Negative equity could last four years, says NHF

Landlords and property owners are being cautioned that negative equity could last for another four years, in spite of the modest rise in property prices.

The National Housing Federation (NHF) believes that many Property owners and landlords that bought at the height of the housing boom are likely to remain in negative equity until 2014.

Negative equity is where the value of the property is actually less than the outstanding amount on the mortgage. This is thought to be a major problem to landlords and property developers, especially, as many rely on quick property sales.

Many property owners could be prevented from selling if they have fallen into negative equity, and they often face a multitude of problems when trying to re-mortgage.

The NHF’s believe that house prices are likely to fall to around 3% over 2011, after which house prices are expected to rise again until 2014, pushing the average price up to £226,900.

David Orr, Chief Executive for the NHF, commented:

"House prices will inevitably increase in the long term because of the huge under-supply of housing."