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?

You are lucky not to be in negative equity which happened to lots of us buying our first properties in the early 1990s.

On the positive side you still got to live somewhere at a pretty low cost compared to renting at a time when your income was low. Now you have a large deposit to put down on something else.
It’s unlikely you would have kept up with inflation through any other means, low risk investments had low rates for the majority of that time and higher risk stocks have tanked more than once.

You've had a nice home. That's what matters.

Bought a one bedroom house in 1990 for £58K. Had a baby in 1994, intending to move soon after. Roll forward to 1997 and we sold for £48,000, a loss of 17%.. We had to save the short fall, save a deposit again as ours had been used to offset high interest rates. Ok the figures are lower than today but so were wages. That's negative equity.

I doubt there will be any huge drops, but it isn’t going to surge again either. Stagnation time.

this, interest rates are also making a big difference.

If the service charge is 4K per year then over that time you would have paid 32K in service charges, plus any other maintenance and lease extension charges.

If you sell it and move to a new place of similar costs you will have to pay a whack in stamp duty. Did you pay stamp duty on this as a FTB ?

Tell me there is no more money in houses any more without telling me there is no more money in houses any more.

If you want a final bit of good news, my guess is the price differential between leasehold flats and freehold houses has further increased over the time period so limiting moving up opportunities.

You are lucky not to be in negative equity which happened to lots of us buying our first properties in the early 1990s.

Mortgage rules are somewhat tighter now so less likely for that to happen.

So you could have invested the money and made 200k

but then you’d have to pay for somewhere to live for 8 years. That’s about 200k right?

If you want a final bit of good news, my guess is the price differential between leasehold flats and freehold houses has further increased over the time period so limiting moving up opportunities.

I think this is also the case

Its your home, not an investment.

Yes inflation might be that rate but would you have earned £200k if you had invested that money in anything other than the flat. No idea what you paid (guessing it's high based on the increase) but I doubt you could make £200k on interest or investments. Also, you would have had to pay for somewhere to live!
I don't blame you being gutted it hasn't gone up but I think you're in a pretty good position so maybe focus on that!

Good grief. The more you post the more your diamond shoes are too tight. You have a mortgage-free place to live and the support of family money that you’re paying back at half market rate. Did you want a home or an asset? I’m also a London flat owner (bought with no help because my parents are and have always been poor) and it’s value never even enters my head because every day I’m just thankful to have a secure place to live.

No i used online calculation £200,000 in 2017 is worth £268,876.46 today
But
You would have paid 70k plus in rent .
So zero gain zero loss

OP bought half the flat for £625k, so would have expected £200k increase in price - the £200k wasn't the purchase price.

Yeah surely the “profit” on it is the money you have hopefully saved by having low housing costs for 7 years.

That’s a lot of money to spend on a flat as opposed to moving further out and buying a house instead

missing the point of the thread but that’s all I’m getting from this

OP, are you prepared to say what area of London you are in? Thanks.

I’m not paying money back. That’s rent on half the value of the flat, not a mortgage I’m paying off. The rest of what you say is totally true and I’m extremely fortunate - I’m aware of this already but it’s good to be reminded!

There is absolutely nothing OP could have invested £625k in 2017, and ended up with £825k now. Possibly crypto I guess, but who'd be reckless enough to put £625k in crypto, rent somewhere to live and keep their fingers crossed? Inflation and return on investment are completely different things, OP seems to have the view that return on investment = inflation, which clearly it doesn't.

Yeah I’m in NW3.

Also, you say you paid 625 but you also say you only own half.

so did the flat cost 1.25m and you paid half, or did you pay 312k?

if it’s the first, then the rest saving is a lot more. If it’s the second then your 200k inflation gain should only be half that.

either way, you’re not down

Happened to another girl I know - bought a house circa 2016/17 in a london-but-for-people-who-could-afford-it sort of area

Nice enough & did a lovely renovation on all baths/kitchen/paint ect.

Could easily sell it for.... What she paid

TBH you probably should just be thankful that you haven't made a substantial loss like some people have with the cladding issues.

You've had a decent place to live for 8 years and have been mortgage free.

Your flat just hasn't turned into the cash machine that a lot of London properties did during the 00s and 10s.

Remember there are a lot of people out there who struggle to even find a place to buy.

I think the whole flat was £625k, not half of it.

Which means she only gets half of £625k and the rest belongs to the trust, which will need to be reinvested elsewhere.

The inflation calculator doesn’t really mean anything OP. There are too many variables when it comes to the property market.

Presumably inner west given it’s a mansion block and was 625k back in 2017 which was bit an inexpensive flat for the time.