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 Ĺ 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

Ireland's Celtic Tiger Excesses...

'Bang twins' may never get to run a business again... POST-boom Ireland is awash with cautionary tales of Celtic Tiger excesses, as a rattle around the carcasses of fallen property developers and entrepreneurs will show. Few can compete with the so-called Bang twins for youth, glamour and tasteful extravagance. Simon and Christian Stokes, the 35-year-old identical twins behind Bang Cafe and exclusive private members club, Residence, saw their entire business go bust with debts of €9m, €3m of which is owed to the tax man. The debt may be in the ha'penny place compared with the eye-watering billions owed by some of their former customers. But their fall has been arguably steeper and more damning than some of the country's richest tycoons. Last week, further humiliation was heaped on them with revelations that even as their businesses were going under, the twins spent €146,000 of company money in 18 months on designer shopping sprees, five star holidays and sumptu

Property Tycoon's Dolce Vita Ends...

Tycoon's dolce vita ends as art seized... THE Dublin city sheriff has seized an art collection and other valuables from the Ailesbury Road home of fallen property developer Bernard McNamara. The collection will be sold to help pay his debts. The sheriff, Brendan Walsh, is believed to have moved against the property developer within the past fortnight, calling to his salubrious Dublin 4 home acting on a court order to seize anything of value from his home to reimburse his creditors. The sheriff is believed to have taken paintings from the family home along with a small number of other items. The development marks a new low for Mr McNamara, once one of Ireland's richest men but who now owes €1.5bn . The property developer and former county councillor from Clare turned the building firm founded by his father Michael into one of the biggest in Ireland. He is the highest-profile former tycoon to date to be targeted by bailiffs, signalling just how far some of Ireland's billionai

I fear a very different kind of property crash

While 80% of people over 40 own their own home just a third of adults under 40 do. This is disastrous for social solidarity and cohesion Changing this system of policymaking requires a government to act in a way that may be uncomfortable for some. Governments have a horizon of no more than five years, and the housing issue requires long-term planning. The Department of Public Expenditure and Reform was intended to tackle some of these problems. According to its website its remit is to “drive the delivery of better public services, living standards and infrastructure for the people of Ireland by enhancing governance, building capacity and delivering effectively”. So how is the challenge of delivering homes for people in 2024 and beyond going to be met? The extent of the problem is visible in the move by companies, including Ryanair, to buy properties to house staff. Ryanair has, justifiably, defended its right to do so. IPAV has long articulated its views on how to improve supply an