Some Regions in the United Kingdom Are Expected to Take Until 2016 to Recover
According to an article that was recently released on Mail Online, some UK homeowners who purchased their homes in the past couple of years may have to wait until 2016 for their investments to break even.
Certain areas are expected to take longer to recover than others. For instance, the South East region of the United Kingdom is expected to lead the way, and the article surmises that prices will recover there to 2007 levels by 2012. After that, areas including London, East of England and the East Midlands are expected to recover to 2007 levels by 2013. Prime Central London, Scotland and Prime South West are also expected to recover by 2012.
The areas that are expected to take the longest to recover are the North East regions of the United Kingdom and Northern Ireland. According to the article, these regions won't see a recovery to 2007 levels until 2016.
Even more ominous is a report from Sanford Bernstein, which states that as many as 11% of the total homeowner population of the United Kingdom will have "negative equity" by next year. This means that the homeowners will owe more on their mortgage than what their home is worth. This will result in many homeowners being "stuck" in their homes and unable to sell, as they wouldn't be able to afford absorbing the heavy losses that any sale of their home would incur. The "negative equity" phenomenon is one that is not just restricted to the United States.
The massive slowdown in the UK real estate market is being blamed on a number of different factors, including: lack of available loans for perspective new buyers, an overheated real estate market that was bound to tumble, and the subprime mortgage crisis that swept the globe over the past year.
The good news is that these prognosticators are predicting that the homeowner market will rebound strongly by 2020. Areas that are expected to do particularly well, in relation to their 2007 values, are: London (+51%), South-East (+79%), and East of England (+57%).
Source: Mail Online
Filed under: Real Estate News | The Economic Meltdown