52% of towns and cities still below 2007 house price peak
Estate Agents Housesimple have released a survey showing the 52% of towns and cities in the UK are still below their previous house price peak in 2007 resulting in many homeowners still trapped in negative equity, i.e. their mortgage loan is larger than the value of their property.
While house prices in London and South East have soared most of the rest of the country is still lagging behind. The worst affected towns are Blackpool and Middlesbrough, where house prices are still almost 30 per cent lower than before the crash.
David Hollingworth, of mortgage brokers London & Country, said: ‘It’s easy to assume that negative equity is no longer an issue given the improved activity levels, since the credit crisis caused the housing market to stall.
‘Much will depend on the timing of the purchase but some homeowners who bought at the peak may still find that recovery hasn’t been sufficient to erase the cloud of negative equity.
‘These figures again underline the multi-speed nature of house prices in the UK and just how significant the regional variation can be. That said, negative equity only becomes a major problem if the property needs to be sold. As long as the mortgage remains affordable the owner can stay put and hold out until a combination of rising prices and erosion of the mortgage takes them out of any potential negative equity.
‘With mortgage rates extremely low at the moment, taking the opportunity to overpay could help to cut the mortgage balance more quickly which can only improve their options in the future.’
THE WORST TOWNS AND CITIES
|Town/City||Region||Average price 2007 (£)||Average price February 2016 (£)||% difference between 2007 & Feb 2016 prices|
|2||Middlesbrough||Yorkshire & the Humber||£107,603||£77,024||-28.4|
|6||Bradford||Yorkshire & the Humber||£120,538||£96,693||-19.8|
|8||Hull||Yorkshire & the Humber||£87,848||£70,914||-19.3|
|9||Doncaster||Yorkshire & the Humber||£116,762||£95,016||-18.6|
|14||Rotherham||Yorkshire & the Humber||£120,453||£101,529||-15.7|