Half US homeowners are overvaluing the price of their property

Half of property owners in the US are in a state of denial about falling prices despite the fact that 74% of homes have lost value during the last year, according to a new survey.

An amazing 49% of property owners told real estate information providers zillow.com that they believe that their home has either maintained its value or gained in value over the last 12 months.

'After one of the most turbulent quarters in history for the US economy and housing market, you'd expect the reality of dropping home values to start sinking in,' said Dr Stan Humphries, Zillow vice president of data and analytics.

Although more home owners are realistic about the value of their property than they were three months ago there is still a significant gap between reality and perception, the company's quarterly report found.

Southern and western homeowners showed the most accurate home value perceptions, according to the report while homeowners in northeastern states showed perceptions most out of line with reality.

A slim majority, 51%, said they believed their home values had decreased. Only 40% percent said they think home values will continue to decrease, however; but 57% did say they expect home values in their local market will continue to decline during the next six months.

'We're seeing a fascinating distinction in consumer psychology. On the one hand, homeowners appear to understand the reality of today's economy and are curbing their household spending, but on the other hand they still aren't ready to admit that these woes might extend to their own homes,' Humpries said. 'There's clearly still some denial.'