling a property has spread beyond the smartest postcodes.
In the UK, 10% of homes - the highest since 2015 - were sold via this route. Previously it was a strategy employed mostly in the London luxe sector among homeowners keen to protect their privacy. Today 59% of off-market sales are outside the capital.
The key cause of this shift has been the shortage of stock. Increasingly buyers, keen to get ahead of the competition, have become willing to pay a premium for a home before it comes to market.
As a result of this eagerness, off-market sellers have been richly rewarded. The average off-market home achieved a record 99.5% of its asking price, against an average 99.1% for a property marketed in the usual fashion. The previous record was 98.0% of the asking price, achieved in the strong prime central London market of 2014.
Between 2015 and 2020, the average home sold off-market fetched £1.2m, reflecting London’s dominance in the field. But, thanks to the rise in popularity of off-market sales in other locations, the average price of a property sold this way has dropped to £858,000, against £979,000 in 2021.
If a property does not find a buyer offmarket, it is then promoted more widely. In 2019, 38% of homes that had been offered off-market came onto the open market. This has fallen to 26%.
The off-market approach appears to ensure a speedy sale, with the average prime property sold this way finding a buyer within 42 days. This compares with 65 days for a similar prime home marketed in the usual fashion. The average time to sell in May was 26 days, up from 24 days in the same month of 2021.
It takes longer to sell a prime property, whatever the route followed, because locating potential purchasers is a more complex process in this sector.
We argue that the off-market sale has become a more mainstream approach. Previously it was the preferred option of those interested in showing their home only to those serious about making a purchase and to avoid the glare of the open market. Such sellers still account for about half of the properties marketed in this way.
But, in a trend that emerged as far back as 2016, they started to be joined by others. At that time, the market in prime central London was cooling and sellers saw the off-market route as a ploy to give their properties a more exclusive lustre. Today, even though the pandemic may be retreating, there are still sellers in other locations who remain nervous about Covid, and want to limit the number of people coming to view their properties. However, it seems likely that off-market sales levels may be close to their peak. The supply of homes for sale is forecast to become more plentiful, which will make buyers less willing to pay a premium to fend off rival purchasers. If this is the case, selling off-market will once more become a technique mainly used in the elite London neighbourhoods.
