House has lost 16% of value

[Askingadvice123]

We bought our house in June 2021. It was never our forever home but gave us the opportunity to move into the area to find out where we really want to be based. We have now found our absolute dream home (offer accepted) and have had our house on the market for 6 months. Original price was just over what we bought it for. We’ve now dropped it to 7% below what we bought it for. We’ve had few viewings but the only offer in sight is 16% below what we bought it for. We are lucky enough that we can afford the hit but it still makes me feel quite sick.

One option is to hold out for a better offer but the estate agent isn’t reassuring at all that we would get one as the viewings aren’t happening, and we are keen to move onto the next stage in our life. I’m not really sure what my question is - I guess has anyone else taken a big financial hit on their property to move to a better house and have you regretted it?

But presumably the house you're buying will also be cheaper because of the fall in the market?

I suppose one way to look at it is the net cost to you of getting the new house? Rather than looking at each component? So if you would have gone 30k more on new house than offer accepted but you’ve had to lose 20k on selling old house - then looking at overall price you have to pay it’s acceptable.
honestly though I can see how it hurts but if this new house is perfect and you know you’re staying and you can afford it then it might be the best move.

As PP have already said, the house you are moving into will also cost less.
At the end of the day a house is somewhere to live, not to be a moneymaking scheme. If it ends up making you money that is a bonus but if you were able to sell your house for (say) 20% more than you paid, your new house would probably cost 20% more as well so you would be no better off. 🤔
Be thankful you are not in negative equity. I knew some people in that situation back in the early 90's and again in the 2010's, they really were up the creak without a paddle!

We sold our flat for less than we bought it as it was during that slump thanks to Trussonomics. But it did also mean we found our house for a much cheaper price than it normally would have gone for, for the area and size of it.

If you take the offer 16% below what you paid, can you still afford your dream home? If not, it might be worth waiting to see if the right buyer comes along but I'd give myself a deadline to make a decision.

How does your accepted offer on your new house compare with the sold price in 2021 of a house similar to your new one?

We sold our London zone four flat in 1995 for just under 60% of the amount we bought it for in 1988. It was very painful but we'd paid off the negative equity so could move. And yes the next place we bought was cheaper than it would have been in 1988 too.

We did this nearly 25 years ago, sold our house for less than we had paid for it some years earlier
of course it stuck in the craw seeing its price on resale a few years later, but we got the house of of a lifetime, still there now, hopefully will go out in a coffin.

This is a good comparison - thanks for the suggestion. I’ve had a look and I’d estimate that the house we are buying would have been about 10-15% more in 2021. It’s hard to tell as not many house come up for sale in that area - another reason to jump on it!

And our accepted offer is 8% under what they put it on the market for last Autumn.

So I guess it all evens out. Ugh, still a horrid feeling but easier to come to terms with when you look at the bigger picture. Thanks all!

It has likely lost even more given that you still haven't completed a sale.

Prices were MENTAL in 2021. It was surely well known that if you sold up again fairly soon you wouldn’t get it back?

I agree with the others though, try and look at the whole picture. Also the loss being the cost of being able to dip the toe in this area.

Was it a new build property ? Can you also mention the rough area ?

The first flat I bought around 2000 for £62,500 . They had been new builds in 1988 just before the crash, which the owner had paid £62,000 .
It had taken 12 years to make £500.

In 2021 a house that needed loads of work sold for 500k in my road, so far new double glazing, kitchen and bathroom plus a rewire. Exact same house but showhome standard cannot sell and has been on market for months at 450k. I reckon they will be looking at 75k minimum to get that house up to full scratch. If they wanted it as nice as next door they would also have to add an extension which would be at least another 50k.

The couple that bought it were from London so probably thought it was cheap.

So a sorry tale and you are doing well compared to that. Shame they are a nice young couple, think they were quite taken aback at how chatty everyone is oop here :)

It feels counterintuitive but it's actually usually better to upsize in a falling market, assuming both houses have depreciated by the same amount.

Say you're moving from a £500k house to a £1m house. If the market goes down 10% the £500k will house will sell for £450k, losing £50k, but the £1m house can be bought for £900k, saving £100k. So overall you're still £50k better off.

This,

Loving the % comparisons! You must work in finance

Yes, a very valid point. Downsizing in a falling market is where you loose out the most.

I'm downsizing and have reduced our house by £200k, in total we will lose about £300k as it was a doer-upper that we'd intended to stay in but due to ill health and personal reasons we are now selling up. It's making me feel very queasy that I'm buying at around £400k and sellers don't want to negotiate £10k down when I've taken such a huge hit - but it is what it is, as they say!

I get why this is upsetting for you, and I agree, realising that you're not paying as much for the next house is probably helpful?

However, I do think this idea that people always make money on property is probably a bit harmful- the idea you can sell in 2-3 years and the value will have gone up isn't always true and has only ever been true at certain points (and about certain houses) over the last 10-20 years. There will be lots of times when people will have had to take a hit.

I think if you can afford to move now, to a home you like, there's not much point holding out for a higher offer that's potentially unlikely to materialise. I think, unfortunately, there's every chance prices could fall further over the next 6 months, rather than increase.

Well not me personally but might do so in the near future. Won't regret it, will count myself lucky if it's a forever home.
Could be worse... you could have no interest at all, many stuck as the house won't sell enough to upsize.

That is annoying for you and is a significant fall in value since 2021. Hopefully you can get a similar amount off your next purchase and move into the property that works better for you.

We definitely weren’t expecting it to have gone up at all but didn’t anticipate that it would be such a big drop. It will go for less than any similar houses have sold for in the area over the last 1 year which perhaps indicates the market here is still going down.

I think you’re right - holding out is a bit of a risk. Best to move on with our lives and try to focus on the positives!