Has the negative equity trap caught 4 million people?
A report by GfK NOP this evening makes for the bleakest of reading for UK property investors and homeowners with an indication that nearly 4,000,000 homeowners in the UK are close to or actually in negative equity. The report is by far and away the most depressing so far and while the figure of 4 million has been questioned by many in the industry, with an average figure of around 2 million often expressed, there is no doubt the situation is getting worse.
As more and more people fall into the negative of the trap, where their properties are worth less than their outstanding mortgages, this is sure to lead to more and more homes being placed on the market. This in turn will see further pressure on property prices in the UK and could delay any potential recovery in the short to medium term.
There is also a significant risk that more and more people will fall behind on their mortgage payments, and despite government assurances that more breathing space will be available, the indications are that banks and building societies are as quick as ever to pull the plug. Despite the vast amount of UK taxpayer's money being poured into the banking system on a regular basis there appears to be little return for UK homeowners or the UK consumer.
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