Daft Property - Irish Property News

The property dilemma -- to sit tight or cut your losses? It's a dilemma hitting thousands -- especially young couples living in apartments. What do they do -- sell now or hold on? Many of them were frightened on to the bottom rung of the property ladder and now find themselves in a home which is too small for their needs. They are asking themselves if they should take the hit on negative equity, and buy a house which can accommodate a growing family. And even if they do, where will they get the money to buy another property? A few years ago, many had held on in the hope of a soft landing, but now are wondering whether they should bite the bullet and jump. Already price falls of 40pc to 50pc have made family houses much more affordable. However, many couples who sell an apartment that they bought in the boom could find that the sale price is far less than the amount they owe to the bank. Banks are slow to allow them to sell, trade up and carry over the negative equit

ESRI has been getting its forecasts wrong for years... In Irish economic circles, you tend to take much more stick from having been right than having been wrong. Those economists who got it wrong in the boom and believed the hype about the soft landing, such as the ESRI, still manage to grab front-page headlines. In contrast, those who called it right are put under constant scrutiny and are still being dismissed by the establishment as cranks, celebrities or, at best, lucky opportunists. The "insiders" rally round each other even when they are wrong and the "outsiders" are denigrated. In the economics world, for what it's worth, the outsiders' crime -- the crime of being right -- is particularly dangerous precisely because it exposes the limitations of the insiders. This type of insider/outsider prototype is commonplace in Ireland. Yesterday, we saw more of this type of behaviour where the establishment insiders carry on with their forecasts despite th

IT could be years before the mortgage market recovers, economists said yesterday. They were reacting to new figures that showed just a trickle of new home loans were issued between April and June. Mortgage lending has seized up, with just 3,550 new mortgages granted in April, May and June. This is half the number issued in the same quarter a year ago, and a fraction of the 41,000 issued in the same three-month period in 2007, figures from the Irish Banking Federation show. Housing economist David Duffy, of the Economic and Social Research Institute (ESRI), said the mortgage market is unlikely to recover until consumers had some certainty about the financial hit they are set to take in December's Budget. "We are looking at a fairly weak market this year and next year unless something big happens which can bring about certainty," Dr Duffy said. Uncertainty around the global economy is also holding back buyers from committing to a massive purchase like a house.

Up to 300,000 homeowners in negative equity Further 30,000 will struggle with mortgage payments after Budget tax increases kick in... THE spectacular fall in property prices is even worse than was stated by a government economic think tank last week -- up to 300,000 homeowners are now in negative equity. Expected interest rate hikes will mean another 30,000 people -- roughly the population of Dundalk -- will struggle to meet their mortgage payments by the end of the year. The recession, joblessness and rising interest rates already mean that 70,000 borrowers have missed payments or renegotiated their mortgages. Now financial institutions are expected to increase their standard variable rates. It is also widely expected that the European Central Bank will increase its interest rate before the end of the year. This would also hit those on tracker mortgages. Michael Dowling, of the Independent Mortgage Advisors Federation (IMAF), said: "With rising unemployment, higher

HOMEOWNERS face paying an €80-a-month property tax under a plan drawn up by the country's top economic think-tank. The charge would be based on the value of homes, and middle-income earners would end up providing most of the tax generated, the study by the Economic and Social Research Institute says. Homeowners who bought their house and paid stamp duty in recent years would be given a waiver, as they would be regarded as having already paid a property tax. Those on low incomes and people getting social welfare benefits would be exempted from the payment. Even with these exemptions, a property tax could still bring in close to €1bn a year, as the Government draws up plans for a €15bn package of cuts and taxes over the next four years. There are 1.7 million households in the country, but the exemption scheme would mean up to 235,000 householders would not have to pay the tax, the ESRI says. But the study, which sets out how a property tax would work, warns that exempting those with

5,000 will leave each month over job crisis... 120,000 to emigrate by end of next year, ESRI predicts: MORE than 120,000 people -- or 5,000 a month -- will emigrate by the end of next year to escape unemployment at home, the State's economic think tank warns in its latest report. That means the equivalent population of Cork city will leave over the next 18 months. The figure is 20,000 more than the Economic and Social Research Institute (ESRI) estimated in its last report, just three months ago. Jean Goggin, a co-author of the report, said: "It's quite significant -- we expect 70,000 to leave in 2010 and a further 50,000 in 2011." Unlike last year, most of these emigrants will be Irish, the figures suggest. Many foreign workers -- mostly in construction and retailing -- whose jobs disappeared have already left the country. "In the two years 2008 and 2009, the number of non-nationals employed in Ireland fell by 87,500," the report says. "The biggest adju

Gap in asking/selling prices of 'up to 20%'... THE gap between asking prices and selling prices can be as high as 20 per cent says economist Paul Murgatroyd. There is no way for the public to accurately determine selling prices in the absence of a national price database linked to the Land Registry, but Murgatroyd, who analysed MyHome.ie’s price survey published this week, says his view is that the figure is “anywhere between zero and 20 per cent below asking price, depending on the seller, the buyer and the property”. Myhome.ie’s figures indicated that asking prices have fallen in Dublin by 33 per cent since the peak of the property boom at the end of 2006. This followed a price index by Sherry FitzGerald saying that selling prices have plummeted by nearly 50 per cent in Dublin since the peak. Vendors and buyers are being left to figure out current property values for themselves by piecing together information from the few indices available: these include ESRI figures based on

Department says it warned of property bubble... THE DEPARTMENT of Finance says it warned the Government from 2005 onwards about the dangers of a property bubble, internal official documents show. Briefing material prepared for the department’s secretary general Kevin Cardiff last month states that the department warned over several years that the “over-emphasis on construction left the economy vulnerable to macroeconomic shocks”. It also defends the department’s performance in failing to forecast the extent of the downturn, and points to similar failures by institutions such as the ESRI, Central Bank and the private sector to predict the magnitude of the slowdown. The material was prepared for the secretary general ahead of his appearance before the Oireachtas Public Accounts Committee just over a month ago. The contents of the documents have been released under the Freedom of Information Act in the same week Minister for Finance Brian Lenihan announced an external review of the depart

Mortgage bid to unlock market could backfire... NEGATIVE equity is the scourge of homeowners who bought their houses in the past few years. By the end of this year, as many as one-in-three mortgage holders are expected to be in negative equity -- where the value of their home has collapsed to such an extent that they owe their lender more than it is worth. Economic and Social Research Institute (ESRI) economist David Duffy made the estimate based on house prices having fallen by 30pc from the peak of the housing boom in 2007. But most commentators say that house prices have fallen by around 50pc from the peak. In that case, the ESRI estimates that some 350,000 homeowners will end up in negative equity this year. Being in negative equity means you cannot sell your house to move somewhere else. This is because you will still owe the bank more than the sale price of the home. Banks will not normally allow you to sell up in that situation. This is why Ulster Bank and EBS Building Society a

Reports blame Cowen for stoking fires of 'meltdown'... TAOISEACH Brian Cowen's overheating of the economy and failure to deflate the property bubble when he was Finance Minister will be identified today as contributing to the banking crisis. The damning findings will be contained in two reports into the banking crisis, which senior coalition sources last night said were "devastating". Contrary to the Taoiseach's version of events a fortnight ago, where he sought to absolve himself of blame in a major speech on the economy, Mr Cowen's budgetary policies are singled out for criticism. The reports also: * Attack bank directors for allowing the financial crisis to develop. * Criticise the Financial Regulator for being too lax. * Find the Central Bank failed to take responsibility in the overall stability of the banking system. * Point out economic projections made by a number of organisations were wrong. The report by Central Bank governor Prof

Writing Ireland's wrongs... Like buzzards picking over a carcass, foreign media is delighting in writing in-depth analysis pieces on our economic tribulations...The way they see us: we were once the landlords of the world; now ghost estates is where we're at. Ireland may not be ablaze, but it is all the rage. Last Tuesday, the UK Guardian newspaper did a major feature on the once mighty, but now much lamented, Emerald Isle. The week before that both the Financial Times and the New York Times produced long articles on Ireland and the state it's in. The headlines said it all. "Ireland's miracle – or mirage?"; "Ireland's shattered dreams"; "How bankers brought Ireland to its knees". It immediately becomes obvious that these esteemed organs are not in pursuit of clues as to how the country produced Jedward or Crystal Swing. Ireland has now become something of a laboratory for chin-stroking international journalists. Profiling the place is a

As the government continues to pump billions into our much discredited banking system, many Irish people unable to find work here are facing into a future outside of this country. John Downes, News Investigations Correspondent, spoke to some of the new Irish diaspora about their recent experiences of emigration... By any stretch of the imagination, they were a startling set of figures, prompting echoes of a past which we thought we had left behind. According to ESRI data released last week, we can expect net emigration of 60,000 in the year to this April – and a further 40,000 by April 2011. That's almost 1,000 of our best and brightest leaving every week. Yet the ESRI's predictions are simply the latest – if most stark – indications of a return to mass emigration among Ireland's unemployed, as the downturn has continued to take its toll. In September, for example, the Central Statistics Office revealed that Ireland witnessed a return to net emigration for the first time si

Cuts, tax and emigration the harshest medicine... IT'S often been said that the best cure for poverty and unemployment is a job. But the reality of the modern Irish economy is that the best cure is emigration. The Economic and Social Research Institute (ESRI) said yesterday that 100,000 people would leave Ireland this year and next, keeping a lid on already high unemployment and helping to relieve some of the budgetary pressures on the Government. The loss of 100,000 mainly young people is hardly something to celebrate, but the reality is that without this safety valve the Irish economy would be mired in levels of unemployment last witnessed in the 1980s. The ESRI calculated yesterday that if the amount of people in the labour market had not fallen over the last year via emigration, the rate of unemployment would be about 16pc not the current 13.4pc. Ireland is shipping out its young people to countries like Canada, the US, Australia and the UK, thereby easing the pressure on the e

House prices drop 1.8% in October... Dublin: House prices fell the most in six months in October, extending a real-estate slump that has pushed prices to their lowest in six years. Prices dropped 1.8% from the previous month, the most since April, Dublin-based Irish Life & Permanent Plc said in a monthly report today. From a year earlier, prices dropped 13.9%. House prices have fallen in every month since March 2007 and are now 27% below their peak in the early part of that year, according to the Irish Life/ESRI index. The average price of a house in Ireland was €228,347, the lowest since October 2003. Report - Irish Examiner.

IRELAND TODAY: IT’S JUST over a year since Wall Street and its Irish cheerleaders chanted “We are where we are” while Main Street reeled. Since then, every wrong-headed, populist Government economic policy, every catastrophic failure of the Financial Regulator, every rampantly greedy, short-termist instinct of the financial institutions and builders/developers has been exposed... A year ago, commentators were predicting something akin to the end of capitalism as we know it. Citizens were demanding humility, apologies, accountability, a purpose of amendment, radical reform, fewer tax breaks, an end to the bonus culture and a fairer share-out of the tax burden. So how is your head now, a year on? Still looking for other heads on plates? There is a lot to rage against. Only this week, headlines announced that banks are being “forced” to pay bonuses. But how long can a people sustain a condition of mass, impotent rage while remaining relatively sane and healthy? A few weeks ago, 1,200 peop

Is property past its sell-buy date?... 10 questions currently facing wary buyers and shell-shocked vendors... Are the banks really granting mortgages? To whom, what percentage of the property price, and under what conditions? Yes, technically. Loans of up to 92%, valued under €300,000, are being granted mainly to first-time buyers from Bank of Ireland, ICS and AIB. Other lenders are giving up to 80% of the purchase price (see graph). But the qualifying conditions are becoming more stringent, and if the bank doesn't really want to grant you a loan, they'll find a reason. Anecdotal evidence suggests that, after initial approval, stringent creditworthiness checks are carried out. For example, if a would-be borrower is behind with credit card payments, the loan will be turned down. Job security is a huge factor and everyone is under scrutiny now, says Peter Bastable of Simply Mortgages. "Those occupations on the danger list are widening day by day. It's no longer just cons

Average house prices are now back at January 2004 levels - report... AVERAGE HOUSE prices in Ireland are now back at the level seen in January 2004, according to the latest ESRI/Permanent TSB house price index. Prices fell by 1.5 per cent in August, according to the data released yesterday, bringing the decline in the past year to 13 per cent. According to the survey, house prices have now been falling for two full years and are 24.4 per cent lower than at their peak in February 2007. Niall O’Grady, general manager of business strategy at Permanent TSB, said the rate of decline had been more dramatic during the summer due to the low levels of activity in the market and a lack of confidence in any recovery this year. “Recently, prices have started to fall faster in the Dublin region due to the high level of surplus stock available,” he said. House prices in Dublin have fallen by 18 per cent over the past year, compared with a 12 per cent decline for property outside the capital, the sur

Roll up for the great property giveaway... Agents say an estimated 24% drop in house prices is far too low... There were double-takes all round last Monday when the Permanent tsb /ESRI house price index announced a 24% drop since February 2007 – a figure many believe to be conservative in the extreme. It's difficult to find out exactly what a property sells for as, under the Data Protection Act, publication of selling prices is prohibited and information is therefore based on asking price. Those involved in the business believe a truer estimate of just how far property prices have plummeted is between 40% and 50%. And counting. Ronan O'Driscoll, director of new homes at Savills, points to "the concrete example" of his own home. "I bought it for €1.9m in 2006, but one on the same road sold recently for around €850,000." The new homes landscape has changed radically in ways other than price, he adds, saying that negotiating a deal on a brand-new property is no