According to the research findings, the average selling price for homeowners was £102,650 higher than the purchase price. Among those who sold in 2023, 8% purchased in 2021 and sold in 2023, realizing an average profit of £56,170, representing a significant 23% increase.
The study also revealed that a staggering 93% of homeowners who sold their properties in 2023 achieved a higher selling price than their purchase price, with London homeowners realizing an average profit of £204,190. Moreover, the majority of homeowners utilized the proceeds from property sales to purchase new homes, promoting market circulation.
Several factors will influence the rise in UK house prices over the next two years. Firstly, multiple bank rate cuts and a rebounding job market will stimulate market circulation. For instance, Nationwide has reduced rates for second-time mortgage applicants, offering a five-year fixed-rate mortgage at a rate lower than the Bank of England's base rate and the current average five-year mortgage rate, which will attract more buyers into the market.
Secondly, the revival of the job market implies increased demand in the rental market. Knight Frank predicts that rental growth will expand over the next five years. Additionally, government incentives for first-time buyers have encouraged more young people, especially those newly employed, to opt for buying rather than renting, further driving up market demand, especially for existing homes.
While Knight Frank notes the instability of the UK inflation rate and the potential impact of the upcoming elections, especially the tax reduction policies aggressively promoted by the Conservative Party ahead of the elections, which could cause fluctuations in house prices, the overall outlook for the property industry in 2024 remains positive. Mainstream UK prices are projected to rise by 3% in 2024, with a cumulative growth of 20.5% over the five-year period until 2028. Additionally, Knight Frank predicts that mortgage approvals this year will surpass the 10% growth seen in November last year.
