Following a fairly upbeat end to June, I am afraid to say that the momentum has not been maintained.
Like the current weather, just as things look to be getting better, they take a turn for the worse.
Any notion that finance was becoming more available seems to have been a temporary blip.
It is now harder to get finance for a property purchase than to get water in the middle of the Sahara.
It is hard to see how anything is going to sort the current situation.
NAMA will not work in my opinion.
Whatever “discount” the Govt. applies to the distressed loans will need to be made up in a cash injection in any event.
So we, the taxpayer, will end up paying full price for these “toxic assets”, which are really “toxic liabilities”!(See this article re same!)
That however, is a whole different blog-post.
This lack of finance has caused a number of Sale Agreed transactions to fall through.
It has also put a virtual halt to new viewers. Very few buyers are being approved for mortgage, so we are limited to the pool of potential buyers that have secured loan approval already.
This is a rapidly diminishing pool, as many approved 2 months ago are not being re-approved when reviewed and quite a few bought in June.
This is reflected in the figures. Both viewings and offers are down on those of June.
Year on year, viewings are near half of July 2008, although offers are slightly above 2008 figures, emphasising the focused approach taken by the current crop of value-seeking bidders.
July 2008: Viewings 94 Offers 24
July 2009: Viewings 50 Offers 26
Prices are way down on last year. At least 10% year on year and up to 20% since peak.
Plenty of people want to buy at these reduced prices. They see low interest rates. They are paying up to €10,000 a year in dead-money rent. Through no fault of their own, they are unable to get finance due to the current state of the banks.
Meanwhile, the Government is on holidays. The country is sinking further into the mire. The fundamental problems of the economy have not been addressed. We are being asked to pour up to €90 billion into the banks to support their errors over the past years. I have said before, let them fail! Set up a State bank and channel the money into that. The Civil Service cannot do a worse job than the current lot of bankers. Somehow, I don’t think a Cowen lead Fianna Fail have the stomach for that. Change is needed.
No light at the end of the tunnel yet!