Negative equity threat as house prices fall once more

03/03/2009

A further drop in house prices has been noted by Hometrack, in its latest data release.

The property experts said that the value of the typical home declined by 0.8 per cent in February.

This means that, according to the survey, house prices have dropped by over ten per cent in a year.

Studies from lenders Halifax and Nationwide put this fall still higher, at 15 per cent.

House price declines lead to more and more people being trapped in negative equity, where the value of a household's mortgage is higher than that of the property itself.

This in turn makes it much more difficult to move home or remortgage, raising the likelihood of falling into debt, having difficulty with repayments or even being repossessed.

Hometrack also noted increases in the level of new instructions to sell and new buyer registrations on the survey - suggesting that recovery might not be far off.

However, Richard Donnell, director of research at the property firm, said that he remained cautious.

"This increase in market activity is off a very low base and falls well short of what could be classified as green shoots of recovery," he commented.

Tags; Housing Debt and Bills, Young Family Finances, Credit Card Lifestyle,

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