Ratings agency Standard & Poor's reckon that house prices will fall about 25% from their peak of last year, which would "plunge one in seven homeowners into negative equity".
According to my own nequity-o-meter (itself based on Bank of England figures), when prices have fallen by 25% from peak (i.e. in a year or two), there will be 'only' about a million households in nequity, i.e. about one in twenty.
The clue is here: S&P said that for every further percentage point decline in house prices, between 60,000 and 180,000 extra homeowners could fall into negative equity. That's a handsome margin of error, eh?
Funnily enough, a 25% fall is just about at the tipping point; if prices fall by 35% from peak, rather than 'only' 25%, the number of households in nequity would double.
Prestigious
2 hours ago
3 comments:
The real issue is not falling prices, they will find their long term average, the issue is if the banks are not lending to first timers, then the fall will be greater as they underpin the market. It will not matter if prices fall to a level they can afford, another distorted market?, which will probably pump up the demand for the next boom.
back on the housing roundabout :0)
The banks are lending to FTBs, but nowadays they expect a sensible deposit again, like 25%. It's FTBs who have entered into a Buyers' Strike.
And yes, the Tories will inevitably blow another housing bubble over the next ten years or so.
when I was a FTB in 1990, at the beginning of the last house price crash, my deposit was 15%.
I think 90% is fine in a stable market as long as the multiples are back to sanity levels.
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