Homeowners overvalue their properties, expert says

Although homeowners are aware of the tough market conditions, they still feel that their homes are worth more than they actually are, according to the National Association of Estate Agents (NAEA).

Chris Brown, president of the NAEA, said homeowners lack a daily exposure to the housing market so, although they know that the property market is tough, they do not know just how bad things are and overestimate the price of their property.

"Overall, as homeowners are not so exposed to the property market, they are not quite as au fait as estate agents are on a daily basis about how dire the housing situation is," Mr Brown said.

However, there are numerous reasons why self build home projects result in a house being worth more than it costs to build, according to the Mortgage Warehouse.

The site suggests that self building takes developers - and their slice of the profit - out of the equation, while VAT can also be reclaimed on goods and materials bought during the building process.

Furthermore, there is less stamp duty to pay of a self build as it is only paid on the land and even then it is only paid on purchases over £60,000.