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An eye-watering £131 billion has been wiped off the value of homes in the UK over the past five years, according to government statistics.
Property wealth has tumbled by 3.7% to £3,375 billion since 2006, says the Office of National Statistics.
The survey found that homeowners are in denial about the value of their properties, with many refusing to accept prices have fallen and continue to overvalue their homes and buy to let investments.
Owners reckon their homes are worth an average 16% more than the true price.
Family homes lost more value than any other property – decreasing by 12.4% compared to a market average of 4.6% of all properties.
The regions with the largest price drops were the North East (down 8.8%), Wales (down 8.7%) and the North West (down 8.6%), while little changed for owners in the South West and Scotland.
The report examines property values since 1950 and looks at the two house price bubbles in the 1980s and during the 2000s.
“During the two boom periods in the housing market, the growth rate outstripped rates of inflation,” says the report.
Looking at the last house price boom – which ended in 2008 – the report explains the reasons which drove up prices.
“Until 2008, the UK experienced strong economic growth and consumer confidence. Mortgages were also readily available as banks offered competitive interest rates and high loan-to-values of 95% to 100% mortgages to their customers. As a result, people from a wide range of income levels were able to obtain a mortgage to purchase their homes. The high demand for housing, coupled with a relatively low housing supply, pushed up house prices, which peaked in the third quarter of 2007 at £184,000,” says the report.
The report also includes a graph of house price movements since the 1950s, when the Nationwide first started keeping records.
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