The economy might be on the rise at present and pay increases being discussed but for many people the effects of the crash live on.
Many people remain in negative equity and are therefore stuck with a property that may no longer suit their needs.
Time can be a great healer though and earlier this week the Economic and Social Research Institute reported that the number of houses in negative equity could fall to zero as early as late 2017.
The think tank said the numbers in negative equity were falling rapidly such is the unexpected pace in house price rises.
The ESRI says the number of households in negative equity at the end of last year stood at 160,000.
That number will likely fall to 100,000 by the end of this year, and fall rapidly again, if home prices continue to rise at their annual rate of 9%, David Duffy, the senior housing expert at the ESRI said.
This would lift all houses out of negative equity by the end of 2017 if the current growth rate continued.
“There is talk of a slowdown in house prices, but if the annual rate were to continue there would be no household in negative equity by the end of 2017,” he told The Irish Examiner.
Mr Duffy said the number of households in negative equity peaked at over 300,000 three years ago, and by value the gap between market prices and the prices paid for homes across the country totalled €16bn at that time.
In 2010, there was around €8bn worth of household negative equity, which had increased to around €16bn in 2012, but assuming house prices increase by up to 10% this year, those 100,000 households in negative equity at the end of this year would amount to €2.5bn, Mr Duffy said.
“No one would have predicted the rapid rise in house prices since 2012. We had expected it would take to 2020 for price increases to lift all those affected out of negative equity,” he said.
The ESRI says falling numbers of households in negative equity could have a significant effect in boosting consumer spending and increasing economic growth.
Research last year by Kieran McQuinn of the ESRI and Yvonne McCarthy of the Central Bank of Ireland showed a strong link between house prices and the amount consumers spend.
- Are you stuck in negative equity?
- What effect has this had on you?
- Would you sell your home if you were no longer in negative equity?
- Do you believe the ESRI when they say everyone could be out of negative equity by the end of 2017?
Have your say below…
