Landlords and householders are being warned that negative equity may last for a further four years, despite rising property prices.
Property owners who bought at the height of the housing boom are likely to still be in negative equity – where the value of the property is less than the amount outstanding on the mortgage.
According to the National Housing Federation (NHF), the average house purchase price in 2007, when the market was at its peak, was £216,800.
The NHF predicts that many of those who bought at this point will remain in negative equity until 2014.
Negative equity can be a major problem for landlords and property investors, many of whom base their business models on the relatively quick sale of properties.
But owners can be prevented from selling if they are in negative equity, and often face problems when trying to remortgage.
The NHF has predicted that house prices will fall by 3 per cent next year. This seems to be supported by Land Registry figures, which suggest that prices may have flattened out.
