Monday, 26 November 2012

Irish House Prices Still Falling...

House prices go into reverse as property register takes guesswork out of buying...

HOUSE prices fell last month in a move that reverses rises in the previous three months.

The fall of 0.6pc in October means that prices have now risen in five of the 10 months of this year so far. The value of the average property in the State is now half of what it was during the peak in the market in 2007.

Dublin prices were down 0.2pc in October, and are 7pc lower in the year so far.

Residential property prices in the capital are 56pc lower than they were when the market was at its highest, according to the CSO index.

Prices outside of Dublin were down 0.9pc last month, and are now down 47pc from the peak.

Some property experts said the introduction of the new property price register in September prompted falls in prices, as people can now seen exactly what prices houses and apartments are selling for, rather than relying on estate agents.

The average value of a property nationally is now €157,400, down from a peak of €313,998, calculations based on the CSO figures indicate.

Report by Charlie Weston - Irish Times

Tuesday, 13 November 2012

Irish Fairy Tale Hides Horror Story...

How the great Irish fairy tale hides the true horror story...

Gene Kerrigan's new book presents an alternative view of the economic crisis, suggesting that some people are actually benefiting from austerity policies. We've been subjected to the Big Lie. We are not all in this together, as this extract reveals
By now, they can recite the fairy tale in their sleep. Politicians, their media fans, tame economists and hired mouthpieces use the fairy tale to explain what happened. Like all stories, the details can be changed from time to time, but the basic fairy tale about the Celtic Bubble, the crash and the recession is pretty consistent.
And it goes like this.
Once upon a time, the Irish people threw off the shackles of the past that held us back. We began to work hard, to innovate, to find within us the talents we always had but which had been suppressed or neglected for too long. In the bad old days, you see, the Brits held us back, or perhaps the Catholic Church stifled our innate talents.
Whatever it was, once we threw off the yoke of oppression we became 'a nation of entrepreneurs'.
We began 'punching above our weight'.
We loved saying that.
'Punching above our weight.'
Those four words explained so much. We were still a small country, with the intimacy and the charm of small countries, yet we were up there with the big guys.
Punching above our weight.
The economics that underlay all this remained hazy. There was no shortage of economists who felt free to expound on the roots of the miracle, but never convincingly. And they were usually working for banks or estate agents. When it came to explaining how a basket-case economy was suddenly being touted as an example for the rest of the world -- well, there were a lot of gaps in the story. And an element of fairy dust.
Anyone suggesting that this might be a problem was a begrudger.
And we all knew what to do with begrudgers.
Now, when a company bought or built a new building it wasn't just accommodation they wanted, they wanted to make a statement.
It had to be state of the art, it had to be world class. Money was no problem; it was cheap to borrow. And people heading world-class companies needed rock-star salaries and bonuses.
Our rampant entrepreneurs bought a rake of prestigious London properties. For some, it was the ultimate victory -- the peasants taking over the Big House. We discussed such triumphs ('Hey! Johnny's gone and bought Battersea power station!') with the same pride we displayed when Seamus Heaney won the Nobel Prize or Roddy Doyle the Booker.
And when anyone looked around at the Ireland we all knew still existed -- with the lengthy hospital waiting lists, the Accident and Emergency chaos, the prefab classrooms, the ghettoes and the potholes -- well, that just meant we needed to 'reform' some outmoded ways of doing things. And we'd get around to that in the by-and-by.
People might now and then become angry about something -- maybe an A&E unit where the nurses were run off their feet and a relative had to wait 12 hours to be seen. Or another relative had an important operation postponed three times, in a hospital where the Department of Health never got around to replacing the beds they closed in the Eighties and Nineties.
But, hey, take a chill pill. Within the Celtic Bubble you could find any number of places in which to relax, while a cheerful barista offered you one of four sizes of eight versions of beverages our parents never dreamed of sipping, poor buggers.
Of course there were faults, the fairy tale admitted, but only losers dwell on the negatives. There was a lot done, and some more to do.
Then, according to the fairy tale, even as our courageous entrepreneurs climbed new heights, our new kick-ass nation was being undermined from within. They caricature this as: careless bankers lost the run of themselves; the regulators took their eye off the ball; and the politicians never noticed.
Even then, everything might have been all right if it wasn't for the bloody Americans.
The fairy tale explains how the Yankee bankers sold a lot of mortgages to poor people, who couldn't pay them, so their banks got into trouble. Then the George W Bush government made a big mistake. When Lehman Brothers was going bust, Bush should have propped it up, say the people who know things. Instead, George W and his people decided to let it go under, which caused no end of bother.
Credit froze right throughout the global banking system, at a time when the Irish housing market was slowing down and the grey, dreary waves of recession were lapping at our shores.
Oh, dear. Perfect storm.
Brian Cowen and Brian Lenihan were overwhelmed by it all, the fairy tale says, and they only had a few hours to make a decision -- and they made the mistake of guaranteeing every cent the bankers borrowed from their fellow bankers abroad.
Most of all, the State had gone deep into debt, spending far too much. Now, we couldn't pay our bills, the cost of borrowing went through the roof and -- the shame of it -- we had to be rescued by the IMF and our friends in Europe.
This involved some harsh measures, some tough decisions, but that's what happens when a country loses sovereignty.
And we're all in this together.
Tough as it is, the only thing we can do is knuckle down, take our punishment. We'd had the fun, now it was time to pay the bill.
Fianna Fail paid the price of its failure, the new government came into office -- but their hands were tied.
There was a 'big hole' in the public finances, and the only way we could fill it was by kowtowing to the European Central Bank -- and the ECB said that a lengthy blast of austerity would straighten things out.
No choice, you see.
But, if we all pull together and do our penance for our sins, we will eventually achieve a state of grace.
The fairy tale said it was just a matter of simple arithmetic. The amount of money collected in taxes was X. And it cost X plus Y to run the country. So, we had to borrow the Y.
But why are we paying billions to the bondholders and . . . ?
Ah, that's about confidence.
We have to generate confidence in our ability to pay back the money we will borrow in the future. And we do that by paying bondholders for the money we borrowed in the past.
But we didn't borrow it.
No, but they were Irish banks that borrowed it and -- look, sure didn't Cowen and Lenihan think up that unfortunate guarantee . . .
But we've been paying billions in unguaranteed bonds and . . .
Look, this is complicated stuff.
Trust us. We know what we're doing.
Besides, our friends in the EU are giving us all sorts of concessions: money at cheap rates, the use of promissory notes -- they can't do enough for us, God bless them.
And the thing that matters more than anything else is that -- if we do as we're told -- we'll eventually get our sovereignty back. We'll wave goodbye to the ECB and the IMF. We'll be free again!
The great thing about the fairy tale is that it uses bits and pieces from real life to prop up the fantasies that are woven through it. Fantasies and downright lies.
When we tell fairy tales to children they work because the children want to believe in dragons and princesses, in villains and heroes and magic; they want to see the world as black and white, easy to understand, with evil punished and good rewarded. For the same reason, we want this infernal economic catastrophe to make sense. And when people in authority hold up a map that shows where we are and how we can escape from Oz and get back to Kansas, it's tempting to believe their fairy tale.
After all, they want what we want, don't they? Freedom, a return to prosperity.
Trouble is, they've been telling us fairy tales for almost five years now, and with each telling the story becomes more threadbare.
We took them seriously, the fairy tales, and the tired old political has-beens who told them. We wasted time, giving each changing tale a fair hearing. We allowed things to get much worse -- to the point where the country is far more broken than it was in 2008.
The time for comforting fairy tales is long past.
We are where we are.
How did we get to where we are?
And where is the tired, old, failed politics trying to take us?

Article - Sunday Independent

Monday, 12 November 2012

Ghost Estates In Dublin...

The term ghost estates colloquially refers to the list of 2,000 unfinished housing developments compiled by the Department of the Environment. Dublin doesn’t do too badly in the 2011 rankings with 95 estates identified in the city council area, compared to 149 in neighbouring Fingal.
The other two Dublin councils also returned quite positive figures; Dún Laoghaire-Rathdown County Council has 60 unfinished developments and South Dublin County Council 50. It’s clear the capital has escaped lightly when some of the numbers recorded in sparsely populated counties are considered. Sligo has 237 unfinished developments, Roscommon has 235.
Dublin also has a low number of estates considered the most problematic. These are the developments where residents’ living conditions are such that they are not required to pay the household charge, generally where the developer has abandoned the unfinished estate. Only 19 estates in the city council area are on this list.
Elm Park was on the department’s first survey conducted in 2010. However, while ghost estate seems an accurate description for the eerily empty complex, it has since fallen off the list. The apartments have been completed and more than 10 per cent – the threshold determined by the department for inclusion – are occupied.
Report - OLIVIA KELLY - Irish Times

Tuesday, 30 October 2012

€9m For Dublin Apartment Scheme...

THE CHOICE of investment properties available to Irish and overseas buyers is steadily increasing with the launch today of a marketing campaign for an entire development of 62 apartments and penthouses next to the North Circular Road entrance to the Phoenix Park in Dublin 7.
David Browne of agent HT Meagher O’Reilly is seeking €9 million for the high quality scheme which was completed 12 years ago by Tony Gannon’s Unicorn Homes. The investment will show a net yield of 7.78 per cent.
The broad mix of apartments in Park Lodge are fully occupied and are producing a rent roll of €823,000 per annum. The location has proved extremely popular from the start – beside the Phoenix Park and five minutes walk from the Luas at Heuston Station which travels past the Four Courts to the city centre. The five-storey apartment block is also a few hundred yards from the newly-built Criminal Courts of Justice on Infirmary Road.
Park Lodge was developed on the site of the old Park Lodge Hotel, once a popular venue for cattle dealers attending nearby markets and later a regular haunt for staff in the adjoining Garda headquarters. The high-spec apartment block has helped to improve this part of the North Circular Road which had become somewhat dated in recent years.
The apartments have a mix of styles and attractive facades incorporating Victorian-style brickwork, cedar cladding and zinc cladding at penthouse level. The glazed balconies and stainless steel handrails add to the contemporary style along with cleverly positioned uplighters and downlighters.
All access points to the building are covered by an advanced CCTV system. Two lifts provide full access to the various levels from the basement where there are 58 car-parking spaces.
Apartments on the upper floors have clear views over a good part of the 1,752-acre Phoenix Park and much of the inner city.
The mix of apartments includes 16 one-bedroom units with an average floor area of 52sq m (555sq ft) which usually rent at between €750 and €1,100 per month. Most of the rental income comes from 36 two-bedroom homes with an average floor area of 78sq m (844sq ft) which are let at between €1,000 and €1,250 per month. There are also 10 three-bedroom penthouses averaging around 101sq m (1,087sq ft) which rent at between €1,450 and €1,600.
The €9 million valuation equates to around €115,000 for one-bedroom apartments, €145,000 for two-bedroom units and €195,000 for three-bedroom homes. These prices are about 20 per cent lower than if the apartments were offered for sale on an individual basis.
JOINT AGENTS GVA Donal O Buachalla and Sherry FitzGerald are seeking €2.5 million for a fully let apartment investment portfolio within a gated development close to Bray town centre.

Fourteen apartments, five of them penthouses in three blocks at Wilford Court, are producing total rents of €199,200 per annum and will show a gross yield of 7.96 per cent and a net yield of 7.6 per cent.

The penthouses with three double bedrooms have wrap-around balconies with views of Bray Head and the Sugar Loaf and are let at €1,500 per month.

Three-bedroom duplex units are rented at €1,200 per month while ground floor apartments are leased at €850 per month. The development was completed in 2007. 
Report by JACK FAGAN - Irish Times

Parknasilla Sells For Over 10 Million...

Parknasilla sells for over €10 million to overseas investor...

LESS THAN seven weeks after being offered for sale, the Parknasilla Resort Spa in Co Kerry has been taken off the market after a satisfactory offer was received by selling agent Savills.
An overseas buyer is understood to have offered in excess of the guide price of €10 million for the four-star resort which is being sold on behalf of Bank of Scotland (Ireland).
The Sneem hotel was bought six years ago by property developer Bernard McNamara for almost €40 million. He subsequently spent at least €30 million on enlarging and upgrading the resort and building 62 self-catering lodges and villas in the grounds.
Tom Barrett of Savills said the sale had attracted over 100 inquiries, most of them overseas hotel groups and investors.
Savills is also close to wrapping up the sale of the Cork International Airport Hotel, also owned by McNamara.
An overseas buyer is to pay over €5 million for the facility which was developed at a cost of around €35 million.
Report Irish Times.

Reality Yet To Hit...

Reality of the market has yet to hit property brochures...

It’s almost  the end of 2012  and let’s face it, the property market is all about reality these days…some would say grim reality so why haven’t some estate agents tempered the grandiose  language in their brochures to reflect the general mood, one wonders?  It’s supposed to be a new era of transparency following the introduction of the  Property Services Regulation Act 2011 so shouldn’t that involve a rethink on the adjective  count  in the average brochure?
Take for example the use, or misuse,  of the word “residence”  which seems to apply to  the  pokiest townhouse and  modest three-bed semi. While referring to a small house as a residence  isn’t wrong exactly, it is a tad misleading, or it would be if you couldn’t see the photos. Maybe the hope is if they use the word often enough it will subliminally trick the buyer into thinking  they are buying Downton Abbey .
There seems to be a brochure  template that some agents sleepwalk through whereby all cul-de-sacs are quiet , all patios are perfect for al fresco dining and all south and west  facing gardens are sunny even in the depths of winter.
Properties are  attributed  feelings, they enjoy all sorts of things including the benefit of being in a  good location, they can boast and, most alarmingly,  they can even exude.
If they’ve got any age at all , they are invariably referred to as “charming”  and “characterful”,  the locations of properties  are often  “second to none”. Although that kinda depends on who you ask, doesn’t it? Communal grounds are often manicured which  roughly translated  usually  means “not meadowland” . The spiel is often finished off with “viewing is highly recommended”…well they would say that wouldn’t they?
And on the subject of  adjective counts, an estate agent in Carlow describes a house “in the beautiful picturesque village of Ballymurphy Co Carlow”, “a superb residence  that affords views in every direction and offers the opportunity for country living in a vibrant and welcoming community. The property itself is situated on approximately half an acre and is bounded by a beautiful stream. Surrounding the property are the foothills of Mount Leinster, and the spectacular scenery that accompanies them.”
Phew…I’m exhausted thinking about all that beauty and splendour. Wouldn’t it be easier all around to let the photos speak for themselves with some supporting detail from the estate agent. The savvy potential buyers of today won’t be buying a place on the strength of fancy descriptions so why bother?

Report by EDEL MORGAN - Irish Times

Sunday, 9 September 2012

Can It Be True?...

Has the property market truly bottomed out? And not only that, but showing some signs of life?

Well yes and no. Very encouraging signs are there for all to see. The newspaper property supplements are less anaemic and signs proclaiming "Sold" which have been as rare as hens' teeth are suddenly being seen in some of the better Dublin enclaves. Agricultural land is making record prices.

And there are tentative signs that if potential buyers can survive a searching examination of their finances -- now so intimate that it would shame a proctologist -- there are mortgages being approved.

Even property auctions, a leit-motif of the halcyon days of the boom, are making a re-appearance after a five-year absence.

While there are huge tracts of the country where the residential property market is still on life support there are at least some signs elsewhere that suggest the patient is out of intensive care.

Recovery has started in Dublin, not all of the capital, but in the areas where there are good family homes near the better schools and with access to good public transport and other infrastructure.

Robert Ganley of auctioneers Knight Frank said there is no doubt that there has been a substantial increase in demand for family homes in good locations.

"There is a big rise in the number of viewings, but more importantly we are actually seeing competition for properties that are currently priced. We are seeing two or three bidders with evidence of funds. These days we would always seek evidence that funds are available and approved. We are seeing competition among people with hard cash and people with loans approved. That's something we haven't seen for five years or so," said Mr Ganley.

He said the family home sector is strong -- particularly in the €400,000 to €800,000 range and that's where competition for good houses in hotting up.

"At the higher end of the market, the €1.5m to €3m range, we are seeing a lot of ex-pats coming back to Ireland and buying. The majority of those deals are being funded by money which has been earned abroad, either in sterling or other denominations. They are coming back for a number of reasons but we have seen that one of the main factors is their desire to educate their children here," he added.

Mr Ganley points out that fees in a good private school or boarding school in Ireland are about €15,000 while a similar school in the UK could have annual fees of £30,000.

"That's a big saving. The other sector which is coming back are those ex-pats who are planning retirement, maybe not now but in five years' time. They are saying 'now is a good time to buy in Ireland, the euro is weak and there is value and the market has bottomed out'," he said.

He believes there is still cash out there held by people who did sell up in the good times and decided to rent.

"They are coming back to buy. Also there are those younger people who have always rented who are now tempted to buy because rents are going up so it's nearly starting to be cheaper to buy," he said.

The increase in the number of auctions is a positive sign.

"We have put a number of properties to auction and plan more in the next few months. It's a sign of better demand.

"In some ways, when you go to auction you do limit your market but, depending on the property, if you do have a number of potential buyers with cash or are mortgage approved then it can be advantageous," he added.

Mr Ganley said they are seeing real interest in good country properties with land that are well priced.

Interest is coming from the UK particularly and from ex-pats coming back from the Americas and the Middle East.

"There's a lot of nonsense spoken about the American market. In essence they are Irish people from America who are buying. There's always an Irish link. An American living in Houston, Texas, doesn't just jump up and decide 'Actually I'm going over to live in Ireland tomorrow.' Either he is Irish or his wife is Irish. There is a connection."

Irish living abroad are helping fuel the recovery in certain segments of the property market.

Analysis of their own sales by Knight Frank shows that -- for the Dublin south residential market this calendar year for sales agreed and sold -- 55 per cent of houses in the €1m to €3m bracket were sold to ex-pats with money earned abroad with no mortgage at the time of purchase. Half of these were UK-based, 25 per cent Europe and 25 per cent from the Middle and Far East.

In the country properties, market this year ranging in price from €400,000 to €2.5m, 46 per cent were bought by UK-based ex-pats, nine per cent by US-based ex-pats and 45 per cent by Irish living in the Republic.

Knight Frank is selling Inish Turk Beg Island in Clew Bay, Co Mayo, which was transformed by the Egyptian-Irish businessman Nadim Sadek, who turned it into a hip super luxury retreat that can accommodate 36 people in a series of houses.

"Anyone could end up buying that. We have had really good international interest. The guide price is €2.85m," said Mr Ganley.

Will Coonan, of Coonan auctioneers, said there is a definite improvement in the Dublin area, specifically Castleknock, Clontarf and south Dublin where asking prices are sometimes being exceeded.

"In the areas 12 to 20 miles from Dublin the demand is also noticeable with certain types of properties becoming easier to sell -- particularly good three or four-bedroom semi-detached and some quality detached houses.

"Prices vary considerably but demand for houses in the €450,000 to €750,000 is quite strong in the city areas and €250,000 to €450,000 outside the city," he added.

He said that in recent months Coonan's has had to put some of the more sought-after family homes to "best and final bids" because of the lack of supply for what the market is demanding.

But getting mortgages continues to plague the market despite the banks' claims about their availability.

"They are available but the slow progress for applications and the continuous questioning of their financial history can often test the patience of many applicants. Mortgage approvals that last for more than 90 days would help purchasers in their hunt for a property and greatly assist purchasers acquiring a new home which has yet to be completed," he said because fitting the viewing process, negotiation and conveyance all within three months is generally not possible.

"Despite the constant talk about ghost estates a shortage of good quality new homes is becoming apparent in the cities and the stronger commuter towns. There has been good demand from first-time buyers to avail of Mortgage Interest Relief and with sales required to be closed prior to December 2012 to avail of that tax relief we have recently had good activity here in Co Kildare in places like at Moyglare Hall, Castlepark and Griffin Rath in Maynooth, The Ryebridge in Kilcock and Hazelwood in Celbridge which is currently sold out," he said.

But Mr Coonan warned that to fund the construction of a new development requires capital from the financial institutions.

"Unless this becomes available developers and builders will simply not have the ability to build the new homes that are required in areas where demand is now apparent.

Simon Ensor of Sherry FitzGerald said that they now have 7,000 potential buyers registered at their offices nationwide -- a return to pre-boom figures.

"An even more interesting fact is that, when we asked them, 4,000 out of the 7,000, claimed they were cash buyers. That is hugely significant. There is no doubt the banks are still being very, very selective about who they approve and for how much. So a market which is not dependent on conventional mortgage lending is very important and very significant."

Mr Ensor said the result is a bit of vibrancy in the market.

"When you are selling a good family home in the right location not only will you have one potential buyer but you would have two or three."

He said there is no doubt that word has filtered back to those people who went into rental accommodation waiting for the market to bottom out that it now appears that point has been reached.

"Not only that but there is definitely an upward nudge in specific sectors," he added.

Another pointer is that people who are actively looking for homes in the well-established areas are seeing it for themselves at viewings.

"Last weekend in Dublin we had a house on open view and we had 56 parties looking at it. That's back to the more traditional market that existed until 2006. The good thing is that people have realised the bottom has been achieved and they are not going to save another 10 per cent by waiting until next year."

"At the more affordable end of the market it is now consistently cheaper to buy and service a mortgage rather than pay rent," Mr Ensor added.

Report by JEROME REILLY - Sunday Independent

Saturday, 4 August 2012

House Price To Fall 60pc...

New blow for house price hopes as market set to fall 60pc from 2007 peak...

HOPES of property prices settling down have received a new blow, with a prediction that values will plunge by 60pc from the peak.

Prices have already halved, but now credit ratings agency Fitch said they are set to keep falling.

A fall of 60pc from 2007 would mean the average house price falling to €125,600 from €314,000 at the peak.

There had been some optimism in the last few weeks that prices could be reaching a floor, particularly in Dublin.

But the latest official figures show that property prices fell in June, dashing hopes that the market was close to stabilising.

The fall of 1.1pc in prices in June recorded by the Central Statistics Office reversed a rise that was recorded in the previous month.

Prices have halved from the peak of the market almost five years ago.

The CSO figures indicate that the average home is now priced at €156,000, having collapsed to half of its value since the boom that came apart at the start of 2007.

This country has suffered one of the worst house price collapses in the western world.

And the figures for a fall of 50pc in house prices are an average -- rural parts of the country are seeing very few transactions with little demand for houses, while family-type homes in parts of Dublin with good services are reported to be selling.

Fitch also said yesterday it expected arrears to keep rising this year, and it has now forecast that 20pc of the value of mortgages will end up defaulting.


If house prices stop falling it may help arrest the rise in arrears, experts said.

The higher the level of the negative equity, the more arrears will rise, mortgage expert Karl Deeter explained. Fitch bases its figures on baskets of mortgage accounts that have been packaged together and sold on.

These mortgages are still serviced by the originating banks, but the packages of mortgages are "rated" or assessed by agencies like Fitch.

Fitch had previously expected 15pc of the value of residential mortgages to end up in arrears.

Central Bank figures indicate that 116,000 mortgage accounts are either three months or more in arrears or the mortgage holders have had to have the repayments on their mortgages lowered.

Fitch analyst Michael Greaney noted yesterday that there has been a sharp rise in arrears.

"More importantly, the delay in economic recovery, the austere fiscal consolidation and falling house prices mean the speed at which arrears are increasing is unlikely to slow in the near future," he said in a report.

State initiatives, including the planned personal insolvency law and various mortgage forbearance policies, will influence arrears performance and house prices over the next several years, the analyst said.

Report by Charlie Weston - Irish Independent

Sunday, 22 July 2012

Irish Property Tax Of €1,000 !

Next big hot potato is property tax of up to €1,000...

There's little hope of a property tax being fair and equitable on the already squeezed middle classes, says Daniel McConnell.

Can you afford to pay €1,000 a year in a property tax? Well, according to the man charged with designing such a tax, that is what we will, on average, all pay once it is introduced.

Don Thornhill, a career civil servant who describes himself now as a consultant "who advises on strategy and policy to a number of leading Irish organisations" has recently presented his report to Minister Phil Hogan recommending how such a property tax should work.

Politically toxic and highly unpopular, the lack of enthusiasm of either Fine Gael or Labour to discuss the matter is a clear sign of the trepidation that surrounds the idea of lumping the extra burden on the shoulders of the Irish taxpayer, but in particular the "squeezed middle classes".

Phil Hogan's department is saying nothing other than they have received the report and will consider it.

Even Thornhill himself declined to comment on the matter when asked.

So what is going on?

The Government, clearly spooked by the €100 Household Charge debacle earlier this year, is caught in a dilemma.

Unwilling to increase income taxes, as promised in the Programme for Government, its options are limited and Thornhill has long argued that common sense dictates that Ireland should have a property tax.

"It must be remembered that Ireland stands unique in the developed world in that it does not have an annual recurring tax on land or on buildings," Thornhill and Donal de Buitleir wrote in an October 2008 report called: "The Agenda for Tax Reform: Playing to and developing our strengths."


"Proposals for tax reform are potentially unpopular -- this is certainly the case for our proposals for a recurring property tax," Thornhill himself wrote previously.

Advocating such a tax, the duo said in contrast to increasing income tax, which has an adverse impact on people getting back into, or staying in, the workforce, property taxes do not have the same negative impact.

Many of the same points are restated in his new report to Phil Hogan.

"Recurring annual taxes on land and buildings (especially residential) are generally thought to have minimal negative effects on economic performance. This arises because a recurrent tax, particularly on residential, is a fixed sum. It has a zero marginal rate and does not negatively effect decisions on whether or not to seek work or to invest in further education or in business expansion," they wrote.

Thornhill says most of the opposition for property taxes is driven by the lack of opportunity to evade it when a system is up and running.

Essentially, it is a wealth tax, the bigger the house you have the more you will pay.

"A recurring property tax on residences would be very unpopular. This may have something to do with the difficulty of evading a tax on a very visible base and because payment of the tax was traditionally demanded in lump sums," he argued.

"The tax base is also stable and predictable. Another attraction from a government point of view is that recurring taxes on property are difficult to avoid or evade because the tax base is so visible. This last feature may explain their unpopularity," they added.

In January 2010, Thornhill argued that a property tax should be based on a combination of the size and location of a house -- not its market value.

"The tax would be based on a combination of the floor area and a valuation band, which would differ from one district to another. Differences in prices between districts vary less than actual prices themselves," he said.

If such a tax was levied, the Central Bank said it would average out at €1,000 per household raising €1.5bn a year.

But, if the average is €1,000, by definition many people would be paying more than that, while many other would be paying less than that.

The real fear is that once again, the squeezed middle classes -- those who earn between €50,000 and €150,000 a year -- will be hit hardest.

Labour's Anne Ferris said that any suggestion of €1,000 charges on average houses "wouldn't wash" with people and that any tax would have to be fair. "No way could I stand over a charge like that. Maybe it might be that for those living on the hill of Howth, but I mean €200 or €300 for average homes."

Thornhill and De Buitleir recognised the political toxicity of such a tax and referred to softening measures like waivers for the old and the poor could be factored in.

They also sought to recognise the plight of those who had paid high levels of stamp duty during the last decade.

"A variety of transition measures can also be introduced to provide relief for individuals and households who have recently paid large amounts of stamp duty. Income tax credits, deductions or reliefs could also be introduced to address concerns about increasing the overall burden of taxation," they said.


Advising against increasing income taxes, Thornhill is pressing the case to Hogan that income taxes affect both job creation and people's ability to spend in the economy."

Lower income taxes increase consumer spending thus stimulating the economy. If income taxes go too high, they become a barrier to consumer spending, but also jobs.

VAT and other consumption taxes are thought to have a less negative impact on economic performance and consumer spending as they do not distort decisions to work or to invest.

In contrast, taxes on property transactions (stamp duties) are highly distortionary -- by for example reducing liquidity in the housing market. The yield is also highly volatile.

* * * * *

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things," Thornhill quoted Niccolo Machiavelli's Prince.

How apt that is.

Following the major fallout of the household debacle, where almost half the population refused or failed to pay on time. Even now, only 60 per cent -- or €97m out of a total estimated €160m -- has been collected.

Coalition tensions were then raised last month when it was reported that Thornhill had called for the property tax to be taken directly from the pay packets of PAYE workers in his report to Hogan.

This approach was one of the key recommendations of a report by Thornhill and Donal de Buitleir in 2008.

Following loud calls of outrage from some within the Labour party, most vocal was party chairman Colm Keaveney, Phil Hogan was forced to deny this would happen.

Fine Gael backbenchers too have their concerns. In particular they are anxious that any property tax will not increase the financial burden on the so-called "coping or squeezed middle classes".

But it was Thornhill himself in 2009, who pointed out the greatest threat to the equity and fairness of a property tax.

"People are naturally afraid of the return of rates because it was so badly administered. Any system that is introduced had better be equitable and had better be simple," he said.

He hit the nail on the head.

The absence of one centralised universal database leaves any new property tax regime vulnerable to charges that certain sectors will be unduly burdened.

A perception has taken hold that the PAYE worker in that middle-income bracket will once again be hammered while the self-employed, the farmer, the immigrant, the working class, the old, the sick will all have means of avoiding the charge.

Given the difficulties of implementing such a property tax a political fudge appears to be under way.

In recent days and weeks, Hogan's department has written to county councils, saying they will be fined if they fail to get the compliance rates up to some sort of a respectable level.

If, say, come the Budget in December, over 80 per cent of people have paid the charge and registered, Hogan could then argue to retain the household charge, albeit at a higher rate, say the €200 or €300 referred to by Anne Ferris above for another year or two, thus kicking the can down the road.

However, the Troika may take issue with any move to delay the targets and commitments it has set for the Government. The key to the household charge was not the fee, but the register which was to be the basis of the property tax.

Following the backlash it suffered earlier in the year, the Government cannot afford any mistakes on the introduction of property tax.

If it does, then Machiavelli's ominous words will be ringing loudly in their ears as they go back before the people.

Report - Sunday Independent

Thursday, 12 July 2012

Property Price Register Mystery...

Property price register pushed out until late September...

THE LONG-AWAITED property price register, detailing the sale price of residential properties here, looks like it’s now going to miss its expected summer deadline.

Despite being eagerly anticipated by estate agents, homeowners and buyers, and a recent call from the head of Nama to develop a commercial equivalent, the property price register has yet to materialise. So why the delay?

The property price database first made the headlines in early 2010 and since then there has been much talk but little action. In December of last year, the register was provided for by legislation, and at the time, it was understood that the register would appear six months later.

However, according to Tom Lynch, chief executive of the Property Services Regulatory Authority (PSRA), the register was never going to be ready for June, despite this date being widely reported at the time.

“I never said it was June,” he says, adding that the register was supposed to be established six months after the establishment of the authority, and while the Act was signed into law in December, the authority did not get up and running until April. This, he says, might have led to the confusion.

Lynch was, however, quoted in this newspaper last November saying he “would be very surprised if the Authority didn’t have it out before then”, referring to the June date for the establishment of the register.

In any case, “it will be up by the end of September,” he now says, adding that the PSRA is currently working on licensing of estate agents, and the database is the authority’s next priority. According to Lynch, it will provide details on all properties sold from January 2010.

There is an obvious need for price certainty in the property market given the volatility in recent years.

Estate agents are precluded from divulging sale prices unless they have the express permission of both parties to the sale, which means that the information available has come mainly from auction sales – many of which are for distressed properties which are sold for cash.

Given that one would expect an additional discount to be factored into these prices, they are not a wholly accurate picture of the market, which means that sellers can struggle to fix a sale price, and bidders can offer unrealistically low bids. And price indices such as that from the Central Statistics Office are not seen as wholly representative of the market.

Minister for Finance Michael Noonan pointed out the difficulties himself at the recent Property Industry Ireland conference, when he noted that “different organisations produce different results on an average house price in Dublin and the rest of the country”.

The new register, he said, will “hopefully put an end to the divergence in estimates of an average house price”.

However, its delay has made some industry members a little frustrated.

“How many times have we heard about this?” asks Ronan O’Driscoll, head of residential sales with Savills. “I believe it will happen; but when I just don’t know.”

Given the delays the project has met to date, there is concern that, as some people have suggested, this date will be pushed out once more.

Report by FIONA REDDAN - Irish Times

Wednesday, 11 July 2012

Russians Buy Irish Apartments...

Russians ride in to rescue Irish apartments in Bulgaria...

UP TO 50 Irish-owned apartments in Bulgaria have been bought by Russian property prospectors in the first six months of this year, a Dublin-based property business has said.

An estimated 30,000 Irish citizens currently sit on more than €1bn of bad property investments in Bulgaria.

Dylan Cullen, head of Appreciating Assets, said growing demand from the former Soviet country for the Bulgarian resorts means Irish people are finally able to offload their unwanted properties.

Since the peak of the Bulgarian property-buying frenzy, from 2005 to 2008, Black Sea prices have fallen by between 35pc and 45pc, depending on location. But the Russians and Ukrainians, the two biggest buyer groups, have formed a view that this market looks to be near the bottom. Buyers are back looking at the Black Sea for holiday homes.

"The Russians are becoming wealthier and as their middle class expands they want holiday homes," said Mr Cullen. We're talking about a country of almost 150 million people.

"To them the Black Sea is like Spain to the Irish and British. Unlike the Irish, however, the Russians are not so naive to buy off plans. They're looking for new -- or nearly new but tested -- apartments at fair market prices.

"As it happens, most of these are now owned by the British and the Irish, many of whom want to sell them. Prices have fallen hard in Bulgaria, but unlike Ireland, there are now plenty of willing buyers at current market prices."

Mr Cullen's company, which has an office in Dublin, London and two in Bulgaria, acts as a link between the Irish, British and a network of 1,500 estate agencies across Russia.

The agency charges 3pc to the buyer of the property, who will also typically be paying between 2pc and 10pc to the Russian estate agents.

The firms act for both British and Irish vendors, with his sales split almost evenly this year among both countries.


"In many ways the British are the Irish apartment owner's biggest competition. Sterling has strengthened significantly against the euro in recent years with the result that a British apartment owner can sell up at an overall loss in euros but can still make a profit in sterling.

"Most Irish buyers are selling at a loss, but some are breaking even. The real sea change we are witnessing is that Irish owners are realising the relative value of property at home. Some Irish apartments are selling for the same price as in Sofia. At 10pc, the yields are much more attractive at home.

"The interesting thing is that those who seemed somehow ashamed of buying in Bulgaria during the boom are now realising that they'd have lost a hell of a lot more had they bought a second home in Ireland."

Compared with an average loss of 40pc in Bulgaria, Irish investors would have lost 60pc at home and larger amounts, give that Irish properties were more expensive.

Separately, Mr Cullen's company is now seeking to open an office in Spain where property prices have fallen by 30pc so far and may end up shedding 50pc.

"We go wherever Russian demand goes and we're increasingly getting inquiries about Spain."

While the wealthiest of Russian oligarchs are busy buying up London's posh homes, so far Ireland's best streets don't even register. "They're not interested in Ireland at all," said Mr Cullen.

Report by Mark Keenan - Irish Independent

Wednesday, 27 June 2012

NAMA Demolishes Apartments...

State bad loans agency NAMA has decided for the first time to demolish a derelict apartment block it owns.

The apartment block -- in the Gleann Riada estate on the outskirts of Longford town -- comprises 12 unsold units that are in disrepair.

It is understood another half a dozen NAMA-controlled ghost estates will be knocked down before the end of the year as the loans agency returns half-built houses and apartments to green areas. NAMA controls about 280 unfinished developments, some 10pc of the total.

Local Fine Gael councillor Peggy Nolan said the Gleann Riada development was "Longford's Priory Hall", referring to the apartment complex in north Dublin that had to be evacuated last year due to shoddy building work.

Residents of the Longford estate have staged a long campaign to have their development properly completed.

The unoccupied apartment block at the entrance to the development has also been vandalised.

There are 90 houses on the estate on Strokestown Road that won't be affected, 80pc of which are occupied.


Ms Nolan said demolition work was already under way and that some of the area would be returned to grass.

She said original plans for the Gleann Riada estate had been for the inclusion of a hotel, creche and shops, none of which have been built.

Last week, Longford Town Council said it had served a health and safety notice to residents in the estate, which was built by Antrim developer Alastair Jackson. There was an explosion on the estate earlier this year caused by a build-up of methane gas.

The council said there were "major defects" in the estate's sewer systems and that there had also been an accumulation of hydrogen sulphide levels in some homes that exceeded World Health Organisation guidelines.

Report by John Mulligan - Irish Independent

Sunday, 17 June 2012

Mortgages In Arrears Hits New Peak...

Number of mortgages in arrears hits new peak of 14pc...

ONE in seven mortgage holders is now in arrears, according to calculations by a leading ratings agency.

Large numbers of these homeowners are understood to be avoiding getting into talks with their banks on restructuring their mortgages.

Moody's also said house prices would fall another 20pc.

The rating agency said its calculations show 14pc of residential mortgage holders are now in arrears, which works out at 107,000 households. This is a new peak, it said.

Figures released by the Central Bank last month showed 10.2pc of mortgage holders were three months or more behind on their payments.

"The steep decline in house prices since 2007 has placed the majority of borrowers deep into negative equity," it said.

"Irish house prices have already fallen by 49.9pc between September 2007 and April 2012, and Moody's expects that house prices will fall a further 20pc from today's levels."

Central Bank figures show that there are 764,138 mortgages in the market.

Last month, the Central Bank said 77,630 mortgage accounts were in arrears for 90 days or more in March. On top of this, another 38,658 mortgage holders have an agreement from their bank to lower their monthly repayments.

Moody's said yesterday that 5.5pc of mortgage accounts were a year or more behind on repayments in April. This works out at 42,027 mortgage holders.

The 360-plus day delinquent loans (which are used as a proxy for defaults) shot up from 4.23pc of the outstanding portfolios at the start of the year.

Moody's bases its figures on a basket of mortgage accounts that have been packaged together and sold on to investors. These mortgages are still serviced by the originating banks.

The ratings agency's arrears figures tend to be more up to date than the data produced by the Central Bank. The Central Bank figures tend to concur with the ratings agency's a few months later, financial experts said.


Moody's also said the Irish economy would only grow 0.2pc in 2012.

"In this weak economic recovery, it will be difficult for distressed borrowers to significantly increase their debt servicing capabilities and so arrears are likely to continue increasing."

Mortgage lenders have begun to give the Central Bank information about how they are helping home owners in arrears.

The bank has asked for the information after a report by BlackRock said mortgage lenders needed to make significant improvements in the way they deal with mortgages.

The Central Bank will use the information to start publishing revised mortgage arrears data later this year.

Report by Charlie Weston - Irish Independent

House Prices To Fall Another 20pc...

IRISH house prices are expected to fall by another 20pc, according to a new report by Moody’s Investor Services.

The report states that house prices have fallen by 49.9pc between September 2007 and April 2012.

''Moody's expects that house prices will fall a further 20pc from today's levels (bringing the aggregate peak-to-trough fall to 60pc)," it added.

It added that the majority of Irish homeowners are now “deep into negative equity.”

And it also said that he performance of Irish prime residential mortgage-backed securities continued to deteriorate during the three months ended April 2012.

Given the current climate, Moody's said the Irish economy would only grow by 0.2pc in 2012. "In this weak economic recovery, it will be difficult for distressed borrowers to significantly increase their debt servicing capabilities and so arrears are likely to continue increasing,'' it warned. reporters

Wednesday, 13 June 2012

Allsop Space 6th July 2012 Auction Catalogue...

Allsop Space Auction Venue - 6th July 2012
The Shelbourne Hotel
Dublin 2
Start Times
Single Session
Auctioneer’s Announcements 10.45 a.m.
Lot 1 not before 11.00 a.m.

Lot     Type     Location     Reserve Price will not exceed this figure
1    Investment Flat    Dublin 2    €135,000
2    Investment Flat    Galway City    €120,000
3    Investment Flat    Malahide    €75,000
4    Vacant Freehold House    Killiney    €95,000
5    Vacant Freehold House    Galway City    €50,000
6    Investment Freehold House    Newbridge    €30,000
7    Land/Site    Gort    €27,150
8    Investment Flat    Dublin 8    €75,000
9    Vacant Freehold House    Mountshannon    €40,000
10    Vacant Freehold Building    Moville    €45,000
11    Investment Freehold Building    Wicklow    €100,000
12    Land    Castlemaine    €50,000
13    Vacant Freehold House    Bunclody    €35,000
14    Vacant Flat    Bundoran    €17,500
15    Vacant Flat    Cratloe    €75,000
16    Vacant Freehold Building    Waterford City    €50,000
17    Investment Freehold Building    Dublin 22    €295,000
18    Vacant Freehold Building    Dublin 2    €1,000,000
19    Vacant Freehold House    Castlerea    €40,000
20    Vacant Flat    Chapelizod    €90,000
21    Vacant Flat    Carrick-on-Shannon    €25,000
22    Retail    Dublin 7    €130,000
23    Investment Freehold Building    Waterford    €410,000
24    Land/Site    Sligo    €5,000
25    Vacant Freehold Building    Dungarvan    €20,000
26    Vacant Freehold House    Shercock    €50,000
27    Vacant Freehold Building    Ballinrobe    €15,000
28    Vacant Flat    Kilrush    €40,000
29    Vacant Freehold Building    Kilmore Quay    €40,000
30    Investment Flat    Portmarnock    €120,000
31    Vacant Freehold Building    Athy    €50,000
32    Vacant Freehold House    Ballinasloe    €50,000
33    Vacant Flat    Clifden    €55,000
34    Investment Freehold Building    Limerick City    €260,000
35    Vacant Flat    Portlaoise    €30,000
36    Land/Site    Kilcoole    €30,000
37    Vacant Freehold House    Mullingar    €125,000
38    Vacant Freehold Building    Wexford    €230,000
39    Vacant Freehold House    Mountrath    €35,000
40    Vacant Freehold House    Inchigeela    €45,000
41    Vacant Freehold House    Blackrock    €105,000
42    Vacant Freehold House    Loughrea    €75,000
43    Vacant Freehold House    Dublin 15    €90,000
44    Vacant Freehold House    Derrygoan    €20,000
45    Vacant Freehold House    Kilrush    €20,000
46    Vacant Flat    Dublin 16    €70,000
47    Vacant Freehold Building    Rathmines    €600,000
48    Vacant Freehold House    Rathangan    €85,000
49    Vacant Freehold House    Milltown    €150,000
50    Investment Freehold Building    Dublin 3    €140,000
51    Vacant Flat    Cratloe    €75,000
52    Vacant Freehold House    Schull    €270,000
53    Investment Freehold House    Salthill    €85,000
54    Vacant Freehold House    Tuam    €25,000
55    Investment Freehold Building    Ballyfermot    €250,000
56    Vacant Freehold House    Mountrath    €35,000
57    Land/Site    Tullow    €35,000
58    Investment Flat    Dublin 8    €75,000
59    Retail    Killaloe    €30,000
60    Vacant Freehold House    Blessington    €47,500
61    Investment Freehold House    Blessington    €47,500
62    Investment Freehold House    Blanchardstown    €80,000
63    Vacant Freehold House    Dublin 1    €35,000
64    Investment Flat    Newbridge    €20,000
65    Vacant Freehold House    Ballybane    €50,000
66    Vacant Freehold House    Bunclody    €40,000
67    Vacant Freehold House    Skibbereen    €75,000
68    Investment Leasehold House    Glasnevin    €70,000
69    Industrial    Drogheda    €135,000
70    Investment Flat    Sligo Town    €25,000
71    Investment Freehold House    Dublin 7    €100,000
72    Investment Freehold House    Newbridge    €26,000
73    Investment Freehold House    Ballyjamesduff    €40,000
74    Investment Freehold House    Mulhuddart    €90,000
75    Investment Flat    Limerick City    €30,000
76    Investment Freehold House    Swords    €120,000
77    Investment Freehold Building    Arklow    €95,000
78    Vacant Freehold House    Coolkenno    €15,000
79    Vacant Freehold House    Mervue    €75,000
80    Vacant Freehold House    Crosserlough    €45,000
81    Investment Flat    Dublin 8    €75,000
82    Vacant Flat    Carrick-on-Shannon    €30,000
83    Retail    Raheen    €30,000
84    Investment Freehold Building    Arklow    €95,000
85    Vacant Freehold House    Mountrath    €35,000
86    Investment Leasehold House    Dublin 12    €45,000
87    Investment Flat    Castletroy    €65,000
88    Vacant Freehold House    Rathfarnham    €220,000
89    Vacant Flat    Kilrush    €30,000
90    Vacant Flat    Dublin 2    €160,000
90 Lots sorted by Lot Number    Lots: 1-90 

A Ghost Estate For Just €50,000 !

Auctioneers to sell 14-house ghost estate in Co Kerry for just €50,000...

DEPENDING on how deep your pockets are, you can pick up a ghost estate of 14 houses for only €50,000 or a Georgian House for €1m in the Allsop Space auction next month.

A total of 90 properties are available at the event on July 6.

Another unusual property on offer is Whites Castle, Athy, Co Kildare, a 15th century castle in the centre of the town, which also has a €50,000 guide price.

The auctioneers are hoping to raise about €8m from the auction, which is below the €13m it achieved in its last auction in May. But then there are fewer lots this time and less valuable commercial properties.

The ghost estate was conceived as a multi-million holiday home development at a pivotal point on Kerry's tourist trail.

The 14-house lot at Annagh Banks in Castlemaine, Co Kerry, is about to be auctioned for only €50,000. It will be the first time that Allsop Space will include a full ghost estate as one lot at auction.

The houses vary in size and some have attic space, but it will be up to the buyer to divide up their accommodation into bedrooms and reception rooms. At present they are built to only shell finish and have not been fitted out.

In contrast, the most valuable lot will be the four-storey over-basement Georgian house at 26 Merrion Square in Dublin, which is being sold by a private vendor.

It had previously accommodated a language school, a bank headquarters and a family home. It retains many of its original features and the original layout is largely intact.

The cheapest Dublin house to go for auction is a three-bedroom semi in Killiney, which has a €95,000 guide price.

The most expensive Dublin residential house is 1 Three Rock Grove, Harold's Grange Road, Rathfarnham, Dublin 16 -- a three-bedroom detached house with a €220,000 guide price.

A Dublin city centre penthouse apartment is also expected to attract strong interest as the three-bedroom duplex at 14 Hogan Square near Merrion Square and Holles Street hospital is guiding at €160,000.

Outside Dublin the cheapest house is a one-bedroom town House at Clancy Mills, Kilrush, Co Clare, which has a €20,000 guide price.


It is closely followed by a two-bedroom bungalow at Sun Street, Tuam, Co Galway, which has a €25,000 guide price.

Despite recent government figures showing that Dublin apartment prices had risen in March and April, the auctioneers have cut the guide prices for one-bedroom apartments at The Tannery complex at Cork Street, Dublin 8, to €75,000.

In April 2011, one-bedroom units in this Liam Carroll development had sold for between €93,000 and €103,000.

So in March of this year, when some more of them were brought to auction, the guide price was increased from €85,000 to €90,000.

However, the one-bedroom units failed to sell and so they cut the guide to €75,000.

Robert Hoban, director of Allsop Space, said that the price cut was a reflection of the weaker demand for one-bedroom flats.

Among the commercial properties to go for sale is the 20-bedroom Drinagh Court Hotel, in Drinagh, near Wexford town, which has a €230,000 guide price.

It is being sold on the instructions of the receiver, Smith & Williamson Freaney, who is also selling two Waterford pubs.

One of these at 45/47 Morgan Street, Waterford, has a €50,000 guide price and comes with five bedsits.

A Dublin pub, The Stout Bar at Lower Rathmines Road, Dublin 6, has a €600,000 guide price and it comes with four flats in an adjoining investment property.

Report by Donal Buckley - Irish Independent

Sunday, 10 June 2012

It'll Take 43 years To Fill Empty Houses...

200,000 homes may need to be bulldozed -- bank

AN explosive report has claimed that Ireland has so many empty houses that it would take up to 43 years to fill them all.

Deutsche Bank figures suggest that there are 289,451 empty houses in Ireland, including almost 60,000 vacant holiday homes. This represents a vacancy rate of 15 per cent. As the Deutsche Bank map shows, the empty properties are highly concentrated around the Atlantic coast with Kerry and Donegal particularly badly afflicted.

This glut of empty homes will have a major impact on future property prices.

"Demand for housing is the key factor as to how long it will take for this oversupply to be reduced, and aside from demand for second homes the key driver should be population growth," Deutsche Bank notes. Based on 2011 figures which showed population growth of just 13,000, and the average number of residents per house, the bank estimates that it could take until 2055 for the glut of houses to be worked through.

The report says that if current population trends are sustained, housing oversupply will take 43 years to clear (this excludes holiday homes from unoccupied houses in the calculations). If holiday dwellings are included in calculations, the oversupply will take 57 years to clear.

However, the 2011 population growth figures were well below the levels seen over the previous decade. But such is the scale of vacant property that even at pre-crisis, boom-year population growth levels it would take almost 10 years to clear the backlog. And this is before taking into account developments which may subsequently be completed, and houses which are still being built -- 10,480 in total in 2011.

Our vacancy rate of 15 per cent is almost five times greater than in the UK. The average vacancy rate in England is 3.2 per cent, with 719,000 empty homes out of 22.8m.

"Barring a sudden and sizeable recovery in Irish net migration, or a politically controversial policy of demolishing large volumes of excess housing stock, housing oversupply will remain a feature for many years, possibly decades, to come," says Deutsche.

"This has ramifications for any bank with development loan exposure, and also for the mortgage market, where prices have continued to fall and oversupply makes any reverse of this trend unlikely in the near term.

"Over 200,000 houses would need to be demolished in order for the housing supply to fall to three years of current population growth."

Nama announced last month that it would spend around €2bn to complete unfinished commercial and residential developments around the country. It indicated that some greenfield sites would also be built "in anticipation of future supply shortages in some market segments". This would create 25,000 jobs in the construction sector, according to Nama chairman Frank Daly.

In April 2010, Nama boss Brendan McDonagh told the Oireachtas Public Accounts Committee that the state agency would consider bulldozing properties in certain circumstances, but that this would not be the "first option".

Report Nick Webb - Sunday Independent

Thursday, 17 May 2012

Ten Properties That Say It All...

The legacy of the boom and the subsequent property collapse have come home to roost in 2012.

This is the year the Nama deferred payment scheme was launched, a ghost estate was sold at a distressed property auction, and the country’s most expensive property failed to sell despite a 74 per cent price drop.

Here are 10 properties that sum up where we are now...

1. Walford, Shrewsbury Road
Now that the madness of the property boom is a distant memory, it has become apparent that not only was Walford on Shrewsbury Road in Dublin 4 never worth the €58 million paid for it in 2005, it has failed to find a buyer for it, even at the radically reduced price of €15 million. The Edwardian house on 1.8 acres went on the market in September 2011 but was recently withdrawn, presumably because it failed to meet the guide price.

When it was sold in 2005, the cachet of the road and the development potential drove rich individuals into a frenzy, pushing the price substantially over the €35 million guide. Bought by an entity known as Matsack Nominees Ltd, the beneficial owner was known to be Gayle Killilea, wife of property developer Seán Dunne. The couple now live in the US.

2. Humewood Castle Estate
Dubbed the “Walford of the country estate market” because of the stratospheric price paid during the boom and its dramatic fall in value, Humewood Castle Estate in Kiltegan, Co Wicklow, a gothic mansion on 427 acres, is now asking a bargain basement €8 million through Sherry FitzGerald and Christie’s International Real Estate. In 2006, developer John Lally of Lalco bought the estate for €25 million. His ambitious plans for a €250 million luxury golf estate never came to fruition and now Nama is hoping to tempt investors with the reduced price tag.

3. The Veterinary College site, Ballsbridge
Amid the developer frenzy to snap up trophy properties, Ray Grehan’s company Glenkerrin made headlines in 2005 when it paid the highest price ever for a commercial site; an eye-watering €171.5 million for the 2.02-acre Dublin 4 site. The site has recently been valued at a mere €20 million: that’s a drop of 88 per cent. Nama is continuing to pursue Grehan, who has been living in London since May of last year and who was declared bankrupt by the High Court there on December 30th. One industry source, who declined to be named, reckons Nama will hold off putting the site on the market for two to three years, in the hope that values will rally significantly. “I don’t think the site would attract serious interest in the current market,” says the source.

4. Treasury Building, Lower Grand Canal Street, Dublin 2
When Treasury Holdings redeveloped the old Boland’s Mills as a state-of-the-art office block at the start of the 1990s, little did it know that one of its future tenants would be Nama, with which it is currently embroiled in a nasty legal battle. The company has begun proceedings against Nama and is contesting the constitutionality of the legislation governing its activities. It is understood that Treasury, which is jointly controlled by businessmen Richard Barrett and Johnny Ronan, has made an application to the High Court on both matters. This relates to Nama’s decision in January to appoint joint receivers to certain assets secured against loans of more than €1 billion owed to the agency.

5. Woodlands, Ballyjamesduff, Co Cavan
Woodlands is one of the many unfinished estates around the country. A four-acre part of the estate with only three houses built sold to a builder at the Allsop Space auction of distressed property this month. It fetched €122,500: more than three times the reserve and has prompted speculation that this could herald the public sale of more unfinished estates to third parties.

Lorcan Sirr, a lecturer in the school of real estate and construction economics at DIT, says he hopes the builder who bought it has a long-term plan. “Given that Co Cavan currently has a housing oversupply of 4,254 units it could be a very long time indeed before the property market there recovers.”
Robert Hoban, director of auctions at Allsop Space, says selling to a third party is just one of a number of options to address the issue of a reported 2,000 unfinished developments in Ireland. “The successful sale will hopefully aid those charged with calculating the value of these schemes.”

6. Sandhouse Hotel, Donegal
In March the sale of the Sandhouse hotel in Rossnowlagh, Co Donegal, for €650,000 to Paul Diver, its manager of 20 years, captured the public imagination because its value had dropped to such an extent that it was cheaper than the average semi-d in Dublin 4. The 55-bedroom hotel overlooking Donegal Bay, which was on the private treaty market for two years, was once asking €4.5 million, and was sold under the instruction of its liquidator KPMG.

On the day, Diver said: “I just can’t believe it. It’s a total adrenaline rush. It’s been a long, long road but we’ve made it.” According to Robert Hoban, director of auctions at Allsop Space, while the licensed and leisure sector has been going through a very challenging phase, the sale of the Sandhouse hotel, and the nine other auction sales in the leisure sector “has established that there is a marketplace, at a sensible price”.

7. Priory Hall, Donaghmede, Dublin 13
There is a chink of light at the end of the tunnel for residents of Priory Hall in Donaghmede as AIB, one of the main banks providing mortgages on properties there, has said it will participate in talks aimed at resolving the residents’ housing and loan problems. The residents of the 187-unit apartment built by developer Thomas McFeely, who has been declared bankrupt, were evacuated last October when the development was declared a fire hazard.

Lorcan Sirr of DIT believes Priory Hall could be the tip of the iceberg as a result of inadequate enforcement of the building regulations: “Self-certification by professionals is worth the paper it is written on only if the penalties for getting it wrong are sufficiently tough on the professional. Dublin City Council’s dilution of its traditional civic duty to look after its people by mostly not inspecting developments, but just designs, must also be noted,” says Sirr.

8. Loughmore Square, Killeen Castle
Last week Nama launched a deferred payment initiative on 115 properties around Ireland, including luxury homes on a golf course at Killeen Castle in Co Meath where prices have reduced by as much as 80 per cent since the scheme was launched in 2008.

It’s understood 17 of the 18 Co Meath homes are now sale agreed. Originally built as investment properties and holiday homes by Castlethorn Homes builder, Joe O’Reilly, who also developed Dundrum Town Centre, the three-beds were originally priced from €1.2 million.The same homes sold last week for about €270,000; one four-bed was asking €360,000.

The Nama deferred payment initiative sees us enter an era where people who buy into these schemes will be protected against negative equity for five years. Elsewhere DNG has sold two units out of four under the same scheme at Carrickmines Manor in Dublin 18.

9. Elysian Tower, Cork
The 81m tall Elysian Tower on Eglinton Street in Cork’s docklands cost €150 million to build on the site of a former postal sortingoffice and was launched with great fanfare in 2008 by developer Michael O’Flynn. Hailed as a “beacon of light” for a “new dawn”, it is one of the tallest buildings in the country and one-bed apartments went on sale for €375,000, while penthouses were between €1.4 million and €2 million.
However the timing of the launch, just as the property market had gone into freefall, couldn’t have been worse . The “idle tower” as it’s known locally, is now in the hands of Nama and stands largely empty, with fewer than a quarter of the 211 residential units occupied.

10. St Matthias Wood, Killiney, Co Dublin
We hear about family homes being repossessed but don’t often get to see it unfold on camera. Whether you think Brendan and Asta Kelly stage-managed their eviction from their Killiney home to garner sympathy or that they were the unfortunate victims of the property crash, it marked the start of the publicised eviction.
The Kellys originally purchased the house in 2004 for €3.2 million, with a €2.2 million mortgage from Irish Nationwide Building Society, now IBRC, and built a large property portfolio of about 21 properties. The couple last made a mortgage payment on their Killiney home in 2009.

Report - EDEL MORGAN - Irish Times

Wednesday, 16 May 2012

No Magic Bullet...

No magic bullet for banks' property crisis...

It is going to take more than a decade to unwind the excess property assets financed by the banks during the noughties

THE BANKS in Ireland, including IBRC and Nama, have more than €30 billion of Irish loans relating to property which they need to unwind over the next five to seven years in order to meet the Basel capital adequacy requirements and also repay the temporary ECB loan support. This unwinding process has started by the sale of overseas assets and loan books but is mainly outstanding in Ireland.

Can this deleverage be achieved? What will be the timescale and what will be the nature of the property market during the process? Should the Government provide further help to the industry?

These are key questions for all close to the banking and property industries. In a comprehensive discussion note* I have tried to join the dots of the many intertwining factors. I have drawn on two recent studies on the overall European property markets published by the Urban Land Institute and by Morgan Stanley, which reach much the same conclusions for Europe as I do for Ireland.

A summary of my conclusions is as follows:

1.There is no magic bullet to resolve deleveraging in the banks and kick-start the property industry. It is going to take many years (10+) to unwind the excess property assets financed by the banks during the noughties. The direct sale of property at the scale necessary to achieve this unwinding is not achievable due to the limited size of the Irish property market – probably a max of €1 billion per annum. There will be further erosion in values if too much property is brought to the market in a dash for cash by all or any of the banks.

2.The sale of loan books will make some contribution to the unwinding process for quality books, but it will be slow and limited for the non-quality loans. In the UK, two-thirds of the properties financed by banks are secured against non-prime property and probably higher here. For lower quality books, any purchaser will be looking to the underlying property market to directly or indirectly get his pay-off. He will seek to discount his price to reflect a long-haul, high-risk investment with ultimate dependence on the property market to achieve the intended result.

3.Internationally, funds are limited and contracting. Ireland is in competition with most countries in Europe for such funds. For Europe, Morgan Stanley estimates a €400-€700 billion loan gap for commercial property lending. The volume of funding available for Ireland to buy loan books or lower quality property will be limited and

highly priced. The high returns expected by buyers with funds, mainly overseas, may make the route impracticable as it would involve too big haircuts for the banks who may just decide to “sit it out”.

4.Property in the early noughties was a sexy, exciting, high-reward activity and every Irishman thought he could make his fortune by being a “player” – mainly with someone else’s money. That paradigm of investing with someone else’s money has changed to “no leverage or low leverage”. That’s the way it used to be up to the start of the banking madness in the mid-1990s.

5.Most banks, here and in Europe, are heading back to their old knitting – to being lenders for commercial property for a period not exceeding five or seven years. This lending period is not compatible with lending for property investment where fixed terms of 15 years-plus are needed to match the relatively low cash flows generated by property. Banks will not be lending significant money to new borrowers to solve the problem.

6.Property is back to being primarily a long-term equity-based investment, giving ungeared income returns of 7 per cent plus inflation. But the banks will be unwilling holders of property, directly or indirectly, for many years.

7.The property market and the real economy are heavily intertwined. While the core elements of the economy will be driven by external forces, the Government, by giving further support to investors and owners in the commercial property industry (not to be confused with the construction industry), could accelerate the transition from a property market based on selling distressed assets to a market driven by equity investors.

8.Helping the property market recover would give a direct boost to the rest of the domestic economy by:

a)Growing property values and thereby stabilising the capital base of the banks.

b)Giving confidence to consumers.

c)Getting the building industry moving.

d)Encouraging the repatriation of overseas deposits.

10.The Irish commercial property industry will be smaller and focused. Deals will be smaller and take more work. Clients will be different: they will comprise equity investors (not borrowers), bankers and insolvency practitioners, and, of course, tenants, owner-occupiers and distressed borrowers. There won’t be too many developers around, renovations and extensions will be the order rather than new build – until values rise to well above replacement costs – probably several years away.

Report by BILL NOWLAN - Irish Times

Tuesday, 15 May 2012

How the NAMA scheme works...

HOME buyers get mortgage approval from either Bank of Ireland, Permanent TSB or EBS.

The buyers then find a property they want that is part of the NAMA scheme.

They will need a deposit of at least 10pc of the value of the property.

If they are buying a €200,000 house, this means the buyer will need a deposit of €20,000.

So the house hunter borrows €180,000 from the bank and repays the mortgage based on this amount for five years.

The scheme works by NAMA deferring 20pc of the value of the property, which works out at €40,000 in this case.

But for the first five years the homeowner makes payments on the full €180,000 they have borrowed.

If, after five years, when the property is revalued under the scheme, the property value has fallen, then the homeowner will end up not having to pay the full amount of the mortgage. This is because NAMA has deferred up to 20pc of the property purchase price.

If the property falls in value by 20pc, then the €40,000 will be written off by NAMA.

If it falls by 10pc in value, then €20,000 of the deferred amount will not have to be paid.

What this means is that after five years if the property has collapsed in value by 20pc, then the mortgage will fall from the original €180,000 borrowed to €160,000.

In fact, what the buyer owes will be even lower than this as they will have already made repayments on the €180,000.

Report - Irish Independent