Bad News for British Housing Market
While Scotland may be doing well in the economic recovery sphere vis-à-vis employment, the picture doesn’t look quite as pretty when you turn to Britain’s housing market. Indeed, just since 2007, prices have dropped by £40,000 and there isn’t expected to be any improvement until around 2015. Just in the last year and a half there has been a 1.4 percent decline and since April 2009, the average price for a home in Britain is at an all-time low.
Homeowners Deal with Negative Equity
These figures have led to homeowners falling into “negative equity,” which is basically when “the size of a mortgage is higher than the value of a property.” According to a spokesman from the Halifax Bank, the decline in house prices however, has only been “modest,” and anyway is due to a weakened confidence in workers due to increases in taxes and inflation, simultaneous to reduced salary increases as well as insecurity in the public sector job market. Although Halifax’s owner Lloyds recently estimated that approximately 150,000 of its customers now “have a mortgage bigger than the value of their home,” and are thus officially facing the negative equity issue.
London Not Impacted
Of course however, the country’s capital – London – remains immune to the drop in property prices. In fact, there, house prices are on the up. Those trying to sell in the north east for example, might be kicking themselves that a few years ago they didn’t buy in the capital. Their house that may have been valued at £130,000 in October 2007, would now only have a market value of £101,000, which is a drop of 22 percent. Those in Kensington might be laughing all their way to the bank however, as an average property there valued at £835,000 and is now worth £876,550 in the same time frame.
No Tunnel Light
Unfortunately we don’t even seem to be able to report a light at the end of the tunnel since all estimates are predicting that this is unlikely to change for Britain in the next five years, marking “the longest slump for at least half a century.”
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