Updated 12.15

The number of mortgages in negative equity has dropped by around 15%.

A report by the ESRI says recent increases in house prices have reduced the number of homes in negative equity, with the greatest drop in Dublin.

At the end of 2012, there was a peak of 314,000 homes worth less than their outstanding mortgage. The recovery in house prices by the end of 2013 reduced that number by approximately 45,000 – a fall of 15%.

David Duffy, Economist with the ESRI explains:

The Dublin market has experienced the greatest reduction.

In 2011, Dublin accounted for 40% of mortgages in negative equity. By the end of 2013, the number of mortgages in negative equity in Dublin had fallen by over 35,000, from a peak of close to 125,000. Hence over three-quarters of the improvement experienced nationally is due to the stronger increase in prices experienced in Dublin.

David Duffy says, "Negative equity can have harmful effects on an economy through its impact on a household’s consumption, savings and labour market mobility."

"The expectation is that, with house prices continuing to increase in 2014, we should see a further decline in negative equity numbers."

Karl Deeter of Irish Mortgage Brokers told Newstalk's Pat Kenny show it's not necessarily good news: 

He is advocating the levying of Capital Gains Tax, saying Irish people should be made to pay the economic cost of the mistakes they make.