Half of Lancaster homeowners undervalue their homes by £62,000 as Zoopla reveals the city’s ‘Hidden Equity’

New analysis by Zoopla, conducted as part of its inaugural Hidden Equity Survey, has found that Lancaster homeowners are undervaluing their homes by an average of £62,142.

By Nick Lakin
Friday, 30th April 2021, 3:45 pm

The survey found:

Half of Lancaster homeowners undervalue their home by an average of £62,142

Almost three quarters of homeowners in the city have lost touch with the value of their home

Half of Lancaster homeowners undervalue their home by an average of £62,142.

A third of homeowners unlocked their ‘hidden equity’ to move to a nicer property

In Morecambe, a quarter of homeowners undervalue their homes by £70,000

The Hidden Equity Survey of 2,000 homeowners* who have had their home valued by an estate agent in the past three years establishes for the first time how accurate Lancaster homeowners’ estimations of the value of their homes really are.

It found that less than a third (29%) of Lancaster homeowners have an accurate idea of the estimated value of their home, a fraction higher than the 25% of homeowners in Morecambe who have an accurate idea of what their home is worth.

Almost three quarters of homeowners in the city have lost touch with the value of their home

The findings from Zoopla show that half of Lancaster homeowners (50%) who had their home valued via an estate agent or sold it in the past three years said it was worth more than they thought it was – on average by £62,142. Lancaster’s figure is slightly lower than the average in Morecambe, where a quarter (25%) of homeowners undervalue their homes by an average of £70,833.

When asked for their thoughts on why their homes were worth more than expected, two fifths (41%) of Lancaster homeowners attributed their good financial fortune to adding a new kitchen, building an extension or getting a new bathroom. The impact of home improvements is something mirrored across the North West. The most popular reasons being given by homeowners in the region for their financial uplift included redecorating (40%), doing work to the garden (32%) and installing a new kitchen (29%).

The practicalities of improving a property aren’t the only reasons for homeowners in the city to get more for their home than they thought it was worth.

Lancaster’s increased desirability due to excellent higher education opportunities and good transport links helped to add value to the properties of local homeowners, with one in four (25%) homeowners citing desirability of the area for homes being worth more than their owners expected.

A third of homeowners unlocked their ‘hidden equity’ to move to a nicer property

For Lancaster homeowners who went on to sell their home and benefit from their hidden equity, the financial boost had a significant impact, with two thirds (65%) of homeowners saying the additional money ‘improved their lifestyle’.

A third (31%) 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.).

At a regional level, 16% of homeowners in the North West used their extra cash to buy a new car and a further 16% used the money to go on more holidays.

For Lancaster homeowners who did not know the true value of their home until they got it valued by an estate agent, a fifth (21%) said they would have made different financial decisions in the years prior if they had been aware of their hidden equity.

In the North West, for property owners whose home was worth less than they expected, a third (32%) said they would have worked harder to build their savings rather than assume their home was accruing equity that they could draw on at a later date, and one in five (20%) said they would have spent less on holidays. 18% of homeowners in the North West said they’d have spent less money on cars.

Zoopla has also revealed the latest House Price Index, which studies multiple local housing trends and prices on an annual basis.

The data shows that the average house price in Lancaster is now £164,100, with prices rising by 4.4% in the last 12 months.

The data also shows prices in Lancaster have increased cumulatively by 14.8% in the past five years.

Kevin Robinson, Sales Operations Manager at leading Lancaster estate agency Lancastrian Estates, said: “Property prices are often top of the agenda when it comes to conversations about our homes, but this survey shows that we’re perhaps not as clued up on prices as we should be.

"Property in Lancashire is booming at the moment, fuelled in part by Lancaster’s world-class university, historical architecture and proximity to Morecambe Bay.

“As an estate agent, there’s nothing better than giving a homeowner the good news that their property is worth more than they expected and with demand for homes in the city outstripping supply, I’d encourage anyone in Lancaster or Morecambe who’s considering their next move to have their property valued.

Their dream move, and a big change in lifestyle, could be much closer than they think.”

Gráinne Gilmore, Head of Research at Zoopla, comments: "The direction of house prices has long been a staple of conversation around dinner tables up and down the country and many Lancashire homeowners could be in for a lovely surprise if they have their property valued, according to our research.

“Because of the impact of the pandemic, many households are re-evaluating how they want to live, and this has had an impact on the local housing market. Buyer demand has soared, racing ahead of supply, putting upwards pressure on prices. House price growth in Lancaster is currently at 4.4% annually.

“Lancaster homeowners keen to check up on their property's value should head to Zoopla's My Home, where they can see an estimated value range for their property and check for potential hidden equity. For those keen to progress with a sale and perhaps unlock hidden equity, they can contact an estate agent using My Home to get an expert market valuation and personalised guidance on how to best navigate this busy housing market.”