Lack of hard data is bad for buyers and sellers alike

THE fact that Ireland suffers from a lack of rapid-reporting structures when it comes to the property market is a detriment to us all.

Information such as list prices and sales prices reported within a week or two after each month-end would be of enormous benefit. This is especially the case for many prospective first-time-buyers (FTBs) who continue to be cautious about committing to a property purchase when there is so much concern about price stability. Currently, the only index that offers a reference on property prices is the Permanent TSB/ESRI one, but its base source of information is limited to just one lender (Permanent TSB), which is too limiting.

Over the last few weeks, there have been some positive developments. For example, ICS, part of Bank of Ireland, announced it would lend higher amounts on properties in excess of €550,000. The announcement is key because the lender is saying it is confident prices at the top end of the market are now at or near the bottom. It is this end of the market that suffered falls when the property market bubble began to burst in 2006.

Separately, KBC Bank recently said it was reducing its deposit requirement for FTBs from 20% down to just 10%. This is a major boost for would-be FTBs who are now required by all lenders to prove that they actually saved for their property deposits on their own.

Finally, Bank of Ireland and AIB continue to lend up to 92% to FTBs. After a big push to tighten lending criteria at the end of 2008, both lenders have kept their qualifying criteria without adding any further restrictions.

Mortgage qualification criteria among lenders follow a fairly similar pattern, which have three main components:

* Employment security.

* Credit quality.

* Deposit Verification.

Employment: Permanency in employment is key. This has prevented many would-be FTBs who may have suffered redundancy from getting a mortgage. However, for those who have been unaffected by redundancy, mortgage qualification is still very much possible.

Credit records are also critical. Lenders are now required by the Central Bank of Ireland to minimise risk. However, applicants with excellent credit records are being approved for a mortgage.

Deposit verification — on this issue, it is important that mortgage applicants, especially FTBs, can prove that any deposit they have was saved by them. Depending on the lender, some will require greater amounts of deposit to be verified through bank accounts. However, if one pays a rent, banks will accept this as support for ability to save and mange personal finances. On this point, it is important that any rents paid are evidenced via bank account details.

2011 will also see FTBs avail of the maximum mortgage interest relief on their mortgage costs. Currently, a qualified FTB couple can benefit from €416.65 relief per month.

Finally, changes to the stamp duty regime are a long-term positive. It means second-time buyers will no longer be burdened with unreasonable levels of cost for simply moving. However, in the short-term, the change has the potential to disrupt the buying plans of some FTBs.

While we are not yet out of the woods when it comes to buying a home, there are a few signs that the situation has stopped deteriorating.

Ireland needs the labour market to stabilise to give a confidence boost to prospective FTBs. We also need stability in the banking sector. Finally, we need more hard evidence that property prices have stabilised. If 2011 bring a degree of each, it will be a positive year for the market.

* Frank Conway is a director with Irish Mortgage Corporation.