Taking a break from the flood of information issuing from NAMA yesterday (Business Plan, Quarterly Report, Annual Report, Codes of Practice – you’d almost forget the fact that the EU published their response to the Anglo restructuring plan and which concluded the Minister for Finance broke State-aid rules in December 2009!), today sees the launch of a new feature on the blog which aims to track the change in property prices for NAMA’s key markets from 30th November, 2009 , the date chosen by NAMA to value the Current Market Values of assets backing the loans it is taking over pursuant to section 73 of the NAMA Act.
Last week in the Oireachtas, Labour Deputy and Finance Spokesperson Joan Burton asked the MfF what effect changes in property values from the NAMA Valuation Date had on the finances of NAMA and the MfF stated that the effects had been “broadly neutral”, which might come as a surprise to many. However the MfF pointed out that a large portion (he said one third) of property backing NAMA loans is based in the UK which has seen a recovery in commercial prices since last November 2009. He went on to say that this recovery offset the decline in Irish commercial property. He didn’t mention residential at all.
So from today, we will show on here the latest price movements by reference to 30th November, 2009 for the Irish & UK commercial and residential markets. NAMA’s Business Plan yesterday didn’t show a split between markets but last October the draft Business Plan said it was 66.8% Ireland, 26.9% UK and 6.3% Rest of World. With changes to the loan mix and currency movements that may change so you will need make your own assumptions about the split of the NAMA portfolio to judge (broadly) how NAMA’s assets are doing.
The four sources for the statistics are Ireland Commercial (Society of Chartered Surveyors/Investment Property Databank), Ireland Residential (Permanent TSB/ESRI House Price Index), UK Commercial (Investment Property Databank), UK Residential (Nationwide Building Society) – take a look at the entry last week to see the background to these indices. The UK indices are produced monthly. The Irish Indices are produced quarterly (next sets due in the next three weeks). I have divided the quarterly decline in commercial in Q4, 2009 by 3 to approximate a monthly decline in December 2009.
There is no split of the property backing NAMA loans between residential and commercial nor any formal uptodate split between Ireland/UK/RoW. If such splits are produced then we could incorporate the four indices into an approximation of one index (RoW is complicated but it apparently accounts for less than 10% of the assets).