News Release

16th November 2004

NEGATIVE EQUITY

Shadow Economic Affairs Minister, Michael Fabricant, has expressed concern that falling house prices revealed by the survey published today by the Royal Institution of Chartered Surveyors may herald an onset of widespread negative equity by overstretched home owners. "With property prices in Lichfield booming and being some of the highest in the country outside London, I have particular concerns for my constituents with high mortgages. I have tabled urgent questions to the Chancellor of the Exchequer today asking what estimate the Treasury has made of the number of homes now with negative equity.

"While property owners should be aware that house prices can go down as well as up, it is an issue which should concern government as negative equity in property can have wider damaging effects on our economy" Michael says.

The RICS survey revealed that house prices are falling at their fastest rate for 12 years as buyers hold back. High interest rates have cooled the market, causing the lowest number of property sales since 1995 and the sharpest decline in house prices since 1992, the Royal Institution of Chartered Surveyors (RICS) reports. The survey indicates that 41 per cent more chartered surveyors contacted by the RICS experienced a decline in prices in October than experienced a rise. The balance fell sharply from the September reading of 30 per cent, and was the worst reading since December 1992. Just 3 per cent of surveyors said that prices were rising, with the rest saying that they were stable or falling.