Monday 19 March 2018

There's no housing bubble – Michael Noonan wants prices to rise

Thomas Molloy, Colm Kelpie and Donal O'Donovan

FINANCE Minister Michael Noonan wants house prices to rise further and claims fears of another property bubble in Dublin are exaggerated.

Speaking at the 'Sunday Independent Business Evening ' last night, Mr Noonan also said the Government will use the state property agency NAMA to tackle the housing shortage. "We need to get property prices up another bit," he told the Dublin event.

While dismissing talk of another boom, the minister conceded he was "worried" about Dublin's shortage of housing .

Mr Noonan revealed NAMA would join forces with developers to build more than 22,000 homes over the next five years.

"I'm worried about the lack of availability of family homes in the greater Dublin area in particular," Mr Noonan said.

"I'm going to use NAMA as a development agency to drive that." Despite rising house prices in Dublin, Mr Noonan said prices were still down 47pc from their peak.

Minister for Finance Michael Noonan pictured at the Sunday Independent Business evening in the Marker Hotel last evening. Picture: Frank McGrath
Minister for Finance Michael Noonan pictured at the Sunday Independent Business evening in the Marker Hotel last evening. Picture: Frank McGrath

"Claims that you've seen since Christmas that we're at the start of another boom, they're widely exaggerated," he said.

"Property in Dublin fell by over 50pc. They're still down 47pc from peak to trough. We can relax for a little while anyway," he said.

The minister was speaking in the wake of mounting concern about the shortage of family homes in the capital.

With huge demand for three and four-bedroom homes in established areas, major estate agents DNG have said Dublin house prices are rising by €5,000 a month.

However, at the same time, thousands are continuing to struggle to pay their mortgages.

In January, the six main banks put in place close to 14,500 permanent repayment plans for residential mortgage accounts that were in arrears.

Mortgage accounts at the six banks that are three months or more in arrears now stand at 79,427.

And in a further blow for those who are struggling with repayments, Ulster Bank yesterday admitted that as many as 1,500 of its customers face a realistic threat of losing their homes. The stark figures compare with fewer than 700 homes repossessed through the courts across all of the banks between 2010 and 2013.

Ulster Bank chief executive Jim Brown said his bank was exceeding its targets – aimed at bringing down the 14,231 of Ulster Bank home loans and 2,675 of buy-to-let mortgages that are 90 days or more overdue.

Ulster Bank said it had launched legal proceedings against more than 3,300 home loan customers in long-term arrears.

Another 2,000 actions could be on the way because those people had also not engaged with the bank, Mr Brown told an Oireachtas committee.

If 25pc to 30pc of those customers don't come to the table, even after the legal action, they will face repossession, bank bosses told the committee.

Ulster Bank's own estimates suggest that it could add up to between 1,000 and 1,500 home seizures, bank executive Stephen Bell said.

The numbers exclude so called 'buy-to-let' investment mortgages.

The figures emerged when executives from the bank appeared in front of the Oireachtas Finance Committee yesterday.

Fianna Fail finance spokes- man Michael McGrath said counting legal threats towards mortgage resolution targets was against the spirit of the initiative.

"It will send shivers down peoples' spines' that 30pc of Ulster Bank customers in arrears of 90 days or more are in the legal and repossession area," he said.

Labour Party TD Ciaran Lynch, the chairman of the committee, said the level of legal action was worrying.

He was also critical of the bank's refusal to engage in mortgage debt writedown, unless the house is sold first.

"They are very, very opposed to any debt removal that is based on people remaining in their home," he said.

Independent TD Stephen Donnelly said it was difficult to see how the bank's claims of such large numbers of mortgage-holders not engaging stacked up.

"They are certainly going for it. They are taking a no prisoner approach with the non-engagement," he said.

The number of Ulster Bank customers three months or more behind on their home-loan fell in each of the 12 months to the end of March, the best performance at any bank, Mr Brown said.

But the bank's bosses agreed with TDs that in some cases people were being hit with the threat of legal actions now because the pressure to meet Central Bank quotas for action.

The main intention of the bank's huge number of legal actions is to encourage customers who have not being paying towards their mortgage, and not been contactable, to come forward, he said.

He added: "Any customer can take themselves out of the legal process at any stage by meaningfully re-engaging."

The heads of all four main banks are due at the committee this week to update both TDs and senators on their progress meeting central bank targets aimed at forcing lenders to address the mortgage arrears crisis.

Irish Independent

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