The negative equity map

Tens of thousands of home owners across the capital will be plunged into negative equity this year if property prices fall by 20 per cent.

People who have taken on huge mortgages compared with the value of their homes will owe more than the building is worth.

Buy-to-let investors who tried to cash in on the housing boom will be among the worst hit, according to analysis obtained by the Evening Standard.

Experian, one of Britain's largest credit rating agencies, believes Calderwood Street in Thamesmead SE18 is the most vulnerable road in the capital.

Flats there that were selling for £250,000 last year are now being offered for £200,000 in a sign of how the market has shrunk. Next on the list are Erebus Drive, also in Thamesmead, and Queenstown Road, Battersea.

A "risk map" of London also reveals that the three most vulnerable parliamentary constituencies are all held by Labour.

Hackney South and Shoreditch tops the list, followed by Poplar and Canning Town, the seat of former minister for London Jim Fitzpatrick, and Barking, where culture minister Margaret Hodge is MP.

These are all areas where the average loan-to-value ratio tops 60 per cent. But in Calderwood Street, a favourite for buy-to-let investors, that figure soars to 91 per cent.

There are fears the high concentration of amateur landlords facing negative equity could tip the rest of the market into crisis.

Ed Stansfield, property expert at Capital Economics, said: "If you bought in the last 12 months you are far more at risk than if you bought three years ago. Anyone who bought in the last 12 months with less than a 15 per cent deposit is running the risk of going into negative equity."

Experian warned that anyone approaching the end of a fixed-rate deal was in a weak position. Matt Sherwood, senior global economist at the firm, said: "The concern is that it would only take a 10 per cent decline in house prices and we would have households in negative equity."

Experian, which holds credit information including mortgage details on millions of borrowers, rates anyone with a loan worth more than 60 per cent of the value of their property as "high risk".

It estimates that if prices fell by 20 per cent, 20,000 households in London would be in negative equity. Across Britain, that number would rise to 78,000 and could even double if prices fell by 30 per cent.

At the height of the property crash in the Nineties, an estimated 1.8 million home owners suffered negative equity.

London and the South-East were the worst hit as prices fell 27 per cent and tens of thousands of people lost their homes because they could no longer afford theirmortgages.

The Halifax, Britain's biggest mortgage lender, reported last week that prices fell last month at their fastest rate since 1992. Independent economists believe prices could fall by around 20 per cent in the next two years. The International-Monetary Fund says UK house prices are overvalued by 30 per cent.

The crisis has been prompted by a borrowing binge and rocketing house prices which have left people in debt and unable to deal with a downturn.

In a normal market, the ratio of average earnings to house prices should be no more than 1:4.

The average wage in London is £35,000 while the average house price is almost £350,000 - a ratio of 1:10.

Click here to see a list of the streets most at risk of slipping into negative equity