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Just when many analysts had come to terms with the 3.5% rise in retail sales in May and the fact this did not seem correct, June has seen a fall of 3.9% in sales – the worst fall in 22 years. The...
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Friday 18th April 2008
Over a million UK homeowners could be plunged into negative equity over the next two years, it has been predicted.
A report conducted on behalf of Morgan Stanley forecasts that house prices will slump by ten per cent this year and by a further five per cent in 2009.
This could leave 1.2 million families - equivalent to one in ten - facing a situation where their homes are worth less than their mortgages.
The last time that so many families were facing this plight was during the housing slump of the 1990s.
The report also outlines a possible worst case scenario in which house prices fall by as much as 25 per cent, which would force one in four households into negative equity.
David Miles, the study's co-author, said: "These figures will understate the magnitude of negative equity as we have excluded lending in 2008, of which people may already be in negative equity, and excluded future lending which could also fall into negative equity as prices decline throughout 2008 and 2009."
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