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House prices to be negative for four more years

Dominic Welling dominic.welling@consumerchoices.co.uk

Homeowners who bought property at the peak of the property market in 2007 are set for four more years of negativite equity.

Thousands of people who bought during the housing boom face another four years of being trapped in negative equity, according to a new report from the National Housing Federation (NHF).

Homeowners who purchased a property in England at the peak of the market in 2007 paid an average price of £216,800.

The report warns that they will now have to wait until at least 2014 for their homes to be worth more than what they paid for them.

David Orr, chief executive at the NHF, said: “For those who bought at the peak of the housing boom, there's a strong possibility that they will have to wait another four years before their home is actually worth what they paid for it.

“But house prices will inevitably increase in the long term because of huge under-supply of housing.”

Although house prices are expected to dip 3% next year, the long term forecast is that they will increase by 22% over the next five years as demand for property grows, but supply falls.

Therefore the NHF has warned that prices will still be too high for many buyers over the next few years.

Orr said: “Even though price rises look sluggish for the next few years, affordability is not improving for many low-to-middle income households - as banks continue to restrict their mortgage lending and house prices remain historically expensive in relation to salaries.

“There’s a very real risk that an entire generation will be locked out of the housing market for the foreseeable future and people will increasingly look to buy or rent an affordable home instead.”