Negative equity threat hits 4 million

Posted: 02 Mar 2009 08:44:04 GMT

The threat of negative equity has reached such high levels that as many as four million homeowners could now be subject to the possibility that they are paying more for their property than it is worth.

Research from GfK NOP, published on Friday (February 27th), shows that four million homeowners are either facing or could soon face negative equity thanks to continuing falling house prices.

The figure has been described as "a little extreme" by the chief economist of the Royal Institute of Chartered Surveyors, Simon Rubinsholm, although the negativity surrounding the marketplace is still putting a strain on sales.

Even if they choose to brave negative equity and purchase new homes, potential buyers still have to face extremely low loan-to-value rates, which will ensure that attempts to purchase a property will be made far more difficult.

Buying online, however, could offer much cheaper properties for sale, as doing so could remove an expensive estate agent.

Andy Thwaites, of GfK Financial, said: "The shift to negative equity has the potential to be a mammoth welfare disaster for the nation."

"The reality is that if there are further job cuts, the problem will become significantly worse."



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