Thursday, 28 January 2010

Talking Property Crash...

It's time to quiz planners for their part in the crash, says ISABEL MORTON

AS THE next few rounds of the blame game get going, including the banking enquiry, one wonders when our 88 different planning authorities and more importantly, our planning appeals board (An Bord Pleanála), will get much more than a sharp slap on the wrist for their part in the property fiasco which resulted in some 300,000 homes lying empty.

No doubt individual planning authorities, much like the banks and the developers, were only interested in what was going on in their own back yard, but one would have to wonder how and why An Bord Pleanála upheld permission for so much of what was built during the Tiger days.

An Bord Pleanála’s mission statement is “to play our part as an independent body in ensuring that physical development and major infrastructure projects in Ireland respect the principles of sustainable development and are planned in an efficient, fair and open manner”.

Surely, as an independent body, An Bord Pleanála was responsible for ensuring that local planning authorities didn’t lose the run of themselves? Why did they permit so much to be built, in so many obviously unsuitable locations, over such a long period of time?

Indeed, much like the Financial Regulator, Bord Pleanála could have gone a long way towards stopping the property train from going off the rails. But it didn’t and, so far, has managed to escape the nation’s wrath.

As we recently discovered, it was not just a simple case of getting the numbers wrong and allowing too many units to be built; it permitted many developments to be built in areas which were at risk of flooding and had poor infrastructure and inadequate services and facilities.

Furthermore, there appears to have been no control or any overall planning strategy, which might have prevented many minuscule one and two-bedroom apartments, none suitable for families with children and many of inferior design and construction, being built.

Ironically, last October 2009, at the launch of Bord Pleanála’s 2008 annual report, its chairman, John O’Connor, said he was “concerned that developers may be tempted, in the present market, to return to lower density development. However, national policies on building more sustainable communities for the future do not favour a return to old-style density development due to the greater than ever need for the most efficient use of expensive infrastructure, for increased environmental sustainability and for less urban sprawl.”

Of course developers will be “tempted” by lower density developments of houses rather than apartments, as there would hardly be much point in building more apartments to add to the unsold glut.

However, Minister for the Environment John Gormley recently recommended an amendment to the Planning and Development Bill 2009, which he brought before the Dáil last December. He said: “I have also taken a strong stance with certain local authorities by issuing directions requiring them to amend their development plans where they have included excessive or inappropriate zonings,” suggesting that planning authorities should consider using existing “down-zoning” provisions.

“It is no coincidence that our commuter towns are now suffering the most from the economic downturn. These are the towns where house upon house was built, and field upon field rezoned, with little thought given to flood risk assessment, or where nothing was provided by way of community facilities or amenities. This is not my idea of sustainable communities. Scatterings of estates, poorly linked by transport, under constant threat of flooding, distant from schools and dependent on transport by car, must become a feature of our past, not our present or future.” He explained how the Bill included the introduction of “flood risk assessments” as part of proposed future planning applications and recommended that all land zonings would have to be the subject of public consultation.

An amendment to the Bill is undoubtedly necessary; however, you can’t but wonder at the point of closing and locking the stable door at this stage. Gormley’s most interesting comment, however, came following his acknowledgement of planning departments’ increased workload and his respect for locally elected councillors, when he said: “I do not want their work contaminated by that small number of people who use the planning system for their own gain.”

His statement was a clear acknowledgement that all has not been well within planning departments. No doubt, they will be the next on the long list of organisations, which will be made subject to lengthy public (yet behind closed doors) enquiries. Like a large onion, there is always another layer to be peeled. And with each layer, come more tears.

Report by ISABEL MORTON - Irish Times

Wednesday, 27 January 2010

Ghost Estates - Haunting Legacy Of Crash...

Over 600 ghost estates stand as haunting legacy of crash...

THE startling scale of Ireland's property crash is laid bare today as academics reveal that more than 600 'ghost' estates are scattered around the country.

For the first time, a comprehensive map charts the locations of the empty and abandoned developments that stand as haunting monuments to the Celtic Tiger splurge.

The analysis suggests pockets of the north-west and midlands will be worst hit by a housing glut that will take years to sell off.

Largely rural counties Leitrim, Longford, Roscommon and Sligo have the highest number of partially built and semi-vacant housing estates when measured against their populations.

Their relative distance from major cities is expected to compound their oversupply problem for the foreseeable future.

Although Cork has 96 so-called 'ghost' estates and Dublin 58 -- the highest figures by county -- it is believed that their urban populations can absorb the surplus much sooner.

The map was drawn up by the National Institute of Regional and Spatial Analysis (Nirsa), which last week revealed that more than 300,000 houses now lie empty around the country.

Professor Rob Kitchin, director of the NUI Maynooth-based body which advises the Government, said black-spot counties at the end of the N4 could be scarred for up to a decade.

"The population went up the M1, the N2, down the N7, down the N11 and so the N4 was the last big corridor. They started their housing boom after everybody else."

His calculation shows that there are 621 'ghost' estates. The worst-hit area is Leitrim, where 2,945 homes were built during the boom, despite population projections that showed just 588 homes were actually needed.

Longford, Roscommon and Sligo, in particular, as well as Monaghan, Cavan and Carlow also face years of oversupply.

In the months ahead, the State's 'bad bank', Nama, will assess the value of the uncompleted and half-empty estates and determine their future.

Nirsa estimates around half of them will be taken over by the agency, which will then have to decide whether to sell, lease, maintain, hold, develop or demolish them.

There is speculation that some developers are keeping 'ghost' estates off the market or hiking their prices in the hope that Nama will value them higher and take them off their hands.

Prof Kitchen believes many estates in rural areas could be left as eerie monuments to the property crash.

"They will just be left as scars on the landscape, because nobody will be prepared to pay the cost of knocking them down and restoring the land to agricultural prices," he said.

Report by Brian Hutton - Irish Independent

Monday, 25 January 2010

Ghost Estates To Social Housing Estates...

State to rent Nama properties for social housing...

The government plans to rent thousands of vacant houses and apartments from the National Asset Management Agency (Nama) and use them for social housing.

Representatives of the new ‘bad bank’ have held meetings with officials in the Department of the Environment, Heritage and Local Government to explore the possibility of renting out properties that would otherwise lie empty.

Housing minister Michael Finneran said his officials were seeking to ensure a ‘‘social dividend’’ from Nama by renting residential units on long-term leases for social housing purposes.

Finneran said an arrangement could help to deliver ‘‘a return in line with Nama’s mandate’’.

The government is under pressure to demonstrate to the European Commission that Nama will be capable of generating significant ongoing cash flows over its lifetime, and that the new agency will not be excessively generous to participating banks.

While a move to rent properties for social housing would generate income for Nama, it could be controversial, as it would mean that tax revenues were being used to pay rents to the agency.

Finance minister Brian Lenihan told the Dáil last year that Nama would aim to generate a profit and that such an outcome would be achievable in certain circumstances. However, critics argued that the minister’s assumptions were too optimistic and based on forecasts of ongoing income streams and a recovery in property values that were unlikely to be realised.

‘‘From a social housing perspective, I see clear potential for real and meaningful synergies between the work of Nama in ensuring the stability of the financial system, and the role of my department in responding to social housing need," said a statement from Finneran.

He said the provision of social housing by local authorities was moving towards ‘‘more flexible delivery mechanisms’’ that included long term leases and the rental accommodation scheme.

He said the government favoured this approach over the traditional model of building or acquiring homes for social housing purposes.

Research published earlier this month by the National Institute of Regional and Spatial Analysis, which is based at NUI Maynooth, estimated the number of empty houses and apartments at more than 300,000. A large number of those are likely to transfer to Nama.

Report by David Clerkin and Ian Kehoe - Sunday Business Post

Sunday, 24 January 2010

Anger At Call To Raze 'Ghost Estates'...

THE head of Ireland's auctioneers and the former Finance Minister Ray MacSharry have clashed over the future of the so-called 'ghost estates' left over from the property boom.

President of the IAVI (Irish Auctioneers and Valuers Institute) Aine Myler has suggested that some new estates may have to be demolished altogether as part of an ongoing effort to restore stability to the property market.

Speaking to the Sunday Independent at the IAVI's annual conference in Dublin on Friday, Ms Myler said that as a result of poor planning and a lack of infrastructure, some of the country's newer housing stock may never be required.

Asked what could be done with these developments, Ms Myler said: "It's really difficult to know. It shows up a number of issues that emerged during the boom, where there was poor planning, the building of large estates where there was no infrastructure, no transport links and other links which have probably diminished in the meantime as a result of the retraction of services."

And while she readily conceded that there was a "huge national demand" for social housing, she went on to say that it would be unfair to place anyone in an estate if they did not want to live there.

She said: "We have a huge national demand of people who need housing from a social perspective, and yet that housing might be in locations where it's not required. Is it fair to ship people out to that location just because there happens to be an empty house there?

"I haven't heard any viable proposals about what to do other than to potentially knock down some of these developments."

Ms Myler's belief that demolition might be the only alternative for certain developments was met with total disagreement from Mr MacSharry.

"It shouldn't be the case under any circumstances that any construction should have to be knocked down," said the former finance minister credited with pulling Ireland out of the last recession.

"The country will survive. Why knock down structures that you know you are going to need in two, five or seven years? It's a ridiculous suggestion as far as I'd be concerned."

Offering his own view on the matter of the oversupply of housing across the country -- estimated last week to be as high as 300,000 units -- he said: "My own view has always been that the overhang should be purchased by local authorities to get rid of housing lists and the waiting lists. That would do a number of things. It would get rid of the housing list and it would generate activity in the housing sector."

But while the IAVI president drew the ire of Mr MacSharry for her views, she did receive some support from a more unlikely quarter.

Commenting on the matter, director of Social Justice Ireland (SJI), Fr Sean Healy, said: "People build estates in the wrong places where people don't live and consequently it's not possible for those estates to be viable. It makes no sense to ship people into communities that would be non-viable where some of these housing estates actually exist."

Citing examples in the counties of Roscommon and Leitrim as just two cases in point, he added: "One new estate in Roscommon that was built during the boom years, as far as I know there's nobody occupying any of the houses. It is a very small place. There is no way you can put 50 new households in there and have it viable.

"In another estate in Co Leitrim there were hundreds of houses built. Many of them are now not occupied. There is no viable support system for people on social housing in that context, so it makes no sense to move people into housing estates that have been built with no potential to be economically viable. They are (only) economically viable for people who have been living there all their lives."

The SJI director concluded by saying: "People who took the risks and put them there, maybe they see a possible future if they hold on to them long enough that they could be used as holiday homes in the summer, or for people who want a second home or something, I don't know.

"My reaction to it, in part at least, is that these were built on the basis of economic incentives and forecasts that were simply nonsensical and as a result people who built them are now left holding them and they have to find solutions."

Commenting on the overall prospects for Irish residential property, meanwhile, the IAVI president said she believed a three-tier market was now emerging.

"It will be a three-tier market, and we've seen already how that's started to divide up around the country where you have some activity at affordable levels in Dublin, a level of activity in other places, and then places where there is no activity," she said.

Report by RONALD QUINLAN - Sunday Independent

Saturday, 23 January 2010

The Worst Is Yet To Come...

Most do not believe worst is over for economy...

A majority of voters do not believe Brian Lenihan’s claim that the worst is over for the economy but they strongly back his decision to remain in office as he battles with cancer, according to the latest Irish Times /Ipsos, MRBI poll.

Asked if they accept the Minister for Finance’s view that the worst is over or if they believe that the worst is yet to come, 61 per cent of voters said the worst is yet to come while 31 per cent believe it is over and 8 per cent have no opinion.

In party terms, only Fianna Fáil voters believe the worst is over with the supporters of all other parties saying it is yet to come. Younger voters are more inclined to the view that the worst is over while the over-65s are the most pessimistic.

Asked if Mr Lenihan is right to remain in office as he battles with cancer, 70 per cent of voters say he is, while 23 per cent say he is not and just 7 per cent have no opinion.

The strongest support for Mr Lenihan remaining in office comes from Fianna Fáil voters with 82 per cent supporting his decision to stay on. There is also strong support for his decision among supporters of other parties with 71 per cent of Fine Gael voters and 66 per cent of Labour voters supporting him while the figure drops to 55 per cent among Sinn Féin voters.

Middle-class voters are more strongly supportive of the Minister’s decision than working-class voters and older people more inclined to back his continuation in office than younger people but support for his decision is strong in all categories.

The poll was taken on Monday and Tuesday of this week among a representative sample of 1,000 voters aged 18 and over in face-to-face interviews at 100 sampling points in all 43 constituencies. The margin of error is plus or minus 3 per cent.

Regarding the budget, a clear majority of voters do not believe that the €4 billion package of spending cuts announced in it was fair.

Asked if they thought the package was broadly fair or unfair 65 per cent said it was unfair and 32 per cent said it was fair.

Fianna Fáil voters are equally divided on the issue but supporters of all of the other parties are inclined to the view that it was unfair. Sinn Féin voters are the most hostile with Fine Gael voters least hostile although a clear majority of them believe it was unfair. In age terms the over-65s are most inclined to believe the budget was fair, probably reflecting the fact that pensions were exempt from the cutbacks. In regional terms voters in Dublin are the most hostile.

When asked if the Government should put more emphasis on spending cuts or increasing taxes to further reduce the deficit in next year’s budget, there was a substantial majority for spending cuts.

A total of 55 per cent say the emphasis should be on spending cuts with 28 per cent opting for tax increases and 17 per cent having no opinion.

There are some striking differences between the supporters of different parties on the issue. Fianna Fáil and Fine Gael voters share almost identical views on the issue with 62 per cent of Fianna Fáil supporters and 60 per cent of Fine Gael voters backing further spending cuts.

Among Labour supporters the number supporting spending cuts drops to 52 per cent, among Sinn Féin voters the figure is 53 per cent and among Green Party voters it drops to 36 per cent.

The only party whose supporters back tax increases rather than spending cuts is the Greens.

On the issue of the banking inquiry, an overwhelming 91 per cent of voters said they wanted to see an inquiry into the crisis. Most of the polling was done before the Government announced the form of the inquiry but the strength of the public mood on the issue is clear from the result. There is massive support for an inquiry into the banking crisis across supporters of all political parties, across all regions, all age groups and social classes.

Report by STEPHEN COLLINS - Irish Times

Friday, 22 January 2010

House Prices Fall €100k

House prices are now at 2003 levels as almost €100,000 has been wiped off the value of an average home.

The price of property has plummeted by a massive 31.5pc since the peak in early 2007.

Data published by the Permanent TSB/ESRI house price index outlined that the pace of property price declines escalated in 2009, with prices tumbling 18.5pc over the year compared to a fall of 9.1pc in 2008.

The standard house price in the country is now €213,000 and the figures deteriorated as the year progressed, with an 8.5pc fall in average prices in the last three months of the past year.

Niall O'Grady, general manager of business strategy at Permanent TSB, described 2009 as a "horrendous year" for the Irish housing market.

"The pessimist will say there's worse to come. The optimist will argue that affordability has improved so much that things will stabilise soon. But the realist will admit we'll have to wait and see," he said.

Separate research from Goodbody has indicated that there are between 103,000 and 144,000 vacant homes in the country.

Analyst Dermot O'Leary from Goodbody said the vacant houses "may not be in the right place".

"Ireland is still dealing with the legacy of the housing boom, but a two-speed market will emerge in the coming years with urban areas having less oversupply, like Dublin in particular, recovering first," he said.

Report - Evening Herald

Thursday, 21 January 2010

Shocking New Probe...

Shocking new probe shows 302,000 homes are left empty...

More than 300,000 houses are lying empty around the country -- three times the official estimate, says a team of academics.

The scale of vacant housing -- equivalent to half of all homes in Dublin -- could be enough to meet demand for years to come.

The figure was worked out by the National Institute of Regional and Spatial Analysis (Nirsa), based at NUI Maynooth, which advises the Government.

It is up to three times the estimate from Housing Minister Michael Finneran, who last week told the Cabinet there were between 100,000 and 140,000 houses lying empty.

The construction industry suggested it was 40,000.

NIRSA director Prof Rob Kitchin said he decided to calculate accurately the extent of empty housing because official figures do not exist -- only estimates.

Along with colleagues, he used the GeoDirectory (Ireland's national address database), the 2006 Census and Department of Environment figures based on ESB connection points.

They concluded that 302,625 houses are empty, including properties for rent or for sale, homes not on the market for various reasons as well as abandoned houses.

The figure does not include the estimated 49,000 holiday homes in the State.


Prof Kitchin said the scale of available housing should turn the construction industry away from housing and towards infrastructure -- particularly the supply of broadband, energy supply, roads and public transport.

"I would say there is a few years' worth of housing supply there," he said. "Particularly in the rural counties, where there is a huge oversupply of housing."

But he added there were questions about whether the surplus housing was in areas where it was needed when the economy begins growing again.

"The higher rates of vacancy tend to be in the counties that don't have large towns," he said.

"So there is 30pc vacancy in Leitrim while Dublin which has the lowest at just under 10pc."

It is believed there are around 200 so-called 'ghost estates' -- developments built over the past few years that remain unsold -- among the overall empty housing stock.

Report by Brian Hutton - Evening Herald

Tuesday, 19 January 2010

Home Repossessions Will Soar...

Home repossessions will soar as 6,400 are in arrears...

AN avalanche of repossessions is now expected after new figures show close to 6,400 people stopped paying their mortgages more than a year ago.

The number who have failed to pay their mortgages for a period of 12 months or more is three times the level it was at a year ago. These homeowners are now almost certain to have their homes repossessed.


And struggling homeowners face renewed pressure from next month, which will be the first time Bank of Ireland and AIB will be able to begin new legal proceedings against homeowners who have failed to pay their mortgage for a year.

A moratorium agreed with the Government forced the banks to wait a year before starting legal action to repossess homes from those who failed to pay their mortgages.

Many of the 6,400 people at dire risk of losing their homes should not have been given their mortgages as they had no hope of repaying them, mortgage experts said.

These bad lending decisions by banks and building societies will have to form a core part of any inquiry into the banking system, the detail of which is due to be announced by the Government today.

The new figures came as the High Court granted 12 possession orders against property owners -- including one investor who lost seven properties as a result of outstanding debts of €2.3m.

Ireland's largest banks, including Bank of Ireland, AIB and Ulster Bank, were among the lenders seeking repossession orders against property owners and investors who have fallen into arrears.

The numbers in mortgage difficulty are likely to escalate over the coming months as funds-starved lenders prepare to hike mortgage rates.

The new figures emerged in a report on the Irish mortgage market by the credit rating agency Moody's, which said that in November some 0.8pc of residential mortgages had not been paid for 360 days or more. This works out at just short of 6,400 mortgages.

There are some 791,000 residential mortgages outstanding in Ireland, according to the Financial Regulator.

More than 26,000 of these homeowners are in arrears of three months or more, the Regulator said just before Christmas. It said 17,767 have not paid their mortgage for six months or more. But the figures did not say how many homeowners had gone a year without making a payment.

Almost one home a day was repossessed last year.

The revelations come at a time when Permanent TSB is poised to hike its standard variable mortgage rate by 0.5pc. Other lenders are expected to quickly follow.

Banking analysts said yesterday that this was likely to be followed by another 0.25pc rise.


Karl Deeter of Irish Mortgage Brokers said the hikes in standard variable rate mortgages were likely to prove to be a tipping point for many mortgage holders.

Senior researcher with the Free Legal Aid Centres Paul Joyce said that the new figures on those a year in arrears were disturbing.

Some 331 houses were repossessed last year, but end-of-year figures show that almost 1,000 new repossession orders were initiated in the High Court -- a 27pc increase on 2008.

Report by Charlie Weston - Irish Independent

Thursday, 14 January 2010

Home, Sweet Home???Not...

The fall in house prices left many homeowners in negative equity, but this need not necessarily prevent you from trading up...

IT'S the topic no one wants to talk about, but this elephant has no plans to leave the room. Negative equity happens when the value of your property on the open market amounts to less than the sum of your mortgage.

If you bought a house within the past five years, you are likely to be in negative equity to some degree.

The average household is sitting on negative equity estimated at €43,000, according to Irish Independent calculations based on a recent report by Goodbody Stockbrokers.

It was estimated that 116,000 households were in negative equity at the end of 2009, rising to nearly 200,000 by the end of this year, according to the Economic and Social Research Institute.

However, this is a conservative estimate based on prices falling by 24pc from their peak in 2007. If house prices end up falling by 50pc, this figure would rise to 350,000.

It is generally expected that when the National Asset Management Agency is established and house prices start to recover, they will do so only very slowly and steadily. But this means that thousands of us may be stuck in negative equity for quite a number of years. This may not be an issue for you if you plan on staying where you are for the foreseeable future.

You may also have just enough of your mortgage paid off that it will not prevent you from trading up in the short to medium term. However, if your LTV (loan to value ratio) is still above 70pc or so, the financial challenge of trading up takes on a new dimension.

Kevin McNerney, director of the Mortgage Finance Company, says most first-time buyers borrowed between 90pc and 100pc of the purchase price.

"This leaves people in a position whereby, even if they wanted to sell the property and rent something for a few years, they would need to come up with a large lump sum to hand over to the mortgage provider, just to clear their mortgage debt." He estimates that if someone wanted to trade up, they would also have to come up with an additional lump sum ranging from 8pc to 20pc of the purchase price of the new property.

"If they buy a second-hand house they will need to have money for their stamp-duty also."

But what if you definitely need to move at some stage within the next five years? Is there anything you can do to prevent negative equity from scuppering your plans?

Depending on your circumstances, the ultimate answer may be no, but at the same time there seems to be little point in just waiting and hoping.

"If someone feels that they will need to trade up their property within the next three to five years, then the only option available really is to start putting additional money aside each month to enable them to have a lump sum set aside for when the time comes," says Mr McNerney.

For those who may need to move in three years' time, Patricia Foskin, of Waterford-based mortgage brokers Foskin Mortgage & Finance, suggests fixing mortgage rates now for the next three years. Depending on the lender, three-year fixed rates start from 3.19pc.

"This way they can avail of the current low rates for the next three years and save as much as possible by opening a regular savings account, where there are rates available of up to 4pc at the moment," she says.

Karl Deeter, operations manager at Irish Mortgage Brokers, says: "I think that it really comes down to what you can afford. If you can repay a little extra on your mortgage, now is a great time because with rates so low you will eat into capital in a more rapid fashion." For those on a cheap tracker mortgage, Mr Deeter suggests putting surplus funds into a high-interest savings account, so that you have the flexibility to decide what to do with it, whether as a down payment against another property or to pay off a lump sum on your existing mortgage.

However, he warns that whatever you do, it is vital that your credit score stays good as missing even a single mortgage payment could create more difficulties, particularly as banks become much more conservative about their lending.

"People need to find a way to avoid damage from the downturn as much as they need to find ways to get themselves lined up for any future move," he said. He also recommends overpaying your mortgage, but warns that those on fixed rates will not be allowed by their lenders to overpay, or will have to pay a penalty for doing so that will negate the overpayments in the first place.

You should also assume that property prices will not increase when determining how much you need to put by in order to clear the negative equity portion of your loan and also raise a deposit for a new property.

"This will help you to work out how much you need to be putting aside every month," says Mr McNerney.

Report by John Cradden - Irish Independent

Wednesday, 13 January 2010

Downturn Wipes 50pc Off Value Of Homes...

Economic downturn wipes 50pc off value of homes...

LARGE detached family homes in the capital have halved in value in the downturn.

Estate agents admit four- and five-bedroom detached properties in Dublin are now only fetching 50pc of their 2007 prices.

This means upwardly-mobile couples who shelled out an average of €1m at the height of the boom years are now sitting in a house worth just €500,000.

The Irish Auctioneers and Valuers Institute (IAVI), which represents auctioneers around the country, says that houses nationally are now worth 40pc less than at the peak.

Connacht has seen the smallest drop in house prices but even these are dramatic. The average two-bedroom townhouse in the region has fallen in value by 27.7pc.

Things are much worse in Dublin for struggling homeowners who are seeing themselves plunged further into negative equity as prices have plummeted by half. But this is all good news for buyers with cash today.

The IAVI annual property survey released shows that new two-bedroom townhouses in Dublin are down 36.3pc from their peak. Three-bed townhouses have fallen by 36.9pc and one- and two-bed apartments are down 42.8pc and 42.4pc respectively.

Also in the capital, three- and four-bedroom semis are down 35.3pc and 37.6pc and four- and five-bedroom detached houses are down 42.6pc.

Reductions in the Dublin second-hand homes market are more stark. One- and two-bed apartments are down 46.9pc and 47.8pc; two- and three-bed townhouses have fallen in value by 39.7pc and 41.3pc; and three- and four-bed semis have dropped by 41.4pc and 44.8pc.

The price drops in the rest of the country are also substantial. Three-bed semi-detached homes are down 37.4pc, 31.6pc and 32.8pc from peak prices in Leinster (excluding Dublin), Munster and Connacht respectively.

The IAVI figures, which are based on sale prices achieved, are a more accurate indicator of the market than other surveys, such as the recently released DAFT report which relies on advertised asking prices. The DAFT report put house prices nationally at 30pc lower than peak, pointing to a gap between asking prices and sale prices.

The IAVI survey also reports few sales in 2009 -- a year that was described as "perhaps one of the bleakest years the market has ever experienced in this country".

However, there are signs of recovery with agents reporting an increase in viewings towards the end of last year. Auctioneers in the Dublin area reported enquiries and viewings increased by a quarter and the number of sales closed was up 9pc.

IAVI president Aine Myler called on the Government to fast-track the planned national register of property prices to provide for transparency in the market and to restore consumer confidence, citing a possible bottoming out of the market.

"These annual results are in line with our expectations for 2009 and consistent with our belief that the average residential property values would decline 40pc to 50pc from peak to trough," she said.

"The survey results indicate that the market floor is close, if we have not reached it already."

Report by Yvonne Hogan - Irish Independent

Thursday, 7 January 2010

House Prices Dropped...

The average Dublin house price is now €242,000 according to the latest Daft report...

ASKING prices for residential property around the country fell by 19 per cent during 2009 and are now nationally 30 per cent below asking levels in early 2007, according to Daft’s latest house price report published today.

The national average asking price for residential property at the end of 2009 was €242,000 – a fall of €107,000 from the peak in early 2007. In Dublin, asking prices have dropped by up to 42 per cent since the peak says the report.

Earlier this week the country ’s largest estate agency chain, Sherry FitzGerald, said that house prices had dropped 20.3 per cent nationally in 2009, and in Dublin, had fallen in real terms by 45.7 per cent since 2006.

Commenting on the link between price falls and movement on the market, Daft economist Ronan Lyons says that while Dublin saw the largest fall in house prices in 2009 “the total stock for sale in the capital fell by almost 20 per cent over the year”.

Commenting on the report, Alan McQuaid, economist with Bloxham Stockbrokers, said: “Although houses have in general become more affordable in terms of price, this is of little comfort to potential purchasers if credit is still very tight.”

Early indications from estate agents are that buyers, the majority of them first-time buyers, are interested in at least looking at houses for sale. The chiefs of two of the country’s biggest agencies, Douglas Newman Good (DNG) and Sherry FitzGerald, which both have branches around the country, report that they have been very busy since Monday when they reopened their offices.

Daft’s report says that asking prices in Dublin city centre for one-bed apartments is currently €201,000 and €216,000 for two-beds. But Keith Lowe, chief executive officer of DNG, says that entry level prices in Dublin are under €200,000 for a two-bedroom apartment. And just before Christmas, DNG sold a cottage-style house off Cork Street, Dublin 8, for €80,000.

Meanwhile there is also some movement at the top end of the market: contracts for the sale of Rosewarne, a house that came on the market in Carrickmines, Dublin 18, in mid-November were signed before Christmas at close to the €2.25 million asking price according to its selling agent, Sherry FitzGerald. Its Drumcondra office reports four “sale agreed” houses in the past four days. Sherry FitzGerald managing director Michael Grehan says that web traffic is up 20 per cent since Christmas; all indications are that people are actively looking to buy.

Meanwhile DNG reports that a house in Sandycove, Co Dublin, that it put on the market in October, was sale agreed for in the region of €1.1 million on on Christmas Eve after a “Dutch auction”in which four telephone bidders chased the property.

Paul Murgatroyd, economic consultant to MyHome, says that while it is true that many first-time buyers have loan approvals and are ready to buy, the general economic situation, their sense of job security, rather than price falls, will in the end determine whether they will go ahead.

Meanwhile, Knight Frank’s Global House Price Index report for Q3 of 2009 shows that of 42 locations, Ireland ranks 35th. With Spain and Denmark, it is one of three European countries yet to record their first quarter of growth since the credit crunch.

Report by FRANCES O'ROURKE - Irish Times

Sunday, 3 January 2010

Raze The Ghost Estates...

Time to raze the unfinished relics of the building boom...

Ireland is about to witness a US-style degeneration of half- built housing schemes into ghost estates, says Juno McEnroe.

FORMER US President Thomas Jefferson once said that small landholders are the most precious part of a state.

In Ireland this phrase rang true during the boom with the first-time buyers and start-up investors who were encouraged to throw their cash into property.

At one stage the property and construction sector made up over 20% of Government income. A precious pot for the State indeed.

But just as Jefferson’s ideology of giving tracts of land to ordinary US citizens ended up benefiting greedy speculators, Ireland’s property investment schemes during the boom saw towns ravaged by sprawl, over-development and a plethora of ‘phantom’ or ‘ghost estates’ that now look unlikely ever to be finished.

So it now looks as though the landholders will be the most worthless, or even the costliest, part of our esteemed state.

At the peak of the property boom, estimates suggested there was an oversupply of anything from 35,000 to 200,000 homes.

Then we were building 90,000 home units a year. As we now know, demand plummeted.

Estimates now suggest there are 136,000 home units lying idle – the equivalent of four years of housing demand, according to economic consultants DKM.

In the United States, oversupply of homes has seen prices savaged, whole estates knocked down and speculators hoovering up properties by the dozen with just a bag full of money.

Houses in Detroit have sold for as little as $1 and whole areas have become ghost towns.

This dilemma is about to unfold in Ireland.

In Longford alone, it was suggested recently that council chiefs had compiled a list of more than 80 unfinished developments.

Houses are being left vacant with not a soul to rent them because jobs are needed in order to have a healthy rental market.

In the US, the same scenario saw estates and new villages become breeding grounds for marginalisation and crime. Roads are left unfinished, street lights remain off and the few families who took the risk of buying into a scheme suddenly find themselves babysitting a whole estate of maybe 60 or 70 empty homes.

Ultimately, gardaí can only patrol these half-complete estates for so long. And no one is going to buy into a scheme with long-term negative equity written all over it.

In Roscommon, Cavan, Longford and Leitrim during the boom, tax incentives saw scores of developers building large estates in or outside small towns so that investors or eager buyers could take advantage of section 23 tax relief under the rural renewal scheme.

Developments were encouraged by the Government’s decentralisation scheme which, for example, saw the prison service and social welfare department move to Longford. Blue- chip company expansions also boosted employment. But that was then.

It could be argued now that the State has been saddled with these developments, which will be at the centre of ‘NAMA-land’ when the agency takes control of bad debts.

Instead of the landowners and land being our most precious commodity, the spectre of ghost estates scarring traditional villages and rural areas has been left.

One TD has even argued that the bland unfinished estates look like grim Soviet housing blocks left over from the Stalinist era.

It could be argued then that all that is really left to do is bulldoze down the mess, the empty villages, the potentially crime-ridden schemes, so the taxpayer is not left to pay for it.

Just like the set of the film Ryan’s Daughter, made and built in scenic Ireland, no one is prepared to move in. Possibly there may be no choice but to knock down such fictions.

Report by Juno McEnroe - Irish Examiner

Saturday, 2 January 2010

Homeowners Seek State Aid...

1,500 homeowners a month seek state aid on mortgages

MORE than 1,500 applications for mortgage interest supplements are being lodged by struggling home owners every month, it has emerged.

As a result, community welfare officers administering the scheme for borrowers are being overstretched as demand for the state-paid mortgage assistance rises.

The number in receipt of Mortgage Interest Supplement has shot up by 260% since the height of the boom.

At the end of November 2009, 17,500 Mortgage Interest Supplement claims had been lodged for the whole year. Up to 12,800 claims were granted during the same period.

Recipient numbers have escalated since the boom, rising 260% since the end of 2007 when the total number of recipients was 4,111.

A private report for a section of the Department of Social and Family Affairs, which oversees the scheme, reveals the concern by community welfare officers over the mortgage arrears crisis.

The report, obtained by the Irish Examiner, puts the debt crisis down to "laissez faire lending practices" and a "childlike borrowing psyche" during the boom.

Waiting times for mortgage supplement payments are "problematic", it adds.

A review of the effectiveness of the Mortgage Interest Supplement scheme by the department is due for completion at the end of this month.

Labour’s Ciarán Lynch last night questioned the effectiveness of the State-funded mortgage supplement scheme, warning it was only a stopgap for borrowers.

"That (scheme) cannot be run on indefinitely," said the party’s housing spokesman.

Labour wants a national home mortgage agency to be set up, backed by emergency legislation, to assess mortgage arrears cases and enable debt-ridden borrowers to adapt their payment schemes with lenders.

Report by Juno McEnroe - Irish Examiner