AIBU to be gutted my house has lost me money?

[Hotpinkparade]

I guess I’m really wondering if anyone else has been in this situation and what I can do… I bought a two bed flat in a nice area of London in 2017. Redecorated, replaced the kitchen and bathroom, and have lived here happily since.

We’re starting to outgrow it and decided to get the flat valued and see what’s out there. Two valuations, both for the same as we bought it - maybe 5% growth if we’re lucky. I’m just gutted. With inflation over that time, we’ve essentially lost £200,000. The estate agent said house prices in our area haven’t gone up over that time because it’s not ‘up and coming’, it came up a long time ago and has stayed desirable. What do we do? Just suck it up and sell, or wait and see if anything changes?

But how much of that money you would have earned from investing would you have spent on renting a similar property?

Unfortunately two estate agents and Zoopla are in agreement so I think it’s correct.

Does anyone think there’s value in waiting another couple of years to see if there’s an uptick, or is 7.5 years enough to say there’s unlikely to be a change?

The money OP paid for it would have made £200k IN INTEREST since 2017.

So I think we can assume it was worth a lot more than that, especially given interest rates were v low for quite a lot of that period.

Are you sure you've lost? Because you would have probably paid rent in that time. Wouldn't that have eaten into much of your interest / returns?

This is why properties should be homes and not investments. It is a bit of a myth that homes are investments or a safe place for your wealth. It is sometimes a gamble. Factoring in inflation you don't make loads of money. I guess it's better than storing it under a mattress and paying rent though.

The flat is ground floor with private entrance and has direct access to a courtyard garden (undemised) and further communal gardens. So does have outside space of a sort.

No, i disagree.

"if id invested " - whos to say that the investments you chose didn't tank due to the Russian invasion of Ukraine? or some other event? My pension savings took an absolute nose dive. Nothing is guaranteed.

And if you'd bought in the up and coming area and spent another 10k it'd now be worth half a million..

And if you'd bought in the Up area - the price could have crashed.

swings and roundabouts

You've got a property, you can't change the past, you're only doing yourself the disservice to be looking at what you thought could have been.

Was this a very expensive flat to start with? 200k worth of inflation since 2017 would suggest a purchase price of over 600k.

Can I ask how much you paid?

Has the value gone down or are you including inflation and cost of improvements?

I don't think house proces have risen as quickly as inflation, when it was at its highest, anywhere and improvements rarely increase the value by as much as you spend IME.

What would you have paid bin rent over that time? If you're going to talk a out money lost, you have to offset what it would have cost you to live elsewhere.

Exactly! A central London flat would be about 3k a month I would think?

I wouldn’t. House prices have shot up between 2017 & now, but they are now levelling off. If you haven’t seen an increase already then another 2 years won’t make any difference.

ok, but as you've not being pay rent or a mortgage since 2017, why did you not invest monthly the equivalent of what your rent/mortgage would have been? Would have had a nice pot now.

You’ve not lost money, you just haven’t made as much as you thought you might. A 5% return on an investment isn’t bad.

Yes, but what would she have paid in rent on a good flat in a nice part of London?

All those stating that the flat hasn’t lost money, it’s not kept up with inflation - so effectively it has lost money

if £100 in 2017 brought 10 gold coins and now 10 gold coins is worth £70

youve still got 10 gold coins but they are now worth £70

You haven’t ‘lost’ money
you bought at a price thinking in a few years time it might possibly double value ( make a huge profit) for you and it hasn’t

I don’t think this is accurate for London at all. There is a huge price difference between a 2 bedroom flat and a 2.5 terraced house in most areas of london. Even many high household incomes can’t sustain the 40% increase. You’re talking a 150k household income plus family money to buy a terrace even in a shitty part of London.

If you'd invested it yes it would have maybe gone up more depending on the investment, but you would have had to pay several thousand in rent each month to live in a similar property. Also sounds like maybe you overpaid in 2017, because generally all housing has increased in value in the past 8 years.

Anyway, housing yourself is not an investment generally, yes at times it has been, but also many many people have lost money on housing, and gone into negative equity. If you had put the say £2000/month you saved on rent into an ISA with a 5% return since 2017, you would have £200k today - so there is that too.

Did you use having no mortgage as an opportunity to save a decent amount each month?

We sold our last house after massive losses in the 1990s property crash had hit the market. The upside was we were moving to a bigger place so the cost of that new place was in that sense proportionately less s in a way you do still win out even if you sell your flat for less as the next place you buy if is more expensive will also usually be less than it would otherwise have been.

I wouldn’t wait OP, I would move if that’s right for your lifestyle now and in the future. You could gamble a couple more years and see no growth while the properties you want to buy move out of your reach. Focus on the fact that you haven’t had to pay a mortgage for the last 7.5 years, which probably means you’ve had a good quality of life Living in a flat that you’ve liked. Now it’s time to move on and maybe you have to take on a small mortgage to enable you to do that, you are still in a better position than most people.

edited to ask, did you use the last 7.5 years to save money as you didn’t have a mortgage or rent to pay?

I'm not sure anything you'd invested in would have kept pace with inflation. Interest rates didn't get up to 11%, and if you'd invested in the stock market you'd have lost a lot of the capital last week. Plus as others have said, if you'd have invested it, where would you have lived? You really can't view your primary home as an investment, it's somewhere to live. If it goes up in value whilst you own it, that's a bonus, but it's not the primary objective of buying a home. We need to get away from this view that property is a guaranteed way to make money.

Thanks, this is point I’m trying to make regarding inflation and the £200k figure!

I paid £625k in 2017. (I put this into an inflation calculator that said this would be ‘worth’ £822k in 2025.)

To make matters more complicated - I bought half the flat, and the other half was purchase by a trust overseen by my dad. The agreement was that we would pay ‘rent’ to the trust on the half we don’t own. So we have been paying rent, albeit half of market rate, which we won’t see again. This period coincided with a drop in my work during Covid, and my partner returning to study, so we haven’t been able to save more on top of that (for the person who asked why we weren’t tucking away the equivalent of mortgage payments).

Statistically there is evidence that it is correct for London still. Rise of WFH, people want space, and with leasehold & service charge issues flats are typically taking a lot longer to sell than they used to, even in London, and are less desirable than they once were.

Sounds to me like you were fooled into the idea that property prices always go up.