People who bought property before 2004 'are in a good position'
Homeowners who got a mortgage and bought their property before April 2004 are in the best position to weather the current economic uncertainty, a new report has suggested.
Consumer website Fool.co.uk revealed that it believes house prices in the UK will drop by around 20 per cent by the end of year.
Should this happen, house prices in the country will return to levels seen in April 2004.
As a result, anyone who made their purchase after this point could find they have made a capital loss on the property.
The site was keen to stress that capital loses are not the same as negative equity, as they latter is "related to the size of a loan taken out to buy a property".
David Kuo, head of personal finance at Fool.co.uk, explained: "It is vital to differentiate between capital loss and negative equity.
"While a capital loss is beyond the control of homeowners, mortgage borrowers can overcome negative equity by reducing the size of their outstanding mortgage compared to the value of the property."
He added that falling house prices could turn out to be good news for some property owners as they might "narrow the gap between the value of your home and a property further up the housing ladder". This could make it easier for people to up-size.
UK Property News posted on 29/04/2008 16:13:05
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