LONDON: UK home sellers made a tidy profit last year, though the gains were smaller as a double whammy of high interest rates and a cost-of-living squeeze sapped demand.

       The average gross profit on a sale in England and Wales dropped about 9% to ￡102,650 (US$130,100) in 2023, from roughly ￡113,000 in 2022, according to a report from broker Hamptons International.

       That’s still a bumper gain compared with the average over the past nine years, but it shows how discounts hurt earnings during a period of weak demand.

       “The numbers illustrate how the scale of historic price growth sheltered movers last year,” said Aneisha Beveridge, head of research at Hamptons.

       “Many households who bought a home between 2014 and 2016, predominantly in prime central London, face selling at a loss, which has reduced sales numbers.”

       UK housing remains under pressure from a series of interest rate hikes, with many prospective homeowners priced out of buying a property due to higher borrowing costs.

       One in four deals involved a price reduction of more than 10% in November, according to a separate report from property portal Zoopla.

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       Still, the average seller in England and Wales made a 48% gain last year, albeit down from 54% in 2022, Hamptons said.

       The decline was largely due to a small dip in house prices in the past 12 months and the fact that vendors are moving sooner, therefore limiting the buildup of value in their homes.

       Some 72% of Londoners who sold a property bought in 2016 last year earned a profit, compared with an average of 88% for all vendors across the city.

       That’s because the average property in the capital’s most affluent postcodes still costs less than it did when the market peaked eight years ago.

       Regardless, 93% of UK households sold their homes for profit in 2023, and optimism that the Bank of England will cut interest rates this year may facilitate higher gains.

       This month, broker Knight Frank revised its UK house price forecast to growth in 2024, while researcher LonRes noted an “improving outlook” for prime London sales.

       Of the households that sold a home bought in 2021 last year, two-thirds did so in a small town or the suburbs, exceeding the typical average.

       Meanwhile, 12% of vendors sold houses in the countryside, compared to a longer-term average of 9%.

       This suggests an unwinding of the pandemic-driven race for space.

       “Most of these sellers are selling larger homes in the country, often in favour of a move back to the suburbs or city,” Hamptons’ Beveridge said.

       “We expect prices to start rising in London later this year, which may start to unlock some of these moves.” — Bloomberg