UNCERTAINTY OVER how the National Asset Management Agency (Nama) will function and the time being taken to set it up has effectively paralysed the house-building industry, according to a new report.

Merrion Stockbrokers’ Spring 2009 Housebuilder Survey said that “even if the end result is positive, respondents believe that this uncertainty is resulting in the housebuilding market coming to a complete standstill”.

“Our conclusion from the survey is that housebuilders expect the downturn in the Irish new residential market to continue well into 2010,” Merrion analysts John Mattimoe and Killian Jones said in the report.

Three-quarters of the builders surveyed said they had stopped work because of the backlog of unsold properties. More than half do not expect to resume work for 12 months.

Merrion expects 16,000 houses and apartments to be built this year, 9,000 of which will be one-off or social housing, and said the oversupply of new houses will not be cleared until the middle of next year. It believes completions will fall again to 14,000 next year. This compares to 88,000 completions at the peak of the housing boom in 2006.

Almost all builders surveyed reported a drop in selling prices, with 40 per cent saying prices had fallen by more than 20 per cent in the last 12 months. None of the builders surveyed said they expected prices to rise over the next two years. The majority of house sales were either at or below the build cost and builders say they see little room for further price cuts.

The 25 companies surveyed unanimously agreed land prices had fallen sharply, with most believing there is “no market for development land in Ireland” due to valuation difficulties.

More than two-thirds of respondents believed land prices had halved, with a number saying land values may have fallen to agricultural prices or even zero, once levies, Vat and other building costs were included. On the upside, more than a quarter of builders said they had no borrowings and only 16 per cent said they were coming under pressure from banks to cut prices and sell units.

The survey of 69 construction firms in mid-May drew 25 responses from firms that built 2,300 houses last year, or around 4 per cent of the total. It does not include builders of one-off units or contractors. The listed Irish companies most exposed to a stagnant housebuilding sector were Grafton, McInerney, Abbey and Readymix, Merrion said.