In L6, which includes Everton, Fairfield and Tuebrook, prices are down 28%, with the average property selling for £60,513.

Last night, Mr Lea said: “If it’s a new-build flat that has lost 45% of its value and if they borrowed at the top of the market and the mortgage payments are high some people will simply hand their keys into their bank or building estate and go off and rent somewhere else.

“But people with a typical house do not need to be too worried. If they can’t afford to move they should just wait.

“Prices are not going to pick up this year or the next in terms of capital appreciation, but growth will return.”

He said it was ironic that there are currently more buyers than properties coming to market, which in other times would push prices up.

“The market remains really tough.”

Economist Mr Stoney, an honorary senior fellow at Liverpool University’s management school and director of the Liverpool Research Group in Macroeconomics, cautioned against worrying too much about the negative equity figures.

He said: “It reduces the ability of homeowners in negative equity to move that’s for sure. But it needs to be seen in the context of a bigger picture, it is a symptom of the decline in the property market. But overall it is not something which we should be overly concerned about.”

Cllr Clucas said: “I feel really sorry for anybody caught in that trap, they thought they had an asset and suddenly they realise it has become a liability.

“But what I think it demonstrates is that perhaps Liverpool is riding out the recession better than other areas.

“We have had unemployment, but not at the same rate as other areas, and the levels of negative equity are not as bad as others.

“But as a council we are not complacent, which is why we are working hard to persuade new companies to come here and local firms to invest in their businesses.”