NAMA controls one in five of the new builds in a difficult market
Published 29/09/2011 | 05:00
ONE in five of all newly built unsold properties are now controlled by NAMA and most are apartments. the agency said yesterday.
Chief executive Brendan McDonagh defended the agency's controversial proposal to help people who want to buy homes avoid getting trapped in negative equity.
THE National Asset Management Agency (NAMA) believes Irish property prices could fall even further and says the prospects for house prices to stabilise are firmly linked to a better outlook for employment, after-tax pay rates and interest rates.
Addressing the Irish Council for Social Housing conference in Galway, Mr McDonagh said the outlook for residential property was "cloudier" than that for commercial properties like offices and retail units because it is so dependent on a marked improvement in economic conditions.
In an attempt to offload some of its property portfolio and to attract buyers who are fearful that houses and apartments will fall further in value if they buy them, NAMA wants to try a deferred payment scheme.
This will first be rolled out on a phased basis later this year, when the agency puts 750 properties on the market. Mr McDonagh described the scheme as a "short-term measure" that would only continue to be used as long as it was necessary.
It would essentially allow a house buyer to delay paying say 20pc of the property's current value for a number of years. If, for example, the house was still worth the purchase price or even more in five years' time, then the owners would pay.
The proposal, which is an attempt to kick-start the property market, has not been universally welcomed, with the Department of Environment raising serious concerns about giving people incentives to buy property again so soon after the bubble. There are fears it could further distort the market.
But the Construction Industry Federation (CIF) rejected suggestions the plan could artificially inflate the property market, saying house prices were already artificially deflated because of the lack of bank finance. The CIF said NAMA's proposals could provide a template for other initiatives that could help to restore a "degree of normality" to property transactions in Ireland.
Mr McDonagh said the bulk of newly built apartments and duplexes that had not been sold were controlled by foreign banks.
It has been looking at ways to divert some of the properties now on its books into social housing, but the NAMA boss said much of it may not be suitable.
This was due to the "type of property, its location, actual demand in the particular geographical area or policy concerns of any over-concentration of social and affordable housing in the particular location'', he said.
But it was continuing to work with the social housing agencies to identify units that might be suitable for their clients.
Meanwhile, it has emerged that NAMA is using secondees from two professional services firms that have been awarded work on the agency's UK loan book.
But Finance Minister Michael Noonan has insisted the arrangements did not disadvantage firms that weren't providing staff to Nama "given the small number" of seconded staff now in place.