Eliminate the negative

Clifford German
Tuesday 29 October 1996 19:02 EST
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The problem of negative equity is shrinking fast, with just under 600,000 properties worth less than the mortgage in the third quarter, according to Rob Thomas, the housing analyst at UBS. The numbers fell from 758,000 in the second quarter, 1.3 million at the end of 1995 and a peak of 1.8 million in the first quarter of 1993. But a further 1.9 million borrowers still have less than pounds 5,000 of positive equity, which is not enough to finance a move.

The housing market is recovering strongly, according to Nationwide BS, with an average rise of 7 per cent likely this year, more in London and the South-east. Outside Northern Ireland, where prices rose a further 3.2 per cent in spite of the security situation, the sharpest increases in the last quarter were in the South-east and Greater London, the least in Scotland, the North, Yorkshire, East Midlands and East Anglia.

Sales are rising and first-time buyers are returning, although they are older and wiser than in the Eighties, but sales volumes will still be less than 1994, and the recovery will have much less impact on the economy than previous booms.

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