Pace of decline in mortgage market slows, survey shows

HOUSE PRICES have fallen 36 per cent on average and the mortgage market weakened further in late 2009, though the pace of decline has eased, according to the latest survey from KBC Bank Ireland and the Independent Mortgage Advisers Federation.

The survey of mortgage brokers concluded that they did not expect an improving market in 2010 but found there were “clear signs” that a “bottoming out has begun”.

The bank and broker association found that the Dublin property market “may be closer to a turn than elsewhere” but that credit constraints and concerns about jobs and incomes continued to weigh on potential buyers.

“The dominant influence on Irish house prices has been the intensity of the downturn in the property market and in the broader economy,” but there were also other factors, said Austin Hughes, chief economist at KBC Bank.

“Signs of slightly stronger conditions, for example in the first-time buyers market or in Dublin, suggest that some parts of the market have begun to bottom out even if no marked improvement is envisaged in early 2010.”

More than twice as many brokers reported a drop in activity in the mortgage market than had seen an improvement, the survey found, while brokers said they expected the market to remain difficult for the first months of 2010.

There was “significant concern” among brokers that Wednesday’s Budget would worsen the outlook for the housing market as only 20 per cent of the 160 brokers surveyed felt that measures introduced this week would be helpful.

The threat of higher income taxes was reported as the major worry as two-thirds of the brokers felt this would be the most damaging change that could be announced by the Government.

One-third of brokers said that leaving taxes unchanged would be the most positive outcome for the mortgage and property markets.