UK homeowners in denial over housing slump
'Not my house' mentality leads to greater optimism for own home vs. neighbours
17th Oct 2008
Despite the widespread coverage of the property market downturn and significant evidence to support falling house prices, one in three UK homeowners believe that the value of their home has not been affected by the recent housing marke t woes - with 32 per cent reporting that they think the value of their property has either remained the same or risen over the past 12 months.
Zoopla.co.uk, the UK's leading house prices website, surveyed over 1,000 homeowners for their views about home values over the past year and market expectations for the coming year in a bid to uncover the 'state of confidence' throughout the country. As the first UK website to provide free instant value estimates on every UK home, Zoopla.co.uk serves as somewhat of a reality check for some homeowners who may be in a 'state of denial'.
Whilst one third of homeowners may think that their property values have not been hit by the crunch, the market reality is not quite as rosy. According to figures released today by Zoopla.co.uk, 97.3 per cent of UK homes have declined in value over the past year and only 2.7 per cent have actually risen in value, indicating a significant number of homeowners in denial.
And underscoring the gap between perception and reality, twice as many of the homeowners surveyed were more optimistic about the value prospects of their own home over the coming year than they were about their neighbours homes, with 38 per cent expecting the value of their home to stay the same or increase versus only 19 per cent expecting house prices overall to remain the same or increase.
Furthermore, only 5 per cent of UK homeowners think that the value of their property will decrease significantly in the next 12 months while over three times as many (16 per cent) think that neighbouring house prices will decrease dramatically. And 30 per cent think the value of their home will increase over the next 12 months whilst only 14 per cent think that neighbouring values will increase over the same period - reinforcing the far greater optimism, or possible delusion, owners have when it comes to their properties than those around them.
Alex Chesterman, CEO of Zoopla.co.uk, commented:
"Our survey indicates quite a significant gap between perception and reality and perhaps more interestingly how homeowners perceive the value of their own home versus those of their neighbours. Clearly there is some element of denial at play here that results in people believing that they are insulated from the market troubles that affect the homes around them. This also spills over into market confidence, where more homeowners surveyed expect the value of their homes to perform better over the coming year than in the past year, indicating that many believe the worst is over despite little evidence to support this. For those who wish to keep track of their most valuable asset - or check out the value of anyone else's - Zoopla.co.uk is the ultimate tool, providing free instant value estimates on any UK home, along with local information and market trends."
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Notes to Editor
- Winner: 'UK's Most Promising Internet Company 2008' (First Tuesday)
- Nominated: 'Socially Powered Site of the Year' (.net 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.