Homeowners who bought at the peak of the market may face four more years of negative equity, a housing group has warned.
The National Housing Federation (NHF) said the average buyer paid £216,800 for a home in 2007.
They may now have to wait until 2014 before prices recover enough to make their homes worth more than they paid. The organisation, which campaigns for affordable housing, also said prices are still too high for many buyers.
Unless homeowners wish to sell their property, being in negative equity does not necessarily pose a problem.But it is when people are looking to move that they can face a struggle, as lenders are entitled to insist that borrowers redeem their loans. In theory, if the mortgage is worth more than the house and the borrowers cannot find the money elsewhere, they will be prevented from moving.
According to the NHF, house prices will dip again next year by 3%, before steadily climbing thereafter. Proposed caps on housing benefit payments could also put nearly a million people on low incomes at risk of losing their home” David Orr National Housing Federation chief executive. The federation expects prices to be 22% higher by 2015 than they were in 2009, bringing the average price of a house to £226,900. Other groups have issued similar forecasts.
The Royal Institution of Chartered Surveyors has said that house prices are starting to fall, while figures from the Land Registry suggest that prices have reached a plateau. The accountancy firm PricewaterhouseCoopers expects prices to be flat for the second half of 2010, and warned that they might not reach the levels seen at the peak of the market for another decade.
