Stagnant home prices - why don’t more people know?

[swaler]

We live in inner London. Hardly anyone lives in a house where we are, it’s just flats. Many of which have private outside space.

We bought ours in 2020 for £770k. We just got it valued at £740k, four years later. We’ve spent over £30k on upkeep and £13,500 on SDLT. Moving costs etc upwards of £10k. So we’ve basically made no saving really vs the cost of renting.

Our neighbours have a much bigger garden flat and they bought for £1.8m in 2014 and it’s now valued at £1.6m. So they’ve lost a significant amount of money in real terms.

But why then do people insist that buying property is the only sensible option?

No one really lives in houses in inner London unless you have 3-4m+

Do you mean central London? 😆

I'm viewing a house today to buy for my mum, the prices around here are about 10% lower than 3 years ago, and if this house is good I plan on offering 15-20% below asking.

I'm in Hampshire and ready to buy as I'm buying via a limited business.

But over the next 20+ years I expect the value to be up, but in the next 3-4 I do expect it to fall a bit below what I'd pay for it.

The issue started when people started to think of homes as investments and not just somewhere to live and then get shocked when they fall.

I think you will find only a small minority of people choose to live in flats in inner London, and a lot of people make choices to live elsewhere to avoid this. I bought a house in 2021 not in London and sold it for £15k profit in 2024 having done 0 upkeep.

It's only a disastrous financial decision if the other option you didn't take was somehow living somewhere for free.

If the choice is buy or rent at market rates, then over the course of the 30 year mortgage, she will be better off at the end of it because she owns a property outright where as the renter will continue to pay rent for the rest of their lives. So let's say she buys at 30 and pays it off at 60 and lives until 80. That is 20 years of advantage over a renter plus she has the option then of selling and downsizing to somewhere cheaper and releasing some capital which either subsidies living costs or covers property maintenance over that 20 years.

If your choice was living for free somewhere and piling all the money saved on rent into the equities markets, you would indeed have done better over the last five years.
But most people don't have the option of living for free.

Also, if the value all properties have remained stagnant then it doesn't really matter. At the point at which you wish to sell, move and buy a new property, the gap in the value between both properties has remained the same as it was before.

Also property “worked” for a fairly long time. Think logically about it though, we have had years of wage stagnation, did you really think you 700k flat would really keep increasing in price? Who would be your pool of buyers? And a lot of flats in London started to stagnate post Brexit.

I have been saying to plenty of my younger colleagues & family to skip the flat stage for a few years, it doesn’t work for most in expensive markets these days

That's disingenuous. Not everyone in London is on a high income.

@Bungrung The Guardian did an article yesterday about people stuck in their starter homes: amp.theguardian.com/commentisfree/2025/jan/03/young-families-starter-homes-uk-housing-crisis

My DC and partner bought a flat 18 months ago and it has increased in value by about £25k since then, judging by other similar properties in the area. They didn't buy it as an investment, they bought it to live in.

I bought this house 30+ years ago, and it is now valued at around ten times what we paid for it.

My late parents once had the opportunity to buy a property in London for £600 just after the war, and had they done so, it would have been worth about £3.5m by now.

Interesting, I’ve seen it in real life for years. Affordability does matter & the higher interest rates of recent are still to play out. So much of the London property market was fuelled by equity gains over the last 30 years so if you can’t build much equity it stagnates.

Flats being stagnant isn’t true London-wide. LR sold prices in my postcode show that almost every single flat which sold between 2019-2021 and then sold again in 2023-2024 has increased in value - some only slightly but some significantly. Our opposite neighbours who have a maisonette they bought for £300K in mid-2020 have just exchanged on their sale with a price of £422K. The only exceptions in this area are those in a large new build block with cladding where flags are now unmortgageable. Stock for flats here is small brick-build blocks and period conversions, which seem pretty good at holding value.

There was a good article about how the property ladder doesn’t really exist anymore & this was in the FT 5 yrs ago.

@ComtesseDeSpair nothing will be a blanket rule and cheaper property will still see increases.

Long term surely buying a property must be more sensible than renting as in time you will have no mortgage to pay and a huge asset in the flat (whether it has depreciated or increased in value). Renting you will have nothing to show for your outgoings ever. Particularly if mortgage payments are on par with what rent payments would be.

Also when people talk about increases on their property are they allowing for inflation?

A 400k flat in 2020 would be 500k today allowing for inflation.

It's not true that prices have been stagnant everywhere - especially over a longer time period.
We bought a 3 bed townhouse in SE commuter belt (within Oyster zone) for £340k in 2015 and have just sold for over £500k. It was relatively modern, so no major work needed doing on it and it's turned out to be an excellent investment vs renting.

Of course - the market for properties in the £1.5 million plus bracket is ultimately smaller than the market for cheaper properties, so demand for property in the lower price brackets generally tends to support relatively stable values in London.

I was referring to flats as per the OP.

Markets like Manchester have seen big growth in recent years because younger people generally are price sensitive.

Unless you want to sell, neither you or your neighbour haven't 'lost' anything

I was forced to sell in the last property crash and lost 25% of the cost of the house. If I'd had a choice I would have waited till prices recovered, which they did.
Part of the issue here is seeing a house/flat as your home, not an opportunity to make money or save money from renting.
Because of the state if our rental market you are far better off owning. You are secure, you can do what you like to your property and you have an asset. Although it might seem a long time off, when you've paid off your mortgage, life will look very different for you than those people who will still be paying rent for the rest of their lives

Agree on this (also l

How big is the pool of people wanting a £770k+ two-bed flat?

You probably need to be earning £200k+ to make that comfortable.

Most people on those kinds of incomes will be looking for more family-type homes and post-covid there is (as has been much discussed) more people wanting space for WFH / outdoor space.

Plus - I think the late age of first buy, plus the high cost of moving, mean people tend to go straight to a home suitable for kids vs buying a flat first.

Additionally there’s been a huge drive in recent years within many industries, including the Civil Service, to decentralise; Manchester being a key destination for this. It’s both increased overall demand for property in the city, and meant more people who have sold London property having more money to spend in Manchester than the average Mancunian, creating further competition.

It depends where you are. The market is really hot where I am in Glasgow. Properties typically go for 10-20% over the home report value (ie what the bank will be prepared to lend).

I've thought of selling my house and moving to a flat to be mortgage free but the service charges put me off.

Because you end up owning it outright! Obviously. You are buying an asset.

I don't think anyone advising that buying is cheaper than renting is basing that on the first few years of home ownership, but over the long-term it typically will be.

If the housing market is stagnant in a given area, then the reason people don't know this could be precisely because it's stagnant and people aren't looking to move - because they're not moving, they're not looking at house price trends.

I guess it's similar to investing in shares - if a person buys company shares and then checks the markets every day to check on their investment, they'd likely be very stressed out if they're sat there trying to determine the best time to sell to make a profit, but the people who accept it's a long term investment know that the short-term fluctuations will even out in the end to hopefully result in a net profit (with a sensible portfolio; not just relying on one company, of course).

One you've paid off the mortgage on a property, there is no rent/mortgage to pay, whereas renters will always have to pay rent. But in the short term, that benefit hasn't yet materialised.