Friday, August 01 10:13:04
New research today shows that the number of Irish households in negative equity has fallen by around 15pc, which equates to roughly 45,000 homes.
Independent economic think-tank, the ESRI, said that recent increases in house prices have reduced the number of homes in negative equity, with the greatest drop in Dublin.
Latest official figures reveal the cost of buying a house in Dublin has surged almost 25pc over the past year.
At the end of 2012, there was a peak of 314,000 homes worth less than their outstanding mortgage.
Economist with the ESRI David Duffy said: "On the back of what we've seen happen to prices throughout the second half of 2013 and people continuing to repay their mortgages, the number of mortgage-alone homes in negative equity has fallen by about 15pc, or by about 45,000 mortgages."
The study found that the number of households in negative equity will have fallen by 43pc by the end of the year from its peak in 2012.
The study found Dublin accounted for more than 40pc of mortgages in negative equity at the height of the financial crisis, equating to 125,000 loans.
However, the number of negative equity households in the capital has fallen more steeply than in the rest of the country over the past two years.
According to the ESRI, the number of negative equity mortgages in Dublin fell by 35,000 last year, which equated to three-quarters of the improvement experienced nationally, reflecting the stronger house price growth in Dublin.
Nonetheless, the study indicated there were still a large numbers of borrowers in negative equity greater than 20pc of the house value at the end of last year, the majority of which were first-time buyers. "Negative equity can have harmful effects on an economy through its impact on a household's consumption, savings and labour market mobility,” the report's author, David Duffy, said. "The combination of property price increases and mortgage repayment has reduced the extent of negative equity in Ireland in recent times which is positive for the economy overall. The expectation is that, with house prices continuing to increase in 2014, we should see a further decline in negative equity numbers."
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