Government needs to give Ireland's ailing property market a shot in the arm
Published 08/05/2011 | 05:00
THE Government should kick- start the property market with new initiatives, according to a Sunday Independent/Quantum Research poll.
More than 76 per cent of respondents believe the Fine Gael/Labour coalition should take decisive action to get movement back into the property market.
In the poll 53 per cent don't agree with Standard & Poor's (S&P) that Ireland's property market has reached the bottom; though 47 per cent do agree with the assessment by the international credit rating agency.
S&P said it believed property prices "have completed their correction". It added the caveat that this does not mean the market will pick up again soon. The agency said in the report that house prices in Ireland at the end of 2010 were down 33 per cent from their peak -- the largest price contraction in western Europe since the beginning of the crisis.
Ronan O'Driscoll, director of residential property at estate agency Savills, said that in broad terms he agrees with the S&P view that Ireland has pretty much corrected the excess of the housing bubble "depending on the location and type of property in question".
Savills says there is evidence that prices have "reached the floor" for three and four-bedroom houses in main cities. However, Mr O'Driscoll said it is likely there will be some further drop in prices for trophy homes, apartments and rural housing.
S&P said it will take a couple of years before there are any "tangible signs" of market activity resuming in Ireland.
"We anticipate the British and French housing markets will likely fall back in the coming quarters, while the Spanish and Irish markets confront continued sluggishness," said the agency.
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According to the Sunday Independent telephone poll conducted with a sample of 500 people drawn from all over the country, 76 per cent want the Government to come up with some initiatives that would get movement back into the property market.
"Yes. They should try something, especially for first-time buyers. There is no confidence out there," said one respondent.
Among the suggested measures put forward by respondents in favour of Government action were tax breaks and debt forgiveness for those who bought at the top of the boom.
Last November, 10 leading economists, including Constantin Gurdgiev, Brian Lucey and Stephen Kinsella, argued the time is now right for some form of debt forgiveness. They argued in an open letter to The Irish Times that the banks "must allow private home borrowers to revert to pre-crisis debt burdens".
Among the 24 per cent who disagreed, many thought the market will correct itself and that state interference was one of the main reasons we got into so much trouble in the first place.
Rachel Doyle, mortgage manager of the Professional Insurance Brokers Association, said last week the biggest impediment to the property market bottoming out or stabilising is the lack of a functioning banking system.
"Unless the issue is sorted out in the foreseeable future, the housing market and indeed the entire economy will be at further risk," she said.
Opinion is divided on whether the market has bottomed out. Among the 47 per cent who believe the market has reached the bottom many had the perception that there have been recent signs of stabilisation within the economy; for example no major announcements of job losses and figures which suggest modest growth.
Meanwhile, Royal Bank of Scotland, 83 per cent owned by British taxpayers, posted a pre-tax loss of £116m (€133m) for the first quarter of this year -- much of it caused by its Irish loan book.