New Study from Aviva Suggests UK Homeowners Overestimate the Value of their Homes by 22%

Only Londoners underestimate the value of their properties
Some regions estimate their homes more than 40% above official property values
One in 10 UK homeowners believe their house value has increased since the Covid outbreak
Almost two thirds of non-homeowners are still keen to get on the property ladder

UK homeowners could be over-estimating the value of their properties by around 22%, according to a new study from Aviva.

The insurer’s How We Live study, released today, asked a random sample of 2,318 homeowners of various ages and locations, to estimate the value of their homes. This was then compared with the official average from the Government’s UK House Price Index.

Respondents to the How We Live study produced an overall average UK house price of £288,263, significantly higher than the latest Government average of £235,673. This official figure relates to house prices recorded in May 2020.

This tendency to over-value appears to be true of almost all UK regions with the exception of London, with homeowners consistently estimating their properties above the average prices indicated by the Government UK House Price Index.

Region	Average house price according to Government UK House Price Index (May 2020)⁽¹⁾	Estimated value by homeowners (average across all homes in this region)	Percentage difference between homeowners’ estimate and official average price
UK	£235,673	£288,263	+22.3%
East Midlands	£197,505	£231,268	+17.1%
East of England	£290,621	£326,653	+12.4%
London	£479,018	£454,764	-5.1%
North East	£134,545	£187,533	+39.4%
Northern Ireland (Q1 2020)	£140,580	£177,454	+26.2%
North West	£168,261	£242,449	+44.1%
Scotland	£154,648	£189,844	+22.8%
South East	£324,659	£375,202	+15.6%
South West	£261,006	£304,387	+16.6%
Wales	£169,436	£224,068	+32.2%
West Midlands	£203,658	£261,518	+28.4%
Yorkshire and the Humber	£170,198	£224,067	+31.7%

Homeowners are optimistic about house prices in spite of Covid

When homeowners are asked about the impact of the Covid outbreak on their own properties, this general state of optimism is also clear. One in 10 homeowners (9%) believe their house has actually increased in value since the Coronavirus outbreak. It is possible to surmise that this may be due to home renovations, given that 85%(2) of UK residents have undertaken some form off home improvement during lockdown.

The majority of homeowners (48%) think the value of their homes has not changed in recent months. Around a quarter expect there has been some decrease in value, although most people feel this reduction will have been slight.

Perception of change in house value as a result of the Covid pandemic	Percentage of UK homeowners with this view
Significantly decreased in value	3%
Slightly decreased in value	24%
Stayed the same	48%
Slightly increased in value	8%
Significantly increased in value	1%
Don’t know	16%

However, whatever is happening in the housing market, this has not deterred non-homeowners’ enthusiasm to get on the property ladder. Of those who do not own a property already, almost two thirds (63%) hope to own a home in the future and three quarters of this group (75%) feel it is ‘likely’ that this aspiration will become a reality.

Gareth Hemming, MD, Personal Lines, Global General Insurance for Aviva says:

“While a number of people may be quite accurate in their property estimates, the fact that the numbers overall are so much higher than official figures, suggests that some people may be unaware of current house values – or are valuing their own homes through an optimistic lens.”

“However, we have seen evidence that house prices are beginning to creep back upwards and would-be homeowners are certainly not deterred, so we must hope that the gap between aspiration and reality starts to narrow as the UK gets back to business and the housing market picks up.”