Table of Contents

Housing Markets and the Global Financial Crisis

Housing Markets and the Global Financial Crisis

The Uneven Impact on Households

Edited by Ray Forrest and Ngai-Ming Yip

Housing markets are at the centre of the recent global financial turmoil. In this well-researched study, a multidisciplinary group of leading analysts explores the impact of the crisis within, and between, countries.

Chapter 5: Housing Wealth, Debt and Stress Before, During and After the Celtic Tiger

Michelle Norris and Nessa Winston

Subjects: economics and finance, financial economics and regulation, geography, human geography, politics and public policy, public policy, social policy and sociology, comparative social policy, economics of social policy, sociology and sociological theory, urban and regional studies, urban studies

Extract

Michelle Norris and Nessa Winston INTRODUCTION Compared to many other Western European countries, the Republic of Ireland is distinguished by historically high rates of homeownership. In 1971, 60.7 per cent of Irish households were homeowners compared to 50 and 35 per cent of their counterparts in Britain and Sweden respectively (Kemeny, 1981). In addition to socio-economic factors such as the predominately rural and dispersed population distribution, these levels of homeownership rates were driven by extensive government support. Direct government supports for first-time homebuyers covered approximately 15 per cent of the costs of an average suburban home in the late 1970s and, during this decade, government provided half of all mortgage loans, as the commercial mortgage market was underdeveloped (O’Connell, 2005; Fahey et al., 2004). Furthermore, since the 1930s social housing tenants have enjoyed the ‘right to buy’ their dwellings, at a substantial discount from the market value and, uniquely in Western Europe, no ongoing taxes are levied on owner-occupied homes (O’Connell and Fahey, 1999). These supports appear particularly generous in view of the underperformance of the Irish economy, which, apart from a brief period in the 1960s/early 1970s, declined or stagnated for much of the twentieth century. As a result, population growth followed a similar pattern, as, despite a high birth rate, emigration was also high, particularly in the 1950s and 1980s (Kennedy et al, 1998). From the mid-1990s, following the advent of the ‘Celtic Tiger’ economic boom, this situation changed radically (see Honohan and Walsh, 2002 for a fuller...

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