Northern homeowners face more years of negative equity
Figures from estate agency Countrywide show across the UK around 6 per cent of first-time buyers who purchased a home in 2007 remain in negative equity.
This means 22,000 first-time buyers are trapped in a house worth less than the value of the loan.
However, the 6 per cent figure is down on the 15 per cent level recorded a year ago.
Figures vary across the country with 53 per cent of first-time buyers in the North East remaining in negative equity. In addition many households technically no longer in negative equity still hold equity of less than 5 per cent.
The firm said these figures mean borrowers will still find it difficult to climb the housing ladder.
Nigel Stockton, financial services director at Countrywide, said: “Despite the largest fall in house prices for 25 years, across most of the country the number of first-time buyers who bought at the peak of the market and still find themselves in negative equity is low, which is good news. For the average household in southern England homeownership has proved to be a solid investment even over a period where house prices have fallen.”
Stockton said it could be a further five years before house prices in the North East recovered.
“In parts of northern England the story is different and a significant number of first-time buyers still find themselves in negative equity,” he said.
“While the number of homeowners in negative equity is falling, it is doing so at a much slower pace than compared to the south of the country, with negative equity reduced though mortgage repayments rather than house price growth. If the current trend continues it could be five years before negative equity loosens its grip on first time sellers in parts of Northern England.”