Friday 23 August 2019

Nice try, Nama, but you won't fix things this way

IT WAS like a return to those good old Tigerish days at the Nama fire sale of 'distressed' properties in Dublin last week at which a queue of eager buyers lined the street, the light of bargain hunters in their eyes and their pockets bulging. One can only wonder at the thoughts that must have gone through the heads of IMF deputy European director Ajai Chopra and his team, who were photographed walking past the scene outside the Shelbourne Hotel on Friday. They may have thought there's life in the auld Tiger yet, and then again they may have wondered why they're bailing out a country that apparently has €126bn stashed away in deposits.

We'll probably never know what Chopra & co were thinking, but it appears that the whole affair was something of an inspiration for the people in Nama, who announced on Saturday that they have €1bn at their disposal to ' build market confidence' and 'use Nama's financial muscle to kickstart the property market'.

It's good to see a State agency taking a proactive approach, but let's not get carried away with ourselves here. The Nama auction in Dublin on Friday was a fire sale of 82 properties that were built or bought at too high a price by people who couldn't really afford them. Most were sold off for less than half their boom time value and, like any bargain basement, the sale attracted bargain hunters. There's nothing more to it than that.

It is difficult to see how the success of this once off sale could justify the enthusiasm that underlies Nama's plans to somehow reawaken the moribund property market.

The property market in Ireland is dead on its feet for good reason. Firstly, tens of thousands of people were ripped off when they paid astronomical prices for vastly over-valued houses. One in 10 of these unfortunate people are now in danger of losing their homes because they can't afford their crippling, and ever rising, mortgage repayments. The shockwaves emanating from this disaster zone will ensure that prospective buyers will approach the property market with a lot of caution for some time to come.

Aside from that, Nama's plans for kickstarting the property market face the not inconsiderable obstacle of the banks' unwillingness to give mortgages to people who want to buy homes, irrespective of any incentives the State agency might offer.

Then there's the widespread perception that homes are still overvalued and that prices still have a long way to fall before they bottom out, which, in anybody's thinking, is a good reason to sit tight.

Indeed Nama's auction on Friday – and more will surely follow – can only have the effect of further depressing property prices by flooding an already over-supplied market.

But perhaps what is most disconcerting about Nama's plan is the use of the word ' kickstart'. It suggests that the property market could somehow spring to life once again with a little proper coaxing. Surely it's obvious that the problem here isn't a flat battery – the engine is seized; it needs to be rebuilt, not kickstarted.

That rebuilding – and it will be a long and intricate process – needs to set aside any notions of making a fast buck from fire sales and instead look at working sustainability, product quality and value for money into the property market. It needs to look at providing well built homes that people can afford and at re-establishing a building industry that can provide sustainable jobs for some of the thousands of young people who are leaving the Ireland of the fast buck.

It will take more than a kickstart to achieve for this involves building something real to replace the fly-by-night property market that was central to our economic collapse. This will involve a change of mindset. That's something the people on the street know and it's something the people need to learn.

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