The possibility that any home will fetch less than its purchase price is an obvious disincentive to sell up and move on.
While most homeowners are unlikely to encounter this issue, owners of properties in the prime markets in the South of England are more likely than most to face a loss. In prime central London in particular, where house prices have fallen for much of the last decade, there is a significant reluctance to sell a property for this reason.
The downside of this stance is lower liquidity in some markets. Our research into the extent of the current relocation reluctance phenomenon shows that 11% of those who have sold a home to date this year in England and Wales have suffered a loss. This is slightly up from the 9% who sold their home in 2024 for less than they paid for it.
But people's willingness to accept a lower price than they paid varies depending on the type of property, the date at which it was purchased and its location.
Among those who have sold a flat this year, 16% have been compelled to take a loss. The figure for houses is just 2%. The difference reflects the disparity in the performance of flats and houses since the pandemic struck in 2020.
As many as 23% of those who put a house or flat on the market this year were hit with a loss if this home had been purchased since 2020. This fell to 9% if they had owned the home for a decade, and to 3% if they had lived there for 20 years or more.
Since 2015, London has lagged the rest of the UK, with prices in prime central London (PCL) now below their level in that year. As a result, just 26% of PCL properties snapped up in 2014, close to the market's peak, have subsequently been sold. The average for England and Wales over the same period is close to 40%.
Owners of more expensive properties, in any area, are also more likely to stay put, 73% of £1 million-plus properties purchased in 2014 have not changed hands since, as Land Registry data reveals.
The refusal to take a loss is entirely understandable. Nevertheless, this psychological barrier is reducing market liquidity in locations where prices have fallen or stagnated. Generally, these sellers are not in a rush to sell and are willing to wait for the market to recover.
But this mindset may start to soften should property values begin to move upwards in London and prime areas across the country this year and into 2026. This would release supply, particularly of the larger family houses, where sellers tend to be more discretionary.
Looking ahead, lower mortgage rates and rising property values over the rest of 2025 and into 2026 may start to unlock moves from people who have stayed put. As property values start recovering towards previous peak levels, particularly in London and the prime markets, we could see some of the pent-up supply from long-term homeowners who have been waiting for the right market conditions to make a move without incurring a loss begin to emerge.
