"Thousands facing negative equity"

Yet another stupid and misleading headline, *sigh*.

Alice's negative-equity-o-meter shows that there are several hundred thousand in Nequity^TM already. Her chart shows that LTV's are fairly evenly distributed between 1% (nearly paid off) and 100% (or more!):Ergo, as there are just under twelve million outstanding mortgages, every 1% fall in prices means another 120,000 in Nequity^TM.

Property prices have been falling at 0.9% per month compound* since last August, so that's about one million in Nequity^TM so far already, plus the mugs who took out mortgages of more than 100% in the first place.

So a more accurate headline would be "Millions facing negative equity".

* Per Halifax May figures August 2007 average price £199,600, May 2008 £184,111;
£184,111 ÷ £199,600 = 0.9224;
+0.9224^(1/9) = 0.991;
1 - 0.991 = 0.009 = 0.9%.

Interestingly enough, the fall in the five years 1990 to 1995 was only 0.2% per month compound, again, per Halifax Historical Data, (Tab: AllMonSA) December 1990 average price £68,708, December 1995 £60,901;
£60,901 ÷ £68,708 = 0.886;
+0.886^(1/60)=0.998;
1 - 0.998 = 0.002 = 0.2%.