09 October 2015

The information contained within the following news articles have been pre published. The articles were published on the dates indicated and the information contained within these issues include references to taxation, legislation, regulation and other issues or concerns that may no longer apply

House prices facing double whammy


A recent report from the investment bank, Morgan Stanley has warned that house process may face a double dip this year and next. 

 The bank’s assessment of the UK housing market is that house process could experience a dip of 3% in 2011 and a further fall of 7% 2012, which would effectively trap 1.3m home owners in negative equity – where their mortgages are worth more than their homes.


The bank identified a number of factors as contributing to this situation: shrinking real disposable incomes, relatively high inflation, forthcoming rate increases and weak employment growth.  However, Morgan Stanley is one of the most pessimistic about the prospects for economic growth, expecting the economy to grow by just 1.2% this year, as against the more widely held view of 1.6%.  The bank also based its projections on an anticipated rate increase in August, but this now seems set to be put back until November at the earliest.


What’s our view at Census Financial?  Well, while the Morgan Stanley analysis takes a very negative view of the economy, we anticipate several years of stagnation in the housing market.  Certainly, other banks are more upbeat in their predictions.  Lloyds Banking Group, for example, expects only a 2% fall in house prices this year and a 2% rise next year, and the Centre for Economics and Business Research (CEBR) has issued a report forecasting that house prices will ease up by 4% a year until 2016!


So, what can you do if you find yourself facing negative equity?  It makes sense to overpay on your mortgage, driving the debt down more rapidly.  This will also help to ease your debt burden when interest rates start to rise.  Also, a number of banks have recently introduced loans to help borrowers in negative equity.  For more help and information on this subject, why not call the Census Financial property team on 028 9066 8700.

Paul Dixon 

Chartered Financial Planner 

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