Restructuring the Property market is the only realistic solution to the underlying problems of the Irish Economy. Until this is done we will not get back to normal trading in our domestic economy. The property market will not recover, and the negative equity problem will drag on for years.
One possible solution to the crisis may be found in revaluing the domestic property market. Relieving the burden of negative equity debt which hangs over so many young couples, (who thought they would be securing their future by entering the property market), and allowing those who now enter the property market, some assurance that they are not going to be wiped out in the event of a further downturn.
By a system of revaluing the family home;
Using the rateable valuation of a property, multiplied by the total Sq Ft, multiplied by 10:
This would provide a current valuation for almost all properties in the state;
Eg:
A Three bedroom house of 1000 Sq Ft. x with a Valuation 14 Euro x multiplier of 10 = 140,000 Euro. This is Approx 4 times the average National salary.
Roughly the same multiple as it was in 1972 before we joined the European Union,
The simplicity of this system is that the rateable Valuation of almost all properties is already known, and takes into account disparities in geographical location, Wealthy suburbs usually have a higher valuation than less affluent suburbs. If a house is perceived to be worth more, because of its situation or other factors, this can be taken into account in arriving at the final valuation.
Once the valuation process is complete, The homeowner could request that any excess mortage outstanding,(Negative Equity) would be written off by the lending institution involved. The Irish taxpayer has already paid the banks Billions of Euro by way of bailout funding, so they cannot shirk their responsibility to help restore the markets.
By providing 30 year fixed rate mortgages;
To restore confidence in the market and provide reassurance that home owners never again have to endure the events of the last few years, a system of 30 Year fixed rate mortgage's similar to those available in other countries, should be introduced. A fixed rate of 5% would provide a reasonable return to the lending institutions involved, and would allow borrowers to know what to expect in the most important years, when they are trying to raise a family.