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?

So you feel you should have lived for free? Lost £200k?!

It’s people like you who are the reason many people can’t even buy a property, as you strive to see it as investment rather than a home.

No sympathy at all.

Flat generally don't hold much value in the sense most flat in London have peaked in price and will only make modest increases in the future.

How would I know this? No one told me anything like this. Also - makes me sick to type but the person I bought from paid roughly £325k in 2011 and sold to me for £625k in 2017. So he made a lovely amount of money over five years!

You haven't lost money, and thinking you have can only make you miserable.
You have lived rent-free for 8 years in a lovely flat in a nice part of London, which is worth a lot. If you'd invested the money when you inherited instead of buying, you'd have had a better return before tax at least, but would also have paid a fortune in rent. Buying was a sensible move.

Many first time buyer are aiming to buy houses than flats due expenses such as stamp duty etc. There no point in buying a starter home, paying stamp duty and then buying another place and pay stamp duty.

London is one of the few places in the country where you see that sort of stuff though. Maybe in city centres as well of historic cities like Oxford and York.

Round my way there are newish build flats that still haven't recovered their 2005 purchase cost. They went down in the crash of 2007-2010 and have never recovered.

Just be glad you haven't actually lost any money. Property is no longer what it was, but I can pretty much guarantee there are a lot of people around in worse positions than you.

There no point in buying a starter home, paying stamp duty and then buying another place and pay stamp duty.

yes this is what younger family & colleagues have done. Makes sense particularly if you are thinking of having dc sooner rather than later.

Bought after decade saving - 2007 height of market three bed house we'd though we'd be in till kids left home.

Despite paying for a full structural survey house which said little other than to suggest further surveys was a money pit and we listend to family who advised fix rate as long as possible as interest rates were low and could only go up - they fell and stayed low.

Upshot we ended up doing practically everything - mostly behind the scenes left us broke and struggling for money for years - re-wiring windows,doors, bathroom and often not though choice but necessity. We were on market for a year - sold for 7 thousand under what we paid - after 7 years off paying off a mortgage were lucky to get out with inital deposit we put in.

Upside didn't have to move at whim of landlord with associated costs. So had secuirty of housing - downside if we'd not fixed for so long could have moved sooner and avoided DH working away in week for years.

Don't think we'd have been better of renting - despite mortage payments for many years being slightly higher or about same.

Anyway moved - borrowed more but interest rates were so much lower - over paid and decade later substanial overpayment and a resonable amount left - and till covid better off every month. This area went up slower than previous are but now housing more expensive.

So still "won" in end I suppose though housing costs are just stupid.

Brexit killing the housing market

It is low wages. The houses are too expensive relative to average person income - well at least in London.

I think your expectations are off why would it have made £200k, that's a huge increase in value in just 7 years. What matters is what capital you have to purchase your next property and whether that is affordable, expecting your house to make you money when markets are unpredictable is not the best bet imo.

Think yourself lucky.
I bought a flat in West London in 1988 for £65k. Sold it in 1995 for £38.5k. That drop was pretty typical over that period. I knew people who couldn't afford the interest rates so just handed their property back.
Property prices rise over the long term, but short/medium term they may not.

You've had a (presumably) comfortable and secure place to live in over the last eight years. That's actually what a house is for.

I guess it’s location dependent it would be very unusual for any property bought in 2017 to have kept up with inflation. Definitely in places I have lived/bought/sold they wouldn’t have.

Nationwide have a House Price Index that I use sometimes for work - it would be more useful for you to look at that.

The other thing impacting flats, in London and in mamy large cities / towns, is the sheer number that are built every year. There is a lot of supply, which definitely supresses price increases. On the other hand, because of location, ease of maintenance, the lock up and leave nature of them, there are times in my life when they have been the right solution.

Our head office in Paddington was mothballed during COVID everyone worked from home. In 2022 it was sold to developers who turned it into flats. I wonder how many times that has been repeated across the city.

I sold a flat in zone 2 last year- bought for approx £300k in 2018, full refurb including new kitchen and bathroom while living there, and then we sold it for about £312k in the end.

The facts are- flats were overpriced around the time we bought, and since then there has been a pandemic and a lot of tightening up around lending on flats in London, so they simply are not desirable anymore. If they are, then FTB want new builds, because they tend to have brand new leases and developers often offer 5% mortgages because they have the capital to be able to.

In addition, the days of property being guaranteed profit are sadly behind us (not in all areas, but in a lot of them), so buying a property assuming it will make you money is misguided. Buy somewhere you want to live, anything else is a bonus.

I understand you're disappointed (I was too) but you need to reframe your thinking otherwise it will eat you up.

It sounds very much like you overpaid when you bought. Nobody needs to have told you flats don't hold their value in London (except specific postcodes, of which NW3 isn't one unfortunately) in the way that houses do. You have to educate yourself. Especially before spending hundreds of thousands of pounds, and before living in that expenditure as a primary home.

Anyway, you are where you are. There's a sunken cost theory, or you can stick it out. In your shoes I'd take the long, long, long term view. You'll buy/sell at least one more time in your life in all likelihood. And do more research before you make the next move!

You could have spent £50k in rent though!!! Don't be daft!

Developers are building thousands of flats. New ones are sold complete with white goods and a nice kitchen. It tore the arse out of the First buyer market and damaged some of the second.
It even affected the price of our house when we sold because of the new builds where we were in East London.

NW3

https://www.tiktok.com/@mubi/video/7332163671797386529?lang=en

Interest rates. Kind of another side of the same coin.

But since 22 interest rate rises have really knocked the stuffing out of the housing market.

House prices go up, down, or stay the same. I’m on my fifth house and not expecting to make a profit when I sell it.

London flats have done very badly since Covid.

i bought one for my son in 2023 and my solicitor advised me not to.

there are massive massive issues mostly around cladding, and leasehold which are causing a lot of legal problems in the conveyancing. Many people are not buying them.

not to mention the whole post covid flight to rural areas and shift to wanting outside space.

i bought it anyway and my son now lives there and he plans to stay for the long term (20 years plus)

many London flats have had actual falls in price and are completely unsaleable due to cladding so you’ve actually done quite well.

Also investments don’t track inflation.

If you’d invested £625k in a FTSE tracker on 1 April 2017, and cashed it in yesterday you would have cashed in £668k, about a 7% increase.

So if you sell for 5% more than you bought for, you’ve actually “lost” £12k but had below market rent housing for 8 years. So it’s cost you £12k to house yourself (plus any rent you actually paid) - the equivalent of £127 a month.

Now that’s not really a loss, is it.

Where would you have lived?