House price research shows millions living in 'underwater' homes
Published by 24publishing for 24dash.com in Housing
Number of home repossessions 'expected to rise'
The majority of homes bought in Britain are worth less now than they were five years ago, new research suggests.
Some 3.5 million properties, or 80%, bought since 2006 are said to be "underwater", or worth less than their purchase price, according to a study by Zoopla.co.uk.
But many owners are unwilling to lose money on their original purchases and are setting unrealistic asking prices, the property website said, resulting in them being "stuck" with their homes.
People who bought at the peak of the market between 2007 and 2008 are the worst affected, with 93.2% and 88.9% respectively of homes bought during this period worth less now.
The situation is worst in the North East, with 93% of properties bought in the region since 2006 now worth less than what their owners paid for them. The average property was valued at £149,364 in June 2011, compared with £182,341 in the same month five years ago, Zoopla said.
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."
However, London has proved more resilient, with fewer than half (46%) of homes in the capital worth less now than in 2006.
Mr Leeming added: "The London market has been much stronger than the rest of the country over the past 12 months and the sheer strength of the London economy relative to the rest of the UK has helped support the overall property market.
"Property prices in London, particularly at the top end of the market, have proven somewhat immune to the economic forces that have deflated prices further down the chain.
"And with the cost of renting so high in London, buy-to-let landlords continue to compete for the bricks and mortar that was historically first-time buyer territory and this has helped support prices lower down the property ladder too."