UK Home Sellers Hit by Profit Slump Amid High Interest Rates
The UK’s housing market has been facing significant challenges, with home sellers experiencing their lowest profit margins in over a decade. According to a recent report by Hamptons International, the average gross profit on a sale in England and Wales dropped to £91,820 (approximately $112,929) in 2024, representing a 11% decline from the previous year.
Higher Mortgage Rates and Transaction Costs Take a Toll
The main culprit behind this profit slump is the rise in mortgage rates and transaction costs, such as stamp duty. These increased expenses have made it more costly for households to move, leading to reduced demand and lower sale prices. Aneisha Beveridge, head of research at Hamptons, notes that “households have had to grapple with higher mortgage and transaction costs, making it more costly to move.”
London Hit Hardest
The decline in profits was most pronounced in London, where high transaction costs and weak house price growth have led to a decrease in people moving. Only 25% of home sellers in London had bought and sold within five years in 2024, compared to 34% of vendors nationally. The average London seller made a £172,350 gain last year, roughly £32,000 less than in 2023, marking the first time profits have fallen below £200,000 in the capital for at least nine years.
Despite Challenges, Most Sellers Still Make a Profit
Despite the profit slump, 91% of households in England and Wales still managed to sell their home for a profit in 2024. Nearly a third of sellers made six-figure gains, indicating that the UK housing market still holds opportunities for those looking to make a profit.
Long-Term Outlook: House Prices Set to Rise
A separate Hamptons report predicts that house prices will rise by 3% across Britain this year, followed by 3.5% growth in 2026. This growth is expected to be driven by a long-term slump in housebuilding, which is squeezing supply and keeping prices elevated. However, this trend is also making it more difficult for prospective buyers to get on the housing ladder, pushing more Britons into renting.
The Cost of Moving
The high costs associated with moving are a significant barrier for many homeowners. As Beveridge notes, “homeowners need to inject thousands of pounds from their own pocket to make a move financially viable.” This often leads to potential sales being scuppered, further exacerbating the challenges facing the UK housing market.
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