High-Value Homes Are More Than Four Times As Likely To Be Worth Less Than Their Owners Paid
Nearly one in three homes originally bought for £1 million or more are now worth less than their purchase price, exposing a growing divide between Britain’s high-value property owners and the rest of the market. Around 32% of £1m-plus homes are currently below their original purchase price, compared with just 7.5% of properties bought for less than £1m, according to new market analysis. Moving Compared,
The disparity is particularly relevant to homeowners who bought expensive property when sustained price growth made bricks and mortar appear an increasingly dependable store of wealth. Prime central London values are now around 26% below their 2014 peak, meaning owners who entered the market around its height can face a very different calculation when they eventually come to sell.
That does not necessarily mean homeowners who have held property for decades have lost money overall. Many will still be sitting on substantial long-term gains, particularly those who purchased well before the market peaked. The pressure is more acute for people who bought later, paid a premium for their property or invested significant sums improving it while expecting continued capital growth.
For older owners considering downsizing, the sale price is only one side of that calculation. Selling one property and purchasing another brings a new set of transaction costs, potentially reducing the amount of equity actually released from the move. Moving Compared’s latest figures put the average overall cost of buying and selling an averagely priced UK home at around £13,018. At the upper end of the market, tax can make the difference considerably larger: purchasing a £5 million main residence in England currently generates a stamp duty bill of £513,750 before other costs are taken into account.
This creates a different version of the downsizing equation for homeowners who have historically viewed their property as a major component of later-life wealth. A smaller home may cost substantially less than the property being sold, but the financial benefit cannot be judged from the two asking prices alone.
For anyone considering that move, understanding the likely net proceeds after transaction costs becomes increasingly important. Conveyancing fees, stamp duty on an onward purchase and the potential cost of problems identified through an appropriate survey can all affect how much value is ultimately released, particularly where the existing property is already selling below the price its owner once expected.
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