Do bigger houses go up in value quicker?

gazfocus

I've mentioned before, my wife and I are selling our current house and the plan is to use the equity from the house to buy a smaller house without a mortgage. However, I've been looking on rightmove and it's got me thinking...

Our current house is selling for 57% more than we paid for it 9 years ago (current house prices suggest we could actually get more but that's for a different conversation), whereas the house we are looking at buying appears that either the seller paid way over the odds for it 12 years ago, or the value has only gone up by 11% in the 12 years since he bought it. 

Thinking back, our last house was a 3 bed semi which we sold for £136k in 2018 and the house is worth about £160k now, so a 17.6% increase.

So, just wondering if, as a general rule, do larger houses tend to increase in value at a faster rate than smaller ones?

user1977

I don't think there are any general rules, these things will depend very much on local markets and will change from time to time. Near me, suburban houses went up quite quickly a while ago and have since dropped back, while inner city flats have held their prices better.

YoungBlueEyes

I think they say styles/types of houses hold their value better perhaps? So detached is a safer bet than a semi for eg.

Could it be down to other factors rather than just the house? What's going on in the area? Any big external factors that might have affected the prices? Like HS2 or a good school or a bladdy great big Waitrose...?

diystarter7

Hi

Location, location, location is the key to price sustainability and best rises.

Thnaks

gazfocus

In terms of the house we are selling now and the house we sold back in 2018, not much difference in the areas if I'm honest. Both in the same town, both within walking distance to the town centre, both not a million miles from ex council estates, etc. No big developments near either. 

The house we are selling now is a 4 bed detached vs the last house being a 3 bed semi. The one we're looking at buying now is a 3 bed semi but in a different town (seaside town about 40 mins away). 

To be honest, it got me thinking about whether we should be keeping our current house rather than buying a smaller one mortgage free but my wife would kill me haha.

aoleks

not really, no. I would say your typical freehold 3-4 bedroom family semi or terrace with a driveway and a garden go up in value most. these are extremely desirable properties for renting, families and FTB-ers, hence a lot of demand.

mi-key

I think it depends, mid to larger size family homes ( 3-4 bed semis and detatched ) will always do better as the people buying them generally have more money to spend in relation to their age than someone getting a one bed flat, so it is easier for them to absorb increases. If they are also in a good school catchment area that can attract a premium as the age of the buyers often means they have teenage kids, so want a good secondary school for them.

This only works up to a point though as once you start looking at 5 or 6 bed houses, there aren't as many people need or want those. 

But then 2 or 3 bed bungalows do well too as the people buying them are typically retirees downsizing from a larger family home with no or very little mortgage, so will pay more to get what they want. 

You do sometimes get weird anomalies though where a house you would expect to increase hardly does

ProDave

I would say don't over think it.  Take the big uplift in the house you are selling and be happy the new one is so much cheaper.

As long as it IS a house that you will be happy with in an area you would be happy with.  e.g. I would NEVER move from a detached house back to a semi or terrace.

Zerforax

If a 100k house goes up 10%, it's worth 10k more. If a 500k house goes up 10%, it's worth 50k more. So percentage increase/decrease may be the same but the £ value will be bigger for bigger prices.

I guess there has probably been a bigger % increase in salary for higher earners than lower earners overall so that can also impact into price for more expensive houses?

Likewise when banks lend money, it's usually on a salary multiple so lending 5x on a 20k salary (100k mortgage) vs. 5x on a 100k salary (500k) is another increased multiple.

So yes there may be lots of small reasons for it but like others have said, I wouldn't overthink it too much.

RelievedSheff

I think a lot depends on the area and what the target market is.

Where we are the vast majority of houses on the large estate where we live are detached so they sell well and tend to increase in value more than the semi detached and terraced houses.

There are some semi's and terraces that were built about 20 years ago and they are now not selling for as much as they were when they were new. Yet on the same estate the prices of the detached properties have increased significantly.

cjdew

I dont think so as if you think about it, the much bigger houses have much smaller number of people able to afford to buy. Therefore they have to take more of a hit to suceed in selling when times are harder. Whereas there generally will be alot more people available for a more "standard" place. 

We have found round here a 4 bed detached with 2 acres is say £800,000, yet a 3 bed small semi with a postage stamp garden is £450,000. But think how much more you are getting for your money with the former?