The data forms part of research the portal has conducted which reveals that UK homeowners are undervaluing their homes by a combined £236.8bn.
A Survey of 2,000 UK homeowners who have had their home valued by an estate agent in the past three years found that almost half of UK homeowners undervalue their home by an average of £46,300 - this is roughly 1.5 times the average UK annual salary. Just a quarter said their home was worth less than they thought, by an average of £44,313.
When all the results of the survey are taken into account, the net result is that the average home in the UK is worth £9,470 more than its owner realises. Multiplied by the 25 million private homes in the UK, this indicates that UK homeowners are sitting on a staggering £237bn of hidden equity.
More than a million properties sitting on six figures of hidden equity
For many homeowners, the disparity between perceived value and an actual valuation from an estate agent was far higher. 9% of homeowners whose property was worth more than they expected found that it was worth over £100,000 more, with 40% of these located in London and the South East. This equates to over 1 million properties nationwide carrying six figures of hidden equity.
Looking at London in more detail, 35% of homeowners in the capital found their property to be worth more than they expected, by an average of £117,000. When all of the survey results are taken into consideration, the average London property is worth £22,846 more than its owner anticipated (more than double the national average of £9,470 cited above).
Nationally, 21% of those whose home was worth more than they realised said they simply couldn’t believe what their home was worth, whilst six per cent said they felt as if they had ‘won the lottery’ when they realised the scale of the equity hidden within their home. A further 31% said they were ‘overjoyed’.
Putting hidden equity to work
For those who went on to sell their home and benefit from their hidden equity, the unexpected windfall had a significant impact, with 81% saying the additional money ‘improved their lifestyle’.
50% said they were able to move into a better property than they expected as a result (for example, it had more bedrooms, was in a nicer area, had a garden etc.), and 18% of those aged between 55-64 said they were able to retire earlier than expected. For those able to retire earlier than expected, it was on average by over three years.
Andy Marshall, Zoopla’s Chief Commercial Officer comments: “The pandemic and subsequent lockdowns have led to a once-in-a-lifetime reassessment from homeowners about how and where they want to live. This, coupled with the stamp duty holiday and the search for space, has led to a buoyant market; however, it's clear this soaring buyer demand is not currently being matched by the supply of homes being listed for sale.
“This is why Zoopla has launched My Home, to encourage homeowners to check the estimated value for their property and consider selling their home to unlock hidden equity, which will, in turn, stimulate the market. For those keen to progress with a sale, they can contact an estate agent directly using My Home to make contact with an agent for an expert market valuation and personalised guidance on how to best navigate this busy housing market.”
