‘Why am I struggling to sell my £1.6m home?’

Sophie Lane Fox has never sold a house before and at the start of May, she and her husband put their three-bedroom terraced house in Fulham, south west London, on the market. 

Although several people have come to look round, the couple are still waiting for a buyer to make an offer.

“We have a one-year-old and another baby due in November and really need more space,” says Mrs Lane Fox, 32, an interior designer.

She is selling her beautifully decorated home for £1.6m through John D Wood & Co.

“We want to move to a house we can live in for the next 30 years.”

In May, there were more properties on the market than in any May over the past eight years, according to Zoopla.

However, now is not an easy time to be selling – especially if your home costs seven figures.

This year, the number of properties for sale in Britain with asking prices of more than £1m is 23pc higher than January to mid-May last year and 38pc higher than the same period in 2022, according to analysis by Stuart Ducker, of the data firm TwentyCi. 

“While demand for £1m-plus properties is also higher than last year, the percentage of properties on the market that are actually selling (sold subject to contract) has fallen this year by 6pc compared to the same period last year, and a massive 29pc compared to 2022,” Mr Ducker says. 

“It is therefore now more difficult to sell a £1m-plus home.” 

By contrast, TwentyCi’s data show the ratio between supply and the percentage of homes selling has improved marginally (by 4pc) this year for properties priced below £1m.

Here are some of the issues facing wealthier homeowners.

Higher mortgage rates restricting borrowing

Over the past couple of months, mortgage rates have edged up again in response to rising swap rates as financial markets anticipate a slower pace of interest rate cuts by the Bank of England. 

While there is some hope the first rate cut will come in August, some experts don’t believe the Bank Rate will change until September. 

While higher mortgage rates are affecting all parts of the property market, they are weighing particularly heavily on property millionaires because in general the higher the property value, the bigger the mortgage. 

Adrian Anderson, of the mortgage advisers Anderson Harris, explains that most people buying homes at this level are “next-time buyers”. 

While some simply cannot afford to take on a larger mortgage at a higher rate, others are choosing not to.

“Many of the next-time buyers I speak to will have been used to paying a cheap mortgage for the last 14 years and they tell me that they are not prepared to sacrifice their lifestyle – with multiple holidays, school fees and high discretionary outgoings – and trade up now,” he says.

“Many of my clients seeking a £1m-plus property are waiting for mortgage rates to reduce before they commit to a much larger mortgage.”

The sustainable housebuilder Q New Homes has pushed back the sales launch of the nine net-carbon-zero, ultra-energy-efficient homes it is building in Kent, most of which have been valued at over £1m, from June to September. 

Damien Wynne, of Q New Homes, says: “Pushing back the launch date is not a decision we took lightly because, as developers, we don’t earn a penny until we start selling the homes we’ve worked so hard to build.

“But this is a challenging market for properties in this price bracket, and we felt it was the prudent thing to do.” 

Mr Wynne hopes buyer sentiment will improve once they are past the uncertainty of the election and interest rates start coming down.

A slow sales process

Jeremy Leaf, a north London estate agent, says big mortgages are also taking longer to go through “as some lenders are nervous about longer-term prospects for the market”.

“Generally when that is the case, transactions tend to be a bit more fraught, chains tend to be more involved and therefore the time taken to get to exchange and completion can be quite a bit longer too.”

The auctioneer Allsop has seen an increase in properties over £1m, notably around the M25, coming to auction this year.

The firm’s Jourdan Prowting partly attributes this to the speed of the auction process.

“Once the hammer comes down, the exchange of contracts is unconditional and completion is within 20 working days,” he says.

“That’s in comparison to the typical six to nine months for a £1m home in the private treaty market.”

Concern over other costs

Many estate agents say those buying or selling £1m-plus properties may be subject to higher taxes under a Labour government, which is causing some buyers to pause. 

Dominic Agace, of Winkworth estate agency, says Labour’s pledge to levy VAT on private school fees means some people are putting their homes on the market.

“They are preparing to release cash to protect them against increased private school costs,” he says.

Other families meanwhile are now looking at a cheaper house than they might previously have sought.

Jemma Scott, of The Buying Solution, says: “Budgets may well adjust and a family buying a £2m home may drop to £1.75m to account for the probable VAT on school fees.”

Indeed demand has ramped up even further for homes in the catchments of sought-after state schools in London, pushing up prices.

John Ramirez, of Dexters estate agency, says: “Buyers will pay over market value to be in the right catchment area.

“A house on certain roads around Ofsted-outstanding state primary schools in south west London can be listed on Monday and by the end the week will have multiple bids from buyers.”

Location is key

The pandemic race for space created a boom in property millionaires, especially in rural areas.

The number of homes valued at £1m or more across Britain has since fallen back to an estimated 670,100 homes, according to analysis by Savills estate agency.

This is 8pc less than in 2023, but still 28pc higher than in 2019 pre-pandemic. Even so, this only equates to one in 44 homes, or just 2.3pc of the total housing stock.

In London, 330,668 homes cost over £1m, equating to 8.7pc of all dwellings, Savills says. In the south east of England, there are 155,085, or 3.8pc of dwellings. 

However, in Wales, there are only 4,239 property millionaires, and in the north east of England, 2,489. As such, it’s obviously more of a challenge to sell a seven-figure home in one of these areas.

In the South West, 45,735 or 1.7pc of all dwellings cost over £1m.

Clare Andrews, of the law firm Moore Barlow, says: “Here, we’re noticing that properties over £1m are taking much longer to sell than they did before interest rates started to rise in 2022 and during Covid, when we saw an influx of people from London, which naturally drove house prices high.”

The postcode can affect how £1m-plus properties fare in London.

Kesha Foss-Smith, of John D Wood & Co. in south west London, says this is often due to how many homes are on the market at a particular price level.

“In densely populated areas such as Fulham Broadway, properties priced between £1m and £2m are currently experiencing a slower market due to an abundance of similar options, giving buyers more choices,” she says.

“On the other hand, in Southfields, properties costing £1m to £2m are selling rapidly.”

Neil Vickers, a professor at King’s College London, is in the process of selling his four-bedroom terraced house in a sought-after part of Southfields – after a bidding war, the buyer is paying £25,000 over the £1.165m asking price.

“I think people feel they can get good family houses for less than in other nearby areas,” says Mr Vickers, 59.

“A big factor when we moved here with two young sons 17 years ago was the calm, and it’s still like that.”

Despite some eye-catching deals – with sales recently agreed on one property at £40m and another at £80m, according to Jo Eccles, of the prime central London buying agency Eccord – the market for the capital’s most expensive homes is slow.

In May, sales over £5m were 21pc lower than the same month last year, but still 19pc above the average of 2017-2019, according to the analyst LonRes. 

Uncertainty caused by changes to the taxation regime for non-domiciled individuals may scare off buyers.

And stamp duty is a key disincentive to buy an expensive home in London right now, says Simon Connell, of the buying agency Property Vision.

“The residential property market is driven by sentiment,” he says.

“Whether they’re upsizing or downsizing, many owners of more expensive homes now feel it’s simply too costly to move within London.”

The price isn’t right

Many property millionaires are still clinging to the prices seen during the pandemic boom, according to Bill Spreckley, of Stacks Property Search, who works in Hampshire, West Sussex and Surrey.

“I cannot stress enough how important the initial asking price is,” he says.

“Anything that’s overpriced will be ignored and properties that are regularly reduced send red flags to buyers.” 

Mr Spreckley’s colleague Ed Jephson, who covers Devon for Stacks, says for every 10 houses on the market in the South Hams at around £1m, “only one is correctly priced. Many are overpriced by as much as 10pc to 15pc”.

Jerome Lartaud, of the buying agency Domus Holmes, sees many overpriced properties – including a townhouse in Clifton, Bristol, listed last year for more than £3.5m and now being marketed by another estate agent at an initial price of £3m, since reduced to £2.65m. 

However, Mr Lartaud says some homes are still going for their asking prices or even above.

“These ‘best-in-class’ properties are in prime locations, meticulously and sympathetically renovated to high standards, and well-maintained,” he says. 

Renting out homes instead

Some owners of expensive properties in the Cotswolds that are struggling to sell are renting them out instead – either as short or long-term lets through the Cotswold Letting Agency.

The firm’s Olly Symonds says: “This means the property brings in revenue until a buyer comes along.”