New data indicates that a significant number of property owners are finding themselves in the position of negative equity, whereby their property is now worth less than they had paid for it when they made a purchase. In some cases they appear to have higher home loans than the current value of their property.
According to new RP Data figures, as of the December quarter, 6.4 per cent of Australian homes were estimated to be in negative equity, a sharp increase on the 4.9 per cent at the end of the previous September quarter.
Australian homes that are worth more than double the price their owners paid for them have also fallen away to 42 per cent, down from 43 per cent in September.
Over the five years to December 2011, capital city home values had seen appreciation in value of about 25 per cent, however over the past quarter values have appreciated at a much slower rate causing the number of homes in negative equity to rise.
Around 40 per cent of homes in Australian capital cities that are in negative equity have been owned for less than two years. This reflects the downturn in the housing markets since late 2010 when home values fell by 5.5 per cent.