Around 170,000 Irish homeowners could fall into negative equity by the end of 2009 if the downturn in house prices continues, according to a new report.

A study by leading stockbroker Goodbody has suggested house prices will have dropped by 30% by the end of next year, compared to their peak value in 2007.

Factoring in that one in three homebuyers took out 100% mortgages during the housing boom, the research indicated thousands would face negative equity on their property.

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According to Goodbody, around 50% of those who purchased their home between 2005 and 2007 would eventually owe more than the investment is now worth on the open market.

Those who maintain employment and can afford mortgage repayments will be safe.

However, according to figures unemployment levels in Ireland are set to rise by around 2% in the next 18 months.

This would result in many losing the cash flow usually reserved for mortgage repayments.

However, evidence has suggested that even in severe housing busts, most owners are able to keep up payments on their mortgages.

(PR)