Some first time buyers feel the pinch of house price slump

According to a recent report many first time buyers that have recently purchased their homes may already be feeling the effects of the house price slump, with some facing the possibility of being plunged into negative equity, where they owe more money on their home than the property is actually worth.

Negative equity is something that struck fear in the hearts of homeowners in the 1990s, but over the last ten years property prices have been soaring and the concerns over negative equity have been left behind. However, with many recent buyers having paid a fortune to get onto the property ladder only to find that house prices have fallen, this situation could rear its ugly head again.

Those most at risk are homeowners that took out a large mortgage to purchase a property but did not put down a sizeable deposit – or in some cases may not have put down any deposit. These are the people that will be the first to suffer as house prices continue to fall, according to industry officials.

House prices in the UK are expected to fall considerably over the course of this year, with even the Council of Mortgage Lenders changing its prediction from a 1% rise over 2008 to a 7% fall.