In times of recession one of the first effects is that the value of house prices falls.
We have seen quite a sharp drop in the value of house prices in some parts of the UK over the last few years.
Whilst those prices may now have stabilised there is very little evidence apart from a few small pockets that prices are on then rise again.
One month may see a small rise of 1% on one index whilst another will show a fall.
We have at the moment got too many houses on the market which means that there is competition for those buyers out there.
This is known as a buyers market meaning that they can be more selective about which property they buy and hence demand a better price from two or more competing sellers.
This problem is made worse because here in the UK we have a mortgage market which is still struggling to lend.
The volumes of new lending compared to a year ago are way down, when in turn that lending was at an all time low.
This means that there will not be new buyers coming into the market as they cannot get the mortgage funding that they need to help complete a purchase.
This will in turn keep property prices low for a good time yet.
This is not a problem unless you need to move house.
It may however be a factor to be taken into account when deciding what debt solution to take, if you have real debt problems.
Many people with a debt problem, are lucky enough to be able to enter a debt management plan which will enable them to make repayments to their lenders at a reduced rate in a structured many over a number of years.
Their property will never be considered.
For those seeking an IVA solution which involves a contractual commitment to make payments over 5 years the value of the house is important as it is part of the repayment terms.
Any equity in the property will need to be re-mortgaged out in year four.
If this is not possible, then repayments will need to continue for a further 12 months.
If you have big debt problems, can't pay your mortgage and have negative equity then the fact that your house is worth less than your mortgage can be a blessing in disguise.
If you choose to go bankrupt and wish to lose the house, then any shortfall on the mortgage will be written off in the bankruptcy.
If you can afford it and wish to stay in the house, then it is possible to have the Official receiver's interest transferred to you or a spouse for £1 plus fees.
So you can see that your house being worth less than your mortgage can mean many things depending on the type of debt you are in and the solution you seek.