The state-operated bank NAMA is to provide mortgages for home-buyers in the 26 Counties -- despite acknowledging that house prices are likely to fall further.
The so-called ‘bad bank’, set up to absorb the loss-making loans of the state’s main lenders, has declared it wants to get the housing market moving again.
Hundreds of thousands of properties around Ireland remain vacant, and many of these have fallen into the hands of NAMA as the ‘distressed assets’ of insolvent developers.
The Central Bank has already warned that house prices would come down by about 60% from the peak, including a fall of about 14% this year alone.
NAMA chairman Frank Daly said this week that the agency saw it as part of its “brief” to generate transactions in the market.
The only way the property market collapse could be reversed is if buyers are found, he said, announcing the mortgage plan.
“The only way that the market can be lifted out of its four-year hiatus is by generating transactions at whatever prices buyers are currently willing to pay.”
The new Dublin government has said it will continue the Fianna Fail policy of protecting the banks and developers from their losses, through the nationalisation of their bad debts under NAMA.
Without a new wave of house buying, the state is facing even greater losses than previously calculated. The problem is exacerbated by its inability to borrow on international markets, other than through a further increase in the already imposing IMF/EU bailout deal.
Officials from the EU, the IMF and the ECB are in Dublin this week to check on the state’s fiscal and banking situation underpinning the bailout and to direct the new government’s budgetary plans.
The EU/IMF/ECB ‘troika’ are said to be putting pressure on the government to offload its property portfolio as quickly as possible, as well as extract further savings from the public sector and welfare recipients.
The IMF this week again cut its prediction for the 26-County economy, predicting growth of just 0.5% for this year. It also forced the government to announce a new spending review across all government departments.
Sinn Fein’s Pearse Doherty said that the cut in the growth rate prediction shows that the debt burden is unsustainable and has left the government and the EU Commission’s debt sustainability analysis in tatters.
“During a recent exchange with myself in the Dail Minister Noonan conceded that the upcoming budget would include revenue raising measures to counter act the funds spent in their so called ‘jobs budget’.
“This sparked fears that what we were actually facing was an austerity budget.
“Today’s announcement of a spending review across all departments confirms for me that what we are in fact facing in a harsh austerity budget and that the so called ‘jobs budget’ was really just a cover for this.”