Dublin Opinion

The average house price in Ireland at the end of March 2010 was €226,245.

This is about €23,000 lower than the average house price in 2004, and over €96,000 lower than the highest average yearly price, which was €322,634 in 2007.

We know that from 2005 to 2009 there were around 138,042 mortgages sold to first-time buyers (see here, new mortgage lending), totalling €42.22 billion when adjusted for inflation.

Based on the latest average house price, those homes have a value of €31.23 billion.

Ireland’s negative equity home mortgage bill is somewhere around €10.9 billion.

In terms of buy-to-let home purchases, there were 91,102 such mortgages sold between 2005 and 2009, totalling €28.313 billion when adjusted for inflation/deflation.

Again, based on the latest average house price, those homes have a value €20.61 billion.

Ireland’s negative equity buy-to-let bill is somewhere around €7.7 billion.

There is an assumption that the property brought down the banks in 2008, when really the immediate cause was was the shutdown in the international equity markets. It exposed their so-called business plan of buying money cheap and selling it here slightly dearer.

The property crash was taking off during that time, but wasn’t the actual cause of the bank crash.

NAMA’s business plan, of course, is based on the property crash as essentially over. It is based on 2008 as the property crash.

The €17 billion negative equity black hole is based on March 2010 figures. When more money is sucked out of the economy after the December budget, that figure is just going to grow.

However, with regard to negative equity and mortgage default, by understanding what is actually going on, we can devise strategies to deal with it. And, in a capitalist economy, the way to deal with debt is to outgrow it.

In terms of a national economy and a national debt, the problem is not so much the size of the debt but rather the ability to make the repayments. And the expressed strategy of the three main political parties is to attack the ability of the Irish state to make the repayments, which is just crazy.

And there are ways out of this.

They are best expressed here, by TASC, and by Michael Taft.