UK Negative Equity Here For Another 5 Years

Well, we are deep into the recession now and experts have predicted that it could be at least five years before UK homeowners manage to drag themselves out of the dreaded negative equity pit. So it will be interesting to see what house prices will be in about five year's time from now.

It has been revealed that many homeowners will be stuck in negative equity for at least the next five years as the poorly performing property market in the UK fights to recover from recent disastrous figures.

According to the National Housing Federation, research has shown that property prices are expected to decline by a further 12.2% in 2009 and could drop by another 4.6% in 2010 before hopefully stabilising in 2011. They have estimated that there could even be a potential rise of 1.1% in that year, which would be good news for homeowners in general.

If you are one of the unlucky homeowners who bought your property at its peak in 2007, then it will most likely not be until 2014 before you see any profit in your abode.

Of course the market will change at some point, and when it does it's certainly going to be for the better, so every cloud does have a silver lining. The average price of a UK property could rise by 20% based on current values to £227,800 by the year 2014, especially as prices may rise by a massive 8.4% in 2013 and a further 6.8% the very next year.

The Chief Executive of the Federation, David Orr, has been quoted as saying: "Our new research shows that while house prices are falling in the short term, they will inevitably increase in the long term because of a fundamental under supply of housing."

He continued with: "Even though house prices are falling, and are set to remain sluggish in some areas for the foreseeable future, affordability is not improving for many low to middle income households."
"For millions of people who want a home, getting a mortgage can be like winning the lottery. First time buyers and those wanting to buy shared ownership properties remain victims of a deep freeze in mortgage lending.
"Until lending is freed up, young and lower income households without access to large deposits will be locked out of the market."

The figures for the National Housing Federation were produced by economists at Oxford Economics, and according to them house prices in England will be 3% below their pre-credit crunch peak of 2007 in 2013. But come 2014 the good news is that they should be 3% higher. This is good news and average prices for areas such as London will be £354,900 instead of £329,200 as it was in 2007.