There's no money, no market... but happy new year

SO, here we go again. January: a time synonymous with clean slates, fresh starts and new year resolutions. A time when the calendar tells us that we should ring out the old and ring in the new, as we look to the future with hope.

There’s got to be something positive to say about the property business these days? Haven’t we been through the worst of it? Things can only get better. What about the reduction in stamp duty, there’s got to be a story or two there?

And first-time buyers? They’ve never had it so good, with low interest rates and greatly reduced property prices. And well-located, well-oriented, fully-renovated three-bed semis are in great demand these days, at the right price of course.

Indeed, I would love to return to discussing the subject of buying and selling property, if there was a market there to discuss, but there isn’t. Well, not one worth talking about anyway. And there is little likelihood of a return to any normal level of activity as long as our lending institutions are still not lending.

So, regardless of the week that’s in it, I’m not in the form to be humorous or encouraging and I’d be lying through my teeth if I launched into 2011 full of the joys of spring, particularly in light of the recently published figures from the Central Bank.

I’m also very likely to get another sharp lecture from my friend Mary M who tells me that she would far prefer it if I wrote cheerful and funny pieces and avoided boring statistics and dreary tails of misery and woe.

Tiresome and depressing these figures might certainly be, but unfortunately they accurately reflect the mood of the nation. And the mood is one of complete lack of trust.

Central Bank figures for November show an increase in what has been going on for some time now; Irish cash leaving Irish banks as depositors are withdrawing their savings.

Irish money is being moved to non-Irish banks and some, fearing the stability of the euro, are putting their savings into other currencies such as Canadian and American dollars and Swiss Francs.

Unsurprisingly, Central Bank figures show that lending for homebuying and other consumer loans declined yet again in the month of November, although loans to partnerships, sole traders and investors have risen. (However, the Central Bank admits that some of this increase might be attributed to outstanding interest being added on to existing loans.)

In other words, there is very little money in circulation and what there is has been borrowed at huge cost from the European Central Bank.

Irish bank customers have (perfectly understandably) such little faith in their own lending institutions and their Government (which now owns/runs most of them) that they studiously avoid supporting them by withdrawing their savings and lodging them elsewhere.

Individually, we can hardly be blamed for such actions given what we now know about Irish banking practices; however, in protecting our own few bob from further decimation, we are adding to our country’s overall debt because each cent now borrowed must come from the ECB, who charge us sky high interest rates.

It’s a catch-22 situation, which can only be resolved if faith is restored in our banking system. There may have been some hope of that happening had we followed the American example and gone in with all guns blazing a few years ago – but we didn’t.

We did it the Irish way, with lots of hugger-mugger behind closed doors and a few games of musical chairs, with much the same motley crew still sitting comfortably when the music stopped. Like this country’s water supply system, our banking system ignored the excessive waste during the good times and now that resources are severely limited, the citizens are the ones being blamed and deprived.

So, here we go again, facing into yet another year of more of the same: I’ll get a few calls from enthusiastic estate agents eager to tell me of the number of houses they’ve sold (up a few per cent on last year – wow!) and a large number of calls from distraught homeowners who now wish they’d never got on the property bandwagon and a few abusive emails from those who (quite correctly) blame the media for their part in the property boom and I’ll learn far more than I ever wanted to know about the defunct Irish banking system and comment far too little on property.

And I’ve just received the Daft house price report which notes that asking prices were reduced by 14 per cent last year and the Sherry FitzGerald report which states that actual sales prices dropped by 12 per cent . . . my friend Mary M will no doubt die of boredom reading more depressing statistics over the coming months. Ah . . . it all sounds so comfortingly familiar.

Happy new year.

• Isabel Morton is a property consultant