New research by the property website Zoopla.co.uk shows that 3.5 million properties bought since 2006 are now worth less than what they were sold for.
This figure equates to 80% of all homes since 2006.
The study went on to conclude that many homeowners who have seen a drop in the value of their home and who want to move, are setting unrealistic sale prices which buyers will not pay and are therefore finding themselves stuck and unable to move.
Nicholas Leeming, business development director at Zoopla.co.uk, said: “There is an unprecedented number of homeowners ‘stuck’ with homes they bought in recent years with the expectation that prices would continue to sky-rocket. And as a result of not wanting to take a loss on their asset, many owners have been unwilling to set realistic asking prices to sell them.”
Worst affected
The people worst affected are the ones who bought their home at the peak of the property boom between 2007 and 2008. 93.2% of people who bought in 2007 have seen the value of their home fall since then, and 88.9% of homes bought in 2008 have fallen in value.
Perhaps unsurprisingly the area worst hit is the north east of England with 93% of properties bought since 2006 worth less than their purchase price.
London however is the least affected with less than 50% of properties bought since 2006 now worth less than the purchase price.
Mortgages
We highlighted yesterday the problem that borrowers on Standard Variable Rate mortgages are having remortgaging their homes because of a lack of equity and this new report from Zoopla simply emphasises this point.
Falling property values not only cause problems for people who want to move house but also for borrowers who are stuck on uncompetitive mortgage deals but who do not have sufficient equity to get a better mortgage deal.
