Homeowners watching their equity whittle away as house prices decline will be more optimistic with the latest information released in the Rightmove House Price Index for June.  According to the latest data, the average UK asking price for a new property increased by 0.6 per cent.  This brought the average price to £240,394.  Remortgaging for homeowners was becoming difficult with the loss of equity levels for many homeowners.  There are in fact many homeowners, as well as landlords, that have found themselves approaching negative equity as house prices have declined. 

Asking prices however are far from the number that really matters and what does matter is the price for which a property sells.  Despite the number of properties on the market and continuing to enter the market, the buyer’s market remains stifled.  Buyers are far from numerous as lending criteria has remained tightened.  Few new buyers can purchase homes due to the high deposits required and the strict criteria of lenders.

The restricted mortgage lending environment has led to an increase in the renting market.  Households do not only have to rent versus buying due to the lending restrictions, but there are many that are choosing to rent as a lifestyle.  Those households are avoiding taking on a mortgage debt in such a weak economy and avoiding buying a home that may lose value in the next year versus appreciating in value.  Falling house prices have been the norm for all areas except for London and nearby areas.  Other areas outside of the London area have seen prices decline each month and some at double figure percentages.  Homeowners have been put on notice by experts to keep an eye on their falling equity to avoid plunging into negative equity.  House prices will continue to decline, despite cheap borrowing, as long as lending remains tight and the consumer’s confidence is weak.