Guardian UK: Negative equity fears grow as house prices take record tumble (Britain)

[marmar]

Property: Negative equity fears grow as house prices take record tumble
Ashley Seager
The Guardian, Friday July 11, 2008





Fears that the housing market is in freefall were heightened yesterday when Halifax reported that house prices tumbled at their fastest pace on record in the second quarter of the year.

The country's biggest mortgage lender said prices slumped 2% in June from May, adding to May's 2.5% fall and April's 1.5% drop. The resultant 5.5% drop for the quarter was the worst since Halifax's records began 25 years ago and far worse than at any time during the housing market collapse of the early 1990s.

Vince Cable, the Liberal Democrat treasury spokesman, said: "As people start to feel the pinch, house prices are going into freefall. The years of uncontrolled and irresponsible lending by the banks are now coming back to haunt us.

"With falling house prices and rising mortgage costs there is a real danger that many people could find themselves in negative equity and under serious threat of repossession."

But the Bank of England left interest rates at 5% yesterday for the third month running as it remained more concerned about rising inflation than about the housing market. City economists predicted rates would stay at 5% for some months before the Bank's monetary policy committee eventually cuts them as the slowing economy pulls inflation lower.

Halifax said house prices were down 6.1% last month from June last year and are now 9% below the peak last August, which brought to an end a trebling of prices over the previous decade. The average house has now shed £20,000 of its value and is worth £180,000. If prices continue falling at June's rate for a year, they would drop by a quarter over the next 12 months. ......(more)

The complete piece is at: http://www.guardian.co.uk/business/2008/jul/11/housingmarket.houseprices

[Tierra_y_Libertad]

1. Our equity dropped about $50,000 since it's peak.

According to zillow.com. That's about 11%. But, it had almost tripled in value before that.

Not that it matters to us, since we're not selling.

But, the ripple effect of the collapse of the housing market is still yet to be fully felt in job loss and the continued economic downward spiral.