Skip to main content

Irish House Prices Falling More...

House prices could fall 13.4% this year in bank test scenario...

HOUSE PRICES could fall by a further 13.4 per cent this year and 14.4 per cent next year before recovering in 2013 under a scenario considered by the Central Bank to stress test the banks.

This would represent a 55 per cent decline in house prices from the peak of the market in 2007.

But under a worst-case scenario, house prices may fall by 17.4 per cent this year and 18.8 per cent next year, which would be a decline of 60 per cent from the peak.

The Central Bank, which published details of the scenarios yesterday, is testing the lenders to see how much of the €35 billion set aside in the EU-IMF bailout fund for the banks will be needed.

Minister for Finance Michael Noonan acknowledged yesterday that more than €10 billion may be required, but said he had “no idea at this stage” how much more was needed.

He was speaking after he and Minister for Public Expenditure and Reform Brendan Howlin met senior officials from the IMF and the EU to discuss the new Coalition’s programme for government.

The bank tests are being applied to AIB, Bank of Ireland, Irish Life and Permanent and the EBS and the results will be published on March 31st. The Central Bank is not testing Anglo Irish Bank and Irish Nationwide Building Society as they are being closed down over time.

The tests are aimed at determining the scale of further losses at the bank and whether they have sufficient cash to cover the losses and remain above a higher minimum level set by the Central Bank.

The next €10 billion to be pumped into the banks will bring the total cost of bailing them out to €56 billion, though this is likely to increase further as a result of the stress tests.

Mr Noonan and Mr Howlin said the IMF and EU officials did not raise any objection to the programme for government, even though it contains proposals that run counter to the conditions in the €85 billion rescue package agreed with the previous Fianna Fáil-led government.

The two Ministers met the mission chiefs from the three international bodies concerned: European deputy director of the IMF Ajai Chopra, ECB chief economist Jurgen Stark, and Istvan Szekely, a senior official with the EU Commission.

Mr Noonan said the “troika” of bodies had agreed in principle that the conditions laid down in the memorandum of understanding agreed last November could be changed to accommodate the new programme for government as long as the overall targets remained unchanged.

A separate European battle came to a head yesterday as the Commission pushed ahead with the publication of long-delayed legislation to establish a common consolidated corporate tax base, an initiative seen by Taoiseach Enda Kenny the “back door” to tax harmonisation.

Dublin fears the plan would dim the lustre of Ireland’s heavily contested tax regime by lessening scope for large multinational companies to maximise the profit they record in Ireland.

But taxation commissioner Algirdas Å emeta made light of criticism from Ireland, saying much of it was based on false assumptions about the initiative. “I don’t understand why some of us are so worried about it,” he told reporters.

Publication of the draft law comes as Mr Kenny faces intensive pressure from France and Germany to make a “gesture” on corporate taxation as a condition for a lower interest rate on Ireland’s bailout loans.

In Brussels last night, Minister of State for Europe Lucinda Creighton expressed cautious optimism about the prospects for a resolution.

“There’s scope for manoeuvre and dialogue with the Germans in the next few days. I think it has to be clarified that one country is not the European Union,” she said.

“The French have always had a problem with corporation tax, have always been on this agenda. Mr Sarkozy is now making a major issue of it, probably for domestic reasons.”



Report by SIMON CARSWELL, HARRY McGEE and ARTHUR BEESLEY - Irish Times

Popular posts from this blog

More Allsop Fire Sales...

Allsop plans five fire sales a year... THE UK auction house Allsop and its Irish affiliate Space plans to hold up to five distressed property auctions a year following the success of its first auction last Friday when 81 out of 82 lots were sold for a total of €15 million. The next auction is scheduled for July 7th, when 200 lots will be auctioned, including apartments, tenanted shops, farms and houses. According to Space director Stephen McCarthy, his company is being inundated with requests from receivers, banks and individuals who want to sell their property fast. Many of the properties in Friday’s auction were sold by Bank of Scotland Ireland and it’s believe there is plenty more of this stock to sell. These include apartments in the Castleforbes development in the Dublin docklands, as well as units in Dublin 8 and in Castleknock. However, the agency is also considering taking on more agricultural land. One lot, a 55 acre farm in Co Wickow sold particularly well, making €42...

As Featured On Dublin Postcards, Ad's, U2 Video...

I see in the Irish Independent today an item concerning a favourite, Dublin landmark, of mine... "THEY have featured in numerous postcards and a very famous Guinness ad, but perhaps their most important cameo appearance came when they featured in U2s 'Pride (In The Name Of Love)' video. However, Dublin City Council does not believe the Poolbeg chimneys are iconic enough to place on their Record of Protected Structures. Following a request from Cllr Dermot Lacey (Lab) to have the landmark ESB chimneys placed on the protected record, city councillors heard that city planners had conducted a survey, history and full assessment of the chimneys. They concluded from this that while the Poolbeg chimneys were considered to be of a certain level of architectural, social and historical significance, they were not of sufficient value within the meaning of the Planning and Development Act, 2000. Complex The twin red and white chimney stacks measure 680 feet in height and were construc...

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

Land values go up like a rocket and fall like a stone... SITE EVALUATION: Why would a developer bid €225,000 an acre in 1999 and €2.8m an acre in 2007? Bill Nowlan explains WHY HAS THE value of development land fallen so precipitously, by over 50 per cent in the past 12 months, when residential and other property values have only fallen by 25 per cent or 30 per cent? There is an old property cliché which says that "land values go up like a rocket and fall like a stone" and this seems to have been bourne out in Ireland over recent years. Why does this happen? To answer this question requires an insight into the way developers prepare their bids for development land and I set out below a glimpse into that process. Let me start by looking at how a developer in normal times estimates his bid for a plot of land with planning permission, which in estate agents' parlance is ready-to-go. The key starting point in a developers equations is the expected sale price of the finished b...