Irish residential property – the key facts

It looks as if the stress test results this afternoon will focus on the mortgage loan books of the four institutions being examined. Here is a note setting out the facts and estimates of our residential property. You might also be interested in a comparison between two distressed property markets: Ireland and the US state of Nevada – apparently BlackRock has chosen Nevada as a key comparator when estimating mortgage losses.

(1) Number of dwellings: 1,980,000

(2) Number of households: 1,630,000

(3) Vacant property units (including holiday/second homes): 350,000

(4) Vacant property units on “ghost estates” : 33,000

(5) Number of “ghost estates” : 2,800

(6) Overhang of supply of property units : 120-170,000

(7) Property units constructed in 2010 : 7,500

(8) Average property price (peak Feb 2007) : €313,998

(9) Average property price (today): €191,776

(10) Official drop from peak: 38.9%

(11) Central Bank stress test baseline drop from peak: 55%

(12) Central Bank stress test adverse drop from peak: 59%

(13) Other notable forecast/projected drop from peak: 80%

(14) Number of mortgages:  786,164 (comprising approximately 407,000 trackers, 113,000 fixed and 266,000 standard variable rate)

(15) Amount outstanding on mortgages: €99.08bn in February 2011 (down from €109.98bn in February 2010)

(16) Mortgages advanced in 2010: 27,666 with a value of €5.7bn

(17) Mortgages advanced in 2006 (peak): 203,953 with a value of €67.6bn

(18) Number of mortgages 90 days or more in arrears: 44,508 (compared to 28,603 at end of 2009)

(19) Repossessions : 374 (in 2010)

(20) Negative equity affecting number of households: 416,000

(21) Unemployment rate : 14.7% (approximately 300,000 from a workforce of 2.1m – in addition, approximately 150,000 are in receipt of work related benefits which makes our Live Register approximately 450,000)

(22) Official GDP outlook in 2011 : + 1.75%

(23) Population: 4,470,200

(24) Mortgage arrears policy: There is a code agreed between the Central Bank of Ireland and mortgage lenders which can forestall repossessions for several years.

(25) Bankruptcy regime: One of the harshest in the world where bankruptcy can last 12 years plus. Is due to be reformed as part of the IMF/EU bailout. The UK bankruptcy rate is 350 times that of Ireland, the US bankruptcy rate is over 1,000 times that of Ireland.

Sources (1) (2) (3) (6) DKM, NIRSA and UCD studies 2009/2010, an “overhang” is said to be the amount of vacant property above the average long-term vacancy level (4) (5) Department of Environment Heritage and Local Government review of incomplete estates October 2010 (7) Estimate by DKM Consultants in June 2010, note that official figures show completions of 14,000 by reference to connection to utilities which may suffer from time delays, DKM estimated real construction (8) (9) (10) Permanent TSB/ESRI house price series national prices. NAMA recently said that prices had dropped by 50% from peak at November 2009 (11) (12) Central Bank of Ireland Stress Test macroeconomic assumptions (13) Professor Morgan Kelly January 2009 (15) Central Bank of Ireland Loans to Irish Household Purpose and Maturity February 2011 (16) (17) Irish Banking Federation publication for Q4, 2010 (14) (18) (19) Central Bank of Ireland arrears/repossession publication for period ending 31 December, 2010 and partially excludes restructured mortgages and mortgages in receipt of social assistance. (20) The Economic Social Research Institute April 2010 projected that 53% of mortgage holders would be in negative equity of prices dropped 50% from peak. The figure shown is 53% of outstanding mortgages and assumes that the present drop is 50% (21) CSO unemployment estimate for March 2011 will equate to about 300,000 people from a workforce of 2,122,000 (22) Department of Finance Information Note on the Economic and Budgetary Outlook in November 2010, the official outlook for 2010 was a 0.3% increase in GDP, figures released last week showed that it was -1.0% (23) CSO estimate at April 2010 (24) Financial Regulator code (25) Various shown here