Task force needed on property issue

The Central Statistics Office (CSO) has published its new residential property price index, which is a study covering house and apartment prices from 2005 to 2011. It shows that prices have fallen almost 40% lower than they were at the height of the property bubble in 2007.

The index grew by about 1% in every month from June 2005 until March 2007. There was little movement in the index during the next eight months, but since December 2007 the index has been in persistent decline. There was an accelerated rate of decline during 2009, peaking in July of that year. At 1.7%, the figure for the monthly decline in February of this year was the highest since July 2009.

House prices in Dublin are down by about 45%, while apartment prices are down by 52%. Prices fell by 1.8% in Dublin during March, which was 13% down on the same month last year. Apartment prices in the capital were down by 2.8% during March of this year, which amounted to a 13.3% drop since March of 2010.

Around the country residential property prices fell by 1.5%, compared to 0.7% in March of 2010, with the result that prices were down by 11% on the same month a year earlier. These figures seem to indicate that property prices are still falling, but they may not be an up-to-date reflection of prices, because there are too many variables built into the index.

The residential property price index is based on mortgages drawn down from eight leading lenders. There is inevitably a delay between the time that a sale is agreed and the drawing down of the mortgage. Moreover, the mortgage may not be the actually price of the property, and the index does not take into account property that is sold without a mortgage.

The Construction Industry Federation has therefore repeatedly called for the introduction of a National House Price Register that would provide information on the sale of every house within the State. The first step in solving any problem is to know the actual extent of the problem.

There is too much uncertainty, which only adds to the plight of the thousands of people in negative equity. Ed Honohan, the Master of the High Court, warned this week that the banks are “hounding borrowers to suicide”. He called for swift and radical changes to the way the courts have to handle mortgage arrears, but Tánaiste Eamon Gilmore has ruled out any significant legislation.

The property market is what got us into this mess, and enough is not being done to tackle the problem. If a factory closes a special task force is set up to try to do something for the workers. We need a task force on the property issue, with the best brains, to recommend the policies necessary both to assess and address the current difficulties.