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It was a nightmare for almost a million homeowners in the early 1990s, leaving them with properties worth less than they owed. In despair, many of them simply gave up and handed the front door keys back to the building society.
Now the words "negative equity" may be returning from the past. The runaway boom which turned the housing market into a one-way bet during the past decade has come to an abrupt and shuddering halt.
Now, it seems, it has gone into reverse - and many experts fear the worst.
Real estate agents acknowledge the leaner times. "There's no doubt that a lot of agents are having a tough time at the moment," said Peter Bolton King, head of the national association.
According to the British government, houses prices fell back in the last quarter of last year, knocking £1865 (NZ$4814) off the price of the average home in November alone. House prices are forecast, at best, to come to a standstill this year.
Some forecasters are more pessimistic. Capital Economics predicts falls of up to 5 per cent this year and 9 per cent next year.
International Monetary Fund estimates that house prices in Britain may be overvalued by 40 per cent, and could fall sharply as banks and building societies tighten their lending to adjust to the global credit squeeze.
Britain's leading lenders, the Nationwide Building Society and Halifax Bank, are forecasting zero growth in house prices this year.
However, the property market will be like the weather, varying depending on where you live.
Halifax believes that prices in the buoyant economies of London and the South-west may creep up 1 or 2 per cent.
In Scotland, too, there is predicted to be growth, of up to 4 per cent. But for the rest of the country, particularly the Midlands and the north of England, there will be a property slide, with prices falling by up to 2 per cent.
For someone buying a £400,000 home now, that would amount to a paper loss of £8000. That could be a problem for anyone wishing to sell and pocket the money. It could also plunge them into negative equity.
The message from the experts is for homeowners to stay calm. "Don't panic. You are not going to see all your equity disappear. We expect the market to be steady," assured Martin Ellis, the Halifax's chief economist.
Some real estate agents believe falling interest rates and strong employment will shore up the market.
- INDEPENDENT
