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London sellers made average £200k profit on their homes in 2022 — a record high

 (Matt Writtle)
(Matt Writtle)

People who bought homes within the last 20 years and sold them in 2022 made record six figure profits, with Londoners reaping the largest rewards.

New data from Hamptons shows that the average London home sold for £219,110 more than its purchase price, with sellers in 17 boroughs —including Camden, Hackney and Brent— making gains of more than £200,000.

Sellers in the capital sold their homes after 9.3 years on average, meaning that their properties earned them £23,560 a year. The median full-time UK salary is £33,280.

Sellers in Kensington and Chelsea saw the highest gains nationwide, making an average of £684,510 on their property sales. This is equivalent to £65,818 per year for 10.4 years, the average length of property ownership in the borough.

Those in the City of Westminster pocketed an average of £473,180, while in Richmond Upon Thames, they earned £319,350.

In Newham, where profits were the lowest in London, sellers still earned an average of £119,000 from their property sales.

In England and Wales, the average seller made a gross profit of £108,000 on their property sale – £11,780 more than those who sold in 2021.

Outside London

Beyond London, most six figure profits were seen in the south of England, although there are 173 local authorities in England and Wales where sellers made more than £100,000.

Almost everyone selling their home made a profit of some kind. A record 94 per cent of sellers sold their home in 2022 for more than they paid for it. On average, they sold for 52 per cent more than they bought it for.

Homes in the north east of England saw the smallest growth nationally, with an average gain of £37,890. No local authorities in the region saw average gains above £100,000.

In Wales, on the other hand, sellers are now overtaking those in London in percentage terms for the first time in at least five years. On average, London homes sold for 57 per cent more than their purchase price, while those in Wales sold for 59 per cent more.

London has seen the lowest house price growth of anywhere in the country since 2019, according to Rightmove, whereas properties in Wales have risen most in value.

Why have sellers earned so much?

“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,” says Aneisha Beveridge, Hamptons’ head of research.

According to Hamptons’ data, sellers in London kept their properties for longer than elsewhere. The average length of ownership in England and Wales is 8.9 years, compared to London’s 9.3.

Properties in Chelsea, where homeowners made the largest gain (Daniel Lynch)
Properties in Chelsea, where homeowners made the largest gain (Daniel Lynch)

Beveridge adds: “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.”

Last year also saw a greater number of larger, higher value homes being sold than previous years, accounting for an increase in the amount of money sellers made.

Detached properties made up 35 per cent of homes sold for profits of over £100,000, earning sellers an average of £186,940. This is three times more than sellers made on flats (£57,080), which are typically owned for less time.

Flat owners lose out

Flat owners have been disadvantaged by weaker house price growth, which meant that their gains did not increase from 2021. The value of the average flat increased by 29 per cent on its purchase price, compared to 57 per cent on houses.

“House price growth hasn’t been distributed equally,” says Beveridge. “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. Typically, these are first-time buyers and second steppers who have bought in the last five years and have accrued less equity in their homes. This, combined with higher mortgage rates, has limited their ability to cash in and trade up in 2022.”

According to Beveridge, 90 per cent of sellers are still expected to make a profit this year, despite falling property prices. The remaining 10 per cent are likely to be flat owners who bought in the last five years.

She says: “The shift away from recent mortgaged homeowners selling cheaper homes towards older, more affluent homeowners selling more expensive homes also looks set to push up gains among sellers again this year.”