Mr John a moran , secretary general, department of Finance ‘supporting a sustainable property market,’ PII June 28, 201

1. Mr John a moran, secretary general, department of Finance‘supporting a sustainable property market,’ PII June 28, 2012 Strictly private and confidential

2. Where we were SHARP CHANGES IN UNEMPLOYMENT NUMBERS Economy too dependent on house building… Sources – CSO and DoF

3. Anecdotal evidence that we’ve reached the bottom? ‘Allsops Auction’ Strong demand with one consumer purchasing three unfinished houses and a four acre plot in Cavan for €122,500 Sherry Fitzgerald Now have an additional 4,000+ registered buyers compared to previous year

4. Property prices – Are they further proof of stabilisation? Residential Property Prices fell by 15.3% in the year to May 2012 Residential property prices fell by 1.1% in April and grew by 0.2% in May, following March 2012 when there was no change in residential property prices In Dublin, residential property prices rose by 0.2% in May, following a rise of 0.5% in April; the rest of Ireland fell by 2% in April. Overall Decline National index is 50% lower than its highest level in early 2007. In Dublin – house prices are 55% lower than at their highest level in early 2007. Rest of Ireland – residential properties are lower at 47% (Source - Central Statistics Office)

5. IBF Mortgage Lending 2005 - 2008

6. New Lending down in Q1 2012 after signs of improvement in previous Quarters New Lending - 31.4% Q1 2012 – decrease in loans issued compared to Q1 2011 down 19.3% IBF/PwC Mortgage Market Profile

7. IBF / PwC Mortgage Market Profile Quarterly Report – New Lending • Loan Values • Q1 2012, a total of €450 million (2,630) in mortgages was drawn down, compared to €639 million (3,856) in Q4 2011. • Total value of mortgages drawn down in 2011 was €2,463m (14,273). • The FTB and re-mortgage segments lost market share, while mover-purchaser, Residential Investment Letting (RIL) and top-up segments each increased their market share. • FTBs and mover-purchasers together made up more than 84% of the market in value terms.

8. Some Existing Initiatives to lift Property Market Budget 2012 Priority Areas of Focus NAMA 80:20 Deferred Payment Initiative • Initiative launched in May 2012. In combination with Budget measures, NAMA believe initiative can increase activity in the market. • Aim is to protect homebuyers from potential future falls in property prices • Limited to 750 houses in total. • Pilot phase of 115 properties located in residential developments in Dublin, Meath and Cork. • Pilot scheme will be subject to an evaluation as to its outcome and NAMA may in future extend the Initiative to additional residential units.. • Stamp duty arrangements for residential property continue to apply with 1% on transactions up to and including €1 million, and 2% thereafter. • For those who wish to purchase a home: • FTBs will get mortgage interest relief at a rate of 25% • Non-FTBs will benefit from relief at 15%

9. Influencing factors • Interest rates amongst lowest in Europe • Strong favourable demographics • Unemployment still high • Mortgage approvals given but not all translating to transactions • Risk – consumer wary of further fall in house prices Strictly private and confidential

10. The Irish Housing Market – David Duffy and John Fitzgerald Demographic Drivers of the Demand for Dwellings, Thousand per Year Number Renting by Age Cohort Ratio of the User Cost of Housing Relative to Renting Population by Year of Age Strictly private and confidential

11. The over-supply picture……or is it?

12. The Irish Housing Market – David Duffy and John Fitzgerald Strictly private and confidential

13. Some Further Initiatives Suggested…… New Bank products, e.g, emigrant purchase loans Extend Mortgage Approvals to 6 months Tax Incentives National Property Forum Clearer Communications on Market Conditions National House Price Register Negative Equity Mortgages What else?

14. Next Steps Strictly private and confidential