How House Prices Are Moving

The Independent (London, England), January 15, 1996 | Go to article overview
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How House Prices Are Moving

The gap in house prices between different regions in the UK, which seemed to stabilise in 1993, may be widening again.

Over the past year, house prices in the North have been falling slightly, while remaining more or less flat in the Midlands and rising gently in the South.

House prices in the South are now about 17.5 per cent above the national average, compared with 15.9 per cent above the average a year ago. Prices in the north today are 15.3 per cent below that national average figure, compared with 13.7 per cent below average this time last year.

In spit0,000 households, mainly in the South-east, have average negative equit y of pounds 7,000 `How long would it have taken before our original flat was worth what we first paid for it?'

{BB} Nic Cicutti

{TT} Suzanne and Alan Sherry have fulfilled a dream common to many property owners by selling their first home, a small one-bedroom flat, and trading up to a spacious three-bedroom semi.

Except that in the Sherrys' case they did so while facing a problem familiar to almost a million households - negative equity.

Despite a drop in value of pounds 18,000 on their previous property, the couple, who live in Wanstead, London, moved home thanks to a rescue package from their lender.

Lloyds Bank's negative equity scheme helps those who, like the Sherrys, want to move home but are trapped by negative equity - where the original mortgage is greater than the current value of the property.

Mrs Sherry said: "This has been really helpful. We wanted to own and live somewhere that was bigger.

"We were able to do so even though our first flat, which we bought for pounds 67,000 in 1988, was only sold for pounds 49,000 in May last year."

Research by Woolwich Building Society shows that although numbers have fallen substantially over the past two years, about 950,000 households, mainly in the South-east, still have average negative equity of pounds 7,000.

The Lloyds scheme, which was launched a year ago, allows mortgage-holders to transfer up to pounds 30,000 of negative equity into a new home, borrowing up to 125 per cent of the property's valuation.

They must have held a current account with Lloyds Bank for five years, have held a mortgage for at least two years with any lender, and redeem the earlier loan while simultaneously completing the new purchase.

Because the Sherrys, who jointly run Sherry Design, a graphic design firm in Islington, are long-term Lloyds account and mortgage-holders, these conditions meant that they were able to benefit from the scheme despite being self-employed.

While a choice of repayment methods is available for the main advance, the negative equity element must be on a repayment basis.

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