According to recent research carried out by a financial research company properties that were purchased four or more years ago in the UK could manage to weather the effects of the falling house prices that are expected over the course of this year. Officials from Fool.co.uk expect property prices to fall by up to 20% over the course of the year, and say that the properties best placed to deal with these price falls are those purchased four years ago or longer.
The research suggests that property prices could fall to an average of £153,400 this year, which would take them to the same level as they were in 2004. Anyone that purchased a property after this time may find themselves in negative equity. However, officials pointed out that not all homeowners who purchased less than four years ago will be in negative equity, as some may have put down a sizable deposit on the home rather than taking out a mortgage loan for the full value of the property.
One official from the company said: "It is vital to differentiate between capital loss and negative equity. While a capital loss is beyond the control of homeowners, mortgage borrowers can overcome negative equity by reducing the size of their outstanding mortgage compared to the value of the property."
Recent reports have shown that house prices have fallen for seven months in a row, and industry officials expect them to continue falling over the coming year or two. However, there has also been a marked slowdown in the sale of properties, with lack of affordability and lack of accessibility to mortgages affecting the number of sales that are being made.
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