AFTER A CRASH, there are usually bargains to be had for the brave, writes JACK FAGAN

This is a perfectly logical expectation in a property market that has been virtually frozen for the best part of a year or so. Some agents are already calling the bottom of the cycle, possibly because many developers who have had to cut prices quite drastically to shift completed stock are at best breaking even but, more likely, losing money on the new homes.

First-time buyers are only too well aware of the exceptional value to be had but, more often than not, they are in no hurry to buy – even after getting mortgage approval.

The increased number of viewers at the various developments has been interpreted by some as a sign of a pick-up but, alas, it does not mean that the developers and their agents should be reaching for the champagne and the party hats just yet.

In some instances developers have adopted the well tried marketing strategy of taking a hit with a loss leader – like offering three-bed homes for under €200,000 – and then hoping for a modest enough profit on other house types on the same site.

For other developers, the dramatic fall in selling prices means that they simply cannot hope to make a profit, particularly where land was bought at the height of the property market, often for €100,000 per unit site and more. On top of that, building costs were agreed with sub-contractors long before the credit crisis took its toll. Other fixed costs have also made life difficult for the industry.

Nonetheless developers, like other businesses, need cash flow to service their loans and keep the bankers off their backs. This does not mean that they will continue to sell other blocks of apartments at a loss. On the contrary, several large developers have mothballed completed or semi-completed apartment blocks in the hope that the slump could end sooner than expected. These homes will only be released for sale at knock down prices if the funding banks threaten to use the big stick.

Last week’s unveiling of Nama prompted talk of a possible turning point in the property market. There is a widely held view that prices may not fall much further but those looking for the green shoots should keep digging. With a vast stock of newly completed homes over hanging the market – not to mention the build-up of resale homes on the auctioneers books – there is little likelihood of an early recovery in a battered economy where banking finance is largely unavailable and the fear of further job losses will discourage young workers from taking out new mortgages. A lot of things have to happen before we can expect signals that an end to the present turmoil could be in sight.

Affordability has obviously improved quite a lot for home buyers but the constant threat of job losses and the strait-jacket of mortgage availability for those trading up seem destined to keep a lid on the residential market for some considerable time.

Important and all as it is to so many people, the property industry does not take precedence in the present economic and financial crisis. The purpose of setting up Nama is to rid the banks of toxic loans advanced by avaricious bankers to ambivalent developers. Once that has been achieved the banks will hopefully get back to basics and resume “ordinary” lending. It is only when businesses can borrow to develop and employ extra staff that normality can be restored.