Nearly half of home sales in the West Midlands have racked up substantial losses in the last six years – with an average shortfall of more than £20,000.
The housing slump means that around 11,000 families in the West Midlands and 130,000 across England and Wales have sold their homes at a loss since 2007, new data shows.
Research by housing investment and shared equity provider Castle Trust show that the deficit for many householders in the wake of the downturn amounted to around 12 per cent of the average property price in the region.
Meanwhile, more than one in eight homeowners fear they may be forced to sell their current home at a loss in the future.
The initial research, which tracks the proportion of properties selling at a profit or loss, includes an analysis of properties in the West Midlands which were bought and sold between January 2007 and January 2013.
Of these properties, 44.4 per cent (10,552) were sold at a loss, with the average shortfall being £20,365 (on average 12 per cent of the house price).
Over the same period, 51.5 per cent (12,237) of homes were sold for a profit, generating an average return of £29,234 per transaction (on average 17.3 per cent of the house price) and the remaining 4.1 per cent (991) sold for the purchase price.
Sean Oldfield, chief executive officer of Castle Trust said: “Since the downturn around 11,000 families in the West Midlands and 130,000 families across England and Wales 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 most people appreciate.”
Castle Trust says 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 per cent of homes sold for a profit, 7.5 per cent for a loss and one per cent for the original sale price.
The nationwide data shows house prices losses have been much more prevalent in the north of England than in London.
Even those who bought at the worst possible time – the second quarter of 2007, when prices were close to the market peak – have been relatively protected in the capital, with only one in five reselling at a loss.
The rising losses have played a part in a changing financial climate for home-buyers.
In 2007, 15.5 per cent of all mortgages sold required a deposit of 10 per cent or less, but the most recent data from the Financial Services Authority shows that only 2.5 per cent of new mortgages were offered with such low deposits in the third quarter of 2012.
Among homeowners that have sold their home at a loss, the most common reason for doing so, cited by 18 per cent, was to purchase a new home at a good price. Looking to the future, 13 per cent 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 per cent for those aged 18-34.