Negative equity declines as property market recovers

15/12/2009

House prices are rising despite an increase in property supply, lifting more and more people out of negative equity.

This is the main finding of a new report from the Royal Institution of Chartered Surveyors (Rics), which polled members on the current state of the property market.

The survey found that 35 per cent more surveyors saw a rise, rather than a fall, in house prices during November 2009.

Negative equity - which occurs when a homeowner's loan is worth more than their property - is therefore likely to have become a less severe money problem over the course of last month.

An apparent recovery in the housing market over the summer, following the earlier falls in house prices caused by the credit crunch and recession, has been assisted by low interest rates and a general improvement in economic conditions and consumer confidence.

The Bank of England lending rate is now at 0.5 per cent, the lowest level in the institution's history and a move that has led to reduced mortgage APRs across the board.

Commenting on the new data, Rics spokesman Ian Perry said: "Despite modest increases in the number of properties coming on to the market, it is clear that this is not significant enough to keep pace with the levels of demand."

Tags; Housing Debt and Bills, Young Family Finances,

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