12 May 2008 Southwark homeowners may not be in as much danger of falling into the dreaded negative equity trap as those in other areas of the country, despite the doom-ridden findings of a recent report, writes Gav Hollander
With talk of house prices dropping by as much as 20 per cent in the coming months, these are worrying times for anyone who owns property. And the report published last week by credit rating agency Experion claimed that two of Southwark's most desirable addresses were amongst the streets in London where buyers could be in most danger of plunging into negative equity.
Great Dover Street and Borough High Street were both in the top ten "at risk" streets in the report, with other parts of the borough, such as Peckham and Camberwell, described as having an "above average" risk.
The upsurge in house prices over recent years means that, if prices drop as much as some experts believe, anyone who bought a property in the last 12 months and who has a 100 per cent mortgage could see their house's value fall below the amount they have left to pay back.
However, Paul Curtis of estate agents Chase Devonshire thinks that the media are guilty of scare-mongering. "What you believe depends on which publication you read," he said.
"I have not yet valued a property which has got negative equity. People are worried but London is not suffering as much as the rest of the country."
That is a feeling shared by Gary Corben, a property investor who runs a helpline that helps people threatened with repossessions. "It is very unusual to find negative equity in a London environment," he said. "You'd have to be really reckless with borrowing to get into negative equity in that part of London."
If anything, the areas around London Bridge and Borough look to be less affected by the predicted crash in house prices. "It is an established area that has lots going for it," said George Kendall of City Docklands Estate Agents. "It will remain a popular place for people to live regardless of property values. I'm not sure the same could be said of certain other areas."
Mr Curtis is wary to paint too rosy a picture for the whole of the borough however. He said: "I don't believe there is a problem with Southwark, but it is very eclectic as an area.
"The diversity means it is very difficult to gauge as a market but we have definitely seen a decline in first-time buyers."
And there is still a chance that other previously desirable areas for young homeowners, such as Peckham and Dulwich, could be hit hard by any future downturn in the market.
Tim Wickham who works in the area for Halifax Estate Agents thinks there is a danger to homeowners in these areas. "Locally, the market is calming," he said. "Prices in Dulwich and Peckham just soared up massively over the last couple of years.
"Now, housing stock is coming in but not being sold so there are more properties on the market and vendors are reducing prices. We're not close to the negative equity stage yet but it could be round the corner."
But Mr Wickham agrees that negative stories in the press are not helping the market. "If everyone remains positive we should be ok," he said.
No comments have been posted.
RAILTON ROAD SE24,
Leasehold, For Sale
TEA TRADE WHARF SE1, £1,295,000 , For Sale
TOWER BRIDGE WHARF E1W, £550 , per week, For Sale
PROVIDENCE SQUARE SE1, £1,600,000 , For Sale