A recent report has suggested that it could take seven years or longer for a recovery in house prices to be seen in the UK. Researchers have said that it could take until around 2016 for house prices to reach the same level as they did last year when they peaked before starting to plummet. This is bad news for those that have purchased properties recently, and are therefore facing negative equity as a result of falling house prices. This is where the homeowners ends up owing more on their property than the property is actually worth.

It is thought that by next year around one in ten homeowners could be in negative equity. Some officials have said that house prices could plummet by up to 35%, which would leave many homeowners in a situation where they are unable to sell because their mortgage is bigger than the value of their home. If house prices do fall by this level around 11% of homeowners could find themselves in negative equity.

An official involved in the recently released report stated: ‘The nature of the recovery will be very different across the country.’

She said that there were a number of factors that were fuelling the lack of activity in the housing market, and this ranged from falling property prices, which were sparking fears over negative equity amongst would be buyers, to lack of mortgages for new buyers, especially those that had little by way of a deposit to put down.

She did add, however, that by 2020 the current dark days in the housing market were likely to be behind us, with house prices soaring again and with the average house price being around 50% higher than it was at its peak last year.

Leave a comment