Molloy rejects criticism over house figures

The Minister of State for Housing and Urban Renewal has rejected suggestions that his Department's housing statistics are less than accurate.

In a statement yesterday, Mr Bobby Molloy expressed his deep concern that prospective house buyers could be misled by different house price figures published by different agencies.

At the same time, the Department has appointed economic consultants Davy Kelleher McCarthy (DKM) and its housing economist Ms Annette Hughes to oversee some changes in its own house price index.

Mr Molloy stressed that the Department of the Environment's figures are based on returns from all lending agencies. Corresponding Irish Permanent figures, which are compiled in conjunction with the Economic and Social Research Institute, are based only on loans issued by that one lender, he said.

According to Mr Molloy, the Department's information suggests that the loans advanced by Irish Permanent only represent one in five of all mortgage loans issued. He added that the Irish Permanent figures were based on a statistical formula intended to compensate for changes in the mix of house types which may or may not reflect what is happening in the market at a particular point in time.

However, one objective of DKM's study will be to produce a new so-called mix-adjusted house price index.

According to Mr Molloy, there are different ways of calculating such a mix and each produces different results. He added that an index compiled by First Active indicated a drop of 4.6 per cent in Dublin house prices compared with the Irish Permanent figures of a 5.1 per cent increase in Dublin over the same period. The Department's figures showed a 1.1 per cent fall in new house prices and a 2.2 per cent fall in second-hand house prices in the first three months.

Another difference is that the Department's figures are based on loan approvals, whereas Irish Permanent's are based on loans advanced. Loan advances can reflect house prices agreed and loan approvals issued some months earlier. According to Mr Molloy, loan approval data provides a more up-to-date indicator of house price movements.

Mr Molloy also insisted that it is because the Department's data are more comprehensive that the figures for April to June will not be ready for a few weeks. However, he pledged to publish them as soon as they are available rather than waiting for the Department's housing statistics bulletin in the normal way.

The Minister added that it is very important that intending house purchasers are prudent in relation to expectations, particularly at a time when objective commentators are suggesting that the market is beginning to settle down.

A spokesman for Irish Permanent said the bank is absolutely confident about figures it uses. "The involvement of the ESRI in the analysis of the data ensures we are provided with a very objective analysis of trends in the marketplace," he said.