House sales boom drives bidders far above asking prices

Nearly one-third of homes in England and Wales sold for more than their asking price in 2021 — twice the average over the previous decade — underlining the strength of the “sellers’ market” during the pandemic as well as the impact of stock shortages.

A record 31 per cent of homes went for more than the seller had asked for, according to figures from estate agent Hamptons International, compared with an average 16.1 per cent in the 10 years to 2020. In 2009, when it began collecting the data, the share was just 10 per cent.

Lockdowns, low mortgage rates and the added incentive of a temporary stamp duty holiday in England and Northern Ireland drove homeowners to compete for properties they found better suited to home-working, such as those with gardens or outdoor space.

Andrew Marshall, Hamptons head of sales for the western region, which covers sought-after areas such as the Cotswolds, said that competition among buyers had been more intense than at any time in his 20-year-plus career. 

“Offers between 5 and 20 per cent above asking price were not uncommon. One house in north Oxford was up for £1.35m and had 26 people to see it in the first week. We got six bids and it sold for £1.7m. There were lots of similar examples.” 

Homes of the right kind were quick to sell — in fact they sold quicker than in any year on record, Hamptons said. It took on average 31 days for a property to go under offer in Great Britain in 2021, compared with 19 days the year before and 61 days in 2009.

However the effect was reversed in London, the region where sales were slowest to go through at 50 days on average — a six-year low.

Hamptons said that the outlook for sales in the new year, when people traditionally begin to market their homes for sale, appears positive, since momentum had not flagged in December, when the average vendor sold for 100 per cent or more of their asking price.

But it added that much would depend on the willingness of potential sellers to put more properties into the market. “All eyes are fixed on whether stock levels begin to rise. This may start to turn the tables in favour of buyers, rather than sellers,” the agent said.

Steep rises in house prices, which Nationwide said were 16 per cent higher than before the pandemic struck in 2020, may act as a brake on activity, particularly at the lower end of the market, as they coincide with a changing mood on interest rates. The Bank of England raised its main interest rate in December from 0.1 per cent to 0.25 per cent, the first rise in three years.

Research by Savills, the estate agent, this week found the number of wards where average house prices still stand at below £150,000 shrank by 28 per cent in the 12 months to September as a result of the booming housing market.

The agent looked at average house prices in the 8,700 wards in Great Britain where there were at least 10 sales over the period. When it came to higher-priced homes, it found the number of wards where the average sale price was more than £500,000 had jumped by 38 per cent to 1,224, compared with the 12 months to the end of March 2020.

The number of wards where average sale prices are £1m or more rose by 15 to 95, with new joiners such as Aldenham, Esher and Clandon & Horsley in the housing hotspots of Surrey and Hertfordshire.

Lucian Cook, Savills head of UK residential research, said: “Typically, the areas which have seen the biggest growth reflect how more affluent households’ locational preferences have changed.

“But the mini-boom in the housing market also means the range of locations accessible to a household with a more limited budget of £150,000 has shrunk substantially,” he added. “This is likely to come more sharply into focus as interest rates start to creep upwards.”