THE worst could be over for the housing market. Although it is early days yet to be definitive on the end of the housing slump, there are tentative signs that the property market could be starting to pick up again.

Yesterday's new figures from the Irish Banking Federation surprised. The figures showed that there was a 20pc drop in the numbers of mortgages taken out last year.

That was expected.

But what was not expected was a continued strong showing from the first-time buyer.

Yes, there were fewer new buyers taking out mortgages last year, but the first-time buyers have not been abandoning the market in quite the numbers that might have been predicted. Instead, the share of the mortgage market made up of first-time buyers ticked up to 19pc last year -- showing that new buyers are holding their own in a difficult market.

Now the Irish Banking Federation has joined a host of other economists and analysts in predicting that the property market is about to pick-up again, although not at the high octane rate it did up to recently.

Builders have dramatically cut back on their output. But cuts in interest rates and falling house prices could now be making new buyers feel optimistic again.

The first-time buyer is considered to be highly sensitive to changes in property prices, lending rates and the general sentiment in the market. The group is also considered to be a barometer of the health of the overall housing market.

Doldrums

If the market is in the doldrums, the potential first-time buyer can continue to rent, or go on living with their mother and father.

What has changed lately is that the new buyer is seeing prices of some new and second-hand houses being cut by 20pc and they are responding by snapping up what they see as bargains.

Last weekend builders of some Dublin developments reported the best weekend of sales after price cuts of up to 20pc brought out crowds of first-time buyers.

Not all developers have come around to the view that price cuts are the way to go. Some are stubbornly holding out in the hope that coming interest rate cuts will allow them to earn high profit margins again.

Independent.ie, By Charlie Weston, 14 February 2008