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Ireland: Up To 300,000 Homeowners In Negative Equity

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THE spectacular fall in property prices is even worse than was stated by a government economic think tank last week -- up to 300,000 homeowners are now in negative equity.

Independent.ie Link

"As many as 250,000 to 300,000 mortgage holders are thought to be in negative equity."

I'd say 300k is probably a conservative estimate. Even so, assuming Ireland's current population is 4.4M, that means almost 7% of the population are in negative equity, Of course it gets worse:

"More than a third of all first-time buyers purchased their homes using 100pc financing."

Ouch, good job rates are low. Oh wait, Euro Zone will increase interest rate hikes pretty soon.

"According to the Permanent TSB/ESRI house-price index, the fall has been 38 per cent since mid-2006."

Luckily the financial meltdown, political instability and austerity cuts are behind us then. Oh wait.

"It means that many of those thinking about buying property will have to re-evaluate their figures to take account of drastically reduced take-home pay."

It also means people will need to re-evaluate how much a house is really worth.

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Yes, but Eire has had 50 to 80 percent falls in prices? We haven't seen that. No where near it.

As long as sellers had 50K a year to asking prices every house owner in the UK will be quids in.

Hmm I think 80% is extreme, perhaps 40-50% fits with various data sources. Although there is so much more bad news, instability and rate raises, on the immediate horizon that prices will be hit much harder. There must be a knock on effect for Northern Ireland as well.

Does anyone know if Ireland has a larger or smaller HPI increase over the last 5 years compared to the UK? Any comparison charts available?


Actually Mr Tulip may be right:

"In Dublin, the capital, the average house price plunged 21% from a year earlier in Q3 2010 to €238,986. Areas outside Dublin were also badly hit, with the average price 11.3% down. to €179,721 over the same period.

Ireland’s house price boom was one of the biggest in Europe. The country saw prices of new houses surge by more than 200% from 1997 to 2007, while average secondary home prices rose by around 280%"


"Ireland’s house price boom was one of the longest and biggest in Europe. It saw prices of second-hand homes surge by around 330% from 1996 to 2006. The average price of new houses rose by 250%, according to the Department of Environment, Heritage and Local Government (DOEI). Historically low interest rates encouraged variable rate mortgages."

Edited by Redback911

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According to Central Bank statistics - the total number of outstanding residential mortgages in Ireland at the end of September 2009 was 791,634.

The total amount outstanding was €78.6 Billion Euro.

That equates to just under €100,000 per mortgage account.

An accurate breakdown of how many people are on tracker mortgages and how many are on standard variable rates is hard to find .

The Irish Independent on Jan 28 2010 wrote that

“statistics compiled by a leading lender, which did not want to be named, show there are about 350,000 people with standard variable rate mortgages. Trackers account for between 140,000 and 200,000 of all mortgages. ”

The same article stated that “Between 80,000 and 100,000 people have fixed-rate mortgages, the figures show. This means that standard variable rate mortgages represent around 56pc of the market.”

So based on those figures - if there are 200,000 trackers and 100,000 fixed rate loands - that leaves 491,000. borrowers who must be on variable rate mortgages.

If these figures are accurate with mortgage numbers that means around 37% of mortgages are in negative equity.


The historical context with the last house price correction in the UK.

Monday, 6 December 1993

ONE IN FOUR people who bought their homes between 1988 and 1991 are living in properties worth less than the value of their mortgage, compared to one in five last year.

But there are marked differences across Britain. In the outer South-east, 41 per cent of recent buyers are affected by negative equity, but the figure is only 5 per cent in Scotland.

The study, conducted October to October, by the Joseph Rowntree Foundation, which conducts research into social policy, is an update on a similar survey last year.

The proportion of those with negative equity has increased because house prices fell in the year to October. Prices fell dramatically in the last quarter of 1992 and then recovered slightly.

Virtually all the people suffering from negative equity bought their properties between 1988 and 1991. Of this group, one in 10 had negative equity in October 1991, one in five in October 1992, and one in four by October 1993.

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Yes, but Eire has had 50 to 80 percent falls in prices? We haven't seen that. No where near it.

As long as sellers had 50K a year to asking prices every house owner in the UK will be quids in.

And we won't see 50% falls thanks to QE, low interest rates and lack of house building over the Labour years.

I think I read somewhere that there is something like 300k empty houses in Ireland as well, which is pretty insane for a country of less than 5 million people

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Looks like the BoI is putting the brakes on repossessions


"when a lender is determining the 12 month period it must wait before applying to the courts to commence legal action, it must exclude any time period during which a borrower is complying with the terms of an alternative repayment arrangement, making an appeal to the internal appeals Board or making a complaint to the FSO under the CCMA."

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