UK homeowners struggle to accept house price reality
- Wide gap emerging between perceived values and market prices -
13 Nov 2008
A house, like almost anything else is worth what someone is willing to pay for it but just try telling that to most UK homeowners! According to research released today, 91 per cent of homeowners think that their house is worth on average 8.7% more than they themselves accept that they could sell it for in today's market.
The extent of the gap between perception and reality, with the vast majority of homeowners having over-inflated value estimates of their homes, was uncovered in a survey of over 1,000 homeowners conducted by Zoopla.co.uk, the UK's leading house prices website, which provides free, current value estimates for every UK home. "The results clearly show that homeowners recognise a fall in values but think that it is affecting all the properties around them, just not their own home" says Alex Chesterman, CEO of Zoopla.co.uk.
Over half of those surveyed (58 per cent) accept they would need to drop their value expectations by up to ten per cent to achieve a sale today, whilst a third (33 per cent) admit that they would need to reduce their expectations by over 10 per cent.
Homeowners in Northern Ireland appear to show the widest gap between perception and reality, noting that they would have to accept on average 12.8 per cent less than they think their homes are worth to make a sale, whilst the Scots have the most realistic idea of value with perceived values only 7 per cent higher than what they think buyers might pay.
With such a reality gap in the market, many homeowners are putting off plans to sell and either looking to re-mortgage or make home improvements in the coming year. Despite the mortgage crisis, 15 per cent of homeowners reported that they are planning to re-finance over the next 12 months in a bid to ease their financial pressures, whilst a further 70 per cent of homeowners said they were planning some form of home improvement in the next year to escape further value drops in the coming months.
Alex Chesterman, CEO of Zoopla.co.uk, commented:
"It appears that UK homeowners are having a tough time accepting the market realities. On the one hand, they appear to understand the sort of price drops that they would have to accept if they needed to sell their homes but on the other, they have not yet adjusted what they feel their homes are worth to these values. The best gauge of the value of a home today is what a rational buyer would pay, not what an unrealistic seller might accept. For those faced with making decisions in this market - either buying, selling or simply curious - Zoopla.co.uk is the ultimate tool, providing free instant value estimates on any UK home, along with local market information and value trends".
- Ends -
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Notes to Editor
- Research carried out by Fly Research amongst over 1,000 UK homeowners for Zoopla.co.uk in October 2008
- Winner: 'UK's Most Promising Internet Company 2008' (First Tuesday)
- Nominated: 'Socially Powered Site of the Year' (.net Magazine)
- Winner: 'Best Property Website - Gold Award' (Web User Magazine)
What is Zoopla
Zoopla is a revolutionary online publishing service and community website providing information and tools to give users an advantage in the UK residential property market. Our aim is to create a transparent marketplace and we believe that information should be free and easily accessible to everyone.
How did it start? In early 2007, following the success of bringing DVD rental to the internet with LOVEFiLM.com, Zoopla founders Alex Chesterman and Simon Kain realised that the internet had yet to deliver meaningful change to the UK property market. It became clear that consumers lacked essential tools and information to help them understand home values, view similar properties, learn about past transactions...
...and then we thought:
- Why not offer users a tool to get access to FREE, instant value estimates on their homes or anyone else's?
- Why not let buyers make offers on ANY home, instead of just the 4 per cent of homes currently on the market 'for sale'?
- Why not let owners find out if there is any market interest in their homes without having to list them 'for sale'?
- Why not let agents and sellers market their 'for sale' listings FREE by providing them with easy-to-use tools?
- Why not let anyone ask/answer questions and share their knowledge about any homes or neighbourhoods?
- Why not put current value estimates, sold prices, homes for sale and local information all together in one place?
So, we have started by providing FREE value estimates and sold prices on homes, allowing sellers and agents to list homes for sale FREE, and letting all users edit information and upload photos. We have also launched some unique features, like TemptMe™ and AskMe™ which allow users to gain an insight into the market and discover information they won't find anywhere else.
By making TemptMe™ offers, buyers can try to entice owners to consider selling. Owners also benefit from this unique feature by being able to see what level of interest there is in their home without actually having to list it for sale. The AskMe™ community feature allows anyone to find out more about any home or neighbourhood that they are interested in by posting questions for those in the know to answer.
Zoopla value estimates are calculated using a proprietary algorithm (secret formula) that we have developed by analysing millions of data points relating to property sales and home characteristics throughout the UK. The algorithm works by comparing relationships between home prices, economic trends and property characteristics in given geographic areas. Our estimates are constantly refined by our team of analysts, using the most recent data available and a variety of statistical methodologies, in order to provide the most current information on any home.
Zoopla Limited is a privately held company, backed by leading international venture capital firm Atlas Venture.