Over 130,000 families have sold their homes at a loss since 2007, according to analysis of housing transactions by Castle Trust.
The initial research, which tracks the proportion of properties selling at a profit or loss, includes an analysis of properties in England and Wales which were bought and sold between January 2007 and January 2013. Of these properties, 40.7% (131,442) were sold at a loss, with the average shortfall being £24,430 (on average 11.0% of the house price). Over the same period, 55.6% (179,689) of homes sold for a profit generating an average return of £45,199 per transaction (on average 20.4% of the house price) and the remaining 3.7% (12,051) sold for the purchase price.
Both the probability of making a loss and the size of the average loss have increased significantly since the economic downturn. An analysis of transactions since 1995 shows 91.5% of homes sold for a profit, 7.5% for a loss and 1.0% for original sale price.
Table 1: Data summary
Housing purchases and sales Jan 2007 – Jan 2013 | |
| Proportion of homes sold at a loss | 40.7% |
| Proportion of homes sold at a profit | 55.6% |
| Proportion of homes sold for the purchase price | 3.7% |
| Size of average loss (£) | £24,430 |
| Size of average profit (£) | £45,199 |
| Loss as a % of the house sale price | 11.0% |
| Profit as a % of the house sale price | 20.4% |
| Total number of loss-making transactions | 131,442 |
| Total number of profit-making transactions | 179,689 |
| Total number of homes sold for the purchase price | 12,051 |
Source: Castle Trust analysis of Land Registry data 2013
Among homeowners that have sold their home at a loss, the most common reason for doing so, cited by 18%, was to purchase a new home at a good price. Divorce or separation was also cited by 14% of loss-makers, the need to upscale by 13% and relocating for work by 12%. 11% of homeowners who sold at a loss say they were forced to do so because they couldn’t afford the mortgage repayments and 8% did so because of a job loss or redundancy.
Looking forward, 13% of homeowners say they are concerned that they may be forced to sell their current home for less than the purchase price, rising to 25% for those aged 18-34.
Table 2: Reasons why homeowners have sold at a loss
Reason for selling at a loss | Reason for selling at a loss, as a % of total loss-makers |
| To buy another home at a good price | 18% |
| Because of divorce/separation | 14% |
| House was too small | 13% |
| Relocation for work | 12% |
| Could no longer afford the mortgage | 11% |
| Needed to raise money | 9% |
| Because of job loss/reduced income | 8% |
| I didn’t believe the price would increase | 8% |
| Because of illness/unable to work | 7% |
| The homeowner had died | 6% |
| To clear other debts | 5% |
| To move into residential care | 5% |
| For other reasons | 24% |
Source: Castle Trust
Sean Oldfield, chief executive officer, Castle Trust said: “Since the downturn, over 130,000 families have made a loss on their home placing them under enormous financial and emotional pressures. When you take into account the costs associated with moving home, from stamp duty to solicitor’s fees, this situation becomes even worse.
“The long-term performance of house prices shows national house price growth in line with national wage growth, but it is clear that individual house prices are really volatile and that home ownership is risky – much more risky than almost everyone appreciates. Our shared equity loan, the Partnership Mortgage, can make a real difference to people’s lives by sharing the loss with them if they are one of the unlucky ones.”
The number of house sales in England and Wales generating positive returns also varies considerably on a regional basis. Since 2007, the number of homes sold for less than the purchase price was highest in Yorkshire & Humber, where 48.2% of properties sold for a loss, 48.0% for a profit and 3.8% returned the purchase price. In contrast, the highest proportion of homes sold at a profit over this period was in Greater London, where 71.1% of properties sold for more than the purchase price, 26.1% for less and 2.8% for the same.
Table 3: Regional breakdown for house sales Jan 2007 – Jan 2013
Region | % of homes selling at a loss | % of homes sold for a profit | % of break-even transactions |
| Yorkshire & Humber | 48.2% | 48.0% | 3.8% |
| North | 48.0% | 47.8% | 4.2% |
| East Midlands | 47.2% | 48.9% | 3.9% |
| East Anglia | 44.7% | 51.8% | 3.5% |
| Wales | 44.6% | 51.2% | 4.2% |
| West Midlands | 44.4% | 51.5% | 4.1% |
| South West | 43.6% | 52.9% | 3.5% |
| North West | 41.1% | 54.5% | 4.4% |
| South East | 38.5% | 57.6% | 3.9% |
| Greater London | 26.1% | 71.1% | 2.8% |
Source: Castle Trust analysis of Land Registry data 2013
Castle Trust’s shared equity loan, the Partnership Mortgage, was designed to provide people with a safer way and more flexible way to buy a home. It’s a loan which doesn’t charge any interest – instead the homeowner shares the profit or loss with Castle Trust when they sell the home or at the end of the mortgage term.
