Fears of negative equity coming to fore |
30 2008 |
| Homeowners' fears of falling into negative equity are beginning to surface, according to Global Insight, the world's leading economics organisation. The latest Nationwide house price index revealed on Thursday that the average price fell by 2.5 per cent during May, confirming a drop of 4.4 per cent for the past year. With investment bank Morgan Stanley also suggesting that 370,000 homes could be at risk if the annual figure reaches five per cent, it appears that renting represents a safer option at present. Global Insight analyst Howard Archer said: "The marked deterioration in sentiment over the housing market also heightens the risk house prices will fall sharply over the next couple of years. "On top of this, unemployment is now starting to rise, which along with many homeowners having to re-mortgage at higher rates, is increasing the likelihood that a significant number of people will have to sell their house for 'distressed' reasons." The Council of Mortgage Lenders (CML) also revised earlier predictions recently by claiming that it expects prices to fall by seven per cent by the end of 2008.  |
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