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Almost 100,000 Irish homes are still in negative equity...

But at the rate property prices are increasing that won’t be the case for long says the ESRI…
Mar 16th 2016, 8:34 AM 14,334 29

7/5/2011. DNG Property Sale Signs Source: Rollingnews.ie

JUST UNDER 100,000 IRISH homes remain in negative equity according to the latest economic commentary by the Economic and Social Research Institute (ESRI).

Negative equity denotes the state in which a property is worth less than the initial mortgage placed on it.

It became a massive problem in Ireland following the economic crash at the end of the last decade. While the figure quoted in today’s commentary is sizeable at 99,950, it represents the lowest such levels seen since before the recession hit.

negneg Source: ESRI/Central Bank of Ireland

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Three years of rapidly recovering property values has seen the number of mortgages in negative equity drastically reduced.

If those property prices continue to rise at their current levels (about 6% year on year), all Irish homes should be free of negative equity by 2019 the ESRI says.

The ESRI has also called today for a modification of the Central Bank’s rules, introduced in January 2015, for mortgage-buyers.

Under those rules those hoping to buy can only do so at up to three and a half times their salary, or combined salaries, while banks are restricted as to what percentage of a mortgage they are allowed to lend depending upon the value of the property.

Growth

Other figures in the institute’s commentary remain broadly positive in outlook.

The ESRI says that Ireland’s Gross Domestic Product (GDP) is expected to grow at approximately 4.8% in 2016, and 4.1% in 2017.

Unemployment meanwhile is expected to continue falling at a significant rate, to below 8.7% by the end of 2016 and below 7.5% by the end of 2017.

“Despite a growing level of uncertainty in global economic conditions, growth in productivity and employment in Ireland suggests robust economic growth,” David Duffy of the ESRI said.

The last two years have seen domestic sources of growth increase in relevance, a trend that seems likely to continue throughout 2016 and 2017.

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Cianan Brennan

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