The latest edition of the Economic and Social Review has been published. The edition contains two policy papers by staff from the ESRI, one by Tim Callan, Claire Keane and John Walsh on property taxes and the other by David Duffy on negative equity. The Irish Independent have “seen Duffy’s report” presumably because they have access to the Internet. Now you can read it too.
Brian Lucey writes an op-ed on this topic in today’s Irish Times: you can read it here.
An important contribution to the economic debate by David Duffy of the ESRI. The paper estimates approximately 196,000 households in negative equity consequent on anticipated house price declines next year. Its main policy conclusion is the advocacy of policies that allow delaying of mortgage payments rather than write-downs.
Ronan Lyons reports some striking calculations on the potential extent of negative equity in Ireland. He estimates that as many as 340,000 homes may be in negative equity, which corresponds to about one home in five. These calculations raise a number of other important questions. What fraction of these loans may end up being defaulted on? And what are the likely losses for the banks? These losses have not been incorporated into any of the calculations relating to the loans going into NAMA, so these losses will be over and above any losses associated with NAMA transfers.