Plus, it’s not going to take you forever and a day to complete the project; you should be in and out relatively quickly. According to a 2021 report by Hamptons, the average flip sold during the pandemic produced a profit of £48,000. Considering that the average salary in the UK is just a tad over £30,000, this sounds like a good way of supplementing your income, if not earning a living.
Now, I’m a chartered structural engineer and property developer by trade, and I can certainly see the attraction of flipping properties as a strategy. But as we go into 2023, we need to take something of a reality check. Property flipping probably shouldn’t be your go-to strategy next year for several reasons, mainly due to the timing.
We first need to take a slightly closer look at Hampton’s £48,000 profit figure. Considering the period over which these numbers were calculated, while there was a global pandemic going on, it was also a period where we saw house prices rising at a rate of close to 10% per annum. The stamp duty holiday had stoked the market and helped motivate many people to take the plunge and move house. And this was great news for flippers. If they purchased a property for £250k and sat on it for 12 months, that property would go up by £25,000 without them lifting a finger. It takes them more than halfway to Hampton’s reported £48,000 profit average.
Clearly, most of these flippers didn’t simply sit on their hands and wait; they got in the builders, plumbers, and decorators, and some may even get stuck in themselves. Let’s assume that, of the average £48k profit, £23k came from adding value, with the remaining £25k coming from an underlying increase in the property’s value over the period they did the work. So far, so good – after all, profit is profit, however you get it. But in 2023, the housing market looks like it will be a different place. Most experts are predicting that house prices will come down in 2023, and while the estimates vary considerably, the general feeling is that we could see an adjustment of 5-12%, with house prices not increasing again until later in 2024.