Although house prices have been slowly rising in the South West of England, they are rapidly falling in the North East and East with more than 800,000 mortgage borrowers in the UK now having negative equity in their homes. The problem is further compounded because many first-time home buyers are unable to get mortgages.
According to the latest figures released by the Council of Mortgage Lenders, 827,000 people having a mortgage in the UK now owe more than their property is worth based on the steadily falling property values in many areas. Although London is holding steady, much of the rest of England is quite vulnerable to a market that is seeing prices of homes dropping.
Recently released data shows that the North East has been hardest hit with July figures looking grim. For the month average prices dropped by 2.3% whilst the annual fall was at 8.8%. For the month of July, The East was up six-tenths of a percent but the annual figure shows that prices fell by an average of 2.3%.
The rest of the country, other than London is equally vulnerable as London is the only area which saw a monthly increase as well as annual increase in house prices. For July, London saw an increase in house prices at 1.9% and the annual increase was 1.3% overall.
It appears as though the main problem is that first-time buyers are not able to get mortgages. This is giving rise to decreasing sales which in turn reflects on the overall salability of homes in most areas of the country. As well, fewer homes are now being constructed but that is forecast to ultimately lead to house prices rising once again.
In fact, according to the Centre for Economic and Business research, by the year 2015, the average price of new homes will increase by 4% because of the shortage of new homes, but this is well into the future and not at all good news for homeowners looking to sell at the moment.