The steady fall in house prices since the market peaked has left a million people with no equity in their property and as “prisoners in their own homesâ€, says a housing market commentator.
Henry Pryor, at HousingExpert.net, says: “With average house prices according to the Land Registry still 16 per cent below their 2007 peak, there are now a million people who have lost all the equity in their homes, who even if they could take the psychological hit on the original price, no longer have the necessary equity to buy their next property.
“These people are blocking the homes for the current generation of first-time buyers and are to all intents and purposes, prisoners in their own homes.â€
Land Registry figures show the number of homes sold in July in the UK fell to just 79,000. The monthly statement from HM Revenue and Customs shows that in July 2010, there were 89,000 transactions.
In July 2006 there were more than 148,000 transactions as the market headed towards a peak in values in 2007. Over the course of 2006 more than 1.6 million homes were sold, but this figure roughly halved in 2010 to 880,000.
In both Scotland and Wales the volumes halved from 13,000 and 6,000 to 7,000 and 3,000 respectively.
“It costs next to nothing to put your house on the market,†says Pryor. “And since the abolition of Home Information Packs a year ago there has been a slight increase in these volumes. Asking prices remain unrealistically high, as sellers struggle to accept the reality of a falling market.
“The problem is that there are so few buyers who can actually transact.
“Although a huge number of so-called ‘tyre kickers’ are looking at websites, those who can qualify for a mortgage or who have the additional equity required are small in number.
“As a result, only one in three homes is actually selling.â€
Pryor concludes: “In 2007 the average first-time buyer saved 35 per cent of his annual pay as a deposit for his house and he was able to borrow 95 per cent. Today he needs a whole year’s pay as he can only borrow 75 per cent.â€
Nationwide Building Society says that average prices fell by 0.6 per cent in August, to an average £165,914, compared with £168,731 in July.
Nationwide chief economist Robert Gardner says: “Sluggish demand for homes, combined with only a gradual rise in the supply of available properties, has helped to keep property prices stable since last summer.
“We expect this trend to be maintained over the remainder of 2011, although downside risks have increased as UK and global growth prospects have weakened.â€
From:http://www.buxtonadvertiser.co.uk/lifestyle/home-garden/property/owners_are_trapped_in_their_homes_1_3777028