Home values are at risk of collapsing in areas where prices are rising – despite a drop in borrowing, according to data analysis by One 77 Mortgages.
Most of the places identified as vulnerable are in the north of England, raising fears the region could become the epicentre of a market downturn.
Cleveland in the North East is at biggest risk of tumbling values, after prices jumped by 11 per cent but lending fell, the study found.
Blackburn and Blackpool in Lancashire are also displaying the worrying trend with a gap between price increases and borrowing of 6.8 per cent and 6.2 per cent respectively.
Alastair McKee, managing director of broker, said: “Demand is what drives sentiment and sentiment is what drives prices.
“But somewhere in the middle people still need to borrow.
“It’s a case of mind the gap for buyers in these areas as lending takes a different trajectory to prices.”
Truro, Torquay, Plymouth and Dorchester are the areas with an average drop in lending of 0.5 per cent and price increases four cent.
Lower levels of lending could be because of high valuations and stricter lending criteria, according to One 77 Mortgages.
Mr McKee said: “Shrinking mortgage lending sticks out like a sore thumb when you have continued annual house price growth.
“In those areas where the two are headed in different directions, this is likely to be the result of first-time buyers beginning to vote with their feet in the face of steep valuations coupled with smaller budgets thanks to stricter lending criteria.
“If opinions about these stretched valuations are starting to feed through into these borrowing numbers then it’s vital purchasers are even more careful not to end up sitting on unnecessary losses.
“Buyers have to be careful that, with interest rates still temptingly low, they don’t jump in with both feet by borrowing too much in a local market that is possibly braced for a fall.”
Areas with biggest gap between annual drop in lending and annual house price change
1. Cleveland, 11.9 per cent
2. Blackburn, 6.8 per cent
3. Blackpool, 6.2 per cent
4. Torquay, 5.6 per cent
5. Bolton, 5.3 per cent
6. Plymouth, 4.8 per cent
7. Bradford, 4.7 per cent
8. Liverpool, 4.7 per cent
9. Dorchester, 4.2 per cent
10. Harrogate 4 per cent
11. Darlington 4 per cent
12. Carlisle, 3.9 per cent
13. Doncaster, 3.5 per cent
14. Sheffield, 2.8 per cent
15. Huddersfield, 2.7 per cent
16. Sunderland, 2.4 per cent
17. Hereford, 2.2 per cent
18. Newcastle upon Tyne, 1.7 per cent
19. Truro, 1.4 per cent
Source : EXPRESS