130,000 homes sell at loss despite rising price claims

Despite property price surveys reporting rising home prices, a depressing fact behind the figures is 130,000 homes have sold at a loss over the past five years.

The latest survey – from Nationwide Building Society – shows the average home increased in price by 0.2% in February to £162,638.

Other surveys by the Halifax and The Land Registry report similar increases.

The latest Land registry figures for January 2013 report a 1% annual price increase to £162,441 a year.

However, new research that looked at Land Registry data going back to 2007 showed 40% sold for less than the original buying price – at an average £24,430 or 11% below the price paid.

In the same period, 180,000 homes (55%) sold at a profit, giving an average gain of £45,199 or 20% of the purchase price. The rest broke even.

The information was compiled by shared equity provider Castle Trust.

The analysis reveals the size of loss has increased since the credit crunch. Looking back to 1995, an average 91% of homes sold at a profit, 7.5% made a loss and the rest broke even.

The main reasons for selling at a loss are a quick sale to buy another home (18%); divorce (14%); aspiring for a larger home (13%) and job relocation (12%).

Homeowners told the survey that they are still concerned about their finances following the downturn, with 13% worried they may have to sell at a loss because of money problems.

Sean Oldfield, chief executive officer of Castle Trust, said: “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.”


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