The news that NAMA has introduced a house sales product designed to protect purchasers from further falls in house prices has to be welcomed. Whilst the proposed scheme, which essentially protects purchasers from a fall in house prices of up to 20% over next five years is not without flaws, it is a step in the right direction. It would seem to me to be designed to appeal to first-time buyers as opposed to those currently in difficulty with their mortgages for whom a solution will have to be found. For the NAMA products to work the banks will have to lend and the test will be whether the banks are willing to begin to invest money into the domestic housing market.
There is no doubt in my mind but that there is very little lending going on at present and all the innovation in the world will be useless if people are prevented from gaining access to the housing market as a result of lack of funding. For those who are currently in distress with their mortgages a long-term solution is as faraway as ever and will require active political involvement. The state by effectively nationalising the banking system in this country is a direct stakeholder in the solution to the crisis caused by the collapse of the housing market, obviously any scheme of debt forgiveness will have a direct impact on the nationalised banks and ultimately on the taxpayers, however, the current situation of inertia will in the long-term prove to be far more damaging to the Irish economy in the long run.