Ireland's bad bank, NAMA, is to offer mortgages with protection against price falls later this year in a bid to stoke some life into the moribund property market in Ireland.
It will trial the controversial scheme with 750 properties but says that the special mortgages will only be offered for as long as is necessary.
NAMA's chief executive, Brendan McDonagh, revealed the details of the plan at a conference in Galway where he also said that one in five of all newly built properties in Ireland are now in its control.
The bad news from NAMA, however, is that it thinks the battered property market will fall even further and says house price stability will be linked to improved employment forecasts.
McDonagh told the Irish Council for Social Housing that the outlook for residential properties was "cloudier" than that for commercial real estate.
His remarks come days after new Central Statistics Office figures showed that the price of apartments in Dublin had sunk like a stone since the peak in 2006 – they are down almost 60%.
Across the country as a whole, prices of all types of residential property are down 43.4% with houses, on average down 41.7%.
So it will be interesting to see how these negative equity protection mortgages work.
Under the scheme buyers will pay 80% of the property price and pay the rest five years later if the property has maintained its value. If the price goes down the buyer doesn't have to cough up.
Bloxham Stockbrokers in Dublin questions whether this is the right way to kick start the market.
"Given labour market weakness, we still think house prices have some way to fall yet," it says in a note to investors.
