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Property speculating hits 10-year peak

The number of homes bought and sold in quick turnarounds in the UK has hit the highest level since 2007. So-called "flippers" turned their attention to previously unloved, cheaper regional markets after stamp duty rises made quick turnarounds of expensive London homes less appealing. 

Countrywide has analysed Land Registry data and found that some £5.5bn worth of homes across England and Wales were bought and sold more than once in the year to April; that: equates to 30,822 houses and Flats. 

These were the highest figures since 2007, a high point for housing speculation, when £9.6bn of homes were "flipped". 

The shift points to investors losing confidence in the potential for price growth in London and the South East, where prices have shot up in recent years. Instead they believe lower-priced areas are going through a market recovery, offering the potential for quick gains. 

Burnley in the north west saw the most activity in the year to April 2017, with almost one in ten homes that were sold during the year in the Lancashire town changing hands more than once.

Only two of the top ten areas for house "flipping" were in London,  the boroughs of Newham and Waltham forest on the capital's outskirts. 

This was in stark contrast to a year earlier, when all but two of the top ten were in London including high-value areas of the capital such as Kensington & Chelsea and Westminster, where homes typically cost well above £1m. 

Johnny Morris, Research Director at Countiywide, said: 'There has been a big shift away from London and towards places where prices are growing a bit more. It is a story about where people think prices will grow. 

"It's about the recovery in the housing market outside the south of England - the market in the Midlands and north has picked up in the last 18 months or so, making this more attractive and more financially viable for people to do." 

Mr Morris said most investors flipping homes earned out some form of renovation, although given the rapid timelines involved, this often consists of fairly modest work such as interior refits or a small extension. 

'There is almost a cloud that hangs over people who buy and do up property, but actually they are taking old, tired housing stock that needs work and getting it upgraded." he said. Mr Morris said that investors planning to flip properties are likely to have brought forward some purchases in an effort to avoid a 3 per cent stamp duty surcharge introduced last April for second and additional homes, giving a boost to the recent figures. 

"In the long term, [the surcharge] is going to drag on people flipping and renovating, as it adds that extra cash barrier." 

Other popular "flipping" destinations in the year to April 2017 were Reading in the south east, where 6.7 per cent of homes changing hands were flipped, and Middlesbrough and Hartlepool in the north east.

Property Professional Magazine Issue 25 - November/December 2017

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