Monday, January 31, 2011

IAVI warns over lack of mortgage lending - The Irish Times

CONOR POPE, Consumer Affairs Correspondent

A BROKEN banking system is having a “crippling” effect on the property market and house prices are continuing their downward spiral, although the pace of decline has eased slightly, according to a survey published yesterday.

The report, by the Irish Auctioneers and Valuers Institute (IAVI) and the Society of Chartered Surveyors (SCS), said a lack of availability of mortgage finance for qualified buyers was hampering recovery except in “micro-property markets” where the effects of the bursting bubble were starting to ease.

“We can no longer rely on average national house price figures, as property values are largely dependent on property type and location,” said IAVI acting chief executive Edward Carey.

The institute received about 1,400 responses from its members to the survey and said signs of “micro-property markets” had started to emerge.

Mr Carey said where the basic fundamentals of location, quality stock, schools, job opportunities and transport were good, activity was “relatively strong” last year. As a result, the pace of decline “has moderated significantly”.

Areas which are lacking these fundamentals are suffering even more.

In Dublin, the average price of a second-hand three bedroom house fell by 14.3 per cent last year, compared to a drop of 18.8 per cent in 2009.

In Leinster, house values fell 17.1 per cent in 2010 compared with a decline of 19.8 per cent the previous year. In Munster, the drop was 15.2 per cent, a decline of 2.7 per cent less than 2009. In Connacht and Donegal, values were down about 15.7 compared with 16.3 per cent in 2009.

Mr Carey said the absence of a “fully functioning banking system” was hampering growth in the sector. “Despite Nama having acquired several tranches of loans from financial institutions,” Mr Carey added, “the survey results suggest that the availability of mortgage finance to qualified buyers has not improved in 2010 and this is having a crippling effect on the property market.”

Yesterday’s survey paints an even bleaker picture of the housing market than the house price index from Permanent TSB and the Economic and Social Research Institute (ESRI), which was published earlier this month. That reported that house prices fell by 10.8 per cent in 2010 compared to a drop of 18.5 per cent in 2009.

The Permanent TSB/ESRI index showed prices in Dublin fell by 15.1 per cent for the year as a whole, while prices outside Dublin were down by 8.1 per cent for the year as a whole.

The average price for a house outside the capital was €174,570 in the final quarter of the year, as against €179,721 three months earlier.

Mr Carey also called for greater regulation of the property sector “to provide consumers with a level of confidence and redress”.

He claimed that a national property price register was “crucial to provide transparency and openness through the publication of actual sales prices for residential and commercial properties, which is readily available in the UK and internationally”.

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