Home Owner Worries Over Negative Equity
Over the course of the last year, since the beginning of the credit crunch, we have been constantly bombarded with the news that property prices in the UK have fallen on a month by month basis, slowly and inexorably chipping away at the level of equity which British home owners hold in their properties above the outstanding balance of any mortgage or home loan.
A new survey, conducted by Barnett’s Solicitors, has now shown that in excess of a third of home owners in the UK are concerned that they may be in a negative equity situation with their homes by the end of this year.
The survey, which was conducted throughout the month of August, revealed that of the 3,000 home owners interviewed, 36.5 per cent were worried about the prospect of negative equity on their homes, even though a recent report from Standard and Poors estimated that only one in seven individuals will suffer negative equity, if house prices continue to fall at the present rate for the rest of the year.
Negative equity is the situation where the balance of any outstanding mortgage or home loan secured on a property is greater than the value of the property on question. The survey from Barnett’s also discovered that around 33.6 per cent of those interviewed had changed their minds recently with regard to selling or buying a property, due to the effects of the credit crunch.
Tony Swift of Barnett’s said “This is another clear indicator of the lack of public confidence in the resilience of the housing market and the encroaching impact of the credit crunch on decision making. In my view the public perception of the state of the housing market is as important a factor in our future economic recovery as anything else. Where there is a lack of confidence, people who may have otherwise been in a position to invest in property will be reluctant to enter the market.”
