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
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