Skip to main content

Half Now In Negative Equity...

Half of us now in negative equity misery...


HUNDREDS of thousands of Irish homeowners could face negative equity as early as June.

A report from NCB stockbrokers has outlined that as many as 45pc of householders could owe more on their mortgage than their house is worth.

NCB economist Brian Devine says that house prices, as officially measured, are still overvalued.

"Our estimate for Ireland suggests the number of homes in negative equity ranges between 29pc and 46pc depending on the price decline assumed," Mr Devine outlined.

NCB believes prices are already 35pc below their peak, meaning close to one in three homeowners are already in negative equity.

"There is little reason to believe that house prices will not continue to fall as future employment prospects remain bleak, further tax hikes are in the pipeline, confidence remains low, emigration is likely and there remains a large supply of properties for sale," the NCB report claimed. "Affordability may have improved sharply but until confidence and job certainty are restored this means very little to many prospective buyers."

In an analysis comparing the advantages of renting or buying, Mr Devine said that as long as the house will be worth more than €145k in 25 years' time, it "makes sense for a household to purchase rather than rent at current prices".

"If prices are not greater than €145k in 25 years' time it would represent the most spectacular collapse in real (inflation adjusted) house prices on record," he added.

The report said that housing transactions would slow down as homeowners were reluctant to accept the loss on their home and refused to sell the property for a realistic price.

"They will set higher asking prices causing properties to sit on the market," the report said.

Figures from the last Permanent TSB house price index showed prices were down 3.6pc in December and additional falls of 10pc or more could well be recorded before June.

However, the stockbrokers said that there are clear signs of improvement in the general economic situation in Ireland.



Report by Claire Murphy - Evening Herald

Popular posts from this blog

Ireland's Celtic Tiger Excesses...

'Bang twins' may never get to run a business again... POST-boom Ireland is awash with cautionary tales of Celtic Tiger excesses, as a rattle around the carcasses of fallen property developers and entrepreneurs will show. Few can compete with the so-called Bang twins for youth, glamour and tasteful extravagance. Simon and Christian Stokes, the 35-year-old identical twins behind Bang Cafe and exclusive private members club, Residence, saw their entire business go bust with debts of €9m, €3m of which is owed to the tax man. The debt may be in the ha'penny place compared with the eye-watering billions owed by some of their former customers. But their fall has been arguably steeper and more damning than some of the country's richest tycoons. Last week, further humiliation was heaped on them with revelations that even as their businesses were going under, the twins spent €146,000 of company money in 18 months on designer shopping sprees, five star holidays and sumptu...

Property Crash Homes For Sale...

Hundreds of repossessed homes in Ireland to be sold by auction... UK property consultancy Allsop to hold auction in April at Dublin's Shelbourne hotel: Flats in Ireland that could have fetched €150,000 in the Celtic Tiger years are to be put on the market for as little as €25,000 (£21,000) in the country's first ever mass auction of repossessed homes. And, in a sign of how wide the property crash is, the latest item to turn up in liquidation sales in Dublin is a job lot of 15 cranes, including a pair towering over Anglo Irish Bank's half-built headquarters in the city's docklands. "Tower cranes were among the most sought-after heavy plant and machinery 10 years ago," Ricky Wilson of Wilsons Auctions says. "You couldn't buy them quick enough. Now they are left idle for two or three years on sites." He has 15 cranes worth €500,000 going on sale on 26 March, with German, Dutch and Polish buyers expressing interest. But it is the auction ...

Property Ireland - Irish Land Values Go Up Like A Rocket & Fall Like A Stone...

Land values go up like a rocket and fall like a stone... SITE EVALUATION: Why would a developer bid €225,000 an acre in 1999 and €2.8m an acre in 2007? Bill Nowlan explains WHY HAS THE value of development land fallen so precipitously, by over 50 per cent in the past 12 months, when residential and other property values have only fallen by 25 per cent or 30 per cent? There is an old property cliché which says that "land values go up like a rocket and fall like a stone" and this seems to have been bourne out in Ireland over recent years. Why does this happen? To answer this question requires an insight into the way developers prepare their bids for development land and I set out below a glimpse into that process. Let me start by looking at how a developer in normal times estimates his bid for a plot of land with planning permission, which in estate agents' parlance is ready-to-go. The key starting point in a developers equations is the expected sale price of the finished b...