Houses gone DOWN in price after five years - is this normal?

[ardeng]

We've seen a house that we like and want to make an offer on it. But to my surprise I see that a couple of houses on the street have gone down in value. I've never seen this before in all the areas I've been looking. Would you go for a house here, or is there a reason you could think of for this? I've included a picture with the values.

OP, have you only looked at the sold prices for that particular street and now are worrying that there is a problem with that location?

If so, then have a look more widely and you’ll see that this is not a location specific issue. As pps have already said, property prices do go up and down, and there can be all sorts of reasons for that.

Where I am, small coastal town in Scotland, prices peaked in 2007 and while prices are rising again, they still haven’t got back to that level.

Buy a house you’ll enjoy living in, at a price you can afford.

You're getting sucked into the usual mantra that property "experts" spout.

That house prices only go up, you can't go wrong with bricks and mortar, that they are not building any more land.

Whether house prices increase or not depends on a lot. The area, what is in it and what is happening around it. The type of house. The conditions that may be imposed on ownership.

In my area there are newbuild flats that are not selling over the price they were sold at new in 2005. This is because 2005 was near peak market, but also they have onerous service charges, which people have become a lot more aware of in recent years. This has severely impacted their selling price.

There are others in the same area that increase less in price because of their flood status, they are in flood zone 2. Over the last 20 years people have become a lot more aware of checking for stuff like this, so the value is impacted.

There are others that are in "undesirable" more modern formats. Houses that are in these formats tend to increase less in price than those in traditional ones.

Finally there are those that do increase in price pretty well. These tend to be of traditional design, detached and on large plots. Still although these houses have increased in price, they haven't kept pace with inflation.

This is just one micro market in one area of the country.

If all the sales at a loss were around the same time then it’s possible that something happened to affect that road - like a new estate being built nearby that had a negative impact on that road’s outlook or traffic or school catchment.

Or if it all happened during covid, perhaps there was some reason why those homes were seen as less valuable during covid than at other times (eg they are great for commuting but have tiny gardens).

If all sales at a loss were very recent then that’s not surprising as house prices have been stagnant or reducing recently.

If every sale ever on that road has been at a loss, no matter when, then that’s weird.

In a general sense property prices do go down, they don’t always continually peak - but I’m guessing you may not be old enough to remember when this was the case? We’ve had a very long stint of prices increasing in most areas.

There may be a specific reason for a drop in this instance but if you can’t find anything then I would take a lower price as a huge positive. After prices drop they do eventually go up - you’d be buying at the best time (assuming you plan to stay in the property for many years).

I bought a house in 2008 a few months before the crash for 94k, the crash happened and I sold a few years later for 84k and the last house we sold we only made 5k on it as it was a new build and they don’t tend to go up in value as quick as other properties, this current house though is worth double to what we paid for it so hopefully my bad luck regarding property prices has levelled itself out, so yes they do go down as well as up!

wow, how old are you?
Surely you know that the house price market is very volatile and of course people have lost money when faced with selling for less than their original purchase price. A house is not a guaranteed financial investment

I remember this. negative equity and repossessions were common. Particularly where a couple split up. The house couldn't be sold for anywhere near the amount left on the mortgage. Happened to a couple of friends.

Having said that, I think this is a regional thing at the moment. prices and demand in Leeds, for example, still going up.

Their was a Covid boom in the market.

People living in small houses or flats etc... who where use to being a school/work all day found they where suddenly crammed in tiny spaces on top of each other 24/7. This gave rise to huge shifts in the market including the fact that having a garden suddenly add around a 5th to your houses value, having an extra office space for work from home also.

After being trapped many became DESPERATE to move and the market had a huge boom, this then predictably crashed back down to normal levels again. Same as it did in the late 2000s boom.

As PP mentioned too new builds go down not up in value, you pay a premium to have a 'brand new' house and when you sell it its no long brand new even if its only a few years old... same as with cars. They usually devalue for up to 10 years but then stablise.

Also to add in case it wasn't clear, that while bigger houses with gardens became highly sought during covid small houses, flats and single person living (single people often prefered bubbling during lockdown for MH reasons) dropped and became undesirable and the market is STILL seeing the effects of that. Especially the flat market which has pretty bottomed out since covid and grenfell.

I remember this. negative equity and repossessions were common.

But lending rules/criteria were very different then.

Lending rules were much slacker leading up to 2008 but the 80s were different.

I'm not sure how the 80s compare. It was essentially a simple two times your income. Its supposed to be stricter now with affordability checks and yet my DS is in the process of borrowing £200k which is nearer three times his income. Terrifying amount.

yet my DS is in the process of borrowing £200k which is nearer three times his income

The amount may be terrifying but 3 x is not scary particularly.

My parents bought their London family home in the early 80s. Cost 50k and was on a high LTV interest only mortgage. They managed to hold onto it (just) and now they cost 1.8m.

If it’s a disproportionate drop to the surrounding area, it could be that someone in the street has sold cheaply.

My postcode is showing a sudden drop due to a house opposite being sold to a family member for over £100k less than market price.

LOL, unfortunately though many people are too young to have experience of losing money on property.

Thank goodness we seem to be getting a correction rather than a crash!

Stuff near me is getting really stuck on the market. Especially anything over 700k

below. People want parking and a garden. Anything without those two is getting stuck.
people are haggling hard on what’s out there and anything with potential is selling to first time buyers.

don’t forget the covid boost was also because of the stamp duty changes.

It would have been so much better to let it happen in 08. Instead they made it so much worse

I agree, we had very low interest rates for so long that it came to be regarded as normal.
Those rates are not normal, and now it's payback time.

So true, millions of people have been allowed to get into debt they didn"t need, and all to bail out the bankers.

You should be able to earn interest on savings. It’s madness that it’s not seen as normal or expected anymore.

Are you local OP?

Could be because Beechfield isn't a sought after school compared to others locally.
We also have a complex high school system and it wouldn't be near enough for distance criteria alone for any selective schools.

Also loads of building and the town is much expanded, I would assume decreasing demand.

There have been recent anti social behaviour issues on that recreation ground and the woods, might put some people off?

I may be wrong about all the above but those are my thoughts!

Decreasing demand is happening all over now, there has also been overbuilding in many other parts of the UK, the market was juiced by the stamp duty break and super low rates, then rates started going back to normal and there is talk of taxing property wealth, so of course it will be difficult to sell for what you paid five years ago. However for a buyer this should be good news, unless there are serious issues with the property/area that they don"t know about also causing the price decline.

My SiL lived close to here and when she put her house on the market on 2022, she was offered 30k over the asking price within two weeks of it being on the market, it was bonkers around that time so I wouldn't worry.

Mortgage free sellers can be the worst for this as they see a drop in price as them having "lost" money, without realising that they have 5 years (say) of living there and not comparing that to how much they would have paid in rent in that time compared to how much they would have gained in interest had they invested their money elsewhere (hint. in a failing market, not much).

@PyongyangKipperbang totally agree. Am not mortgage free but to escape DV during Covid I had to get out fast and bought a property known to be in a desirable and safe area. The house seemed overpriced but I did pay for a valuation survey and was told it was reasonable. However, something pulls at my gut that when I come to sell hopefully in a year or two that I’ll probably lose around 30k on it. I just feel in my gut with hindsight I paid too much and didn’t haggle as I was in a bit of a traumatised state whilst still working FT and no friends family to support. I make myself feel better that if I did lose that amount off the value then it’s equivalent to me having rented for two years in that area and then having bought the property for less. I don’t know if that logic makes sense to anyone else lol but makes me feel better.

Im not too fussed if houses prices in general go down though because it likely means the house I eventually find should also have gone down. I’ll be looking to downsize to a smaller property so hopefully I shouldn’t be too financially affected in terms of sourcing a suitable home in a similar area.