MR JOHN A MORAN, SECRETARY GENERAL , DEPARTMENT OF F INANCE‘SUPPORTING A SUSTAINABLE PROPERTY MARKET,’ P I I JUNE 28, 2012

Strictly private and confidential 1

2

Where we were

Economic Growth

driven by a property bubble

Rapid employment

growth

As employment and income rose, house

prices increased

Construction rose –

increased unemployment – further construction

By 2006 construction

accounted for 20% of GNP

Over reliance on property related tax revenues

Stamp duty on Property in 2006 was €2.99 billion

SHARP CHANGES IN UNEMPLOYMENT NUMBERS

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Pe

rc

en

t

ECONOMY TOO DEPENDENT ON HOUSE BUILDING…

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Department of Financeforecasts

2012 to 2015

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 FitzgeraldNow have an

additional 4,000+ registered buyers

compared to previous year

4

Property prices – Are they further proof of stabilisation?

Residential Property Prices fell by15.3% 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 pricesrose by 0.2% in May, following a rise of 0.5% in April; the rest of Ireland fell by 2% in April.

Overall DeclineNational 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 lowerat 47% (Source - Central Statistics Office)

5

IBF Mortgage Lending 2005 - 2008

6IBF/PwC Mortgage Market Profile

New Lending down in Q1 2012 after signs of improvement in previous QuartersNew Lending

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

0

1000

2000

3000

4000

5000

6000

Number€m

- 31.8%

New Lending

Number €m

Q1 2012 2,630 450

Q4 2011 3,856 639

Q3 2011 3,607 623

Q2 2011 3,551 624

Q1 2011 3,259 577

Q4 2010 5,624 982

Q1 2012 – decrease in loans issued compared to Q1 2011 down 19.3%

- 31.4%

7

IBF / PwC Mortgage Market ProfileQuarterly 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

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%

NAMA 80:20 Deferred Payment Initiative

Budget 2012 Priority Areas of Focus

9Strictly private and confidential

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

Decision to Buy

Improving Affordability

Unemployment Pay Cuts

Housing Pricing Risk

Favourable long-term

demographic trends

Credit Availability

10Strictly private and confidential

The Irish Housing Market – David Duffy and John Fitzgerald

Number Renting by Age Cohort Demographic Drivers of the Demand for Dwellings, Thousand per Year

Ratio of the User Cost of Housing Relative to Renting Population by Year of Age

The over-supply picture……or is it?

12Strictly private and confidential

The Irish Housing Market – David Duffy and John Fitzgerald

Some Further Initiatives Suggested……

Extend Mortgage Approvals to 6 months

Clearer Communications on Market Conditions

National Property Forum

New Bank products, e.g, emigrant purchase loans

Negative Equity Mortgages

National House Price Register

Tax Incentives

What else?

14Strictly private and confidential

Next Steps

Priority for the Government

Action Points from this morning’s

seminar will feed into the process

Establish and Inter-departmental group (along the lines of Keane Report) to consider actions

that could be deployed to address the

property situation

Continued engagement between the

Department of Finance,

stakeholders, the banks and the IBF