Impacts of the Irish Property Crash and Post-Crisis Housing System

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Between 1997 and 2007 Ireland experienced an unparalleled residential property boom, with huge increases in housing supply, house prices, mortgage borrowing and leveraging. Banks recklessly expanded the mortgage market under an increasingly liberalised regulatory regime, and successive governments encouraged the expansion of home ownership at the expense of other tenure forms. Recently, Ireland has experienced a reversal in its economic fortunes, as the property bubble which drove the economy suddenly burst in 2007 (Kelly 2010). Since then, many of Ireland’s banks have been nationalised and recapitalised with taxpayer monies, which in combination with a collapse in the domestic economy, forced the country into an international bailout. Property prices have fallen by over 50%, while unemployment has risen dramatically and high incomes have declined significantly. This has produced a very serious situation regarding negative equity and mortgage arrears. Approximately 50% of total outstanding mortgages are in negative equity, while almost 18% of mortgages are in arrears (Moody's Investors Services 2012; Central Bank of Ireland various).
Despite the severity of the crash, little is known about the extent of the difficulties facing households, particularly at the micro-neighbourhood level. Publically available data is produced only at the aggregate banking sector level and information regarding the kinds of borrowers and mortgages in distress is virtually non-existent. Unlike in the United States, spatial datasets of mortgage defaults or foreclosures are unavailable (Wyly, Moos et al. 2009). This paper addresses this gap by utilising data from a recent large scale survey of households in north Dublin which dealt specifically with the issue of mortgage arrears. The paper begins with an overview of market trends over the bubble and the crash. It then discusses the extent of the mortgage crisis by analysing the social profile of borrowers in arrears and the characteristics of the neighbourhoods in which they are clustered. Finally, the paper considers how the crisis might influence the future housing system, particularly whether attitudes are changing in relation to home ownership and whether a more resilient housing system may emerge with a greater emphasis on tenure diversity.
Original languageEnglish
Publication statusPublished - 2013
EventJoint AESOP-ACSP Congress - Dublin, Ireland
Duration: 15 Jul 201319 Jul 2013


ConferenceJoint AESOP-ACSP Congress


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