"Flippers" who buy homes and sell them rapidly at a profit, are retreating from the English housing market as the latest property boom appears to be ending.
The number of homes in England and Wales that were bought and sold twice within a year came to 17,120 in 2018 — down 11 per cent from the latest peak two years earlier, and 70 per cent below the high point of "flipping" in 2004, according to the estate agents Hamptons International.
Speculative homebuying in London almost halved in the past four years, with 1,107 homes flipped last year, as the housing market in the capital — which had led the post-crisis surge in prices — weakened. Of £3.9bn (NZ$7.37 billion) of homes flipped in the UK past year, £600m were in London.
"The art of flipping generally involves buying, renovating and selling a home, in most cases for a profit," said Aneisha Beveridge, head of research at Hamptons, a division of Countrywide.
"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."
The annual rate of house price growth across the UK in 2018 was at its slowest in five years, according to the Office for National Statistics, with prices rising 2.5 per cent in the year to December; in London, prices fell 0.6 per cent during that time.
The slowing trend has continued since, with prices across the UK up 1.4 per cent in the year to April, while in London prices dropped 1.2 per cent.
In 2018, flippers sold homes for an average £30,150 more than they paid — although this figure does not take account of stamp duty, estate agent fees or any renovation costs.
According to the online estate agent Yopa, buying and selling a home worth about £200,000 can cost as much as £20,000 in total, meaning flippers must choose carefully to ensure a profit.
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Ms Beveridge said flippers are not merely speculators, but often "play an important role in the housing market by improving existing housing stock and bringing empty homes back into use".
The latest peak for flipping was in 2016, when some 19,180 homes in England and Wales worth £4.2bn changed hands twice in a year. National house price growth began to slow that year, after coming in at 8.3 per cent in the year to March.
But that paled in comparison with the boom of the early 2000s, when 56,560 homes, worth a total of £8.2bn, were flipped as house prices shot up by 20 per cent in 2004.
The capital of rapid buying and selling for the past three years has been Burnley in Lancashire, where more than one in 10 homes that changed hands were flipped in 2018.
Burnley has some of the lowest house prices in England. This allows flippers to buy properties worth more than £125,000 that do not incur basic stamp duty, although they may still be liable for the 3 per cent surcharge applied to second and additional homes.
Written by: Judith Evans
© Financial Times