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Homeowners face capital loss
28/04/2008 09:57:00
If predictions of a 20 per cent drop in house prices come true, those house owners who purchased their property after April 2004 are facing a capital loss, a financial advisor has claimed.
According to Fool.co.uk, which foresees the 20 per cent decrease, this market movement would see average house price levels down to those last seen back in April 2004.
David Kuo, head of personal finance at Fool.co.uk, said: "A 20 per cent fall in house prices will mean that many people who bought their homes after spring 2004 will suffer a capital loss."
He added that it is "vital to differentiate between capital loss and negative equity" as the latter is related to the size of the loan taken out to buy a property.
The average house price drop would be from £196,000 to £153,400.
People in the South West must have bought their homes before January 2004 to avoid suffering a loss.
Meanwhile, almost a quarter of homeowners aged between 24 and 34 are worried about experiencing negative equity as a result of property values falling, according to recent research from the firm.
© Adfero Ltd