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Archive for May 7th, 2012

Fact: NAMA claims that it controls loans underpinning 10,000 houses and apartments in the Republic of Ireland. It told an Oireachtas hearing in September 2011 “We believe that we have 10,000 residential units in our portfolio. Fewer than 2,000 of these would be regarded as houses, whether detached or semi-detached. We have approximately 8,000 apartments.”

Fact: NAMA says that the value it placed on Irish residential related loans was a total of €3.69bn, comprising €2.31bn worth of housing inDublin and €1.38bn for outside Dublin. The NAMA valuation includes an average of 10% Long Term Economic Value premium.

Fact: NAMA says that residential prices had dropped 50% from peak to 30th November, 2009, the NAMA valuation date – you’ll need take my word for this claim as NAMA has now removed from its website the transcript of its chairman, Frank Daly’s speech to the Licensed Vintners Association in March 2011.

So, taking account of the above three facts, this means that the average value of a home in the Republic of Ireland acquired by NAMA was €332,100 in November 2009 – €3,690,000 less 10% Long Term Economic Value divided by 10,000 – and that represented 50% of a peak value of €664,200.

This doesn’t look realistic, particularly when you consider that NAMA says that 8,000 of the 10,000 “residential units” under its control are apartments. NAMA was asked for a comment on its claims but there has not yet been a response.

For quite some time, the position on here has been that NAMA does not have the dominant position in Ireland’s residential market widely accorded to it. There are 2m homes in Ireland, of which 290,000 are vacant, of which 60,000 are holiday homes leaving 230,000 non-holiday home vacancies. The National Institute for Regional and Spatial Analysis believes that the overhang of vacant homes in Ireland is 80-100,000. “Overhang” means an excess over the long term average vacancy. The Republic of Ireland’s vacant housing rate is 14.5%, which is twice that of Northern Ireland.

So 10,000 homes subject to NAMA’s loans is significant but out of an overhang of 80-100,000 it doesn’t give NAMA a dominant position, unlike the Irish commercial property market where NAMA control 15 times the size of the total market in 2011. However the figures above indicate NAMA has either control over relatively expensive housing or it controls more than it is letting on.

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