Saturday, 31 January 2009

The New Paradigm For Ireland?

Cowen's call to arms in time of need...

The nation is demanding an Obama-esque state of the nation address from the Taoiseach. Here, Frank McNally offers his take on what Brian Cowen might say...

‘FRIENDS, CITIZENS, COUNTRYMEN: lend me your ears! And not just your ears. If there’s anything else you can lend me, all pledges would be gratefully accepted. We have people ready to take your call now at the number showing on screen. But I’ll come back to that later.

Sixty-five years ago, in the midst of another national emergency, Éamon de Valera addressed the people, much as I am doing this evening, and chose the occasion to outline his vision of the ideal Ireland.

He said the country of which he dreamed was one whose people would be satisfied with frugal comforts, and who devoted their leisure time to things of the spirit.

It was a land in which material wealth would be valued only as the basis for right living; a land whose countryside was bright with cosy homesteads; whose fields were joyous with the sounds of industry, with the contests of athletic youth, and the laughter of happy maidens.

It would be also be a land, he said, in which firesides were forums for the wisdom of serene old age.

I have to tell you tonight, citizens, that based on the latest exchequer figures, many of de Valera’s main aims are now at last within our reach.

For the first time in decades, right living is expected to outstrip material wealth in Ireland during the current fiscal year. That surplus is likely to grow in 2010 and 2011.

The Government also projects huge opportunities for frugality, going forward. In addition, we predict a dramatic increase in the amount of leisure time that will be available for devotion to things of the spirit, or whatever.

On the question of athletic youth contests, the picture is even rosier. Munster and Leinster are through to the last eight in the Heineken Cup. Bernard Dunne is getting a shot at a world title. And the new Lansdowne Road has cornered a European soccer final even before it opens.

As for the laughter of happy maidens, I passed a couple of hen parties on the way out to RTÉ this evening and I never saw people looking so happy. Based on the get-ups they were wearing, “maidens” might be overstating it. But at least they were laughing.

That’s the good news. The bad news, vis-a-vis de Valera’s vision, concerns the homesteads. The countryside is certainly bright with them, at least during the day. Not so much at night, unfortunately, since many of them are still empty.

The other black spot is industry. It turns out that in so far as there will be any fields joyous with its sounds over the next year or two, they may be in Poland and other low-wage economies; which is where the people who were meant to make our homesteads cosy have gone back to.

But all in all, if we look on the current crisis through Dev’s eyes, the new economic paradigm is not as bleak as it seems. I use the word “paradigm” deliberately, even though I have been criticised for doing so. Apparently nobody else knows what it means.

Maybe that’s why I like it. It has a calming effect on me, because it makes our problems seem more manageable. If I wasn’t able to say “the new paradigm”, I might be tempted to say we were up s**t creek without a paddle. And that might start another run on the banks.

WE HAVE A HISTORY in this country of using euphemisms during times of crisis. The second World War was ‘the Emergency’. Thirty years of war in the North was ‘the Troubles’. I’m hoping that “the new paradigm” will become the official description for the latest situation. That’s why I again invite you all to internalise it, as soon as possible.

I chose to evoke the address of Éamon de Valera earlier because a more recent precedent is embarrassing. Thirty years ago, another former taoiseach whose name I won’t mention went on television like this to say that we as a people were living way beyond our means.

He was certainly speaking from personal experience there. But when he said later in the speech that we would all have to tighten our belts, it turned out that he was the only one wearing braces.

The Irish people need have no fear that I will not share whatever hardships lie ahead. As a token of my personal commitment going forward, and inspired by my fellow Offaly man Barack Obama, I am pleased to announce that, earlier today, I joined a gym.

I will be working out at 5.30 every morning from now on, followed by a six-mile jog to Government Buildings. I hope soon to regain the gazelle-like shape I had when I played under-21 for Offaly. That was before I turned into a metaphor for the Celtic Tiger, with more than a decade of unchecked growth.

Barring injury, I plan to run the Dublin City Marathon next October, to raise funds for the Minister for Finance. Again, all donations are welcome: except – if you’re watching – from you, Ben. You’ll understand if I draw a line there. The gym membership was enough.

But getting back to politics, the opposition has an important role in the resolution of the current crisis and I hope it will play its part honourably. The fact is we are where we are, and there is no point now in anyone indulging in the blame game for whatever mistakes may have been made.

If I was to do that, I could point the finger at my immediate predecessor, who for years assured the economy of a soft landing. Then he handed me the controls of the plane and pressed his ejector button just before a flock of geese flew in to both engines.

He was in such a hurry getting out of here, he broke his leg. Now I’ve been left with a stricken aircraft to land, and I can’t see a river anywhere.

The important thing is not to panic. It’s only the new paradigm, after all.

I said in the Dáil a few days ago that I would lead the country my way. This may have sounded arrogant. But times of emergency call for strong leadership. So I make no apology for asserting my authority.

In the difficult months ahead, to use a popular phrase, it will have to be ‘my way or the highway’. And although I haven’t told the Minister for Transport yet, the highway has just been cancelled.

I WANT TO FINISH this broadcast by returning to de Valera’s vision: in particular to his hope that the firesides of Ireland would become forums for the wisdom of serene old age.

Given what’s happened to pension funds recently, I can’t promise serenity to anyone retiring in the near future. But I would urge all you seniors out there, if you can still afford a fire, to organise a forum around it as soon as possible. In the event that your wisdom throws up any good ideas for how we can get out of this mess, I’d be delighted to hear from you. In the meantime, good night, and good luck.”

Report by Frank McNally - Irish Times. TV Photo Montage by Irish Times Imaging.

Thursday, 29 January 2009

Bigger The Bubble - Bigger The Bust...

Best to ignore the cheerleaders for the property sector...

HAPPY new year? Not really. The banks are at death’s door. Unemployment is rocketing. Cuts much more severe than those proposed in the recent budget are inevitable. The recession is deepening, with fears that Ireland is on the verge of a so-called ‘lost decade’ growing increasingly realistic.

We’re up the creek.

Auctioneers and developers, however, have a different vision for 2009, one where ever more affordable homes will be snapped up by a willing populace. After all, construction firms cannot cut prices further as they are “down to their bottom line” on prices, according to one builder recently. Indeed, those who are “stupidly waiting” for prices to fall further should cop themselves on and realise that prices are bottoming.

This stupidity has been disappointing developers for some time now. In August, property tycoon Derek Quinlan noted that first-time buyers must be given the confidence to buy as “negative media commentary force them to sit and wait, believing that prices have not yet bottomed out”.

Impartial ‘experts’ have been beating this drum for some time now. Tom Parlon, former minister and now Director General of the Irish Construction Industry Federation, warned last March that “there’s not much more scope for further cuts” and that “now is the time to buy, there is real value out there”. Politicians, too, are puzzled by this ignorant penny-pinching. “If I was to give advice to people, I would say, go out and buy some property now”, said Galway TD Frank Fahy last May. Frank has a pretty extensive property portfolio, as does his Fianna Fáil colleague Donie Cassidy. Donie, perhaps better known for his masterful management of Foster and Allen and other show-band giants than his political accomplishments, said last April that there was “unbelievable” value in the marketplace, something he would remind us all of in 12 or 18 months “when prices have again increased by 25% or 30%”.

That didn’t quite pan out. A mule could have told you that Donie was in la-la land but he wasn’t the only one. “The time to buy is now”, said estate agent Pearse Wyse last April, warning that the “great value” didn’t “mean people can dilly dally.”

“It makes little sense to hold off making a purchasing decision”, said another in summer 2007, when the bubble had already burst. “There is no better investment than Irish property at present”, said high-profile estate agent Ken McDonald in the same year, going on to ask why “we allow scaremongers and doomsayers with unfounded pessimism and unbridled negativity” to talk down the economy. Never mind, said Ken: “the Irish love affair with property will continue undaunted despite the knockers.”


Of course, this love affair was encouraged by good old Bertie, our dearly departed Taoiseach. “The boom is getting boomier”, he said in 2006. “We should have an examination into why so many people got it so wrong”, adding that people “should have bought last year.” By April 2007, he was predicting a “soft landing”. By July, he asked why those who sit on the sidelines “cribbing and moaning” don’t “commit suicide”. Two months later, we were told that there “is no place for politically motivated attempts to talk down the economy and the achievements of our people across all sectors.”

What a crock. It’s one thing to have to listen to such garbage from those in the property sector. It’s another thing entirely when the leaders of our country were encouraging one of the greatest housing bubbles in history, a bubble whose bursting has plunged Ireland into a crisis of incalculable proportions. Ahern is famously pally with developers, whose one-dimensional thinking seems to have informed government policy.

Take Bertie’s buddy Sean Dunne, who said just last month that he was “prudent” when he splashed out almost $600 million for a 5 acre site in Ballsbridge at the height of the boom. In 2006, Dunne lashed out at the economists who had “mistakenly forecast the end of the housing and property boom in Ireland” for the last six years. This deluded bunch of “hyenas”, those “harbingers of doom and gloom”, included the Economist magazine, the IMF and the OECD. “The hyenas have stopped laughing…each and every one of them was wrong.”

They weren't wrong though – just early. David McWilliams, who had been warning for years that the housing bubble couldn’t last, likes to use the analogy of a doctor who advises a patient to change his lifestyle. Smoking 20 fags a day, the patient ups it to 40 as the years pass. After all, the doctor’s been warning him for years and nothing’s happened. By 2007, our patient is puffing on cigars aplenty and downing a daily bottle of whiskey into the bargain. Why not? Sure he’d been hearing the same old warnings for the best part of a decade…

It was obvious that a serious property bust was a question of ‘when’, not ‘if’, just as it was obvious to decent economists that a financial crisis would likely be triggered by this bust. Study after study has confirmed as much. 2007 was full of guff about a soft landing even though studies of international housing bubbles show that there has never been such a thing. Bubbles are followed by crashes just as day is followed by night.

The global financial crisis hit the headlines in 2007, creating a perfect storm for Ireland in the process. And yet, politicians and regulators appear to have been taken unawares. When UCD economist Morgan Kelly published a study showing that house prices typically fall by between 40-60 percent in a crash, he was dismissed as a scaremonger (it’s now very likely that Irish falls will be even greater). Also dismissed were his comparisons with Finland, which saw unemployment rocket from 3 to 20 percent and house prices halve in the aftermath of its housing crash in the early 1990s.

It wasn’t rocket science. Between 2000 and 2006, house prices doubled relative to income and rents. Construction accounted for nearly a fifth of our economy (the international norm is just 5 percent). First-time buyers became priced out of the market so banks invented 110 percent mortgages to be paid back over a forty-year period. The signs of an unsustainable bubble were everywhere. And yet, politicians trumpeted that the fundamentals were sound. What were they smoking?

Other countries, of course, also had their fair share of paid housing cheerleaders. Take David Lereah, former chief economist with America’s National Association of Realtors. Lereah, author of the 2005 bestseller, Why the Housing Boom Will Not Bust and How You Can Profit From It, used to routinely trot out wildly bullish forecasts that mirrored the hallucinatory abominations of his Irish counterparts.

He left his job in 2007. Was he wrong to be so bullish, he was asked recently? “I worked for an association promoting housing, and it was my job to represent their interests”, he admitted. “I put a positive spin on it. It was easy to do during boom times, harder when times weren’t good”. And now? “I’m pretty bearish and have been for the past year and a half. Home prices will continue to drop.”

Kudos for his new-found honesty, if nothing else.

There are many David Lereahs in Ireland. Developers, estate agents, dizzy television presenters with their own property agendas, economists working for the banks – the same old clowns will trot out the same old claptrap, rabbiting on about ‘value’ and the dangers of waiting too long and how a bottom is near and how it’s a great time to buy.

It’s not a great time to buy. It’s a great time to wait. Property remains over-priced by any conventional valuation yardstick, some places more than others (West Cork comes to mind). Property crashes play out over a period of many years, partly because sellers become anchored to old prices that are no longer relevant. There’s also a large element of wishful thinking involved – a recent US study found that people expected prices in their locality to fall but believed that their own house would appreciate in value or stay the same.

The facts are, however, that house prices do not rise in real terms (after inflation) in the long run. Countless international studies confirm this. A couple of booms aside, real house prices were flat or falling most of the time in the US in the 20th century. Booms occur periodically before prices revert to their historical mean. The bigger the bubble, the bigger the bust.

We’ll still have to put up with the cheerleaders, however, even as the market deflates. Morgan Kelly puts it well. “We can start looking forward to estate agents telling us that the worst is over, a necessary correction to an overheated market has taken place, there has never been a better time to buy, and so on until most of them go out of business.”

Report By Proinsias O'Mahony - The Southern Star Newspaper.

Wednesday, 28 January 2009

Chasing The Bubble & Paying The Price...

‘Wrong-Headed’ RBS, Danske, HBOS Lose in Irish Bubble...

Jan. 28 (Bloomberg) -- It’s not just the Irish who are being stung by the collapse of the property market in what was once Western Europe’s most dynamic economy.

Royal Bank of Scotland Group Plc, which bought Dublin-based First Active in 2004 in what was the largest overseas takeover of an Irish bank, said on Jan. 26 it will cut 750 jobs. Danske Bank A/S said provisions for impaired Irish loans rose by more than 10 times in the third quarter.

“They were chasing the bubble, and now they are paying the price for it,” said Alex Potter, an analyst at Collins Stewart in London. “Their timing was absolutely wrong-headed.”

Ireland’s economy is shrinking at the fastest pace in the euro area as the real estate market dives. The demise of the “Celtic Tiger” forced the government to seize control of Anglo Irish Bank Corp., which lends mainly to property developers, and to promise Allied Irish Banks Plc and Bank of Ireland Plc, the two biggest lenders, at least 4 billion euros ($5.2 billion).

Irish gross domestic product more than doubled in the decade ending in 2006. The economy may shrink as much as 10 percent between last year and 2010, Prime Minister Brian Cowen said in parliament in Dublin today. About 100,000 jobs may be lost this year and next, he said.

“We’re no longer flavor of the month,” said Ray Kinsella, professor of banking and insurance studies at University College Dublin. “There was a time when, because the Irish economy was powering ahead, everybody wanted exposure to it.”

‘Market Conditions’

Edinburgh-based RBS, now majority-owned by the U.K. government following a rescue package, acquired mortgage lender First Active for 887 million euros. It already owned Ulster Bank, which has branches in both Northern Ireland, part of the U.K., and the Republic of Ireland.

RBS said it will cut as many as 550 jobs in the Republic of Ireland and 200 in Northern Ireland in response to “prevailing market conditions.” Ulster Bank had its credit rating downgraded by Moody’s Investor Services last week because of its exposure to the crumbling property market.

In Northern Ireland, unemployment is rising at the fastest pace in 28 years and real estate prices sank 34 percent in 2008.

Ulster Bank faces “depressed profitability” and “substantially” higher provisions for souring loans over the next couple of years, Moody’s analyst Ross Abercromby said.

Danske Losses

In December 2004, Copenhagen-based Danske paid 967 million pounds ($1.35 billion) to buy National Australia Bank Ltd.’s units in Ireland and Northern Ireland.

Danske’s Irish unit lost 49 million euros in the first nine months of 2008 as it set aside 93.6 million euros for potential bad loans. The Irish operation accounted for a quarter of the bank’s impairment provisions in the first nine months of last year. It accounts for 5 percent of its loan book.

Andrew Healy, head of Danske Bank’s Irish unit, wasn’t available to comment until after the company reports full-year earnings, a spokesperson said.

“Ireland doesn’t seem to be anywhere near the bottom,” said Andreas Hakansson, an analyst at UBS AG in Stockholm who recommends investors sell Danske Bank shares. “A lot of people made the same mistake by buying into Ireland around that time.”

Edinburgh-based HBOS Plc, now part of Lloyds Bank Group Plc, paid 120 million pounds to buy former electronics stores across Ireland in 2005. The bank then converted about a third of them into bank branches as part of a plan by the U.K.’s biggest mortgage provider to tap Ireland’s booming property market.

The rest weren’t suitable for bank branches and were sold on, a spokesman said.

Falling Prices

Ireland’s house prices quadrupled between 1997 and early 2007. They have since lost 15 percent in two years, as credit froze, unemployment surged and emigration resumed.

HBOS said in October it didn’t need to join the Irish government’s guarantee of all bank deposits and borrowings, citing the bank’s strong “financial position.” Lloyds is now 43 percent owned by the U.K. Mark Duffy, head of the bank’s Irish division, wasn’t available for an interview.

KBC Groep NV, which has operated in the country of 4.4 million people for more than 30 years, said in November that Ireland has the highest share of non-performing loans across eight countries in which the Brussels-based bank does business.

Arrears on home loans at its Irish unit rose to 2.5 percent of its mortgage book in the country, double the 1.2 percent across the company. Moody’s downgraded its rating on KBC two days ago, partly because of its exposure to Ireland.

KBC said on Jan. 22 it will get 2 billion euros from the Flemish government to boost capital after a full-year loss of about 2.5 billion euros.

“Given the problems these banks have at home, it’s inevitable there’s going to be less emphasis abroad,” said Scott Rankin, an analyst at securities firm Davy in Dublin.

By Ian Guider and Dara Doyle - Bloomberg.

Tuesday, 27 January 2009

Irish Property Crisis Slump To Crash...

Property crisis has moved from slump to crash...

...price guide reveals desperate state of the housing market and its negative effect on the value of homes all across Ireland:

First, we need to get our terminology right. To date, Ireland’s property crisis has been described as a slowdown, a downturn and a slump.

But today the Sunday Times Property Price Guide 2009 shows that we’re in the grip of nothing less than a full-blown crash — and, by world standards, a severe one at that.

In recent months, property agents have claimed that successive price surveys have not come close to reflecting the grim reality they have been experiencing on the ground. Now, with the help of our guide, you can realistically assess for the first time how the crash has affected the value of your home.

This survey is more accurate than any other; to put it simply, no rival survey is as specific as the Sunday Times Property Price Guide.

Here we examine the performance of more than 20 types of property in more than 60 individual micromarkets. We have achieved this using a nationwide panel of more than 60 estate agencies, all with hands-on experience in their specific locales.

Furthermore, the Sunday Times Property Price Guide 2009 is not based on asking prices. Nor is it based on data gleaned from mortgage customers who purchased their homes six months ago. It’s not based on what you think or hope your home might be worth — the price that you might, as a prospective vendor, ask an estate agent to achieve.

The following figures are based solely on the figures that our agents, working on the ground, know they can sell your home for in the current market.

So here comes the reality check.

On average, prices have fallen across our surveyed markets by 20% since this time last year.

In general, the areas that have been hit hardest are in Dublin, where a third of Ireland’s population lives. Most postcodes in the capital have experienced price falls of between 25% and 35%.

To put this in context, Britain’s big property “crash” of the 1990s saw house prices lose 30% across what was almost a decade. In Ireland, many locations have shed that much in just the past 12 months.

Generally speaking, apartments and new apartments have been the biggest losers. With investors shying away from buy-to-lets, new one-beds in Dublin’s city centre have seen their prices tumble by about €100,000.

The following tables show what each property type can be sold for today, the price it would have achieved a year ago and, speculatively, what agents believe it might be worth in a year’s time.

The tables reveal the worst year for Irish property prices in living memory.

So, what happened?

Put simply, a necessary correction to the market that was already under way in 2008 was swept off its feet by a perfect storm of global economic turmoil, the like of which has not been seen since the Wall Street Crash of 1929.

The normal mechanisms of the Irish property market were ultimately swamped by what was happening internationally. As a result, the number of completed sales plummeted. Nobody wants to invest when prices are falling; and, more ominously, those who needed to buy a home were prevented from doing so because banks no longer gave out mortgages in sufficient numbers.

If 2007 was dominated by a stand-off between buyers and sellers who refused to lower their unfeasibly high prices, then 2008 became the year in which the Irish property market was forced not only to take its medicine, but also to swallow a great deal more besides.

Like all businesses, the property industry needs sufficient trade and turnover to occur to benefit all those involved — the vendors, the buyers and the professionals who bring both parties together.

At the moment, trade has virtually halted, and without mortgages to fuel the market, the old terms and conditions under which we bought and sold homes in the past have been thrown out of the window.

Those who are lucky enough to have money to invest will be aware that the biggest property market killings have been made in downturns. If value does not already exist for them out there, it will certainly become apparent soon.

This time last year, agents may have hankered for the return of investors, but now they’d be more than happy to see a resumption of transactions by ordinary owner-occupiers. Ominously, however, unemployment, now rising at a rate of 1% per month, is likely to play a leading role in suppressing the market further in the months ahead.

Until some stability returns to the global market and banks start lending again, prices will remain, at best, static. At worst, they’ll continue to fall this year. To get to the level where a property will “wash its face” on a regular, old-fashioned mortgage — if that’s what it must take — average city houses might have to shed another ¤100,000 from their values.

If there is any good news at all to be gleaned from this survey, it is the speed of the correction. The faster we fall, the sooner we’ll hit the bottom, the sooner value will be realised again and the sooner trade in property will resume at a more efficient level. A slow, painful descent, drawn out over many years, would be an even worse scenario.

Where are prices likely to end up? Pushed for a view, most of our estate agents say they believe prices will flatline later this year. But nobody, of course, is equipped to predict that far ahead when each passing week seems to bring a new twist to the world’s financial crises.

From a report by Mark Keenan - Irish Times.

Saturday, 24 January 2009

House Tells Story Of Irish Property Boom...

Trophy seaside home tells story of the boom...

IF A SINGLE house could tell the story of the property boom then it might be Sorrento Villa on Vico Road in Dalkey, Co Dublin. The Victorian detached house, facing the sea, slumbered up on the hill for decades, its interior divided into two spacious units that would have been described as flats rather than apartments.

The house dates from the 1860s when it was built by a provost of Trinity College as a summer villa: and he chose one of the finest sites on the hill with a sunny east-to-south exposure.

Two years ago when property prices reached fever pitch, it came on the market with an Advised Minimum Value (AMV) of €4.5 million. However, after intense bidding at auction it sold for €5.6 million. Stamp duty at 9 per cent added an additional €500,000.

The new owners went on to spend many thousands more on redecorating the rooms and making changes to the layout, converting it to a five-bedroom house.

They also drew up plans to install an expensive kitchen. However, they have now decided to put the house back on the market, in the hope of recouping much of their investment.

Sorrento Villa is asking €4.5 million through Sherry FitzGerald where Rosie Mulvany is handling enquiries. Having sold it before, Mulvany is well acquainted with the house, which she reckons has one of the best views on the road, “because it’s so high up, and it’s incredibly bright”. Viewed on a sunny morning, it had light pouring into every room through exceptionally tall windows.

Sorrento Villa sits on just under half an acre of grounds, with a large level lawn as well as a back garden that rises in steep terraces up Dalkey Hill.

The grounds include an original teak-built garden house that sits above Vico Road and an old bomb shelter which the owners uncovered under a thicket of brambles.

The house shares an entrance with an adjoining property, and comes with plenty of parking as well as a detached garage that has been modernised and adapted to suit the owner’s vintage Mercedes.

Inside, the 353sq m (3,800sq ft) house has a linear layout designed to make the best of the views.

The entrance hall, with its pretty mural of entwined flowers, leads to a long corridor, off which is the superb drawingroom with three tall sash windows looking out to sea.

Then comes a large double reception room, with a deep bay window, that serves as a family room, diningroom and playroom.

It was here that the owners intended to install the kitchen, and the deep bay window would provide a striking dining space. It is a large room with access to a small Victorian conservatory at one end.

Beyond this room is another large reception room converted for Sorrento Villa’s original garage. Currently the kitchen is a modest room at the back of the house, where there is also a spacious utility room.

Upstairs, past a tall window giving a view upwards to the terraced gardens, the layout is excellent for families. There are three sizeable bedrooms – all with sea views for children, and then the main bedroom which has a wonderful deep bay looking out to sea.

The teenage son of the family has a separate suite, complete with a small sittingroom and an en suite shower room. In addition, there is a large family bathroom and a walk-in dressingroom.

Clearly more work could be carried out at this level, and new owners may configure the space to allow for a bathroom with each bedroom.

As it stands, however, this is a house which is made for a big family needing plenty of space in which to play and entertain.

Report by ORNA MULCAHY, Property Editor - Irish Times.

Friday, 23 January 2009

Irish New House Prices Cut 40% In 2009...

Developers are offering substantially lower prices in the hope of shifting remaining units at schemes built in the last two to three years...

PRICE CUTS of up to 40 per cent are being offered by builders in an attempt to get the stalled new homes market moving again and to clear unsold units.

While price reductions are bringing many new homes back to pre-2006 prices and interest rate cuts have gone a long way towards improving affordability, lack of finance and negative sentiment remain as the big hurdles for potential buyers.

A raft of new homes developers are hoping to shift remaining units at developments built in the last two to three years and are pitching prices at substantially less than the original asking prices.

For many builders it is not a case of making a profit any more, it’s simply making some sales to cover the cost of building and paying off some of the debt on sites.

Price cuts will be most prominent in large schemes on the edge of the city where developers have struggled to clear long-running sites.

First out of the blocks is Menolly Homes with further cuts at its Red Arches section at The Coast, in Baldoyle.

The developer says it is offering reductions of 26 to 37 per cent from peak prices at the development on the former racecourse in Baldoyle, Dublin 13.

Selling agent Sherry FitzGerald will be opening show units on site this weekend to give buyers a flavour of what is on offer.

One-bed apartments at Red Arches in The Coast are for sale from €225,000, down from €340,000 when the scheme was first launched in the middle of 2006. Three-bed duplexes are priced from €325,000, down from €470,000.

Over 500 units have been sold at The Coast and it is envisaged that there will be about 1,600 homes when the scheme is complete.

Menolly Homes and Killoe Developments are coming to the market this week with their Beaupark scheme off Grange Road in Dublin 13, which forms part of a new town on the edges of Baldoyle and Balgriffin in Dublin 13.

The last remaining homes are for sale at the 620-unit development through Sherry FitzGerald. Prices start at €180,000 for one-bed apartments, compared to €285,000 when the scheme was first launched back in 2006, a cut of 37 per cent. Three-bed duplexes were priced from €560,000 in 2006, now they are priced from €335,000, a reduction of €225,000 or 40 per cent. In Rathcoole village, Finnegan Menton is selling homes at Peyton on the outskirts of the village. Prices start at €290,000 for two-bed apartments going up to €525,000 for four-bed semi-detached houses.

In north Co Dublin, Sherry Fitz-Gerald is opening showhouses this week at The Hastings in Balbriggan.

One-bedroom units at Kingscroft Developments’ scheme are priced at €175,000 and three-bed townhouses are priced from €250,000.

When the scheme was first launched in 2007 three-bed townhouse were priced at €310,000, representing a price drop of 19 per cent.

Report by FIONA TYRELL - Irish Times

Thursday, 22 January 2009

No Brainer – Irish Not Buying Affordable Housing Scheme...

Dublin council to reduce affordable house prices...

DUBLIN CITY Council is to discount its total stock of affordable homes to get rid of a backlog of 300 unsold houses that are costing the council upwards of €300,000 a month in bridging loans and fees.

The council is to offer further discounts of about 25 per cent on houses it had already discounted by up to 35 per cent of the original market price to compete with developers’ discounts.

Developers must provide 20 per cent of any new housing estate or complex for social and affordable housing. A discounted price for the affordable units is agreed on the market price. The discount in Dublin is generally in the region of 30 – 35 per cent.

The council gives the developer names of people who are eligible to buy an affordable house. If two affordable house buyers reject the house or apartment, the council is obliged to buy it from the developer at the agreed discounted price. In a rising market, this system worked well. However, now that house prices are falling, developers are discounting private houses in the same estates to less than the price of the affordable houses. Buyers of affordable houses must pay a “claw-back” to the council of the percentage of discount they received if they sell their house within 20 years.

Private buyers are not subject to such restrictions and so the incentive to buy through the affordable scheme has greatly diminished.

To date, the council has had to buy 300 homes from developers because they were rejected by buyers. The council is paying about €1,000 a month in bridging loans on each of these units. However, the council is facing even greater debts as it has a total of 630 affordable homes on offer to applicants.

If it was forced to buy the remainder of these homes through further rejections from applicants, it would be paying monthly fees in excess of €630,000.

The council releases affordable homes for sale in a number of tranches each year. In its most recent sale last September and October, the council offered 350 affordable homes. These offers were rejected in 283 of cases and half these did not even respond to the council’s offer, according to its executive manager, Peter Ayton.

“In some parts of the city, there is very little difference between the market value and the affordable price. When the two prices merge, it’s a no-brainer – people won’t buy the affordable unit,” Mr Ayton told councillors at a special housing meeting yesterday.

The council could not afford to keep servicing the increasing debts on houses it could not sell, Mr Ayton said. It intended to offer reductions on houses, in the region of 25 per cent, to achieve a quick sale.

To fund this reduction, the council plans to accept cash instead of affordable units in future deals with developers.

While this is permitted under housing legislation, the council has had a policy of not accepting money in lieu of the 20 per cent social and affordable housing to ensure a good social mix was created in any new estate.

If the council has no takers after it reduces the prices of the properties, it will offer them for private sale to people who would be eligible for the affordable housing scheme but who had not applied.

If some units remain unsold after this process, the council proposes to use these as rental accommodation, for people qualifying for rent assistance, until the market recovers and they can be sold.

The council is also seeking talks with the Department of the Environment in relation to introducing a new scheme, whereby people could rent one of the properties for a number of years before buying and have the rent they paid offset against the purchase price.

A number of councillors suggested that some of the 630 homes be used for social housing. However, Mr Ayton said the council had already allocated its full budget for social housing and hadn’t “another bean” to spend.

Price gap: new reduced market prices rival those that are discounted

DUBLIN CITY Council has admitted it is offering “little or no discount” to buyers of affordable housing, because of the fall in property prices.

In general, the discount price at which an affordable house will be offered is negotiated with the developer before the estate or the apartment complex is built. Developers have, in recent months, been heavily discounting private houses in estates. This removes the incentive to buy an affordable house.

The council’s housing department yesterday gave several examples where discounts given by developers have made the price gap between affordable and private housing negligible in the context of a long-term mortgage.

In the Royal Canal Park development in Ashtown, Dublin 15, two-bedroom apartments were originally offered for private sale at €375,000 and at an affordable discount price of €264,000-€111,000 lower.

The same apartments are now being offered for private sale at €266,000, a difference of just €2,000 on the affordable home. For the discount, the affordable home buyer is locked into a deal with the council for 20 years.

A similar situation exists in Clare Village, a development off the Malahide Road in Dublin 13.

There the market price of a three-bedroom unit was €365,000 and the affordable price was €285,000. Now the market price is just €290,000.

The council says similar situations exist across the city. The council intends to further discount affordable homes by about 25 per cent and will shortly be launching a new marketing campaign at

Report by OLIVIA KELLY - Irish Times.

Wednesday, 21 January 2009

Last Rites For Celtic Tiger...

European journalists deliver the last rites to Celtic Tiger...

EUROPEAN DIARY : European media outlets have been scathing in their criticism of a ‘Wild West’ financial culture...

THE CRISIS gripping the Irish economy is clearly the big news at home this week. But it is also hard to avoid the topic in Brussels, where journalists and diplomats are busy reading the last rites to the Celtic Tiger and rethinking their past praise for the Irish economic miracle.

In the European Commission press room, colleagues from other EU states tend to broach the subject in one of two ways. Over a cup of coffee some ask concerned questions about what went wrong, who is to blame and what impact it will have on a second referendum on the Lisbon Treaty. Others invoke gallows humour, telling the in-joke: “What’s the difference between Iceland and Ireland? Answer: One letter and about six months.”

The BBC’s daily current affairs programme Europe Today repeated this – by now hackneyed – joke on air on Friday in a lengthy segment on the debacle surrounding the nationalisation of Anglo Irish Bank. It also broadcast a sequence of angry comments made by shareholders at the bank’s annual general meeting: “We are being watched all over the world and the world is seeing that this is a cowboy economy run by cowboys,” said one, who stands to lose almost his entire investment in the company.

The Financial Times , the most influential business newspaper in Europe, has written extensively on the economy’s decline. In an editorial entitled “The Blue Emerald”, it focused on how the job losses at Dell signalled the end of the boom. A few days later its Ireland correspondent wondered if “the one-time ‘Celtic Tiger’ is destined for a protracted period as one of the continent’s also-rans” in a feature under the headline “Things Fall Apart”.

The damage to the country’s reputation as a safe and profitable place to invest is clearly suffering a pounding in the face of the current recession. An article published last week by Motley Fool – an internet site that provides advice to investors – raised the spectre of the country going bust. “Until last year, I would never have believed that the once-mighty Celtic Tiger economy could fail. However, since the collapse of the Icelandic economy and its banks, I’m going to admit the possibility that Ireland could default on its sovereign debt,” said a columnist, who acknowledged this was “unlikely”.

Ireland’s economic meltdown has also raised eyebrows in Germany, where Der Spiegel last week strongly criticised the lack of regulatory oversight of German finance firms based at the Irish Financial Services Centre (IFSC). One article noted how state bank Helaba used its Dublin subsidiary to sell commercial paper. “At the start of this decade the Irish finance ministry unashamedly advertised to banks annoyed at the strict controls exercised by the German Bundesbank that – with some financial instruments – ‘oversight by the Irish Central Bank is not absolutely essential’,” it said, reinforcing the commonly held German perception that Ireland is some sort of European “Wild West” of finance.

The normally restrained financial daily Handelsblatt summed up the worsening situation under the headline “Panic Broadens in Ireland”, while the Frankfurter Allgemeine Zeitung reflected last week on how “Europe’s periphery is now losing the confidence of investors” and how states such as Ireland were finding it more difficult to borrow money.

On Saturday, Le Monde picked up this theme and listed Ireland as one of “black sheep” within the euro zone that are destabilising the currency. Portugal, Greece and Spain also share this dubious distinction from Le Monde , suggesting to its readers that Ireland is now some sort of Mediterranean of the north when it comes to finances.

RTÉ’s mid-week gaffe over the need for IMF intervention in the Republic added fuel to the fire of an unfolding PR disaster when news wires picked up the story. Bloomberg noted how German stocks fell sharply, while Reuters reported that the euro dipped by a cent against the dollar before it stabilised following a strong denial.

This incident underlines how interconnected the economies of the 16 euro zone members (Slovakia joined the single currency in January) have become. Economic commentators and journalists are increasingly questioning whether the worsening economic problems in Ireland, Spain, Greece and Portugal could create real problems for the single currency.

As euro zone finance ministers gathered in Brussels last night for their monthly meeting, monetary affairs commissioner Joaquín Almunia did his best to allay these fears by stating unequivocally that IMF support would not be needed in Ireland. “Risk of default . . . always exists in the private and public sectors, but in the case of euro area members, I don’t think the risks are high or are significant,” Almunia told EU journalists.

With Government debt in Ireland still relatively low by EU standards, he is probably right. But after a decade of flattering news reports about the Celtic Tiger, it is not surprising that European colleagues are now questioning the basis of the Irish economic miracle.

Report by Jamie Smyth - Irish Times.

Monday, 19 January 2009

Irish Top 10 Property Blackspots - Biggest Price Drops In Ireland...

Well-heeled south Dublin suburbs, commuter enclaves and student cities have all been devastated by the property price slump. But some have been hit worse than others and the pace of the fall in prices is picking up in some counties and cities. Nick Webb reveals where prices are falling fastest...

1. Galway City

12.2 per cent drop at end of 2008

HOUSE prices in Galway City are falling faster than anywhere else in the Republic, according to new research. In the final quarter of 2008, house prices fell by a staggering 12.2 per cent. That means that between October to Christmas, the average house price in Galway shed €40,000, falling to just over €303,000 or by close to €450 per day.

Galway city house prices have fallen by 21.1 per cent since the height of the property madness in mid-2006, according to Daft findings. The price haemorrhage was slower in Galway county, although it was still the seventh fastest falling market in the last quarter, with prices tumbling 7.2 per cent.

Last week's agent survey by the Irish Auctioneers & Valuers Institute noted an apartment in Salthill had dropped 20 per cent to €390,000. New homes on average were down by 14 per cent.

2. Kerry

Down 10 per cent in three months

PRICES in Kerry crashed 10 per cent in the final quarter of the year, according to the Daft figures. Asking prices in the kingdom had held up relatively well until then, falling just 5 per cent year on year. But since the banking crisis hit with full force, Kerry property has been in freefall.

IAVI members have reported that the price of second-hand homes in Tralee have fallen by as much as 30 per cent, with new homes down 20 per cent. Transaction volumes in Kenmare have plummeted 75 per cent, with estate agents absorbing price falls of about 20 per cent. lists 60 properties with reduced asking prices, ranging from a €160,000 drop on a €680,000 four-bed home in Killorglin to a 19 per cent fall in the price of a Kenmare five-bed home.

3. Westmeath

Down 9.9 per cent in three months

At the outer edges of the commuter belt, Westmeath was always likely to get hit hard by price falls. But in the final part of last year, asking prices crumbled at 9.9 per cent, bringing the average house price down to €232,000. Almost one-fifth of the value of homes in the county has been extinguished since the peak of the market less than two years ago.

Properties advertised with drastically reduced asking prices include one four-bed home in Coralstown with a 40 per cent cut since December. An Athlone terraced home has also seen over 30 per cent slashed off its asking price in the last month.

However, the almost complete shutdown of building projects in 2007 has led to a smaller overhang of properties on the market. Despite this, estate agents report prices of new properties falling from €220,000 to under €200,000. The IAVI survey suggests that the number of transactions has fallen by 50 per cent, although local players indicated signs of increased activity in December.

4. South County Dublin

Down 9.6 per cent in three months

The lawyers, doctors and accountants are getting it bad. South county Dublin could be suffering real falls of as much 60 per cent in some cases, with the well-heeled suburbs of Foxrock, Dalkey and Sandyford absolutely savaged. Asking prices slumped 9.6 per cent in the final quarter of 2008, according to, pushing overall falls since the peak to nearly 21 per cent. The average asking price of a pad in south county Dublin remains the highest in the country at €541,000 -- almost three times the price of a home in Longford. The average house has seen €150,000 slashed off its value in less than 18 months.

House prices in some parts of Dublin are down by as much as 50 per cent, Sherry FitzGerald managing director Michael Grehan revealed last week. Anecdotal evidence from IAVI members suggests that property prices have slumped by up to 36 per cent in south county Dublin.

Monitored property advertisements have shown that there are 259 properties with drastically reduced prices in Dublin. A large five-bed home on Knock-na-Cree Road in Dalkey has had its asking rice reduced from €3m down to €2.175m over the last year. Other recent chops include a €40,000 cut in the price of a Highthorn Park home in Dun Laoghaire, which is now being sold for €660,000 by Gunne's; almost 20 per cent off a new build two-bedroom home in Blackrock village and a near 18 per cent drop in the asking price for a Monkstown four-bed. Asking prices are now lower than at any time since early 2006. New homes have suffered particularly badly, with prices falling 25 per cent in less than two years.

5. South Dublin city

Down 9.2 per cent in three months

From Ranelagh and Rathmines to Crumlin or Chapelizod, prices in the south side of Dublin city centre have been hammered, with falls of 9.2 per cent in the last quarter alone. This brings the total asking price drop to 19.1 per cent since the bubble burst. The south city redbricks held up well enough originally but 2008 was meltdown time, with asking prices falling the most in the capital -- down 16.6 per cent for the year.

Dublin 4 and Dublin 6 prices were hacked, according to IAVI agents. Reductions in the area include €2m off a home in Temple Villas in Rathgar to a €355,000 reduction in the asking price for a house on Scholarstown Road in Rathfarnham. Higher priced second-hand homes have been hardest hit, with suggestions that this sector has tumbled by as much as 40 per cent in some areas. The average asking price of a house in the south city is just under €380,000.

6. Leitrim

Down 8.2 per cent in three months

Ireland's least populated county has suffered a 8.2 per cent drop in asking prices over the last three months of 2008. This has taken the overall fall in prices to 19.5 per cent since the peak of the property boom.

Local estate agents suggest that a large amount of unsold housing stock remains in the market.

One three-bed home in a new housing estate in Tullaghan has seen its asking price dropped twice since October, with offers of €190,000 sought for the property once valued at €240,000. The average asking price for a house in Leitrim is now just over €202,000. Places like Dromohair and Mohill have experienced an 80 per cent drop in the number of sales, with agents pointing to €180,000 valued homes now on the market at €150,000.

7. Galway county

Down 7.7 per cent in three months

With Galway City topping the charts as the Ireland's weakest property market, the surrounding countryside isn't much better off. In the last quarter alone, prices have fallen 7.2 per cent, leaving the average asking price slightly north of €270,000. Galway asking prices remain higher than most other parts of the country apart from Dublin, Cork and certain commuter enclaves. estimates that prices have fallen just 13.5 per cent since the peak, which lags behind most of the rest of the country. The rapid increase in price falls could indicate worrying times for the Galway market.

These include falls of as much as 45 per cent for a two-bedroom house in Dunmore. Most of the price falls were smaller, including a near 15 per cent drop for a number of homes in the Thornberry estate in Barna. A Connemara cottage had dropped more than 30 per cent to €300,000.

8. Donegal

Down 6.9 per cent in three months

The fall in the value of sterling has completely destroyed the cross-border market, where purchasers from the North had helped sustain a healthy market in Donegal. Prices falls are accelerating, tipping past the 6.9 per cent mark in the final quarter alone. Average asking prices in Daniel O'Donnell's county have now hit €221,000, representing a near 18 per cent drop since the height of the boom.

A three-bed home in Greencastle has seen over 41 per cent axed off its asking price, with a four-bed in Castlefin dropping by €250,000 to €500,000. The developer of the Cnoc an Oir scheme in Letterkenny is to guarantee buyers against potential price reductions.

Estate agents have reported a 50 per cent drop in transactions for both new and second-hand homes in the county.

9. North city Dublin

Down 6.7 per cent in three months

North Dublin prices are believed to have fallen by as much as 37 per cent, with grander suburbs such as Howth being particularly badly hit. But estimates that the postcodes closer to the Liffey are being hammered most. It believes that prices have slumped by 6.7 per cent in October, November and December, bringing the cumulative slide to 17.7 per cent since the top of the market.

Sherry FitzGerald has somewhat different figures -- in fact, all the major players have different statistics. The common thread is that price cuts are everywhere and they're not small. Sherry Fitz has suggested that second-hand homes in Dublin dropped by a staggering 7.8 per cent in value in the final three months of 2008, bringing their annual fall to 20.1 per cent in a year.

Some big north Dublin price reductions include: a luxury Castleknock home has seen its asking price cut from €4.5m down to€2.9m. Another pre-1963 redbrick on the North Circular Road has had its asking price cut 26 per cent to €850,000 in the last month, while a rental property on Aughrim Street, Dublin 7, has also dropped by 25 per cent recently.

10. Meath

Down 6.2 per cent in three months

The much maligned Permanent TSB/ESRI house price index showed that property prices in the commuter belt counties of Meath, Louth, Kildare and Wicklow had fallen by close to 14 per cent last year. This represents a fraction of the fall reported by local estate agents. The Permo Index is calculated in a different way to other price charts and has been miles behind the curve for a number of months. Agents in Trim suggest that prices have fallen by up to 25 per cent for both new and second-hand homes. IAVI members noted that Enfield was a major blackspot thanks to the huge oversupply of homes. Falls of up to 30 per cent were noted in the area.

Report by Nick Webb - Irish Independent.

Sunday, 18 January 2009

Ireland's Muppet Show - Nob Nation & The Drink's Cabinet...

RTE's biting satire ruffles feathers of Cowen circle...Supporters unhappy at Cabinet portrayal as boozing buffoons:

RTE has become embroiled in a potential controversy, reminiscent of the infamous Scrap Saturday furore, following the broadcast last week of a series of biting satirical sketches which have already ruffled feathers in political circles.

Nob Nation, a topical comedy series broadcast each day on the Gerry Ryan Show on 2FM, last week portrayed some members of the Cabinet, including Taoiseach Brian Cowen, as hard-drinking buffoons, and made several joking references to "The Drinks Cabinet".

A flood of complaints was subsequently fielded by the programme, primarily in relation to Nob Nation's portrayal of Mr Cowen, but also several other members of Cabinet, including the Finance Minister Brian Lenihan.

Mr Cowen was on government business in Japan last week and, therefore, did not hear the series. But supporters in Co Offaly are understood to have been upset.

The Taoiseach, who arrived home yesterday, is now likely to be made aware of his portrayal and may even seek to establish for himself what the fuss is about.

The satire has sparked an unprecedented increase in downloads of the 2FM comedy show, sending Nob Nation to the top of the podcast charts.

If he is questioned on the issue, Mr Cowen is likely to seek to publicly play down any upset he may personally feel. But the possibility exists that his Nob Nation caricature may eventually politically damage him, particularly if his Government fails to get a grip on the spiralling economic crisis.

In an address at Keio University in Japan last week, Mr Cowen spoke of a "common bond between the two countries -- the love of a pint of stout!"

Unknown to the Taoiseach, back home on the national airwaves, Nob Nation was using Mr Cowen's self-confessed fondness for an occasional pint to devastating effect against a background of the economy slipping ever deeper into crisis.

Oliver Callan, the Co Monaghan-born mimic behind the irreverent satire, produced five cutting sketches. His radio sketches came a week after a flurry of comments to RTE over his send-up of GAA and church figures on the Late Late Show.

There has been a non-stop "brouhaha" in RTE over the daily 2FM insert, with Fianna Fail insiders and even Church figures said to be criticising the show for being "vulgar", "sexist" and even "racist".

In recent days, Callan has portrayed the Taoiseach swaying and snorting in booze-filled sing-songs about his difficulties in office. In comically cutting scenes, chauvinistic TDs and ministers are also heard leering over a new bar girl, known as 'Arska', while calling for lock-ins and ballads.

RTE will be reassured by the findings of a Sunday Independent/Quantum Research telephone poll which last week found that a massive 71 per cent felt the satirical portrayal of Mr Cowen and his Cabinet colleagues by Nob Nation as "hard-drinking buffoons" was not wrong; 29 per cent felt it was wrong.

One Dublin male respondent said: "'Who needs Nob Nation? These muppets are doing a brilliant job all by themselves. It's so good, I'm hoping that I'll wake up and find the last six months have not really happened."

But another Dublin male said: "This is just a childish form of bullying. Making fun of someone's physical appearance and accent is the stuff of sandboxes."

RTE sources yesterday said that Nob Nation now leads all its shows, including Morning Ireland, for online activity. "It has simply exploded in recent months, it's getting over 250,000 hits a month and makes up nearly a third of all downloads in RTE," a source said.

Gerry Ryan this weekend has stood firmly behind Nob Nation.

Report by JODY CORCORAN - Sunday Independent.

Ireland's ship is sinking fast and the government's going down with it - singing all the way in the Drink's Cabinet!!!!

Saturday, 17 January 2009

2009 - In China It's Year Of The Ox, In Ireland it's Year Of The Renter...

With an oversupply of properties and tumbling prices, renting seems the way to go...

IN THE Chinese calendar, 2009 is the year of the ox, but in Ireland it looks set to be the year of the renter. Economists are predicting that rents will drop by at least 10 per cent in the year ahead, compounding similar falls in 2008.

Tenants are waking up to the fact that it’s a buyers’ market and negotiating lower rents and better conditions (see panel). In many cases, they are renting properties that they could never afford to buy.

Large, luxurious homes are coming on to the rental market for the first time. Meanwhile, new standards are coming into force next month which will improve the quality of existing rental accommodation.

Forget about grotty bedsits, coin-operated electricity meters and rent hikes – tenant power is in the ascendant.

The downward pressure on rents has been caused primarily by a glut of properties flooding the market. Developers, buy-to-let investors and those trading up who found themselves unable to sell their properties have become reluctant landlords.

The result has been a deluge of rental stock coming on stream; the number of rental properties listed on tops 20,000, compared with 5,000 two years ago. Property website has seen the number of properties advertised on its site double in the last six months of 2008.

“What’s happened is that people bought [properties] to flip,” says Dr Stephen Kinsella, of the Kemmy Business School in UL. “They weren’t selling so they put them on the rental market. So what’s been happening over the last number of months is that the supply of available high-quality, brand new housing, especially apartment housing, has gone through the roof.”

On the other side of the rental equation, demand has flagged due to the exodus of migrant workers from Ireland. The ESRI expects that net outward migration will reach 50,000 in the year to April 2009, which would free up even more rental properties.

“You don’t need a PhD in economics to know when the supply of something goes up, the price of it is going to go down,” says Dr Kinsella. This is exactly what has happened.

According to Daft’s most recent rental report, average rents had fallen to €1,300 by last October, the lowest price recorded since late 2006. Although final figures for 2008 have yet to be finalised, Daft’s economist Ronan Lyons estimates that rents fell by between 10 and 12 per cent over the course of the year and he expects similar declines in 2009.

Small towns, such as those in areas designated for section 23 tax relief, are likely to be hardest hit, he predicts. Downward pressure will also be particularly intense at the top end of the rental market. Landlords renting out luxury properties such as penthouses could previously command “prestige prices”, Lyons says, but this is unlikely to be the case now.

“Those take a big hit when sentiment is low.”

The upshot is that owners trying to rent out opulent homes have had to scale back their expectations significantly.

For example, according to property website www.thepropertypin. com, which tracks the reduction in asking rents on properties, a seven-bedroom house in Killiney which was originally advertised with a crippling price tag of €18,000 a month has been reduced to a still breathtaking, but considerably smaller, monthly outlay of €10,000.

Until recently, renting was widely perceived as a course of action taken out of necessity by students and low earners or as a stop-gap measure for people who couldn’t afford to get onto the property ladder. However, many people who wouldn’t have considered it in the past are now choosing to rent rather than buy.

“We’re certainly seeing a new age group renting – we’re seeing an older age profile,” a spokeswoman for says. “That for us has been one of the key changes in 2008.”

Families with children are now making the deliberate decision to rent for now and to revisit the buying decision at a later stage.

“You’re seeing the young professional now making a decision that renting is what they want to do,” she adds. “They want to rent because they want to live somewhere cool and trendy and they don’t particularly want the hassle of a mortgage or owning their own place.”

In addition, the “dead money” argument often bandied about during the era of soaring property prices doesn’t stand up to scrutiny in the current market. For starters, it tends to be substantially more expensive to service a mortgage on a property than it is to rent it at the moment – and that is if a mortgage can even be arranged at all.

Many aspiring homeowners are more than happy to rent for the time being while they wait for the market to bottom out, as they expect that the price of their desired home will fall by more than they will pay out in rent in the meantime.

“No one wants to buy a house when the expectation is that the price of the house is going to fall further,” says Dr Kinsella. “It doesn’t make sense for anybody to be in a situation where they’re intentionally walking into negative equity.

“It depends on their individual circumstances, but in the short term, I think for most people, renting is the better option right now,” he adds.

In light of the property implosion, can we expect to see a permanent shift in the Irish attitude towards home ownership and an acceptance of renting as a viable long-term living arrangement as is the case in many European countries?

“I think it will take another two or three generations for that to happen,” Dr Kinsella says. “Irish people are absolutely addicted to buying land. It’s a cultural and societal thing. Everyone wants to own their own home. That’s just part of the Irish psyche.”

Until the property market has bottomed out, though, until the overhang of rental stock is sold off, the gap between the cost of renting and buying closes and banks loosen their lending criteria, renting will continue to enjoy a revival.

Top tips: becoming a savvy renter

1. Shop around

According to Kevin Baneham of the national housing organisation Threshold, there is plenty of scope for tenants to negotiate lower rent.

He advises people to look around their area and establish whether there is cheaper or better accommodation out there.

If you are not willing to move in order to save money, then at least try haggling with your existing landlord by presenting them with evidence (for example advertisements) of better-value rental accommodation available in your vicinity.

If you’re a good tenant, they won’t want to lose you and may be willing to negotiate.

2. Don’t automatically renew your lease

Once you have been living in a rental property for more than six months, you have security of tenure, which means that the landlord can only end your tenancy on specific grounds, for example if they intend to sell the property.

Baneham says that, two years ago, many landlords were offloading their investment properties but the situation has changed now as rental properties aren’t selling.

“The change in housing sales has given much more security on rented houses,” he says.

Baneham advises tenants not to sign a new lease automatically if they have been renting the property for more than six months. They will already have security of tenure, so they should weigh up whether it is in their best interests to commit to paying a set rent for a fixed period.

3. Claim tax relief

If you are paying for private rented accommodation, you are entitled to tax relief at 20 per cent on your rental payments up to certain limits.

You can apply for this by completing a Rent 1 form, available on

You can also claim it by registering with the PAYE anytime system on the Revenue website.

4. Know your rights

It is important for tenants to be familiar with their legal rights.

For example, landlords are only allowed to enter the rental premises with the tenant’s permission, and they may only raise the rent once in a 12-month period unless there has been a substantial change in the nature of the accommodation.

Further details of rental rights can be found on

5. Don’t be afraid to complain

If a dispute arises with your landlord, you should bring your complaint to the Private Residential Tenancies Board (

Threshold provides a free advocacy service to tenants at hearings of the PRTB.

Report by Caroline Madden - Irish Times.

Friday, 16 January 2009 - Latest Report - Daft Property Ireland - January 2009...

Ireland's Property Market: A Fallen Star?

Ronan Lyons, Daft's in-house economist, commenting on the latest Daft research on the Irish property market...

When we look back at 2008 in a few years' time, I think it's fair to say we will regard it as the annus horribilis for Ireland's property market. In late 2006, we issued a report which was the first to spot a slowdown in the property market. At the time, it was our view - unpopular though it was - that rising interest rates and high levels of supply would lead to a levelling off in house prices. This turns out to only have been the start of the story. Bursting onto the world stage at the end of the 1990s, Ireland was heralded as an economic phenomenon and rapidly became a global superstar and poster-child for economic development. But recently it looks like it's all just falling apart. Nowhere is this more evident than in Ireland's housing market - until recently the engine of Ireland's economic growth. House prices have fallen signifcantly from their 2007 peak, with trends in Ireland's property market driven by the ongoing effects of overproduction of housing, combined with extraordinary international economic developments.

As this review of Ireland's property market in 2008 shows, asking prices for Irish property fell on average 15% during the last year. That makes 2008, in many ways, the opposite of 2006. While asking prices were static throughout 2007, the 12 months of 2008 have seen the typical home lose just over €50,000 in value, almost the exact amount gained in 2006. Ireland's average asking price of €295,000 in December 2008 is almost exactly the same as that in January 2006. Even the property market's quarterly trends were like 2006 in reverse.

The early part of the year was marked by uncertainty about growth in developed economies, as ongoing financial turmoil took its toll on share prices and the dollar. There was still a widespread belief, however, that emerging markets would take up the slack and that we were experiencing a blip rather than a derailment. Asking prices therefore eased back just 1.4% in the first three months of the year. As summer came along, though, it seemed that we were entering a new economic era, one of $200 oil and inflation. As this sank in, confidence took a further hit. Asking prices fell twice as fast between April and June as they had done in the first quarter, with the outer commuter counties of West Leinster, more dependent on petrol prices than elsewhere, particularly badly hit.

As autumn descended, the full extent of the financial crisis was revealed. Long-standing banks and investment houses were wiped out or nationalised on a weekly, if not daily, basis. House prices fell almost 4% in the three months between July and September as a result. There was still a feeling, however, that the financial and real economies, or Wall Street and Main Street as they were dubbed, worked in somewhat separate spheres. As the year came to a close, however, the full impact of the financial crisis on the real economy was becoming apparent, with job losses in retail, catering and manufacturing. The largest fall in asking prices, almost 6%, has come about in the final months of the year (just as the largest rise occurred in the first part of 2006).

South County Dublin has been in many ways the flagship of Ireland's property market. Average asking prices in the area rose from €530,000 in early 2006 to over €680,000 by mid-2007. They have fallen steadily since then and in late 2008 fell over €50,000 to stand very close to their early 2006 levels. Elsewhere around Dublin, the fall from the peak has been in the region of €70,000 to €80,000. Outside the capital, falls in asking prices of between €40,000 and €50,000 from peak values in mid-2007 are more typical.

A range of global economic developments has made it necessary for countries around the world to revise down their growth estimates over the coming years. Russia, which earlier in the year had been expecting growth in 2009 of perhaps 7%, is now fighting talk that it is already in recession. The US may experience its first two-year recession for some time, while the IMF believes that the world as a whole will be in recession next year, according to its definition of global growth of less than 3%.

Ireland was delicately poised atop recent global economic trends. Its two major currency exposures are to the dollar and to sterling, so recent depreciations of both are having a major impact for Ireland's exporters. In the midst of all these external developments, Ireland's domestic sector - so heavily reliant on construction for employment, wages, tax revenues, and general sentiment - has contracted sharply. The government budget shortfall for the year totalled €8bn, with likely implications for public sector pay and employment in 2009 and 2010. It is likely that net migration will change from large inflows in 2007 to outflows in 2009, particularly as unemployment looks likely to reach double digits at some point in the next few months.

What do all of these local and global trends mean for homeowners and prospective first-time buyers? To see where the property market will go next - and when it is likely to recover - it is necessary to look to the past as well as to the future. Over the past few years, Ireland has built perhaps twice as many houses as it needed, due in large part to tax incentives. Between 2005 and 2007, a quarter of a million new homes were built in a country that only had 1.4 million households in 2005. Worse still, due to the nature of the tax incentives, many of these properties were built in areas that did not need them. It stands to reason that if you build twice as many houses as you need for three years, you'll need to build half as many as you need for six years to get back to equilibrium.

So should we write off Ireland's property market until 2015? Not necessarily. It's likely that prospects will vary from region to region. As outlined above, areas like South County Dublin are certainly feeling the pinch now, falling almost €150,000 on average from peak values. In such areas, prices are determined less by wages and interest rates, and more by expected future value and confidence. Therefore, whenever sentiment eventually reverts to a more optimistic outlook, those areas are likely to rebound faster. With the government seemingly tied into a pro-cyclical trap and not able to implement an economic stimulus package, due to large increases in public expenditure in the good times, it is of course an entirely different question whether lower interest rates will be enough to kick-start sentiment in Ireland.

In other regions, the long-term prognosis is very different. For properties close to centres of employment, four elements - employment, wages, interest rates and access to finance - will be crucial. Other areas, suffering from a glut of properties, may need a longer or a larger adjustment. Ballpark figures, based on the 2006 Census and listings, suggest that as much as 10% of properties are for sale in counties like Roscommon, Cavan and Leitrim, compared to less than 5% elsewhere. It won't be impossible to sell properties in these counties in coming years, but sellers must be realistic about the value of their property in a flooded market.

Over the past decade, Ireland was a star in the world economy. Bursting on to the scene in the late 1990s, we earned worldwide recognition for how much we achieved so fast from such humble beginnings. With all this fame, it was perhaps to be expected that we lost our way in the early years of this decade. Recently, things have got a lot worse - bank bailouts, budget debacles, job losses and public sector cuts : we've been through it all. Nonetheless, like any star, while a lot of damage has been done, with good management, we can look ahead and spot elements of a brighter future - just look at the cost of petrol, mortgages, food or clothing now compared to a year ago. Ultimately, with the resolve to put right what needs to be fixed, and with a far better starting point than we had in the mid-1980s, we have to be confident about our prospects for the future.

Report from Ronan Lyons -

Thursday, 15 January 2009

Post Property Bubble Ireland - Economic Crisis 2009

Ireland plans drastic cuts to prevent debt crisis...

Ireland is to demand pay cuts for civil servants and public employees to prevent the budget deficit soaring to 12pc of gross domestic product by next year – becoming the first country in the eurozone to resort to 1930s-style wage deflation to claw back competitiveness.

"We will take whatever decisions are necessary," said premier Brian Cowen. The Taoiseach yesterday denied reports that he invoked the spectre of the International Monetary Fund to terrify the trade unions into submission. But the threat – uttered or not – has been picked up nevertheless by labour leaders.

"The IMF's normal prescription in such situations involves mass dismissals and pay cuts, along with cuts in pensions," said Dan Murphy, head of the public service union, who accepts the need for draconian retrenchment.

The budget deficit will soar to 9.6pc of GDP this year as property tax revenues collapse. It is so far above the EU's Maastricht limit of 3pc that Brussels will have to impose sanctions. It is still rising fast.

"On the basis of existing policy, A General Government Deficit in the range of 11pc to 12pc of GDP is in prospect for each of the years to 2013. This is untenable," said the finance ministry in a fresh revision to its (already dire) Stability Programme. It has drafted a swingeing five-year plan, slashing spending by €16bn (£14.4bn) or 8pc of GDP by 2013.

The markets are watching nervously. Yields on Irish 10-year bonds have risen to 180 basis points over German Bunds. Standard & Poor's has issued a "negative outlook" alert on Ireland's AAA rating, noting that the bank bail-out has increased state liabilities by 228pc of GDP. This guarantee may be tested. While Dublin's "Canary Dwarf" has been a success story – leading a finance sector that makes up nearly 10pc of Irish output – it has also become an Achilles Heel.

Chris Pryce from Fitch Ratings said Ireland had shown great courage by facing up to the full implications of the global crisis earlier than others. "We're very impressed by the vigour of the Irish government," he said. Even so, the public debt will jump from 25pc of GDP in 2007 to 62pc by 2010.

It is a grim moment for the Celtic Tiger after achieving so much as a high-tech hub with an educated work-force and one of the most flexible economies in the world – all qualities that should help the country pull through in the end.

Dublin expects the economy to shrink by 4pc this year as the post-bubble hangover goes from bad to worse. Unemployment will hit 12pc by December, up from 4.9pc in early 2008.

Ireland is paying the price for letting wages spiral upwards during the long boom, eating away at competitiveness. The computer group Dell, Ireland's top exporter, has stunned the country by announcing plans to shift its EU manufacturing arm from Limerick to Poland, taking 4pc of Irish GDP with it. Workers in Eastern Europe are closing the technology gap, and they are much cheaper.

Dublin house prices have fallen 28pc from their peak. Professor Morgan Kelly from University College Dublin – the first to predict last year that Irish banks would need a state rescue – fears that prices will drop 80pc in real terms before the glut of unsold property is cleared.

"It has taken us 10 years to get into this situation. It will in all likelihood take us 10 years to get out of it. Construction will fall to zero for the foreseeable future," he told a Dublin conference. There may be net "demolition".

It is hot debate whether euro membership is making matters worse at this stage. The country has not been able to "get ahead of the curve" over the last year by slashing interest rates. Indeed, Frankfurt raised rates in July.

The euro has jumped almost 30pc against sterling in a year. This amounts to an "asymmetric shock" for Ireland, which depends on Britain for 21pc of its exports. John Whelan, head of the Irish Exporters Association, said the strong euro puts100,000 jobs at risk this year.

"Most companies cannot make money selling into the UK at an exchange rate above 0.80 pence and today the euro is worth 0.91 pence. Currency hedges will run out by March, and the small guys are feeling the full whack instantly," he said.

Mr Whelan said there was a feeling of betrayal that Britain did not join the euro alongside Ireland – or shortly after – despite Labour's pledge to do so.

"We thought Britain would join in 2003, but then Tony Blair lost his popularity in Iraq and never tried," he said.

Finance Minister Brian Lenihan has even accused Britain of pursuing a beggar-thy-neighbour strategy.

Report by Ambrose Evans-Pritchard - UK Telegraph.

Wednesday, 14 January 2009

It's Irish Housing Market Demolition Time As Prices To Fall 80%...

Warning that house prices may fall by 80%...


IRELAND WILL see more demolition than construction of houses over the next decade, as the economy struggles to recover from the collapse of the housing market and the emergence of “zombie” banks, UCD economist Morgan Kelly told the conference.

In a presentation that drew several collective intakes of breath, Mr Kelly predicted that house prices would fall by 80 per cent from peak to trough in real terms.

“Construction, but not demolition, of residential and commercial property will fall to zero for the foreseeable future,” he said.

Low levels of education among those employed in construction – where worker numbers peaked at about 280,000 – meant retraining would not be straightforward.

Recovery will be slow: “It has taken us 10 years to get into this situation – it will in all likelihood take us 10 years to get out of it.”

Mr Kelly said he had been hailed as being extremely prescient as a result of his warnings in relation to the property bubble, when in fact he and a handful of other “amateurs” were merely stating what was obvious.

Sparing no blushes, he said professional economists in the Central Bank and the Economic and Social Research Institute “need to look very closely at their analyses of the Irish economy and figure out what went wrong”.

Mr Kelly said Ireland’s “reputational capital” had been damaged by “chancers” such as ex-Anglo Irish Bank chairman Seán FitzPatrick, who had been abetted by “buffoons” such as former financial regulator Patrick Neary, Minister for Finance Brian Lenihan and the Taoiseach.

In discussing the €110 billion given in loans to developers, Mr Kelly said a typical regional housing collapse in the US saw banks sustain a 20 per cent loss on these loans, but the narrowness of the Irish market increased the risk of “substantially larger losses” for Irish banks.

“The guarantees of Anglo and [Irish] Nationwide liabilities have a strong chance of being called in over the next 21 months,” he said. Extending the Government guarantee to these two financial institutions was “extraordinarily unwise” and could produce losses that the State cannot afford to repay.

The global financial crisis may have been positive for the Irish economy as it “stopped us dragging ourselves even deeper into our hole,” he said. “If it had taken another year or two, we would have ended up in an Icelandic-shaped hole, which is not to say that we won’t end up in one.”

Mr Kelly said the Government should abolish stamp duty on property, compile proper price and quantity statistics and restore competitiveness through a public sector pay cut of 10 per cent.

A paper by TCD economist Patrick Honohan on the banking crisis argued that capital injections in the banks were a prerequisite for recovery. The financial regulator needed to decide now which banks had systemic importance to the economy – in other words, are “too big to fail”, and which are “zombie” banks.

“The goal is to avoid the continued operation of an undercapitalised, error-prone bank with a flawed business model and administrative practices, a problematic customer base and a compromised management facing distorted incentives,” the paper stated.

Report by LAURA SLATTERY - Irish Times.

Monday, 12 January 2009

Spectre Of Gloom Looms In Ireland As Recession Hits...

Spectre of gloom looms for those who keep their jobs as well as those laid off...

GOING, GOING gone. Once these three words were the oft-repeated mantra of Ireland's busy auctioneers; now they form a gloomy synopsis of the state of the Irish jobs market.

With no homes going under the hammer, the axe fell on jobs in the construction sector over the course of 2008. A decisive coinciding blow from the global economic crisis saw the reverberations spread through all sectors of the economy.

Jobs are now being lost at such a fast rate that an Opposition leader (Labour Party's Eamon Gilmore) can call the soaring unemployment rate a "national crisis" and it doesn't sound like political hyperbole.

Having started the year below 5 per cent, the estimated unemployment rate in November was 7.8 per cent. Economists now forecast that the rate will jump to double digits by the end of 2009.

Almost 100,000 people joined the Live Register of unemployment benefit claimants in the first 11 months of 2008. The speed and scale by which the dole queues have lengthened is by any standard alarming: November's monthly rise in claimants was the highest ever in absolute terms and the largest spike as a percentage of the workforce since January 1975.

The Department of Enterprise, Trade and Employment's figures show a 57 per cent annual increase in official redundancies, with both the services and manufacturing sectors shedding jobs at an ominous pace.

In terms of crude numbers, the Government's oft-talked about attempt to establish a "knowledge economy" isn't enough to counter the slump in traditional bread-and-butter industries. IDA Ireland's job creation announcements in 2008 come to a total of around 5,300 jobs. "High level" - or "high value-added" - though many of those positions may be, they fall somewhat short of the 37,300 notified redundancies recorded in the first 11 months of 2008.

In 2009, the miserable consequences of such job losses will continue to be felt both in terms of the wider economy and in the local communities that depend on a small handful of big employers for the bulk of their employment.

The commuter counties have been particularly badly affected by the collapse of the housing market: in Kildare, Meath and Wicklow the increase in the number of people signing on is running at more than 80 per cent. In six towns in Ireland, the number of people claiming unemployment benefits has doubled: Ballybofey in Co Donegal, Westport in Co Mayo, Maynooth in Co Kildare, Kells in Co Meath, Cahir in Co Tipperary and Newmarket in Co Cork.

The biggest job-cut announcement of the year came courtesy of insurance company Hibernian, which said it was transferring 580 jobs over a three-year period to Bangalore, India. Despite that move, Ireland is judged to have a reasonable chance of clinging on to its financial services industry in the long term.

But in the short term, the sector is capitulating to the credit crunch: GE Money, Citco, Inter Group Insurance Services and stockbrokers Davy were among the financial services firms to let staff go in 2008.

Going into 2009, the spectre of mass layoffs hangs heavily over the main Irish banks and IFSC operations with global redundancy programmes.

Outside the financial services sector, victims of the property boom's busting include Howley Civil Engineering (250 job losses), McInerney (225 job losses) and Wolseley Ireland (150 job losses).

Retail jobs are also looking especially vulnerable. The malaise started with the furniture retailers, which last year gave hotel conference rooms an unsustainable new trade in creditors' meetings.

Now with the numbers of people in employment shrinking and those who are hanging on to their jobs adopting more cautious spending habits, retail sales have already plummeted 7.4 per cent in the year to October.

Even if, as one retail industry representative claimed, Christmas proved "almost more important than recession" and shoppers made a last minute dash for the tills, the chances are that those tills will have been north of the Border: a weak sterling, a British cut in VAT rates and increased budget-consciousness all conspired to drive Irish consumers up the N1. Once the tinsel is taken down, there will, as one economist put it, be a retail "shake-out".

The extreme currency movements in sterling in December also mean that exporters, many of whom were already suffering from a slide in the dollar, will be forced to have a staff clearout in the weeks ahead. Tourism is another industry under pressure, partly due to the currency deterrent for UK and US travellers and partly due to lower levels of discretionary income among both overseas and domestic tourists.

With new car sales down 55 per cent annually, it's not a good time to be tangled up in the motors business, while the plunge in advertising revenues means the media sector is also feeling the pinch.

Cashflow constraints are compounding the dips in demand for small firms: according to a survey by business group Isme, half of small and medium enterprises (SMEs) expect to lay off staff in 2009, with only 14 per cent expecting to take on staff.

While some job losses may be cyclical - that is, a reflex response to recession - many of the lost jobs won't return.

After announcing 490 redundancies in late 2007, Waterford Crystal said in October 2008 that it wants to reduce its workforce by another 280 people as it plans to outsource production to lower cost eastern Europe.

Dell is shifting production from Limerick to the Polish city of Lodz at the cost of up to 2,000 jobs, while the Tullamore business of Boston Scientific (240 job losses) is going back to the US.

With some of the largest job loss announcements, simple technological efficiencies were at play: medical devices firm Abbott (500 job losses), biscuit maker Jacob Fruitfield (220 job losses) and Guinness brewers Diageo (250 job losses) have all found ways to streamline production.

These technological advances won't be unwound, while, for better or worse, the housing market may never again inflate to such a large bubble.

Those who keep their jobs during this recession face the prospect of pay cuts, grimmer working conditions and more casual terms of employment: in other words, longer hours for less money, even more rubbish pensions and precious little job security.

Those who lose their livelihoods will face a highly competitive scramble for the few vacancies that do pop up. Welcome to the recession.

Report by LAURA SLATTERY - Irish Times.

Sunday, 11 January 2009

Mangy Celtic Tigers Face 2009...


Testing Times...

How do we cope with recession? Valerie Shanley hears from leading experts and thinkers...

In with the old, out with the new. But if we started 2008 as slightly mangy Celtic Tigers, who are we now as we venture a toe into 2009?

The collapse in our economy has left an entire section of society feeling much poorer – especially those with big houses and share portfolios in Irish banks. Gone are the days when estate agents could tell you that the first thing new owners of a house should do on moving in was to rip out the designer kitchen the previous owners had only recently installed and replace it with another. Because gone are many of those estate agents.

If the masters of no universe are having to re-evaluate the way they look at themselves, what about the rest of us?

Even though most people were observers, as opposed to participants, in the ostentatious wealth of 'the boom', there was a positive, knock-on effect in confidence generally. Looking around, it was like that old Cranberries album title Everybody Else Is Doing It, So Why Can't We?. Everything, on some sort of scale, seemed possible.

But now, that weekend whim of a flight to somewhere unheard of but unexpectedly cultural and historic in Poland, a wardrobe bulging with clothes worn once or that classy glass-box kitchen extension are all very secondary to a population fearful of unemployment and bracing itself for tougher times.


The evidence all around of caution
in spending shows just how the global scale of the financial crisis, and its effect on employment and economic activity, has impacted on the nation's psyche. Austin Hughes, hief economist with KBC Bank, compiles monthly consumer-sentiment reports which show the steep decline in confidence in just over two years.

"Fear is the dominant influence. Four out of five people polled believe the economy will worsen, and confidence is seen as the major negative. There is a 58% drop in consumer confidence since 2006. It's not necessarily because we've run out of money. People are spending a minimum 10% less with credit cards than a year ago, and generally, there has been an extraordinary scaling back on spending. The number of people who are expecting things to get worse shows consumers have already battened down the hatches and are braced for something potentially worse than what will happen. And that's probably not a bad thing. Provided we get the leadership to bring us out of it."


Complaints from retailers here that shoppers who head north for groceries are being 'unpatriotic' fall on deaf ears in a newly pragmatic economic climate.
The move from ostentatious wealth to
no longer hiding the German discount-store carrier bag has been an emerging pattern in recent months as household budgets are squeezed. The upside, says
Dr Susan Whelan, a lecturer in economics at Waterford Institute of Technology, is that the drop in confidence has ushered in a new national sense of prudence.

"Consumers seem to be meeting their utilitarian needs, rather than the desire to display wealth. People are certainly being extremely cautious. On the broader scale, an obvious negative of the Celtic Tiger era is the impact on tourism. We have been perceived as a high-price destination, and that has had an effect on Ireland as a brand."

Despite the speed and scale of the economic downturn, many Irish businesses have already been preparing for tougher times. Property development, as everyone knows, has reached a standstill, and yet there is still the odd success story. London-based Irish developer Brendan Kirwan has a portfolio of luxury self-catering holiday accommodation, here and abroad, the most recent of which – The Gatsby – has opened in Ardara, Co Donegal.

"At first blush what I did in Donegal looks bold but looking closer you will see that I bought at pre-bubble prices and chose to develop this project in a way that it could join my existing boutique self-catering portfolio with virtually no expense. That means costs can be slashed and those savings passed on to guests who can now get their fix of luxe for less. The key to surviving this transition period is to get real and get on by acting nimbly on the conditions we actually have, not the ones people may wish they had.

"Ireland's problem is one of denial. The economic reality just seems to be too bitter a pill to swallow. The danger with denial is that it translates to people not making the right commercial or financial decisions."


How can confidence be restored, in the nation as a whole, and in individuals fearful of predictions that things are going to get a whole lot worse? Psychologist Rosemary Troy suggests that the country could be looked on as a depressed individual suffering from an overwhelming feeling of catastrophe.

"They feel that everything in their lives has gone wrong. A suitable treatment is cognitive behaviour therapy (CBT). It takes the form of changing how a person thinks, and it could be applied to the country generally. Get people to look at the world in a different way. What would help a lot of people now would be to go back to a more relaxed way of life. Look at the way we perceive things, reassess that, not reinforce the negative. At night time, switch off the bad news for a while. We all need blocks of time to switch off. I would be an advocate of returning to Sundays where the shops are closed, to get back to a different kind of vibe.

"I'm just back from Tenerife, and I could feel the wave of negativity the minute I arrived back in Ireland. I feel we are quite negative as a people, especially compared to other nations who may be even worse off economically. Of course, they don't have our terrible climate. But we have bought into a certain materialism and our value system is a bit skewed. It's time to get a degree of balance. We overdo the need to shop, over-emphasise the need to acquire things. It's not all about acquiring wealth, or shopping, or jobs. Even during the boom we heard stories about people struggling with debt. We are now obsessed with hearing the news, and it makes people see a problem in everything. We have developed a way of seeing the world as quite negative.

"We take things quite personally; if something bad happens, we feel it personally. I would challenge those negative paths of thinking. An awful lot of it is perception. We have enormous debt, a lousy climate, but we have good things too. It's okay to want to earn money and okay to want to provide for our families, but those material things are not the only important things in life. There's a need to move away from defining ourselves in terms of wealth.

"I had two teenage patients last year who agreed that their parents could be involved in the consultation. On two occasions, the parents concerned said they didn't have the time. That's the wreckage of the boom, the feeling that earning money is all that matters, rather than children's welfare."

Writer Joe O'Connor agrees that the excesses of the past decade were experienced pretty much selectively.

"I never knew anyone who had a three-grand handbag. Certainly, most people did better than they had done in the 1980s, but here was an incredible lack of willingness to end the divisive inequalities that have always existed in Ireland. We're going to have to get used to things we previously took for granted now becoming luxuries. But so what? That isn't going to kill anyone. I don't blame the politicians for being shocked. But over Christmas, they'd really want to get in gear and come back with leadership, and hope.

"All the flailing around and passivity has to stop. If there's one thing worse than a country where there was too much money swilling around, it's a country where there's suddenly none."

Mark O'Halloran is the award-winning writer of 'Prosperity', the 2007 RTé drama series which prompted a lot of soul searching at the height of the boom for its searing portrayal of the lives of four characters on the margins of society. He agrees that most people are now dealing with much more uncertainty in their lives.

"People are genuinely afraid of what the next few years have in store for them. It feels like everything that we have been told over the last few years – such as we've never had it so good, growth will keep coming, business knows best, etc – has all been just fanciful nonsense pedalled to us by people who really had no idea what they were doing.

"I think that people are beginning to reflect also on who we were in the good times – beginning to see the flashy trashy idiots we became with a few extra euro attached.

"But it's not good to be all doom and gloom. I think that this recession does hold out great opportunities for us. We will certainly all have more time to reflect on who we are and what we want but perhaps more importantly we may all have more time for each other, more time to appreciate the really important things in life – friendships, lovers, family, etc. And that can't be a bad thing."

Report by Valerie Shanley - Sunday Tribune.