The phrase ‘as safe as houses’ may no longer have the same positive connotations after months of continual, and in many cases, steep drops in global house prices. What started off as an isolated slide in the US property market has now turned into a global phenomenon. Britain has certainly not been immune to the turmoil that has led us into recession. One alarming consequence of the current situation is the number of first time buyers who have less job security coupled by the increasing threat of accumulating negative equity in their homes.

This situation has rapidly deteriorated for many according to the Council of Mortgage Lenders (CML) who report that around 900,000 borrowers are currently faced with negative equity in their homes. The data suggests three out of four homeowners face an average shortfall of £6,000 to £8,000, while a staggering 250,000 people have a shortfall of about £20,000.

Interestingly, a report by GfK in February estimated that almost four million homeowners faced the risk of negative equity, which is predicted to rise to 5 million by the end of the year. This paints a far worse picture then the CML and suggests that there may be more bad news to come later in the year.

One of the commonalities between the reports is the acknowledgement that falling house prices are at the route cause of the problem. The CML suggests that house prices have fallen around 18% at the end of 2008, however this has certainly increased as we move our way through 2009.

There are also a significant number of homeowners who, although they are not yet in negative equity, are on the verge of it if the housing market does not pick up. The CML suggest that around 1.1 million homeowners have seen the equity in their home decline to around 10% of the property value. This has significant knock on effects on those who were looking to use the equity to fund their retirement or other leisure activities.