That's the conclusion of new research from financial information experts Experian.

But, property experts in the city say there is no need to panic as the housing market remains healthy.

Experian found the average mortgage in the SR1 postcode area centred on Frederick Street was £107,604 – 99 per cent of the average property value of £108,674.

That means property prices have to fall by just one per cent for homeowners to find themselves in negative equity.

The city centre is home to some of Wearside's most high-profile new residential developments, such as the Echo 24 building and the old post office in Sunniside.

City estate agent Thomas Watson said some buyers were already finding themselves saddled with property worth less than they had paid for it – but it was more often the result of faulty valuations in the first place.

"There has been a lot of apartment building in the past year or two, and there is an awful lot of buy-to-let," he said.

"There have been Newcastle valuers coming into Sunderland to value flats in the city centre.

"Really, if I had been valuing a lot of these flats, I would not have put them at anywhere near a lot of these values."

The market had been hit by the vast increase in the number of apartments available in the city centre, spearheaded by gentoo, the former Sunderland Housing Group.

"Gentoo's heart is in the right place as far as the regeneration of the city centre is concerned," said Mr Watson.

"It is trying to preserve some of the oldest buildings in the city and, unfortunately, about the only thing they can do is refurbish them as apartments."

Echo 24 director Michael Orr said the city centre property market was still buoyant.

The stunning block on the former Sunderland Echo site close to Wearmouth Bridge opened last year with a target of selling all 179 apartments and penthouses by this July.

"We have sold 144 properties out of 179 in total – we only have 35 left," said Mr Orr.

"We have had no problems whatsoever. We are perfectly happy with the project."