An anatomy of the Mortgage Crisis in Ireland

Research output: Contribution to conferencePaper

Abstract

Starting in the mid-1990s, for almost a decade Ireland had one of the one of the most pronounced residential property booms in Europe. House prices rose by over 400% over the decade and by 2006 housing supply was the highest per capita in the European Union. Based in large part on an avalanche of credit which filtered from the international markets, to Irish banks and then to residential developers and home purchasers, the market overheated to a tremendous extent. Consequently, Ireland has suffered a calamitous decline in the housing market since 2007. Prices have fallen by an average of 50%, with sectors such as the apartment market declining by over 60%. The property market collapse has been the proximate cause of the more general economic disaster. Massive over lending by the Irish banks to the property sector led to a banking crisis and in late 2008 the Irish government guaranteed all bank deposits to prevent a collapse in the banking system. By effectively moving the debts of the private banks to the government balance sheet, Ireland then faced a crisis of its public finances and in late 2010 needed a ‘bailout’ from the troika of the IMF, ECB and European Union.
While Ireland has been subject to what could be termed a combined economic, political and social crisis, this paper examines in detail one of the most pronounced social consequences of the crash, namely the mortgage crisis. Unemployment has increased from 3% to 14%, incomes have fallen by a fifth on average and mortgage arrears have increased dramatically as a consequence. Using national data as well as a new large scale survey of owner occupiers in suburban Dublin, the paper assesses the extent of mortgage stress, its impacts on households and the likely effects of future government policy with respect to mortgage arrears. National data shows that up to a fifth of all mortgages are in arrears, representing 22% of mortgages by value, while the new survey data shows the profound impact that mortgages stress has on struggling households. The paper concludes by questioning the likely impact of higher repossession rates, which is forecast over the next three years.
Original languageEnglish
Publication statusPublished - 2013
EventEuropean Network of Housing Researchers (ENHR): Overcoming the Crisis: integrating the urban environment - Tarragona, Spain
Duration: 19 Jun 2013 → …

Conference

ConferenceEuropean Network of Housing Researchers (ENHR)
CountrySpain
CityTarragona
Period19/06/2013 → …

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