Millions in negative equity

| January 30, 2009 | 0 Comments
Millions in negative equity

The worst housing market crash since records began has left an estimated 1.2 million households in negative equity, according to Nationwide Building Society.

The average house price has dropped from £186,050 at peak in October 2007 to £150,500 today, a fall of over £35,000.

This month alone, prices fell 1.3%, or £2,500.

At current house prices, anyone who bought their home since 2003 paid more than it is now worth.

Michael Saunders, Citigroup’s head of European economics, said up to 200,000 people every month are falling into negative equity.

Saunders believes that 3 million people will enter negative equity before house prices bottom out. This is compared to less than 100,000 households in negative equity a year ago.

With 11.7 million mortgages across the UK, this would leave one in four homeowners unable to move house.

In related news, Government figures show that nearly one million UK homeowners are struggling with mortgage payments.

Earlier this week, the International Monetary Fund said the collapse in house prices will mean Britain suffers one of the worst recessions of any major economy.

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