Citi today:
“We doubt that house prices have yet reached their low, and expect that prices will fall a further 10%, and perhaps 20% from here.”
Their forecast is for 3 million people (one in four) of mortgage holders, to be in negative equity by next year.
Given the close correlation between house prices and consumer spending in Britain, this feel-bad factor will last for as long as so many are in negative equity. And how long will the negative equity last for?
This graph showing how house prices
took nine years to recover in the
last downturn – and were propelled back upwards with a credit binge that a recession-decimated Britain is very unlikely to repeat. So it may well be the 2020s before anyone who bought in the last few years will recover their capital.
