Wednesday, 14 January 2009
Ireland Housing: The First Time Buyer In The Front Line
"At least 140,000 homeowners have fallen into negative equity, with this figure expected to rise to 200,000 by the end of next year, it was warned last night.
Jim Power, chief economist with Friends First, said: "I reckon the majority of first-time buyers who bought into the market over the last three years are in negative equity."
Analysing the gains made up to the peak of the housing boom, and the losses since, Mr Power said negative equity was affecting "at least 140,000 people and that's rising by the day".
He warned that, in terms of the recession, "we haven't seen anything yet" and predicted the numbers in negative equity could reach 200,000 by the end of 2009.
Latest Census figures show there were 570,000 residential mortgage holders in 2006, with tens of thousands of new mortgages taken out since.
So the continuing decline in house prices means that one in three mortgage holders are likely find themselves trapped in a home worth less than the loan they took out to pay for it."
while there was a catchup phenomenon at the beginning -joining the EU, end of the conflict with IRA, and enjoying a booming economie-, that would have explained some part of the explosive growth in the housing market up to a point.
As in all boom, euphoria tend to take over and people extrapolate the future (would average citizen has other than a "line" as a model of prediction?, how about "-(x+2007)^2" model?).
Of course, the Irish first time buyer didn't use common sense from the 2005-2007 period in Ireland and will pay a heavy price, most probably a decision that will follow them all their adult life.