The Irish Independent this morning reported that asking prices at the Devlin Bank development in Naul village, north county Dublin have just been reduced by around 30%. This is a development on which NAMA made available its deferred mortgage product in its pilot launch in May 2012. The deferred mortgage, or as NAMA calls it, the 80:20 Deferred Payment Initiative gives buyers protection against future price falls of up to 20% of the original purchase price after five years. Today we learn that after six months, the asking prices have dropped at Devlin Bank by between 27-31%. “Wawawiwa!” as Borat might say.
Luckily for buyers, no properties at the development have been sold in the past six months, this despite NAMA originally offering 29 of the units but the Property Price Register revealed in October 2012 that none had been sold.
So if you go along today, you will have a 30% reduction on the May 2012 asking prices and be able to benefit from NAMA’s 80:20 product. Whew! But if you had bought in May, you might already be nursing a 30% loss on your purchase and given the properties had asking prices of €175-390,000 and the reductions now offered range from €50-105,000, that would have been a pretty hefty loss in just six months. And it might call into question whether NAMA is building a premium into the prices of property subject to its deferred mortgage scheme which was last month expanded from the original 115 properties to a further 180 properties.
Maybe time for NAMA to offer a 60:40 deferred payment scheme!
On a more general note, the feeling on here is that the Property Price Register will have a major short-term negative impact on property prices as buyers and sellers can see actual transaction prices and in a buyers’ market, transaction prices should rationally come down to the lowest transacted level or even lower. So the price reduction at Devlin Bank is not surprising.