Walthamstow Homeowners at Risk from House Price Crash

11.33.39am BST (GMT +0100) Tue 15th Apr 2008

"Rocketing local house prices and lending has for far too long been allowed to escalate out of control, with inevitable consequences for residents."

Local Liberal Democrats have expressed their concern after Walthamstow homeowners were told that they face an "above average" risk of suffering from negative equity.

The warning came as fears of a "credit crunch" induced housing crash continue to grow, with some experts suggesting that house prices could fall by as much as 25%, causing misery for those who could end up owing more on their mortgages than their property will be worth.

Figures released this week by credit rating agency Experian suggest that Walthamstow residents could be amongst the worst sufferers of the growing credit crisis, with those who have bought within the last 12 months expected to be the worst hit.

Liberal Democrat Councillors in Waltham Forest raised the issue of local house buyers reliance on credit last year after figures published by the Government in September showed that Waltham Forest had the second worst record in the country - and the worst in the capital - with regards to the speed in which the gap between pay and house prices was increasing.

The figures showed that, whilst average pay in the borough had increased by 27.6% since 1997, average house prices have grown by an incredible 247%, to £215,000, suggesting that house buyers in the borough were being priced out of the market or being forced to rely heavily on credit from mortgage lenders.

Separate Bank of England statistics released last week also revealed that mortgage approvals had fallen by 40% in the last year.

Liberal Democrat councillor John Macklin, who represents Walthamstow's Chapel End ward, said:

"Sadly, the anguish that these reports will now be causing Walthamstow homeowners has been all too easy to predict.

"Rocketing local house prices and lending has for far too long been allowed to escalate out of control, with inevitable consequences for residents. It is becoming increasingly clear that the downturn in the housing market is much more than just a blip.

"As house prices continue to fall and mortgage costs rise, we are in real danger of returning to the woes of the Tory recession with large numbers of families suffering negative equity and repossession.

"The Government must act now to prevent mass repossessions which will only worsen this housing crash."