Cautious welcome for NAMA house sale scheme

Fine Gael TD for Dublin South, Olivia Mitchell, has today (Tuesday) extended a cautious welcome to the announcement of NAMA’s pilot scheme for house sales.

“This scheme is good news for the residents of unfinished housing estates who may finally see their estates fully occupied and also for their surrounding communities. However, any form of manipulation of the housing market should be treated with extreme caution, given our experience of the housing bubble.

“The sale of these houses should not be the indicator of the scheme’s success; its wider effects on the residential property market is the real issue at stake and the obvious benefits must be weighed against the cost to the taxpayer and the impact on the overall market.

“The scheme seeks to protect buyers from a further possible fall in prices. But the downside risk of any house purchase is already factored into the market price. By definition, the market price is the price at which any house can be sold. Reducing or postponing the payment of 20% of the market price is in effect a 20% subsidy. The taxpayer has already taken a hit on the purchase of these loans from banks and building societies. They’re now being asked to take this further hit.

“Although 150 housing units is a relatively small scheme, it is a big percentage of today’s total market and has the potential to benchmark the entire residential property market. NAMA should also be conscious of the impact on the market for private house sales. A couple trying to sell their house at, say, €200,000, could now see an identical NAMA-scheme house next door being sold for €160,000. The unintended effect could be to further depress the entire market. This pilot scheme is intended to be rolled out to 750 houses but at one stage a figure of 5,000 units was mentioned.

“It is imperative that the impact of this initial pilot scheme is thoroughly assessed and analysed before proceeding to a more comprehensive, nationwide scheme.”