Number of people ‘flipping’ homes for a quick profit falls drastically

29 July 2019

The number of homes sold within a year of purchase has fallen 69% since the peak in 2004 

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The number of people who are buying and selling homes in the space of a year to make a quick profit has fallen drastically over the last 15 years, new figures show.

18,630 homes were sold within the first year of purchase in England and Wales, 69% less than in 2004, according to residential estate agent Hamptons International.

Known as 'house flipping,' property buyers snap up property as cheaply as possible and then increase its value through renovations or planning applications to sell with the aim of making a substantial profit.

Number and % of homes sold more than once in a year

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Source: Hamptons International & Land Registry, July 2019

'Flippers' now make up a smaller part of the housing market compared to historic standards.

Last year, just 2.1% of homes were flipped in England and Wales, down from 4.8% in 2004.

The value of the sector has also fallen, down from £8.2 billion in 2004 to £3.9 billion in 2018.

Flipping a house is also becoming less lucrative, with the average flipper now making a 22% average gain compared to 32% in 2004 – a time when house prices were rising faster.

The number and proportion of homes flipped has fallen in every region since 2004. 

London saw the biggest drop in the number of homes flipped since 2004 (-81%), followed by the North West (-73%).  

The North East is still the region with the highest proportion of flipped homes, with 3.6% of homes sold more than once in 2018.

However, between 2017 and 2018 every region other than London recorded a small increase in the percentage of homes flipped. 

The North East saw the biggest increase, with the proportion of homes flipped in the region rising from 3.3% in 2017 to 3.6% in 2018. 

Meanwhile the proportion of homes flipped in London fell from 1.5% in 2017 to 1.4% in 2018.

Aneisha Beveridge, head of research at Hamptons says: “The art of flipping generally involves buying, renovating and selling a home, in most cases for a profit. 

"Flippers play an important role in the housing market by improving existing housing stock and bringing empty homes back into use. 

"Yet the number of flipped homes has fallen considerably since its heyday in the early 2000’s. 

“Flippers tend to operate when house prices are rising, to really maximise their profits. Between 2000 and 2007 house prices were rising at an average annual rate of 13%, so there were plenty of opportunities for flippers to make profits. 

"But following the financial crash price growth has slowed, and this combined with tax changes has meant that generally it’s harder for flippers to make as much of a return as before.”

Mortgage approvals

In other news, the number of mortgage approvals for house purchase hit a five-month high in June, suggesting the housing market has picked up slightly after Brexit was delayed in March.

The Bank of England reported that mortgage approvals for house purchases rose to 66,440 in June - up 1.2% on the previous month.

Howard Archer, chief economic adviser at EY Item Club, says: “Despite being at a five-month high of 66,440 in June, mortgage approvals were well in the 63,000 to 68,000 range that has broadly held since late 2016.

“They were also not that far above the average of 65,267 seen over the first half of 2019.

“June’s mortgage data tie in with the view that housing market activity got some help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit has been relatively limited.

“Improved consumer purchasing power and robust employment growth has also recently been helpful for the housing market but latest developments have been somewhat mixed, with employment growth in particular showing signs of slowing.”

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