Over 130,000 Homes Sold At Loss Since 2007

March 1, 2013

Four in ten homes have been sold at a loss since property prices peaked in 2007, according to shared equity firm Castle Trust.

The firm used Land Registry data to track house sales in England and Wales and found that 40.7% of homes were sold at a lower price than they were purchased for. The average shortfall was £24,430, which is 11% of the house price.

The research also showed that over the same period 55.6% of homes were sold at a profit, with an average return of £45, 199.

Chief Executive Officer of Castle Trust, Sean Oldfield, said it was easy to lose money on a house, explaining: “Since the downturn, over 130,000 families have made a loss on their home, placing them under enormous financial and emotional pressures.

‘When you take into account the costs associated with moving home, from stamp duty to solicitor’s fees, this situation becomes even worse.

‘The long-term performance of house prices shows national house price growth in line with national wage growth, but it is clear that individual house prices are really volatile and that home ownership is risky – much more risky than almost everyone appreciates,” he said.

Property prices increased in 2007 and there has been an economic downturn since. According to Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), “It is tragic for people who bought when the market is high and then had to sell when the market is lower but as the report highlights, a number of people did so in order to get a better deal.”

Research showed that there was a big difference in whether a home sold for a loss or not based on location. According to Adrian Anderson, director of mortgage broker Anderson Harris, “Much will depend on where you live in the country, with prices holding up much better in the south, particularly London. The north of the country is a different picture and price falls have been more dramatic.”

Since 2007, the North and Yorkshire and Humber had the largest amount of properties sold at a loss, whilst nearly 75% of homes in London made a profit.

According to Castle Trust, the biggest reason for selling at a loss was to purchase a home at a good price. Other reasons given were divorce or separation, the need to upscale, and relocation.