Tuesday, 30 December 2008

Ireland's House Of Cards Tumbles Down...

The grand house of cards comes tumbling down...

The engine of the economic boom came grinding to a halt this year, but optimists hope the housing collapse is near bottom...

MAYBE, JUST maybe, people will look back on 2008 as the year in which they should have bought property. A few years from now, when the economic gloom has lifted, today's prices - down as much as 40 per cent from the peak of 2006 - might seem like so many missed opportunities for first-time buyers and trader-uppers.

If that sounds like something that a property journalist would say, then consider Warren Buffet's oft-quoted advice to investors: "Be fearful when others are greedy, and be greedy when others are fearful."

Right now, people in the Irish property market are very fearful. A combination of tumbling prices, banks refusing to lend and fast-eroding job security has created an atmosphere in which people are afraid to commit to buying even a sofa, never mind a home.

"It's carnage out there," says one estate agent involved in the new homes sector, where developers are going bust by the week and an estimated 30,000 construction jobs have been lost in the past year.

A further 40,000 job losses are expected in 2009, according to the Construction Industry Federation (CIF), which expects house completion to be no more than 25,000 units this year - a far cry from the 88,000 new homes built in 2006 at the peak of the boom. Housebuilders have had to offer deep discounts as well as incentives such as full fit-out or rental guarantees to shift stock, but in many cases neither have worked and entire developments have been "mothballed" due to lack of interest.

As many as 35,000 new homes lie empty across the country - the equivalent, as one estate agent put it recently in The Irish Times, "to a ghost town the size of Galway city". Some of these homes "will never sell", according to Ed Carey, president of the Auctioneers and Valuers Institute (IAVI), "because they were built in places in which they should never have been built".

In some cases, banks - the same banks that offered 100 per cent mortgages to all comers in the boom - have refused to lend at all on certain categories of property, notably one- and two-bedroom apartments in the commuter belt. The first-time buyers they were built for can now afford to buy in the cities rather than in far-flung dormitory towns.

The silver lining is in the rental market, where rents are dropping fast as developers flood the market with unsold properties. Last month the rental website estimated that there were 18,000 properties available to rent nationwide - a rise of 133 per cent on the same period last year. Rents in Dublin city have dropped back by as much as 20 per cent this year as tenants have the power to pick and choose. Many of those renting are would-be buyers who are taking a year out to see where prices will go. They're heeding dire warnings from economists about the Irish economy and expecting to see at least 10 per cent more come off house prices next year.

Estate agents are weary of all this watching and waiting. Transactions in the second-hand market have dwindled to the point where they are selling no more than one or two properties a month. Nearly 20 per cent of agents are selling nothing at all, according to a recent survey by the Institute of Professional Auctioneers Valuers (IPAV). The country's big agency chains are closing branches, cutting pay and letting staff go. An estimated 25 per cent of estate agents have either lost their jobs or closed shop and more of the same is expected in 2009.

HOMEOWNERS, MEANWHILE, have seen the value of their property drop by as much as 40 per cent since 2006, a severe blow to those who used the equity in their home to invest in more property, or simply to fuel a better lifestyle through borrowings. Some of the worst hit are young buyers, encouraged by the hype of the boom to get on the property ladder as the market reached its peak. Anyone who bought in 2007, 2006 or even 2005 is almost certainly now in negative equity.

Selling has become a tortuous process involving serial price drops and collapsing deals. The IPAV survey found that more than 50 per cent of sellers had to reduce their price more than twice to achieve a sale this year. Worst affected are people who bought a trade-up home first, without selling their existing home. Investors who purchased apartments off plans in the past two years have also been badly hit by having to complete on properties that are not worth the money. Many such purchasers have attempted to get out of contracts, or at least to renegotiate terms on completion.

Buyers have finally found themselves in the driving seat, and they're taking their time to commit, often "gazundering" their way to a deal. Gazundering means offering lower prices as a deal progresses, knowing that a seller is likely to accept out of desperation.

They can do this because there is so much choice out there. The property website currently has a record number of homes posted on its site, and the average posting - the time a property takes to sell, or be withdrawn - has jumped from 100 days in 2006 to 220 days.

Houses are selling, but prices are a closely guarded secret. Earlier this year a row about accurate information on house sale prices blew up after reports that The Irish Times had complained to agents about exaggerated prices being submitted for publication in its property supplement.

The National Consumer Agency immediately warned estate agents that not to provide accurate information would be an offence under the 2007 Consumer Protection Act. Estate agents pointed out that it would be an offence under the Data Protection Act to reveal exact prices without the permission of both seller and buyer. This permission is rarely given and so price information, which had previously been revealed by agents on an informal basis, is now restricted. The near total collapse of auction sales (just 127 auctions were held in Dublin this year, compared with nearly 1,500 in 2006) has also starved the market of price information.

This lack of information has added to the confusion over what property is really worth right now. However, as the property year draws to its dismal close, there are reasons to be cheerful. Interest rates are on the way down, with yet another cut from the European Central Bank forecast for January.

This should bring interest rate levels back to levels not seen since early 2006. And though economists warn that house prices will fall further, sale agreed signs are beginning to appear. Canny buyers will have negotiated an extra 10 per cent or 15 per cent from exhausted sellers in the run up to year end.

No one knows if we are at or near the bottom of the market. The bottom will only be obvious in hindsight. Or, as Warren Buffet puts it, "The market will move higher. . . well before either sentiment or the economy turns up. So, if you wait for the robins, spring will be over."

Report by Orna Mulcahy and Frances O'Rourke - Irish Times.

Tuesday, 23 December 2008

Ireland's Property Market Goes Downstream...

Dublin 4 property market to float — with houseboats...

The Docklands Development Authority says the vessels would ‘contribute to life along the water’s edge’...

THE DUBLIN 4 property market could soon get an injection of liquidity. The Dublin Docklands Development Authority (DDDA) has recommended that houseboats be allowed to moor at Pigeon House Harbour in Ringsend. The DDDA’s draft master plan has advised that houseboats would “contribute to life along the water’s edge” and should be “actively encouraged” to set up at the disused harbour.

The Inland Waterways Association of Ireland (IWAI) has welcomed the proposal, calling for the DDDA to adopt specific policies encouraging the establishment of a “live aboard” community in Dublin 4.

Derek Whelan, a spokesman for the IWAI, said: “The harbour is an ideal location as it’s sheltered and near the city centre.”

Although there are about 10,000 privately owned coastal and inland vessels in Ireland, it is estimated that fewer than 100 people reside on houseboats as the practice is officially discouraged. Waterways Ireland, the body responsible for maintaining the country’s navigable waterways, only allows boats to moor at any one place for five days. The Electricity Supply Board (ESB) can only connect a supply to a houseboat with the permission of Waterways Ireland.

Waterways Ireland discourages houseboats because it is concerned that the growth of live aboard communities could choke the waterways. The DDDA, though, is solely responsible for the development of Dublin’s docklands.

Despite the lack of official support until now, small houseboat communities have grown up in areas such as Hazelhatch, Co Kildare. Waterways Ireland tolerates “live aboards” outside Dublin but enforces regulations rigorously in the capital.

The body said several years ago that it would begin a public consultation process on houseboat-dwelling. It has yet to begin the dialogue.

In the UK and most European countries, a licensing system operates and prospective owners can apply for a mortgage to buy a houseboat with a mooring, which can cost from €30,000 up to €300,000.

Whelan said: “Because the practice is not encouraged, there are limited services available at Irish berths, such as water, electricity and sewage facilities.”

He said that the DDDA should appoint a marina company to “fit out” Pigeon House Harbour and lease berths.

Nick Kelly, whose houseboat is moored at Twelfth Lock near Blanchardstown, said he would move to a berth in Ringsend. “I work in Dundrum, so it would be ideal for me as I could use public transport.”

He has no access to electricity. “I’m planning to get a wind generator,” he said. “If there were proper facilities in the docklands, I'm sure there would be huge interest.”

Report by

Sunday, 21 December 2008

Ireland's House Crash Not Over Yet...

The latest house price figures, which show prices falling by 0.5pc in November, seriously underestimate the true extent by which prices have fallen. And there is almost certainly more bad news to come in the New Year.

Every month, mortgage bank Permanent TSB publishes its index of house prices. The index, which is compiled by the ESRI and has shown a decline in house prices for every month since March 2007, is generally regarded as being the most authoritative and up-to-date source of information on the state of the Irish housing market.


Unfortunately, the Permo numbers are not foolproof. They are based on completed house prices during the month. With huge stocks of unsold new and second-hand houses on the market, and up to 18-months supply at current levels of demand by some estimates, sales are taking much longer to close than they used to.

What this means is that the Permo numbers reflect sales that were agreed four, five or six months ago, as far back as last May or June, rather than the current state of the market. Since then the world has changed. The Irish banks have in effect gone bust and have, to all intents and purposes, stopped making new loans, while the economy has gone over a cliff.

And there is another problem with the Permo numbers. They don't include the huge reduction in asking prices as desperate sellers seek to offload unsold properties. A combination of the time lag between when sales are agreed and completed, and the huge stock of unsold property currently on the market means that, through no fault of its own, the Permanent TSB/ESRI house price is, at best, an incomplete reflection of the true state of the housing market.

House prices have fallen by a cumulative 15pc since February 2007, according to the Permo. It is also apparent that the rate at which house prices are falling is accelerating. They fell by 9.6pc in the year to November 2008, compared to 5.9pc over the previous 12 months.

Things are going to get much, much worse in the next few months. One of the factors underpinning the Irish housing has been strong inflow of people into this country. As recently as the year to April 2007, more than 67,000 immigrants came to live and work in this country. Most of these immigrants are young people who eventually plan to return to their own countries.

This made them more likely to rent rather than buy a house in Ireland.

The arrival of this large group of non-nationals, more than 420,000 at the time of the 2006 census, tempted many investors to borrow money to buy houses to rent to this new market.


Now the boot is on the other foot. The ESRI expects at least 50,000 people to leave this country next year as they flee the collapsing Irish economy.

While many immigrants are thinking of returning to their own countries, the cash-strapped banks are putting the squeeze on heavily borrowed rental landlords.

This lethal combination of declining rental demand and a rash of forced sales by landlords threatens to trigger a fresh downward spiral in the housing market. Rents are already down by almost 10pc over the past year, and will almost certainly fall further in 2009, piling pressure even on those landlords who were previously making ends meet.

This will, in turn, lead to more forced sales, reinforcing the downward spiral.

When the housing market first started to head south, even the most bearish forecasters reckoned that prices would fall by no more than a third.

With asking prices in many areas now down by a quarter, and the difficulties in the rental market likely to lead to tens of thousands of forced sales, it may well turn out that even the pessimists were being optimistic.

Report by Dan White - Evening Herald.

Saturday, 20 December 2008

Testing Your House - The BER Essentials...

Will your home pass the test?...

From next month, all houses on the market will have to have a Building Energy Rating certificate. What does this mean for homeowners, renters and landlords?

WHEN THE Building Energy Rating (BER) assessor came by it was a cold two degrees outside and we were all wearing our fleeces indoors - even with the blinds down, curtains drawn and the heating on. Good recyclers and energy-conscious home owners, we thought we'd do okay.

We knew we would be nowhere close to the top of the scale but we thought we might scrape through with a D. The house was partially carpeted. We had blinds on our double-glazed windows and draught proofing on the front doors. However, the assessor, James Carroll of, explained how the cavity walls were letting cold air in. Pumping polystyrene bead insulation into the cavities would be the only way to reduce this huge loss of heat, he explained.

Meanwhile, our stylish flame-effect gas fires were merely cosmetic, he added. Ironically, just three years ago, we had taken out a stove and replaced it with this gas fire. Replacing the two gas fires with either glass-fronted gas heaters or stoves was recommended.

In the hall, the original 1950s floors that the estate agent had promoted in his sales pitch were seeping in cold air. The patio doors in the dining room had undesirable air vents.

Moving upstairs to the converted attic, the lack of proper insulation became obvious to us. Better than none at all, the assessor said kindly, and, along with filling in the gaps next to the patio door, improving the attic insulation was something we could get started on next weekend. Two days later, the BER certificate arrived by e-mail. Let's just say it was below a D.

FROM NEXT MONTH, all houses put on the market for sale or for rent will be legally bound to have a BER certificate.

This certificate will rate the house's energy efficiency on a scale of A to G and belong to the house for 10 years unless significant work is carried out in the meantime. BER certificates, which are part of the EU's Energy Performance of Buildings Directive, have been required for all new homes let or sold since January 2007.

"We're currently getting about 500 calls to our helpdesk a week about BERs," explains Kevin O'Rourke, head of built environment at Sustainable Energy Ireland (SEI), the State agency in charge of implementing the Energy Performance of Buildings directive.

"There is a growing awareness among the general public about the requirements of having a BER when selling or letting a house and also a growing awareness about the entitlement of having a BER certificate when buying a house," says O'Rourke.

The purpose of the directive is to improve the energy performance of all buildings across Europe and develop common building standards. The BER assessment itself measures the energy performance of an individual house, taking several factors into consideration. It is carried out by a BER assessor, registered with SEI and involves about two hours' work in your home, followed by calculations and the issuing of a BER certificate and an advisory report on how you can improve the energy rating of your home.

"We look at the type of house (semi-detached, bungalow or apartment), the size of the living room area and the number of storeys," says Carroll.

"Then, we assess everything from the types of ventilation, the wall, roof, floor, window and door insulation, the main space heating system (whether there are thermostats, zone controls, separation of domestic hot water and space heating) to the efficiency of the water heater, hot water storage insulation, hot water controls and percentage of low-energy lights."

Once the assessment is complete, the house is graded and issued with its BER certificate. In advance of widespread uptake of BER assessment, SEI has indicated ratings for typical homes from different periods. According to these estimates, houses built in the 1980s would typically get a D1 rating, houses built in the 1990s would get a C2 rating, houses built since 2000 a C1 and those built this year (that had to comply with new building regulations) will get a B1.

Houses built before the 1980s, would, according to O'Rourke, typically get somewhere between a D2 and E1. So, energy efficiency aside for a moment, the question on everyone's lips is, what difference will it make to the price of the property?

O'Rourke answers: "It won't supplant location in people's judgment but when there are two properties in a similar area, a premium will apply to the house with a superior BER.

"Also, a property with a poor BER could be expected to be slower to sell - all other things equal. People may also be sensitive to their house having a poor BER rating, which might encourage them to make some improvements before selling," he says. "Purchasers will also be assisted by an advisory report issued with BER certificates when it comes to remodelling a house."

According to O'Rourke, the key point about the BER certificate is that it is a visible signal of the energy performance of a building in the property market. "It will then be weighed in balance with other factors."

TO DATE, JUST UNDER 1,000 people have registered with SEI as BER assessors for newly built or second-hand houses. "Although there were over 3,000 people who completed certified BER courses, many of them have not registered yet. However, we are confident that we have enough assessors, particularly in the current climate," says O'Rourke. He advises home-owners to shop around for the best price but always to choose someone who is registered with the SEI. This ensures they have completed training courses that meet the SEI specification.

There is no set fee to obtain a BER certificate as costs will vary depending on the size, age and various heating systems in the house. From start to finish, the process shouldn't take more than two weeks.


What is a BER? A Building Energy Rating is a rating of the energy performance of a building using a scale of A to G
(G is least efficient).

Which houses need one? All newly-built houses sold or let since January 2007 require a BER certificate. From January all houses sold or let must have a BER certificate. There are fines of up to €5,000 for non-compliance.

What happens during an assessment? An assessor calculates the energy performance of a house by looking carefully at the ventilation systems, the type and quality of wall, roof, floor, window and door insulation, draught proofing, the type and efficiency of space and water heating systems, light bulbs, and so on. The survey of your home should take between one and two hours depending on the size and age of the house.

Where can I find an assessor? Sustainable Energy Ireland has contact details of almost 1,000 registered BER assessors. See

How much will a BER assessment cost? There is no set fee for a BER assessment, however expect to pay between €300 and €500, depending on your home.

Report by SYLVIA THOMPSON - Irish Times.

Friday, 19 December 2008

More Property Price Cuts - Dublin City and Suburbs - House Price Drops...

AS CHRISTMAS and 2009 loom some vendors are cutting prices to get buyers off the fence.

Number 7 Claremont Road in Howth has a new asking price of €3.75m, down from €4.8m, a drop of €1.05m or 22 per cent. For sale through Savills, the four-bed Georgian-style home first came on the market in August. It ticks all the boxes for a trophy home with 418sq m (4,500sq ft) of space and three large reception rooms. A large basement could be used as a gym, music room or home cinema.

Gunne Residential is asking €1.95m for an Edwardian semi - 4 Proby Square off Carysfort Avenue in Blackrock, Co Dublin - which is a 29 per cent drop from the original price of €2.75m. The house has been on the market a number of times in the past five years. In September 2003 it sold for €1.625m with 0.25 acres of rear and side garden with development potential. The following year the house sold with a substantially reduced garden for €1.5m. The six-bed, 300sq m (3,200sq ft) house is in a cul-de-sac.

Gunne Residential has also recently reduced the price on 23 Balcartie in Roganstown Golf Country Club in Swords. The five-bed came on the market in October 2007 at €2.05m. At the start of 2008 this was reduced to €1.925m. Another reduction at the start of the summer brought the price to €1.675m. By the end of the summer the price was €1.4m and in the last two weeks the price dropped to €1.2m - a cut of 41.5 per cent on the original price.

In Booterstown, Co Dublin 80 St Helen's Road has been reduced from €1.2m to €850,000 - a fall of 29 per cent. For sale through Lisney, the 143sq m (1,550sq ft) house has a formal drawingroom, a diningroom and a breakfast room that leads into a kitchen overlooking the rear garden. To the side of the property there's a utility room, shower room and a garage with double doors to the front. Upstairs there are four bedrooms and the attic has been converted. The south-east facing back garden is in lawn.

A three-bed house in Clontarf has been reduced from €675,000 to €525,000 by Gunne. Number 27 Dollymount Park in D3 came on the market in May and since then the price has been reduced four times. The terraced house has 110sq m (1,118sq ft) of space.

In D4, 13 St John's Park Avenue in Sandymount is a two-bed townhouse quoting €570,000, down from €660,000. Bennetts Auctioneers is the selling agent. Close to the Dart, it has 66sq m (710sq ft), including a kitchen with fitted units and a livingroom with a stone fireplace.

Also in D4, Bennetts is quoting €440,000 for 19 Aikenhead Terrace, Stella Gardens, Irishtown - it has been reduced from €520,000. The mid-terrace house has 60sq m (645sq ft), two bedrooms and a rear patio garden. Downstairs is a livingroom with wood flooring, a diningroom and a kitchen with Shaker presses and a tiled floor.

Monday, 15 December 2008

New Homes Market - Rent To Buy Housing Scheme...

Try it, and if you like it, then buy it...

Could a rent-to-buy housing scheme that helps first-time buyers get on the ladder help stabilise the new homes market, asks Róisín Carabine...

A rent-to-buy scheme that allows prospective buyers to lease a new home with the option to buy later, using part of the rent towards the purchase, is growing in popularity with first-time buyers and developers as the credit crunch worsens and residential sales stagnate.

Seán Power of Rent2Buy in Ballincollig, who first introduced the scheme to Ireland three years ago, says interest has more than doubled in the last few weeks, with 1,200 first-time buyers now registered on its database.

"Of those who have recently signed up, the majority – around one in six – want to buy and live in and around Dublin. We've a number of buyers particularly interested in the Swords area," says Power, who plans to match 1,000 prospective buyers with homes in 2009.

The scheme was first launched at The Beeches, a development in Boherbue, north Cork, and has expanded in the past few months to include properties in Kerry, Cork city and county, and Tipperary. New developments in Wexford, Clare and Dublin are expected to come on board within the next few weeks. The company also offers a handful of secondhand properties from individual sellers.

Buyers who sign up to the scheme pay rent at normal market rates to the developer for an agreed period, usually three years, after which time they can opt to buy their property at a pre-agreed price, based on the market value of the property at the time of the contract.

"The buyer must also put down a deposit of €2,995 (plus VAT) which goes towards the purchase price but which is non-refundable in the event of the sale not going ahead. A portion of the rent, sometimes up to 100%, is also credited towards the purchase price," says Power.

The website ( lists one- and two-bed apartments at a new development in Ard Cluain, Clonee, which can be bought under rent-to-buy. The one-beds are available for €199,000 at a rent of €900 a month with a €600 monthly credit. The two-beds can be bought for €235,000 and rented for €1,200 a month with a €700 monthly credit. The buyer can choose to buy at the end of two years and will have up to €16,800 available in rent credits (plus their initial deposit) against purchase price.

According to Power, the rent-to-buy scheme is a win-win situation for both developers and first-time buyers.

"It brings cashflow to properties that otherwise might be stagnant. And buyers lacking adequate deposits or struggling with poor credit can build up savings in order to get a mortgage," says Power.

"The buyer can earn credit from the rent, which is usually seen as dead money, and the developer doesn't have to worry about the buyer not looking after the property as they have a vested interest in it. We also carefully vet buyers to make sure they're in a position to buy at the end of the three-year period should they wish to."

Power is confident more developers will sign up to the scheme as the recession deepens, and believes it could have a stabilising effect on the market.

"If you can't shift a property that's been reduced repeatedly down to €200,000, price is no longer the main issue. Our market research shows that there are hundreds of first-time buyers out there ready to buy, they just haven't got a deposit and can't get finance," says Power.

He is convinced the scheme can also work when the market returns and sees no reason why developers and buyers will not continue to find it an attractive solution.

"During the boom, building was done on a speculative basis; with this scheme builders could build with buyers already signed up to buy," he says.

Report by Tribune Property.

Friday, 12 December 2008

Irish Property - Deal Or No Deal? It's Your Call...

2008 Review: NEGOTATING:

It was the year everybody learnt how to haggle. Arthur Beesley reports...

HERE'S A dilemma. After searching for that sleek new home, you've finally found just the place, done the deal, raised the money, surveyed to your satisfaction and readied your crew for the big move. All that remains is to ink the contract.

Should you sign? Or should you refuse, warning that you will withdraw if the vendor won't cut their price? After all, there may be no one else in the race. And the vendor, for whatever reason, may be under pressure to complete the sale. Threatening to pull out now might endanger the deal, but a lower price would improve your fiscal position.

Your call. You're a buyer in a rapidly declining market. Your job is secure, your bank is on board and you're ready to transact. You might see dishonour in seeking to snatch better terms after a "final" agreement is reached - or you may decide there's no place for moral quibbles in a purchase of this nature.

It's simply business. If the market has dropped in the couple of months since the sale was agreed you judge you can extract a superior deal, then maybe you should try.

But if your heart is truly fixed on the property and you fear it will fall from your grasp, then maybe not. Just as the vendor may have no choice but to capitulate, they might also pull the sale entirely.

Either way, the last-minute pull-out is not uncommon in the current scene. As the bubble deflates, buyers are the market makers.

Gone is the time when estate agents could relentlessly play one buyer off another, the price rising all the time while the vendor sat back in anticipation of a neat little fortune. Now the buyer is king.

That assumes, of course, that banks are willing to lend. All the negotiation nous in the world is worthless if funding is not available. If banks stoked the boom with a seemingly limitless supply of money in the good times, their credit assessment these days verges on the obsessive.

They are by no means as liberal when it comes to making funds available, loans take longer to negotiate and the upper limits on loans have dropped significantly.

This, too, has a bearing on price. In every transaction in every market, there's a "quoting level" at which the property is priced and an "acceptance level" at which the vendor might sell. In a rising market, the acceptance level typically rises above the quote. In a falling market, it's below. In a full-blown crash, the gap between the two widens by the day.

New figures from the Central Bank indicate that the market reached a virtual standstill in October, when the annual rate of increase in residential mortgages was at its lowest point since 1986.

The net increase in mortgage lending throughout the market fell that month to a total of only €26 million from an average of €700 million in the previous three months.

This presents a big opportunity for buyers, particularly in the new homes market. Under mounting pressure from their banks and their other creditors, many developers have already dropped prices by as much as 30 per cent in a desperate effort to drum up business and maintain an inflow of cash.

Even after that, industry participants say buyers in certain cases have extracted further discounts of 15 per cent. In the current climate, only a fool would bid at the list price. "Let's face it, nobody can give houses away at the moment," said an industry source.

Still, buyers of new homes should do their homework. Hands up all those who want to live in the top floor of an empty apartment block? Or the only occupied house in a half-finished estate with no neighbours?

The parameters of the second-hand market are broadly similar, though most vendors will be under less pressure to sell. As the economy slides, however, buyers should always bear in mind that the overall picture may look a lot worse by the time a deal closes. Beyond Christmas and into the new year, a further deterioration in economic conditions is likely. That this will pull prices down further seems beyond doubt at this point.

Thus buyers should not be afraid to offer well below the asking price. Equally, they should resist any false sense of satisfaction arising from any significant reduction in price quoted many months previously.

If the property didn't sell then, it probably wasn't worth the price in the first place.

Yet if both buyer and seller are serious, there's always a deal to be done. With the assistance of the estate agent, whose fee depends on the deal being done, both sides should be able to agree terms if both are realistic about the state of the current market.

The process takes a lot longer these days than in the boom times but the longer it goes on, the stronger the buyer's hand. The seller's neighbours might not like it at all if they opt for less than a premium price, but they may ultimately receive considerably less if they hang on too long.

That's the way markets work. For a good many years there was no such thing as a bargain in Irish property. With no upside in sight and none likely for a long time yet, now there may be.

Report by Arthur Beesley - Irish Times.

Thursday, 11 December 2008

Property, Real Estate, Financial Jargon Guide...

2008 Review: AGENT SPEAK:

Jargon busting guide - revised for the recession...

BROWSING ON the internet, I came across a very helpful guide to property and financial jargon which was thoughtfully provided by Sherry FitzGerald. I felt obliged, however, to write up a revised version, which might be more suited to today's virtually non-existent property market.

Approval in principle : valid for no longer than 14 days from date of issue.

Appreciation : no longer applicable to Irish property.

Arrears : the term most frequently used this year.

Asking price : well, you can always ask, but don't expect to receive.

Auction : an extraordinary event where people actually competed with each other in order to buy a property. No longer necessary.

Auctioneer/estate agent : a dying breed (from starvation).

Arrangement fee : another bank scam.

Best and final offer : that's all you're getting. Actually, no, cut that by €50,000.

Bidding : a reckless act.

Booking deposit : the money the developers had to hand back.

Bridging loan : once of Golden Gate proportions. Now, no longer obtainable.

Broker : a pre-historic profession, no longer in existence.

Budget : a pointless exercise.

Capital : no longer applicable.

Capital gains tax : a tax we would now be thrilled to have to pay.

Caveat emptor : bit bloody late for that warning.

Collateral : the banks have a lien on everything including the wife, kids and the mistress. What more do they want?

Closing date : whenever the purchaser wants, even if it's Christmas Day.

Conditions of sale/contract of sale : dust-covered documents stacked up on now redundant conveyancing solicitors desks.

Contract : to include whatever the purchaser wants including the vendor's soul.

Conveyancing : a once lucrative little earner for Irish solicitors. Alas, no longer.

Deeds : paperwork which shuffles between one bank and another. If it moves, you pay dearly for its transfer.

Deferred payment : now regarded as normal practice.

Endowment mortgage : don't even consider it for a second.

Equity : no longer applicable to Irish property.

Fixed rate : somehow it never seems to be fixed in the borrower's favour.

Fixtures and fittings : whatever the purchaser wants, including your bed.

Gazundering : the most popular activity of 2008.

Guarantor : even God himself would no longer be considered good enough.

Interest-only loan : no longer on the bank menu.

Investment property : bit of an oxymoron.

Loan offer : now so rare that if you are lucky enough to get one, you frame it and hang it over your mantelpiece (that's if you're lucky enough to have one to hang it over).

Loan-to-value ratio (LTV) : could more appropriately stand for Lean Times for Vendors. Not something anybody wants to think about, let alone discuss these days.

Money laundering : if only we had any, we'd wash it twice daily.

Mortgage protection : something no one ever thought they would ever need.

Offer : so rare these days that you think you must be hearing things.

Private treaty sale : otherwise known as a Purgatory Trial Suffering.

Redemption figure : every last cent you own.

Reserve price : those were the days when you had the confidence to set one.

Sale agreed : as good as winning the Lotto.

Stamp duty : the money which used to flow into the Government coffers.

Standard variable rate : the rate of interest banks set depending on their mood on the day.

Square footage/square metres : always more when you are selling and less when you are buying.

Tracker mortgage : always impossible for you to track - hence the number of confused people sitting on the top level of the bus in the TV commercial shouting, "we still don't know what a tracker mortgage is".

Under offer : the vendors' state of purgatory.

Valuations : no longer possible to attempt.

Variable rate : the bank's way of successfully keeping you in a state of complete and utter confusion.

Vendor : a person at the mercy of a purchaser (if they are lucky).

Viewing : a rare event that warrants a chauffeur service and a red carpet.

Withdrawn : no longer happens. These days you would sell at any price.

Yield : no longer applicable.

Report by Isabel Morton - Irish Times.

Wednesday, 10 December 2008

U2 - House Swap Opposite Bono...

If you can't sell, swap: how the rich do it...

A Dublin property developer has acquired the Canadian embassy residence on nine acres opposite Bono's house in Killiney in exchange for a D6 home - and €3m

THE CANADIAN government has swapped its Killiney embassy residence for a lavishly renovated house in Ranelagh, plus cash, in a deal with property developer Michael Roden.

A foreign affairs spokesperson in Ottawa confirmed that Mr Roden had paid around 4.8 million Canadian dollars (€3.01m) in cash and given a detached house on Oakley Road in Ranelagh in exchange for the Canadians' nine-acre property on Strathmore Road, Killiney.

He plans to renovate the sprawling 1860s house which lies across the road from Bono's Vico Road home.

Strathmore has been owned by the Canadian government since 1957 when it bought it for £20,300. Last year they put it on the market at €17 million and moved new ambassador Pat Binns into an apartment in the Four Seasons Hotel in Ballsbridge.

The sale had been on the cards for a while: the house was expensive to keep, the grounds required two gardeners and ambassadors didn't like the long commute to the embassy's offices in the city. However Canadian expats objected to the sale of a house famous for its parties and cultural events.

They should be pleased with 22 Oakley Road. It has a series of grand reception rooms in over 604sq m (8,500sq ft) of living space and superb landscaped gardens front and back. Staff have moved in already and there are plans to erect a flagpole in the garden.

The six-bedroom house was placed on the market in March, priced at €12 million, a wildly optimistic price, given the downturn. One agent not involved in the sales reckons it to be worth closer to €8 million. The swap deal was arranged between estate agents Sherry FitzGerald and Lisney.

The idea of a property swap was first tried earlier this year by the French government which attempted to exchange its €50 million Ballsbridge residence and offices on Ailesbury Road, for alternative properties and cash. Despite receiving offers from at least three parties, the French deal did not go through, after frontrunner Denis O'Brien pulled out of negotiations with Paris.

Michael Roden is seen as one of the more astute operators in the residential property business. He came to prominence in 2003 when he sold the former Bank of Ireland playing fields in Mount Merrion to Niall Mellon for €50 million - double what he had paid for it four years previously. His Merrion Property Group owns several houses in Ballsbridge and in the city centre.

Strathmore has no less than three different entrances and it is possible that a number of houses could be built in its grounds. However, it's unlikely that any large scale development will be allowed in the medium term.

Report by Orna Mulcahy - Irish Times.

Tuesday, 9 December 2008

The Property Crash & A Very Middle Class Recession In Ireland...

It's less middle of the road, more end of the road as the reality of the recession sets in with mid-income families who'd become used to mochas, Maseratis and Manolo Blahniks, writes Justine McCarthy

You've probably heard most of the blood-curdling stories by now. There's that one about the corporate wide boys dumping their flash unpaid-for cars in the airport car park before hopping on the emigrant Airbus. And the one about crèches haemorrhaging toddlers as their highflying parents stagger to the dole office clutching their P45s. Or the one about builders offering free Lamborghinis and villas in the sun in a last-chance-saloon effort to flog three-bed new-builds in commuter-land. Or the mother 'n' father of all the doomsday tales: the one about the once mega-rich tycoon spending his last million hiring bodyguards to protect him from his angry creditors.

You've probably heard them, and thought: Sure, and pigs fly. Perhaps it comes from a defiant optimism rooted in the Irish psyche, or maybe it's the head-in–the-sand example set by the government, but one of the hallmarks of the recession so far is mass denial. In Grafton Street on a seasonally crisp afternoon three weeks before Christmas, window-shopper after window-shopper blamed the media. "They've everybody scared witless," scorned a woman outside opulent Brown Thomas while, inside, there was 40% off Armani and Burberry and the shrine to Manolo Blahnik shoes was quieter than Christmas night. Not a customer stirred.

"We're from Dungannon. We came down on the train this morning and we were expecting an awful air of gloom," said Mary and Leo Hurson, emerging from a card shop on one of the world's most expensive retail streets. "But it's not bad at all. We decided we wouldn't buy a thing while we're here. Our son lives in Newry and they won't leave the house at weekends because of all the shoppers arriving from the south. There was a six-mile queue last Saturday."

In a country where, until early last summer, spa treatments and Prague weekends were de rigueur and only the "new Irish" had jobs because everyone else had careers, the truth is dropping slowly. "It's probably as serious as it gets," says IIB Bank economist Austin Hughes. "We're coming from a situation of growing 60,000 jobs a year to talking about 60,000 jobs being at risk next year. There's a good chance we'll have deflation in Ireland next year but there's 'good deflation' and there's 'bad deflation'. Good deflation means your euro will stretch farther with prices going down. Bad deflation means people become so fearful they postpone spending. If every consumer does that, you're in real trouble. We're into the second year of a significant downswing now and it seems to be accelerating. We'll probably see the economy bounce to the bottom at the end of next year, though that doesn't mean it will start improving straight away. The darkest hour is probably still ahead of us in the early part of next year."

It takes a while for the impact to ripple outwards. People started losing their jobs last year, but it was kept as quiet as a secret. Then suddenly, one morning we woke up to a banking crisis, a currency crisis, a panicky budget, stockmarkets wobbling like jelly edifices, pension funds teetering, 155 jobs a day evaporating, jumble sales and Oxfam replacing Barneys and the Place Vendôme as the places to shop. In the wink of an eye, those indefatigable Celtic pups you used to see in the morning gridlock, refuelling themselves from outsize thermos mugs of coffee at the wheels of their (or the banks') Maseratis and Porsches, have vanished.

The departed
They've gone to Dubai, according to Donal O'Donoghue, Dublin director of Brunel, the technical recruitment arm of the Premier Group. "During the boom times in the last 12 years, mid- to-senior white-collar people in the construction sector were getting incredible salaries because demand outstripped supply for the likes of architects, quantity surveyors and engineers. That demand has completely gone from the market. Guys who were on €150,000 six months ago can't even get an interview in Ireland. They're going to the UK and the Middle East. Six months ago, if one of them came to us, we'd have had 10 job offers for them in an hour. There's so much fear now. We have quantity surveyors applying for sales jobs and office-support jobs. The ones with no ties for whom moving overseas is a possibility can go to Dubai and earn €120,000 tax-free and have a lower cost of living. We have a client company coming over from Canada in the next two weeks to recruit for construction jobs all over North America."

Many of the recently departed have pitched up in the traditional diaspora destinations of New York, Boston and San Francisco, says Ciaran Staunton, who emigrated from Mayo 26 years ago and owns O'Neill's restaurant and bar on Third Avenue. "I live in Sunnyside, Queens, and we've seen all the new faces fresh from Ireland in the stores around here. A lot of them come to me in the restaurant looking for jobs and they seem to be getting on fine. I needed a bartender and I rang the first seven names on my list but they'd all got jobs already. One young guy came into me the other day. He said he was born in Queens because his parents had moved over in 1984. They got Morrison visas and went home to Ireland when things got better. Now he's back looking for work."

With their exodus goes their spending power too. These were the people buying the trophy houses that now stand unsold like epitaphs to the good times. In the big law firms, the insolvency and labour-law departments are enjoying a revival but the conveyancing corridors are like ghost towns. That was the bread, butter and foie gras that sustained the 600 new solicitors coming out of college annually in the last decade.

"The activity in residential sales has reduced to a level we haven't seen in living memory. Values have been retracting for the last two years and business took a dive in the middle of last year," confirms Peter Stapleton, managing director of Lisneys, whose residential-sales team have been put on a three-day week until February. "We would see a lot of distress in families and in home ownership, from younger people to the elderly who've seen their life savings in shares fall in value and their homes, which were potentially tax-free lump sums, disappear. We expect to see more repossessions next year as people won't be able to meet their debts. I think 2009 will be the worst year and there should be signs in 2010 of it having bottomed out. But the market isn't going to come galloping back."

In Athlone, one of the regional towns that mushroomed during prosperity, senator Nicky McFadden is constantly being asked to intercede for people faced with losing their homes after losing their jobs. This week, she will accompany a constituent to her bank to plead for leniency. "This is a very proud woman. She never defaulted on anything. Her car was paid for, taxed and insured. She paid her mortgage every fortnight. She's been let go by a reputable firm. She has enough to make the next payment on the mortgage and after that she doesn't know what to do. I'm going to the bank with her to see if they'll agree to a moratorium on her mortgage. She's a frugal, thoughtful woman. She didn't squander money."

Deep depression
The realities of unemployment hit Sandra, who does not wish to be identified, like a wave when she lost her job in the accounts department of a Cork company 13 months ago. She had been earning more than €400 net a week. Suddenly, she had just €222 lone parent's allowance to fend for herself and her 12-year-old son.

"I went into a deep depression for four or five months. My mother was giving me money for coal. I couldn't buy my son little treats. If he asked me for €3 to go to the all-weather pitch with his friends, I had to say no. I was able to nearly halve my shopping bill when a Lidl opened near me. I work voluntarily in the Congress (Ictu) Centre for the Unemployed because it gets me out of the house. I've always worked and so have my family. Now everybody's struggling. But people are good. The hairdresser felt sorry for me and she did my highlights for free because I always had them done. I was able to pay her three weeks later. I'm borrowing money all the time. My son would like a Playstation 3 for Christmas... It was his birthday two weeks ago and he asked me for a party. I said I couldn't afford it so he paid for his own party out of the money he got in birthday cards from family and friends. He's a great kid. It's hard now to do the things I used to take for granted – being able to keep myself and my home and my son."

Not everything is gloomy about this recession, though. Emer Purcell of Hamper & Co in Dublin says she is repaying her customers' loyalty with a standard 10% discount this year. Though business is down by about 10%, she has taken on extra staff this year and is coping with a last-minute guilt splurge by employers who, having cancelled staff Christmas parties, are ordering modest hampers as gifts for their workers. "The media has everyone terrified and expecting Armageddon," she says. "When the banks regroup and the government steps up, there'll be a bit more confidence and business can come out of this better run."

Meanwhile, anybody with a secure job can look forward to lower prices and haggling for bargains with shop assistants who were once too posh to look at you. Harvey Norman might find Ireland "catastrophic" but John Lewis and Ikea are still coming. Have you noticed how the old rules of politeness are coming back?

Report - Tribune News

Monday, 8 December 2008

Houses For Sale - So Enticing - Hard Sell Style...

Buy my house and get me free - sellers turn to novel ways of enticing customers...

2008 Review: HARD SELL: Want a Lamborghini? A pad in Cape Verde? A wife? These days vendors are getting increasingly desperate, says Paul O'Doherty...

SO, IT'S come to this. You're sitting on your stack of blocks that someone in risk management - the irony of it - said would make a great investment five years ago, and now, your Polish long-term tenants have gone home and you can't sell, rent or live in it for love nor money.

Or, the bachelor pad has just become a fashion accessory too much - read, I can't afford it - and you're going to move back in with poor Mum and Dad.

You can take your pick from any number of examples. Meanwhile, the bank wants to know whether, having missed last month's repayment, you would mind calling in for some financial advice?

But how to shift that one-time prime piece of real estate that just won't budge? What you know for certain is that you've tried all the conventional methods.

You've contacted every auctioneer within a 20-mile radius, stuck it up in lights on MyHome and got extra planning permission for a gigantic For Sale sign.

And, now that it's been on the market for longer than anyone has lived in it, and despite all the arrows pointing towards it, you're coming to the conclusion that it might be time for something completely different.

So what are your options? Well, raffling your home might be the answer. Last month Tony Browne from Carrabullawn, in Corbally Co Limerick, decided to do just that and was in the process of applying for a lottery licence to sell his five-bedroom home that he'd paid €352,000 for nearly a year previously, the plan being to sell 800 tickets at €500.

While Browne is still waiting back for news from his solicitor about whether his lottery licence application has been successful, he told The Irish Times this week that he is "expecting good news within a day or so and I am 99 per cent certain that the house will be raffled before Christmas. Anyone interested in buying a ticket can text me at 085-7055648 and I'll get back to them."

It's an idea that's been tried before. Back in 1984, Barney Curley, the trainer and professional gambler, raffled his Middleton Park mansion in Mullingar when he sold 9,000 tickets at £200 a go.

Curley claimed later that the Irish and British lotteries copied his concept when it came to their own moneymaking systems. However, Curley's innovation wasn't without its difficulties: when the gardaí took a closer look it deemed this and other house-selling lotteries to be illegal and a matter for the courts.

Thinking a little bigger, some developers are even offering two-for-the-price-of-one on new homes. Warren Developments in Cork, for instance, is offering takers at its Desert Heights five-bedroom scheme in Clonakilty the carrot of a free one-bedroom apartment (worth around €70,000 with an income of €3,500 for three years) in Cape Verde, off the West African coast. The "stick"? Well, just the €595,000 asking price.

The buy-one-get-one-free is now a popular tool for desperate developers around the world from Europe - Bulgaria, England and Spain, for example - to the west coast of the US. For instance, Michael Crews Development in San Diego is offering buyers a $1.6 million pad in San Pasqual Valley with a $400,000 home in Escondido for free.

On a similar theme, a couple from Battle Creek Michigan is selling a doll's replica of their home for $169,000 and throwing in their real house for free.

While deals are on the increase, the notion of giving away the family car into the bargain is not as attractive as it seems.

In September a 30-year-old English entrepreneur, Rick Hill, tried to sell his six-bedroom home in Hockley, Essex, and had included his £150,000-odd yellow Lamborghini in the £1.15 million asking price. However, Hill has had no takers for his house or his sports car and has now decided to keep the mojo and reduce the price of his house to a more inviting £875,000. Elsewhere in the UK, Surrey developer Kevin Sheehan built a villa in Spain and sent 32,000 e-mails to register it on sales websites around the world.

Countrywide estate agency in Glasgow held a "sale day" of £16 million worth of homes with an average 22.5 per cent price cut.

Plymouth developer and agent David Trathen is accepting boats and horses in part-exchange deals for homes.

A woman in Florida is promising to marry the man who buys her three-bedroom townhouse - caveat emptor, if you ever needed to say it.

Business woman Barbara Corcoran, a real estate contributor for NBC's Today Show, maintains that "you should drop a dead personality into your livingroom" on a site such as MyHome: "like Marilyn Monroe, for instance, which will make people stop at your site and start talking" about seeing said celeb in your bathroom or kitchen.

Corcoran, who was selling a block of 82 one, two and three-bedroom apartments, averaged out the cost of each apartment and advertised all of them at the same price.

So, the three-bedroom penthouse was the same price as a one-bedroom ground-floor apartment. She sold everything within one day at a profit. Irish developers take note.

Report - Irish Times.

Sunday, 7 December 2008

Irish Property Prices - Get Real For 2009...

Falling prices represent new reality...

At the end of last year, estate agents and vendors alike were reeling from the price drops that the market had experienced during 2007.

But although they were shell-shocked, many industry experts were predicting that the rate at which prices were dropping would slow during 2008, and that prices would stabilise.

Twelvemonths on, that now seems like nothing more than wishful thinking. The banking crisis, soaring unemployment and extremely poor consumer confidence have all resulted in the market having one of its worst years in living memory, a fact underlined last week by a survey which found that 80 per cent of estate agents were selling less than three properties a month.

Even those potential buyers who are interested in buying are finding funding increasingly difficult to source, although observers are hopeful that the European Central Bank’s (ECB) policy of aggressive rate cuts will go some way towards alleviating that problem.

With asking prices having been cut by as much as 40 and 50 per cent in some areas, some vendors are simply taking their homes off the market and shelving plans to move.

According to Marian Finnegan, economist with the Sherry FitzGerald Group, stock levels have been steadily falling throughout the year.

‘‘The number of properties going off the market, either through sales or withdrawals, has been higher than the numbers coming onto the market every single month this year,”

she said. ‘‘If you compare stock levels this November to last November, the number of properties on our books is down by around a third, and we feel the situation will continue to tighten further up until Easter.”

Finnegan believes that last Thursday’s 0.75 per cent cut in interest rates by the ECB will have an effect on the market, but said it would take time to filter through. ‘‘It is certainly encouraging that AIB came out quickly to say that it will be passing on the rate increase; they are the market leaders, so that is very important,” she said.

‘‘What this rate cut definitely means is that everything priced at under €400,000 in Dublin is now cheaper to buy, rather than rent - and that is really important. But it will take a while for the effects of the rate cut to trickle down to people, given that we’re facing into Christmas.”

Finnegan expects prices to continue to fall in the early part of next year, but believes that activity levels will pick up around Easter. ‘‘When that happens, we would expect prices to stay flat,” she said.

Robert Ganly, of Knight Frank, said the rate cut was ‘‘encouraging’’, but said rates needed to come down more in order to boost confidence.

‘‘There’s still an awful lot of money out there, but people need to have the confidence to spend it,” he said.

Ganly said that some vendors were still not facing the full facts about prices. ‘‘The simple fact is that prices are down by about 40 per cent on their peak in the spring of 2007. In locations that are less than prime, that figure could be as much as 50 per cent,” he said.

‘‘But a lot of properties are still overpriced, and their owners are not taking the hard decisions that need to be taken in terms of cutting their asking price. At the same time, some agents are still reluctant to strongly deliver the message to vendors that this is where the market is now. But it’s in everyone’s interest to be realistic about the situation we’re in.”

Keith Lowe, of Douglas Newman Good, agreed.

‘‘We reduced prices on McDonagh Junction, a scheme of Section 23 apartments in Kilkenny, by 40 per cent around three weeks ago. We have now sold 52 units out of 55 and it just illustrates the fact that, if you drop your price, you will sell,” he said.

Lowe is optimistic about the prospects for the market in 2009.

‘‘Things certainly won’t be returning to the way they used to be, but I do believe that the number of transactions will pick up. Last week’s rate cut has taken €300 a month off a €400,000 mortgage - that is quite a drop and it has to have an effect,” he said.

‘‘Everyone tries to predict what prices will do next; it’s virtually impossible to do so, but I do feel that if someone buys a property now, they will have got the majority of the price drop.”

He added that, for the first time in a long time, he has noticed investors returning to the market. ‘‘It is very much at the bottom end of the second-hand market, but I think it’s significant nonetheless,” he said.

‘‘You can now buy a house in areas of west Dublin like Clondalkin for €250,000 and rent it out for between €1,200 and €1,300 a month, so it’s paying for itself. We are going to see more of that type of buyer coming back into the market over the next few months.”

At the upper end of the market, a number of vendors found buyers for their properties, but only after substantial price cuts. Savills sold Ceanchor House in Howth, the home of Jennifer Guinness, for between €7.5 million and €8 million the house initially went on the market in 2006 for €12million.

In Foxrock, Fairholme on Brighton Road in Foxrock made €4.2milli on through Sherry FitzGerald, and the same agents secured €5.7 million for Glenarm on nearby Torquay Road.

Knight Frank handled the private treaty sale of singer Lisa Stansfield’s Dalkey home, Mount Henry on Torca Road.

The house had gone under the hammer with an AMV of €8 million in June 2007, but the asking price was subsequently cut to €6 million.

In Monkstown, Willow Lodge at 5 Richmond Hill was sold by Sherry FitzGerald, which had quoted €4 million.

Report by Gillian Nelis Sunday Business Post.

Saturday, 6 December 2008

Ireland - How Affordable Are Affordable Homes?...

Homes at a discount - but are they still a good buy?

2008 Review: AFFORDABLE HOMES: There are lots of apartments and houses for sale under the Government's Affordable Homes schemes, writes Frances O'Rourke

AOIFE MACMAHON had been renting for years when she applied to Dún Laoghaire-Rathdown County Council (DLRCOCO) for an affordable house in November 2005. "The property market was at its peak and my mum urged me to apply. A couple of weeks later I got a letter saying I was number 168 on the list."

After that, Aoife - a single 36-year-old media buyer with an income under the €58,000 affordable eligibility threshold - forgot about her application. She was happy to go on renting her apartment near the Luas in Dundrum; she had lived there for over five years but buying "was off the radar - apartments cost from €600,000 up" and anyway she had always dreamed of living near the sea. In January 2007 she got a call from the council. "There was a two-bed unit available with my name on it." The apartment was in a development called Olcovar, just beyond the village of Shankill; its market value at the time was €425,000; the affordable price to Aoife was €235,000 - a 45 per cent discount.

"Next day I was interviewed by the council to make sure I could afford mortgage repayments and so on." (She can, but needs to rent out a room - her mortgage repayments are twice the rent she was paying).

The council brought her to see the site where the scheme was being built - "it's lovely, very green, and five to 10 minutes' walk from the sea!" The deal was done: Aoife completed the purchase in August 2007, closed finally just before Christmas a year ago. "It was like winning the lottery, something I thought could never happen to me."

Local authorities around the country provided lucky buyers like Aoife with over 3,500 affordable homes in 2007, under one of the schemes first introduced in 1999 to meet the needs of first-time buyers who were being priced out of the market by the seemingly unstoppable property boom.

The schemes - which give buyers discounts on newly-built homes ranging from 15 to 40 per cent off the open market price, subject to a clawback if they sell it within 20 years - have undergone several changes since then. In 2006 the Affordable Homes Partnership (AHP) was established to speed up delivery of affordable homes and provide information to the public: in the six months to June 2008, 2,059 affordable homes were delivered by local authorities, a rise of 73 per cent on the same period in 2007. The bulk of these homes are in recent private developments- like Beacon Court in Sandyford and St Edmund's in Palmerstown - all over the country.

But the dramatic fall in house prices is affecting the affordable homes market, as a quick look at local authority websites will show: the difference between the market price and the affordable price of homes in a place like Adamstown Square in west Dublin, for example, has narrowed considerably in recent months.

But reports that some affordable homes are dearer than the same homes being sold on the open market have been quashed by the AHP, whose chief executive John O'Connor says: "Our advice to local authorities is to make discounts at least 15 per cent lower than the market price at time of purchase."

One of the big attractions of an affordable home right now is that you can get one from one of the AHP's approved lenders with a 3 per cent deposit. The drawback are clawback provisions (see panel) which could wipe out any price gain if a property is sold, especially within the first 10 years of purchase.

The odds are that a young adult like Aoife buying, say, a two-bed apartment in their twenties or thirties, will want to trade up to a two/three-bedroom house within 10 years if they marry and start a family. The good news is that under the Government's new shared equity scheme, due to be introduced next year, affordable homes buyers may qualify for a second, larger affordable home.

The shared equity scheme - under which the State retains a percentage stake in an affordable home - will replace all existing affordable homes schemes: eligible buyers will still be offered homes at varying discounts, but will have to pay back the equity if they sell (or at the end of a 35-year mortgage term). The legislation for this scheme is currently before the Seanad but it is not likely to be up and running before autumn 2009.

John O'Connor advises buyers of all homes - affordable or not - to think carefully about whether they really want to buy and not just to rush into it. "Often people buying affordable homes don't pay attention to the market price, aren't aware of what's going on in the market."


What are affordable homes : it is one that you buy at a discount to the market price, to live in. If you sell it within 20 years, you will have to pay back a percentage to the local authority. They are a mix of one to three-bed apartments and two and three-bed houses, mostly in private developments around the country.

To qualify: you must be a first-time buyer, usually with an income of between €25,000 and €58,000 if single and under €75,000 for a couple and be able to make mortgage repayments. Divorced and separated people can also qualify.

How do you apply: you apply to the local authority in the area you want to live in but can apply to as many as you want; applying to a number increases your chances of getting an offer. You can apply to the four Dublin councils for a single €50 fee.

How long before you get an offer? The average time is 17 months.

How are they allocated? Mostly they are offered on a first come, first served basis. Dublin City Council operates a lottery.

How much do they cost? Prices of properties on the affordable homes website currently range from around €127,000 to around €300,000 - but should be averaging 15 to 30 per cent below the market price of the property. They will all cost less than the open market price.

How can I finance it? With a mortgage either from a local authority or from six named lenders - they include EBS and Bank of Ireland. You will be able to borrow up to 97 per cent of the purchase price. You cannot rent out your home but you can rent a room (and get tax relief on the rental income).

What if I want to sell? If you sell within the first 10 years, the local authority will claw back a percentage of the sale price that you got as a discount when you bought your home. If the discount was 30 per cent, the clawback is 30 per cent of the selling price. But if the market value of the home has fallen since you bought it, the percentage discount is based on the difference between the new lower price and the price you paid. If the market value falls to the price you paid, there will be no clawback. After the first 10 years, the clawback reduces by one-tenth for every year - and after 20 years, there is no clawback.

Report from Irish Times.

Friday, 5 December 2008

Irish House Prices Crash...

Prices down by 40% since peak...

2008 Review: PROPERTY VALUES: Residential property prices have fallen further than people realise, says estate agency chief Keith Lowe - but he says next year could show a recovery

THERE IS STILL much after-dinner discussion as to what is really happening in the residential property market, only now the subject matter has changed from how high prices are, to how far property prices have really fallen.

At the moment, due to data protection legislation, the media, buyers and sellers alike are starved of accurate information on the actual sale prices that are being achieved for property, leaving consumers with a wholly unsatisfactory vacuum of information.

As a result, most interested parties turn to the plethora of house price indices produced by a variety of organisations.

One of the most respected indexes is the Permanent TSB/ESRI house price survey. Having the ESRI involved has given this survey independence whereas other surveys are deemed to have some sort of vested interest. The highest percentage price drop reported by the Permanent TSB/ESRI from peak, Dublin and nationally, is 16 per cent.

The situation on the ground provides a far more stark reality. It is our view that residential property prices in certain areas of the country have dropped by as much as 40 per cent since their peak in September 2006, although not all areas of the market or the country have witnessed this level of price decrease.

One of the main public indicators of substantial price reductions has been the new homes market where advertisements have been aggressively showing the actual price cuts being offered.

What is interesting is that where new-homes developments have dropped their prices sufficiently (and I say sufficiently!) sales have been strong.

As agents, we have had first-hand experience of this on a number of developments across the country where prices have dropped by 20 per cent to 40 per cent and strong sales activity followed as a direct result.

We recently dropped prices by 40 per cent on a tax-incentive apartment scheme at the MacDonagh Junction shopping and leisure complex in Kilkenny city.

As a result over 40 units have been sold. To me, this level of activity proves the point that there are plenty of buyers who wish to purchase but only when they see what they consider to be excellent value.

We have witnessed similar percentage cuts in prices in the second-hand market.

Dublin 4 and 6 have suffered substantial price falls, but properties in the higher price brackets seem to have been affected most.

Houses under €1 million have dropped by about 20 per cent, while the reduction on properties between €1.5 million and €4 million has been up to 30 per cent, but sales at this price level and over have been very thin on the ground.

South Dublin has shown a similar trend. As an example, we sold two fine semi-detached homes at Dundrum and Ballinteer in 2006 for €660,000 and €820,000 respectively.

This year we sold identical houses in the same estates for €505,000 and €520,000 respectively, showing price falls of 23.5 per cent and 36.5 per cent.

We also sold a pre-war house on an established road in south Co Dublin in 2006 for €1,900,000 and a very similar but smaller property on the same road last May sold for just under €1,200,000 - representing a 37 per cent decrease.

The position in north Dublin is also similar.

We recently sold a house in Sutton for €2,750,000 that would have sold for €4,000,000 two years ago. We also sold a house in Sutton in June 2006 for €1,200,000 and we recently agreed a sale on an identical property in the last few weeks for a price close to €750,000 - a 37.5 per cent drop.

In west Dublin, prices of entry level homes have dropped by approximately 25 per cent in the last two years.

For example, we sold three similar homes in the same modern estate for about €450,000 each in 2006. Last week we sold an identical property in the same estate for €350,000 - a fall of 22 per cent.

While it is only right to acknowledge that many recent buyers will be concerned with the speed and extent of these price reductions, the property market is cyclical and I know that house prices will rebound to levels higher than today at some stage in the future, hopefully sooner rather than later.

It is my belief that next year could show a recovery in the residential market.

My reasoning is that residential property prices have fallen substantially and further than people realise.

Interest rates are now on a rapid downward cycle. As interest rates continue to fall we will soon witness rents exceeding mortgage repayments which will entice tenants and investors into the buying arena once again.

In addition, new homes commencements which form part of a multi-unit development (ie, excluding one-off housing) have collapsed in recent months, running at an annualised rate of around 5,000 completions.

This brings us closer to a time when sales will exceed completions, a key point in reducing the overhang of stock in the market.

Many potential buyers are trying to do the near impossible and predict the bottom of the market but, if a buyer purchases now, I would argue that they will have experienced the majority of the anticipated total price fall.

So, with the up-to-40 per cent drop in prices of new and re-sale properties, with interest rates on a downward trend and potential new and second-hand supply shortages then, if you have the confidence and the money, now could be a very prudent time to enter or re-enter the market.

Report by Keith Lowe - Irish Times.

Thursday, 4 December 2008

Daft Property Scene Ireland: 2008, 2009...

2008 Review: Buyers haven't gone away, you know, says Ronan O'Driscoll - but selling the 30,000 empty new homes will be a challenge...

THANKFULLY, WE are coming to the end of the GUBU year for new homes in Ireland. It was unquestionably grotesque, unbelievable, bizarre and unprecedented. Whilst we entered 2008 with some degree of nervousness, we were hopeful that it would be a better year than the annus horribilis that was 2007. Sadly, the market went from bad to very much worse.

Savills started the year in spectacular style, selling over 650 new homes between January and Easter, with very successful new launches virtually every week. This demand had been triggered by some of our leading developers who reduced prices significantly in the early part of the year.

The market responded very positively to the value, with reductions of up to 25 per cent on some new Dublin projects. In January, we even had queues at three of our new developments for Manor Park Homebuilders, Capel Developments and Albany Homes.

To a certain extent, however, we became victims of our own success. Most of the other developers and agents followed suit by also reducing prices, so the impact was diminished and, by the end of April, even reduced prices were not generating any new sales. The credit crunch had hit and suddenly the Irish realised that they were not the only ones feeding on a frenzy of easy credit and supernormal capital growth. The financial world changed very quickly and the property market retrenched. In the second half of the year, virtually nothing happened, with the exception of economists who rubbed their hands together enjoying the schadenfreude. They had, eventually, been proven right.

So, the new world is upon us. We are now faced with the prospect of having to sell over 30,000 new homes, which stand idle today in Ireland.

Mortgages will not be as freely available anymore and the economic outlook is bleak. Tough times are ahead, it's fair to say.

This oversupply, which equates to a city the size of Galway, is made up mainly of urban apartments and rural new housing and holiday developments. I believe the outlook for the former is far better than for the latter.

I don't dwell on statistics because I believe that 87 per cent of them are made up on the spot; however, we have seen prices of new developments in Ireland fall by as much as 40 per cent so far this year in Ireland. The number of sales has dropped dramatically and is currently down by 70 per cent on 2006 levels.

Spectacular. Depressing. Encouraging. It is encouraging because I believe we have finally reached the agonising bottom in terms of price. We are also facing the prospect of a lengthy period of very, very low interest rates. Whilst the macro economic ills will prevail, those who do take out mortgages next year will enjoy the double-whammy of really attractive low prices and extremely favourable low interest rates. It is a very long time since those two factors co-existed.

In many cases, developers are now offering new homes at cost price or less. As they analyse and focus on the stockpile of completed properties, many more will offer extremely good value next year.

By next spring, we will most probably see further interest rate reductions. Over the past two-and-a-half years, people have been renting rather than buying. With lower prices and lower interest rates, it is now much more sensible for people to pay off their own mortgage rather than someone else's.

The market is on the floor and people will be able to get some very good value. Since the top-of-the-market in May 2006, 29 months ago, people have been holding back and it is fair to assume that during that period, a level of pent-up demand has been building.

"They haven't gone away, you know." This demand will be released at some point soon.

In general economic terms, 2009 will be a very poor year. The residential property market is, to a certain extent, ahead of the economic situation. The market has been weak for a much longer time than the economy. Property was overvalued at the peak in 2006 but it is my contention that it has now, in the main, corrected. The difficulty is that, however low the price, confidence will be slow to return in a recessionary environment.

What is certain is that, like bank shares, property prices are attractive right now and those willing to make an early move should enjoy the maximum gain.

The outlook for non-city based developments remains very challenging. First-time buyers can now afford to buy in the cities so they don't need to tolerate long commutes anymore. It will therefore take much longer for out-of-town locations to recover. Similarly, the Irish holiday home market has been terribly damaged by oversupply, which was driven by over-generous tax breaks and over-enthusiastic planners and county councillors.

Residential investment activity overseas has virtually ceased and I do not expect any real recovery in this sector until the domestic market substantially recovers and credit frees up.

Irish investors had become extremely active on a global scale and have punched well above their weight mainly in the UK, southern and eastern Europe, North America and Dubai. Virtually all of these markets have been impacted to varying degrees and Irish investors who had intended to sell-on their apartment upon completion will have no option but to hold their property and generate rental income in the interim.

Next year, I believe that finally, following almost three years of turbulence, the market will turn the corner. There will almost certainly be casualties in the sector as the industry continues to adjust to a smaller, leaner and more competitive model.

The number of new homes completed will be in the region of 20,000 units nationally, or a quarter of the 2005 figure. Developers will be very slow to start new projects, so new home completions next year will be taken from built stock. Supply will therefore continue to reduce.

Amid all this, however, 2009 will offer definite value and I believe that we will look back on it as the year of the beginning of the upturn.

Report by Ronan O'Driscoll - Irish Times

Wednesday, 3 December 2008

Dublin House For Sale - €1 Million Price Drop...

€1 million price drop for well located property...

DONNYBROOK €2.25m This four-bedroom house on Nutley Lane, which was extensively and expensively refurbished, has seen its price fall by more than €1 million

EXACTLY ONE YEAR ago we carried a review of a house at 18 Nutley Lane in Donnybrook that had been bought as an investment with the intention of doing it up and sellling it on at a profit.

The owners of the four-bedroom house purchased it in 2006, paid stamp duty at nine per cent, and spent several hundred thousand on renovations. In all, they probably spent in the region of €3.5 million.

It went back on the market last November at €3.25 million, to snorts of disbelief from rival agents who were finding it difficult to shift property in the area for a good deal less.

The price has been gradually dropping ever since, but the latest discount has landed number 18 at €2.25 million, a full million below its 2007 price.

Selling agent Felicity Fox hopes this latest cut might tempt buyers who scent a bargain and don't want the hassle of builders.

Located close to Elm Park Golf Club and RTÉ, it was originally a fairly modest semi but now has 258 sq m (2,780 sq ft) of accommodation with a good mix of family and formal space leading off the room-sized hallway.

There are two fine interconnecting reception rooms and a 36ft eat-in kitchen that spans the back of the house and overlooks the 40ft back garden. Pale oak floors throughout the ground floor make the space seem larger.

Upstairs, all the bedrooms are comfortable doubles while the main bedroom has a dressingroom and shower room.

18 Nutley Lane, Donnybrook, Dublin 4

Close to Elm Park Golf Club and RTE, with 258 sq m (2,780 sq ft) of accommodation

Agent : Felicity Fox

Report Irish Times Property

Property Ireland - Irish Land Values Go Up Like A Rocket & Fall Like A Stone...

Land values go up like a rocket and fall like a stone...

SITE EVALUATION: Why would a developer bid €225,000 an acre in 1999 and €2.8m an acre in 2007? Bill Nowlan explains

WHY HAS THE value of development land fallen so precipitously, by over 50 per cent in the past 12 months, when residential and other property values have only fallen by 25 per cent or 30 per cent?

There is an old property cliché which says that "land values go up like a rocket and fall like a stone" and this seems to have been bourne out in Ireland over recent years. Why does this happen?

To answer this question requires an insight into the way developers prepare their bids for development land and I set out below a glimpse into that process.

Let me start by looking at how a developer in normal times estimates his bid for a plot of land with planning permission, which in estate agents' parlance is ready-to-go.

The key starting point in a developers equations is the expected sale price of the finished buildings which they intend to build on the land. In a stable market this is generally easy to predict as developers will be familiar with sales prices for new and second-hand houses in their area. They will know, for example, that three-bed semis sell for a certain level.

But, in a rapidly rising (or falling) market it gets more difficult because it takes at least two years from the time a developer buys land with planning permission until they have houses or apartments to sell - or even longer if they want to alter or improve the planning permission.

Also, bear in mind that land to a developer is only one of the ingredients that goes to make up the finished product of a house, or an office or a shopping centre. The other ingredients being bricks and mortar, taxes, professional fees, financing, local cost, local authority levies, social and affordable obligations and a profit margin - all of which will change over time and have to be estimated in his bid price.

Let us look at a situation of a hypothetical fully serviced plot of 10 acres which comes up for sale with full planning permission for a scheme of 100 houses in an area where three-bed semis sell for €350,000. Let's also assume that there is a normal market.

A developer's calculation of the price they could afford to pay for such land would look like that outlined in table 1 (see near right). The price the developer bids would be calculated by multiplying the value per site at €84,000 by the number of sites and, hey presto, you have a bid price for the 10-acre plot. In this case at a density of say 10 to the acre, this would give a bid price of €840,000 per acre or €8.4 million for the 10 acres.

This looks quite simple and was so at the beginning of the Celtic Tiger. But other factors got added into the melting pot of land values over the past 10 years.

First, there was the rapid growth in overall prosperity and population linked to cheap and available credit.

This created a demand for accommodation over and above the development industry's capacity to deliver. In turn, this resulted in sales prices for new and second-hand houses being increased to ration available supply through the process of market price escalation.

The average price of a house in Dublin increased from €82,400 in 1996 to €428,000 in 2007 - but fell to €395,000 in January 2008 and is still going south. My projection for January 2009 is €350,000.

Second, various State planning rules significantly increased the permitted density of new developments on each acre of land - in some cases by more than doubling the permitted density of units per acre.

Third, from 2002 onwards the Government introduced the Part V Social and Affordable obligation which transfers 20 per cent of land or its value to the local authority. They also significantly increased the levy for services.

These factors changed the developers' calculations progressively. Some of the changes increased land values and others had a downward influence. How did this pan-out over the long term?

In the set of calculations (see table 2 right) I have taken the average sale price of a Dublin house from the Permanent TSB Index over a 10-year period from 1999. Then, using professional quantity surveying advice and the SCS building cost index for houses, I have worked out the value that a developer would bid per acre at different times between 1999 and 2008 with a projection for 2009.

Thus a developer would only bid €225,000 an acre in 1999 but by 2001 he could bid €1,069,000 for the same acre and still make his margin. By 2007 he could nearly bid double this amount again at €2.8 million per acre and still expect to make his 15 per cent margin.

The reason for this is that, for every €50,000 increase in house prices, almost €40,000 went straight into land values. Thus the leverage effect of increasing house values went straight into the pocket of landowners.

This table traces reasonably accurately the actual value of land in suburban Dublin over the 12-year period. There would be variations for the attributes of any given location which cannot be captured in a generic example but it verifies the "up like a rocket" part of the cliché. The calculations for apartment sites and other city sites would be similar but the technical details as to construction cost and sales prices would be different and give different site values.

The calculation also demonstrates why land values have increased for the 10 years of that period and why they have fallen so significantly over the past 18 months. They also show why the sky high land values of early 2007 are unlikely to return for some time, particularly as the oversupply of houses and the ready availability of development land are unlikely to replicate the condition of the mid part of this decade. Indeed, it would be hard to imagine a situation where developers will bid for land based on sales prices of completed units escalating by 10 per cent or 20 per cent per annum which they did up to 2007.

But, like it or not, this is the way that developers did and do their sums. It is this bidding process that forced land values up to close to €3 million per acre in many Dublin suburban locations. But it is also the logic behind why land values have come back down to about a quarter of this level today when individual house values have fallen by only about 25 per cent. As house prices fall the impact of a €50,000 decrease goes straight into the land element and thus multiplies the effect of a fall in site values.

The second question posed was to know how professional valuers actually value ready-to-go development land. In fact, the professional valuer simply does the developers calculations exactly as above. In real life far more detail goes into the calculations than I can show in this example but the essence of the analysis is the same. A valuer will also look at comparable sale prices of other land in the vicinity to verify their opinion of value.

I am sure that you will be saying to yourself that this is all very well for ready-to-go sites but what about the pricing of land that is not ready-to-go. The developer's bidding and valuation process for such land is more difficult and the valuer prepares similar calculations but discounts them for the delay, cost and risks of making the site ready-to-go.

And of course there is no guarantee that such land will become ready-to-go or when it might happen, so this factor is also built into the valuation.

Report by Bill Nowlan - Irish Times.

Ireland's Property Bubble - Irish Real Estate Bubble...

Bubble bubble toil and trouble...

Bargain House For Sale In Ireland - Daft Property Scene...

Sunday, 30 November 2008

Irish Property Prices In Freefall - The Daft Property Scene In Ireland...

How Low Dare You Go?

...With few property deals being done and prices in freefall, many vendors are wondering what their bottom line should be to get a sale...

House prices are sliding – and fast. Yet while most vendors now accept that they have to cut prices in order to tempt buyers, despite all the potential bargains on the market, statistics suggest that buyers are still deterred.

Lack of liquidity, the prospect of further price falls, job losses and a worsening economic climate are taking its toll.

In 2007, 158,000 people drew down mortgage loans. Frank Conway of the Irish Mortgage Corporation suggests this is down by as much as 36% this year – so far.

According to Sherry FitzGerald's latest House Price Index prices have fallen by 26% since their peak in June 2006, with prices down by as much as 32.8% in Dublin.

At the lower end of the market, vendors slashing €60,000, €70,000, €80,000 off the price of their property is common. High-end homes have been reduced by hundreds of thousands of euro and in some cases millions.

Website, which lists price drops of hundreds of properties all over Ireland, shows the price of one home in South Dublin slashed by 47%, another property in Westmeath has been reduced by 40%

In Kildare, Moyglare Manor, a 17-bed house hotel on 13 acres went to auction last year quoting €10m. It was subsequently reduced and was presented for auction again this year at €4m. It didn't sell and is now quoting €3.75m.

"The property has had no offers as yet," says Robert Hoban of Savills, adding that the vendors are open to negotiating with a cash buyer. "The reality is that people aren't willing to commit to paying high price tags in this market until they know for certain what is going to happen."

In south Dublin, a detached five-bed, 2,400sq ft house at 6 Richmond, Newpark Avenue, Blackrock went on the market earlier this year at €1.6m. It's been reduced several times and is now selling for €895,000.

Agent Andrew Allen of Allen & Jacobs Estates reports that the property has had viewings but no firm offers. "Based on price per square footage, it's certainly a good buy and possibly the cheapest in Blackrock," he says.

Reports abound of vendors who have had their property on the market for over a year without a single viewing. While others who have reduced the price of their property four and five times are still failing to attract a buyer.

No-one wants to undervalue their home, but many are now wondering just how low do they have to go to get a sale?

Some optimistic estate agents are predicting a 'bottoming out' soon. Other experts say that prices will continue to fall by a further eight to 10% next year, while commentators on property blog sites are predicting an Armageddon scenario and price drops of 80% – although they've little evidence to back this up.

Estate agent Owen Reilly believes that prices are close to bottoming in Dublin city centre but that prices in the suburbs still have a while to go.

He says many vendors reacted far too late to price reductions and are now being forced to make even bigger cuts.

"Prices are only now at a stage where estate agents advised them to be six months ago," says Reilly who's expecting a lengthy period of inactivity in terms of transactions with only those who have to sell or have to buy doing business next year.

On a more optimistic note he adds that when the market does pick up, prices could spike by as much as 5% in some areas, then level off.

A recent report on the economy by Davy Stockbroker says 'real progress' will not be made in the property market until property prices fall to a clearing level and mortgage availability improves.
Rossa White, economist at Davy's believes prices will fall a further 11.5% next year, and possibly more.

He says that there's still a lack of realism in the second-hand market. "Some people still expect their house to sell for 2006 prices," says White.

Dermot O'Leary chief economist, Goodbody Stockbrokers, expects prices to drop by a further 10% next year, adding that the rate of decline is very much a regional issue and that property prices will be affected by location and type of property.

"There is a huge oversupply of property in rural areas, particularly the midlands.

"A lack of liquidity and jobs losses means these areas can expect further price drops," he says,

With so many conflicting reports as to just how far prices will fall next year, Paul Murgatroyd, economist, Douglas Newman Good is perhaps most accurate when he says: "it's anyone's guess."

"No-one really knows when the bottom is until after it's passed," says Murgatroyd, adding that vendors who really want to sell will have to continue to reduce the price until someone buys.

He advises that all offers be considered, no matter how ridiculous.

Report by Roisin Carabine - Tribune Property

Saturday, 29 November 2008

Ireland - Boom To Gloom - Average House Price Drops €46,000

THE average house has lost almost €46,000 of its property-boom value. Prices fell in October for the 20th month in a row.

House prices are now down 15pc from their peak of January/February 2007, according to the latest figures from the Permanent TSB/ESRI house price index.

Over the past year prices are down 10.2pc after average prices nationally showed a fall of 0.8pc in October, a marginally smaller drop than in the previous two months.

However, many economists feel that price declines have been more severe, with a number of estate agencies estimating that prices are already 30pc off their peak.

And new figures out yesterday from the Central Bank seemed to back this up. They showed that residential mortgage lending is at its lowest level in 22 years.

Permanent TSB executive Niall O'Grady yesterday defended the accuracy of the house price index. "The index remains as valid as it was when house prices were rising," he said.

However, he admitted that there was a three-month time lag in the figures. Economists have said the house price index is based on mortgage transactions put through by Permanent TSB and stress that the volume of business Permanent TSB is doing is down relative to its competitors. Mr O'Grady said the latest version of the index has picked up a sharp drop in Dublin house prices, which fell by 2.6pc in the month -- compared with 1.4pc outside Dublin.
If the decline stayed at that level for a year it would translate into an annualised fall of around 30pc, he said.

Across the country prices have fallen by 7.8pc in the first 10 months of 2008, leaving the average price at €265,364. Prices in the commuter counties around Dublin dropped by 1.9pc.
Prices for first-time buyers fell 2.1pc and those for second-time buyers were down 0.4pc. New house prices were 0.5pc lower.

Also yesterday, new figures from the Central Bank said mortgage lending figures for October were "exceptionally weak".

The annual rate of growth in October fell to 7.6pc, the lowest figure since 1986.

The amount of money lent for mortgages rose by just €26m during October, compared with the average monthly increase of almost €2bn at the height of the housing boom in 2006.

Mortgage lending had recovered a little in September after a very quiet August, but the Central Bank says the October figures reflect banks' tightening credit rules for households.

Overall private sector credit grew at an annual rate of 9pc, compared with 10.7pc in September.

Report by Charlie Weston Personal Finance Editor -Irish Independent