In 2013, Ireland was bracing itself for a tsunami of house repossessions. The number of homeowners in mortgage arrears of 90 days or more had spiked by nearly 300 per cent to 129,000 in less than four years.
The possibility of thousands of families being kicked out of their homes, swelling the ranks of already overcrowded social housing waiting lists, loomed large.
The arrears issue was highlighted by the troika, the OECD and the IMF as the greatest single threat to recovery. Four years on and it all seems to have gone away. The number of mortgage accounts in long-time arrears is down by 44 per cent to 72,000 while repossessions have remained low by international standards; lower even than in countries that never experienced a property crash.
With house prices surging again, banks are likely to want to seize the opportunity to cleanse their books of these bad loans once and for all
A Government policy of kicking the can down the road and a courts service that potects debt-laden homeowners is perhaps the best explanation for why the predicted tidal wave of foreclosures never arrived.
That said the issue of arrears still presents a serious threat, albeit in a different way than before. With house prices surging again, banks are likely to want to seize the opportunity to cleanse their books of these bad loans once and for all.
This means getting indebted homeowners to sell up - a move that will convert thousands of owner occupiers into new renters, who will then find themselves competing with existing tenants and new people coming into the country for housing.
Dublin housing expert Mel Reynolds reckons that up to 29,000 former owner occupiers in arrears - half the current crop - could find their way into the rental market over the next four years, equating to 7,250 a year. This would overwhelm the current rental market, which, according to property website Daft.ie, has only 3,100 available rentals. In his view, this is likely to prompt another spike in rents and homelessness, requiring another major increase in public expenditure on rent supports and social housing. One way of avoiding such a scenario, he believes, is through the establishment of a National Housing Co-Op, which would buy up distressed mortgages from banks and let the homes back to the occupiers. With the Government seeking ideas for ways to tackle the housing crisis, this is one worth considering.
