THE spectacular fall in property prices is even worse than was stated by a government economic think tank last week -- up to 300,000 homeowners are now in negative equity.
Expected interest rate hikes will mean another 30,000 people -- roughly the population of Dundalk -- will struggle to meet their mortgage payments by the end of the year.
The recession, joblessness and rising interest rates already mean that 70,000 borrowers have missed payments or renegotiated their mortgages.
Now financial institutions are expected to increase their standard variable rates.
It is also widely expected that the European Central Bank will increase its interest rate before the end of the year. This would also hit those on tracker mortgages.
Michael Dowling, of the Independent Mortgage Advisors Federation (IMAF), said: "With rising unemployment, higher taxes and the threat of higher interest rates this year, at least 100,000 people could be under stress to meet their mortgage payments by the end of the year."
The Economic and Social Research Institute (ESRI), in conjunction with Permanent TSB (PTSB), said last week that prices were now back down to 2002 levels.
But leading auctioneers Savills Ireland told the Sunday Independent that the fall had been even higher. They said that in some sectors of the market, prices were now back to the levels of 11 years ago.
Joan Henry, head of research at Savills Ireland, said: "While the PTSB/ESRI index shows that prices in the market are back to 2002 levels, Savills data for particular areas shows that houses are transacting in some cases at 2000 price levels."
She suggested that given this level of price correction and the removal of stamp duty, there was "good value" for those seeking to buy but there was unlikely to be any large increase in property transactions in the first half of this year.
"Unfortunately, economic developments in the final two quarters of 2010 have had a negative impact on both activity and price levels in the property market. Entering into 2011, continued liquidity issues in the banks, coupled with reduced disposable incomes via tax increases, will impact on sentiment and the purchasing power for potential buyers," she said.
Ms Henry suggested that the effective removal of residential stamp duty may have a positive effect on the second-hand market.
"The fact that first-time buyers are in the stamp-duty net, albeit at very low levels, could result in further price reductions for that category of buyer," she said.
Frank Conway of the Irish Mortgage Corporation said those who bought at the height of the property boom would be in negative equity and trapped with their existing lenders for years to come.
"As many as 250,000 to 300,000 mortgage holders are thought to be in negative equity. In mid-2006, more than a third of all first-time buyers purchased their homes using 100pc financing.
"Today, all would be in negative equity as house prices have fallen by 40pc or more," he said.
According to the Permanent TSB/ESRI house-price index, the fall has been 38 per cent since mid-2006.
But the index shows that house prices fell by 3.5 per cent in the final quarter of last year -- a time when consumer confidence was low in advance of December's austerity Budget.
The rate of decline in average house prices in Ireland accelerated in the fourth quarter of 2010.
However, overall, the rate of decline for the year was significantly less than in 2009. House prices fell by 10.8 per cent, compared to a drop of 18.5 per cent in 2009.
But last week, tens of thousands of workers who received their monthly salaries discovered the true extent of the tax and levy increases introduced by Mr Lenihan.
Couples on average pay have had their net income cut by €140 a month.
Workers on the top tax rate are now burdened with paying 52 per cent of their gross pay in taxes and through the new universal social levy.
Official figures given to Labour finance spokeswoman Joan Burton show that 91,000 PAYE workers will move from the 20 per cent standard rate to the top 41 per cent rate.
It means that many of those thinking about buying property will have to re-evaluate their figures to take account of drastically reduced take-home pay.