A Zoopla report highlights substantial financial gains for homeowners selling in 2023, amidst the first house price reductions in over a decade and changes to the property tax system introduced by Chancellor Jeremy Hunt.
In 2023, homeowners who sold detached houses in England and Wales made significant financial gains, with average profits of £137,000 over the initial purchasing price, as reported by Zoopla. Bungalow sellers also saw substantial returns, with average profits of £102,000. Semi-detached, terraced, and flat sellers experienced gains of £81,000, £65,000, and £30,000, respectively.
Izabella Lubowiecka, a senior property researcher at Zoopla, emphasized that these gains provided essential financial leverage for homeowners looking to purchase their next property. However, she also noted the occurrence of modest house price reductions, the first in 11 years, which may signal lesser gains in the future.
Amid the backdrop of these gains, Chancellor Jeremy Hunt has introduced changes to the property tax system. Specifically, there has been a reduction in the higher rate of capital gains tax for residential properties. This policy adjustment is aimed at encouraging landlords and second homeowners to sell, potentially improving market accessibility for a wider range of buyers, including those purchasing their first home.
Despite these changes, there has been feedback that opportunities for first-time buyers were overlooked in the Budget. Discussions about proposals such as the 99% mortgage scheme have raised concerns over the risk of negative equity. Moreover, there have been calls for reforms to Lifetime Isas to better support individuals saving for their first home.
According to Zoopla’s analysis, which included over 100,000 Land Registry entries from 2023 matched with transaction records from the past 20 years, homeowners tend to remain in their properties for several years before selling. Bungalow owners, for instance, had an average stay of 11 years. Despite the recent decline in house prices, the data indicate that most sellers in 2023 still managed to secure meaningful capital gains, aiding their progression to another home. However, the possibility of lower house price growth in the future suggests that homeowners may need to look further afield to find value in their next property purchase.
