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drbubb

Ireland : Is anyone buying property yet?

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"... from Muddy Fields ... to Bank boardrooms." ?

Perhaps bank boardrooms have now become like Muddy fields in Ireland.

Ashes to Ashes, Mud to Mud.

 

Synopsis: http://www.penguin.co.uk/nf/Book/BookDispl...4882502,00.html

 

Simon Kelly's involvement in property development began when, as a computer-mad child in the 1980s, he started making spreadsheets for his father, the developer Paddy Kelly. By 2008, when the Irish property market crashed, Simon and Paddy owed their creditors nearly a billion euro. In 2009, they were the first big developers to admit they were bust - and they encouraged their fellow developers to face reality in the same way. In 2010, in the pages of a national newspaper, Simon Kelly apologized for his part in the long-term damage created by the property bubble.

 

Until now, the story of Ireland's property boom and bust has been told only by people on the outside. The bankers and the developers have kept quiet. Now, Simon Kelly breaks the silence with this vivid and unsparing account of how it all worked and why it went sour. He brings us to the muddy fields, humble cafés and grand dining rooms where the deals were made; he explains how it was that debt always begat more debt; and he takes us through the hitherto opaque portals of Anglo Irish Bank, the Kellys' main lender.

 

In an account packed with telling and indiscreet detail, Simon Kelly makes no excuses for ending up bust. He simply shows how it happened - to him, to other developers, to the banks, and to the country. In doing so, he courageously breaks ranks with the insiders who created this disaster, and who would prefer to blame 'international forces', bad luck, or one another. Breakfast with Anglo is a landmark in our national accounting of the present crisis, an essential read for anyone who wants to know how we got into this mess and how we might begin to think about getting out of it

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There could be some risk involved in acquiring land and property on the cheap in Ireland now that memories of Captain Boycott are being stirred.

 

Time to reclaim the land that is rightfully ours

14 November 2010 By Tom McGurk

 

Ireland invented the boycott during the land wars, and perhaps it is time to take this effective weapon of resistance down from the thatch to deal with repossessions and resales Despite the spiralling economic crisis we are in, there was, last week, an epiphany at a small auction in Co Meath.

 

A 67-acre farm in Crossakiel, which had been repossessed by ACC bank, was up for sale. Despite a reasonable attendance by local farmers at the auction, there was only one derisory bid of €1.

 

There was, according to some present, ‘‘an atmosphere’’ in the room, and the auctioneer later told the Irish Times that ‘‘there was no question but that people weren’t bidding because it was being sold by the bank’’.

 

At one stage, one person present questioned whether the land was being sold with the goodwill of the owner - and was told that the bank had the authority to sell the land.

 

The owner of the land had reached this financial crisis after using the land to raise funds for a property development which then crashed. The farm remains unsold.

 

It is not difficult to imagine the historical ghosts which haunted that Meath auction room, and I make no excuse for returning yet again to the personal debt crisis that I have been writing about for some weeks now.

 

One result of this issue has been the emergence of the New Beginning organisation, a group of some 50 barristers, businesspeople and citizens who are prepared to give free legal support to those facing repossession. And three cheers for them.

 

The failed land sale in Meath is yet another sign that, if the banks think they can regain the high financial ground over the thousands to whom they over-loaned in a reckless fashion by repossessing land, they may have to think again.

 

This applies equally to the government, which scooped up so many million euro in stamp duty.

 

Given Ireland’s history, those silent farmers in the auction room in Co Meath last week would have had a far better sense of where all of this will lead than the men running our banks. If the banks and the political and financial establishment think that our current bank repossession methods and laws on debt and bankruptcy are adequate for the forthcoming crisis, they had better think again. Parallels with the land and eviction crisis of the 19th century are beginning to look pertinent, particularly when one considers that, by late next year, almost 20 per cent of Irish home ownership may be in negative equity.

 

At the outset of this crisis, most people didn’t really understand what had happened and were prepared to let the government get on with saving the banks since they were essential - so the government argued - to safeguarding our economic future. Well, we did that, but the economy is still in crisis.

 

As the months have passed, the government’s financial targets have been missed, the debt crisis has grown and the public mood has changed. The realisation that thousands of families in this country are so in debt to the banks, that their children and unborn children will be paying it off, is slowly sinking in.

 

The auction in Meath last week may prove to have been be a significant turning point.

 

There have been two recent significant interventions in this debate. Professor Morgan Kelly of UCD warned in an Irish Times article that we were headed to what he depicted as a new type of land war between those who could pay their mortgages and those who could not.

 

He summed up the public mood as follows: ‘‘The perception growing among borrowers is that, while they played by the rules, the banks certainly did not, cynically persuading them into mortgages that they had no hope of affording.

 

‘‘Facing a choice between obligations to the banks and to their families’ mortgage or food, growing numbers are choosing the latter," he wrote.

 

Last Thursday, a group of ten leading economists wrote to the Irish Times, arguing that some form of mortgage debt forgiveness was not only essential for our society, but also for the economy.

 

The group argued that, were mortgage debt forgiveness not introduced - and radical reform not introduced to our debt and bankruptcy laws - then our financial crisis would only deepen. At the core of their argument was the following assertion: ‘‘As there are three parties to the problem - the banks, the regulator (ie the state) and the individual - these three must also be part of the solution."

 

With the government having insisted on a year’s grace for home repossessions by the banks, we are currently in some sort of unreal financial hiatus. It means that the full dimensions of the crisis to come are still hidden.

 

But late next year,when property and water taxes have been introduced - and when interest rates begin to rise, as they surely must - then the personal debt crisis has the potential to become the most serious crisis in the history of the state.

 

If the banks attempt a process of mass repossession next year, then they must be met by organised citizens’ action. Boycotting was invented in 19th century Ireland, and the time to use it again may be now.

 

Like the Tea Party movement in the US, which was organised on the internet and through websites and social networking, people in Ireland now have the organisational resources in their living rooms to bring the full power of the boycott against bank repossessions and attempted resales.

 

Boycott.ie - when it is set up - should be the rallying point to help those facing eviction. It could lead to the organised boycott of anyone involved in the eviction and, most especially, the auction of repossessed property. In the forthcoming general election, independent candidates fighting the repossession crisis should be put up through Boycott.ie.

 

It seems that, in this crisis, everyone except the taxpayers and homeowners of Ireland were allowed to make up the rules as they went along.

 

Now is the time for the citizens of the Republic to take back control of their lives and their finances and, like the Meath farmers, bond together in an unbreakable moral crusade for justice.

 

Our great-grandfathers and great-grandmothers did this before, and we can do it again

 

http://www.sbpost.ie/commentandanalysis/ti...ours-52816.html

 

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There could be some risk involved in acquiring land and property on the cheap in Ireland now that memories of Captain Boycott are being stirred.

 

Boycott.ie - when it is set up - should be the rallying point to help those facing eviction. It could lead to the organised boycott of anyone involved in the eviction and, most especially, the auction of repossessed property. In the forthcoming general election, independent candidates fighting the repossession crisis should be put up through Boycott.ie.

 

http://www.sbpost.ie/commentandanalysis/ti...ours-52816.html

Hmm.

Buy it, and you may be buying some headaches too.

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Top 20 Building Contractors in Ireland, 2007

======

1. Sisk ----------------- : E, 1,209 mn :

2. Michael McNamara : E. 507 mn :

3. Pierse Contracting- : E. 474 mn :

4. Ascon Contractors- : E. 388 mn :

5. P. Elliott & Co.------- : E. 340 mn : http://http://www.pelliott.com

6. PJ Hegarty & Sons- : E. 325 mn :

7. The Bowen Group-- : E. 320 mn :

8. SAIC Construction-- : E. 280 mn :

9. John Fleming ------- : E. 276 mn :

10 Patton Group ------- : E. 262 mn :

11 John Paul Constr.- : E. 254 mn :

12 Laing O'Rourke ---- : E. 250 mn :

13 G&T Crampton ----- : E. 230 mn :

14 Wall Holdings ------ : E. 205 mn :

15 JJ Rhatigan & Co - : E. 175 mn :

16 O'Flynn Constr. ---- : E. 160 mn :

17 Bennett Constr. ---- : E. 140 mn :

18 Cleary Doyle -------- : E. 119 mn :

19 O'Malley Constr. --- : E. 115 mn :

20 Gama Constr. ------ : E. 105 mn :

==========

 

Listed Co's :: http://www.ise.ie/app/equityList.asp

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Straight Talking, Lorcan Sirr - Ghost estates will haunt us for years

 

That the minister responsible for housing cannot even provide an accurate account of the number of vacant houses around the country is merely the first of the government's problems

 

gorey_estate1031915_display.jpg

 

Although the blame game is still under way, some solutions for coping with Ireland's legacy of development over-exuberance are beginning to emerge. To propose solutions, however, we must first know the problems. The scope and scale of the problem of ghost estates – 10 or more houses at the one address, at least 50% of which are unoccupied or unfinished – is staggering. They will cause headaches for a long time to come.

 

The state itself is lumbered with a series of problems, the biggest of which is the numbers. It will be interesting to see policy being formulated when not even the minister responsible for housing can provide a definitive account of the number of vacant units across the country, and whether those are finished or not. This is incredible.

 

The state needs to compile accurate statistics on numbers and transaction prices, and it needs to do it now. It also needs to know where these vacant houses and ghost estates are. Most likely they are just where they are not needed, which is a problem in itself. How will Donegal use up its 25,000-plus empty units?

 

Politicians themselves will feel the heat, as most of them acquiesced to the building of vast numbers of unnecessary houses in ludicrous locations. These are houses for which the taxpayer will be paying through Nama for many years to come. As if you didn't already know.

. . .

Where the problems of ghost estates really hit home, however, is at home. Think about being an owner who's living in an estate that is still a construction site. The builder has disappeared, and the estate agent says it's nothing to do with him, and most of your neighbours are renters, and their landlords paid about 70% less than you did 12 months ago. You can't let the kids out because it's just too dangerous to play outside, and you're 20 minutes' walk from the bus stop, but the bus only comes once a day anyway, and the shops are miles away, and you've lost your job and are struggling to pay the mortgage. You have been offered a job far away but can't move, and you're understandably miserable

 

/more: http://www.tribune.ie/article/2010/apr/25/...states-will-ha/

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First rule of Finance: Blame everyone but yourself

 

irishoutrage.jpg

 

Certainly, property speculators in Ireland have taken this rule to heart

 

There's plenty of blame to go around, but maybe "the guy in the mirror" deserves some too.

 

Any lessons for the UK in this? ... Do you think?

 

Folks of PT do not seem to think so.

Reading there. I find comments like this one:

" The situation UK is very different to US, Spain, Ireland."

 

My response, here: http://tinyurl.com/GPC-Warns / post#4

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If Irish interest rates are pushed high enough by the prospects of default, we may soon see:

"a calamitous collapse"

 

Does anyone know what mortgage rates are now in Ireland?

 

Ireland doesn't have control over its central bank interest rate - as a eurozone member that is done by the ECB and the current ECB rate is 1%.

 

Most people who bought houses during the 2000s availed of ECB tracker rates - these are as low as .5 above the ECB rate - i.e. a lot of people are paying a mortgage rate of 1.5% and this is adding to the banks woes as they are now borrowing from the ECB at 5% and their loans are paying them just 1.5%.

 

The fact that Ireland had no control over its interest ratesadded to the bubble. At a time when the irish economy was booming, there was an artifically low rate of about 2%, leading to easy credit and excessive borrowing. The rates were held low to assist the German economy and this is now coming back to bite Germany as German banks are hugely exposed, having loaned crazy levels of money to Irish banks during the boom.

 

Of the approx 1.6 million homes in Ireland, about half are mortgage free.

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Ireland doesn't have control over its central bank interest rate - as a eurozone member that is done by the ECB and the current ECB rate is 1%.

 

Most people who bought houses during the 2000s availed of ECB tracker rates - these are as low as .5 above the ECB rate - i.e. a lot of people are paying a mortgage rate of 1.5% and this is adding to the banks woes as they are now borrowing from the ECB at 5% and their loans are paying them just 1.5%.

 

Of the approx 1.6 million homes in Ireland, about half are mortgage free.

Good points.

So the banks are hit two ways:

+ Collateral values are way down (ie potential losses shot up.)

+ Their capital & funding costs may be way over what they get from their mortgage portfolios

 

I begin to see why the government had to guarantee its banks. Without the guarantee, their skyrocketing borrowing costs would have killed them, given the low returns they make on their mortgage portfolios. The banks basically sleepwalked into a balance sheet and collateral trap.

 

Maybe I should be asking a different question:

 

What do Irish banks pay to savers?

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http://www.angloirishbank.co.uk/

 

http://www.angloirishbank.co.uk/Personal_S...ixed_Rate_Bond/

 

My last one year fixed rate bond with Anglo Irish paid 7%. The rate now is 2.45%.

A very low rate - reflecting the govt gtee, I suppose.

 

I think Irish govt bonds (10 years?) pay 8% or so. There's a huge difference there

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And to answer your question, I wouldn't want to buy anything in Ireland at the mo. Still too expensive. I think the UK is still to expensive also.

 

I am waiting for Detroit "fire-sale" prices before I look seriously at anything other than a rental agreement.

 

Besides, I would be loathe to sell any other investments for property now because I reckon I would lose on both sides of the trade.

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The Hunt for Jobs Sends the Irish Abroad, Again

 

http://www.nytimes.com/2010/11/21/world/eu...d&st=Search

 

Some of those emigrating are desperate for a paycheck. Others are just disgusted that Ireland should find itself in such a state, and they fear they will be paying for years — with tax increases and pay cuts — for a mess they did not create.

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I am very tempted. If this place has broadband, I could live there :)

 

http://www.greenshifters.co.uk/for_sale/63..._ACRES_TURF_BOG

 

632_10.jpg

 

From approx £106,000 sterling OFFERS CONSIDERED FOR LESS IF CASH PURCHASE AND CAN COMPLETE WITHIN 4 WEEKS,

  • Rural smallholding cottage set at end of long drive ,
  • safe for children and pets,
  • willow field,
  • large pond with island,
  • 50x50 ft,Boyle is about 9 mins drive,
  • Frenchpark village about 4 mins drive,
  • own deep bore well, with pump house water sofftener, uv ect,
  • septic tank, newly renovated,
  • new roof,
  • rewire,
  • bathroom and kitchen,
  • oil c/h and solid fuel stove,
  • sea about 30 mins,cottage is in the lake district of ireland,
  • lots of lake and river fishing ,3 organic markets with in 30 mins drive,
  • Sale again due to time wasters,
if viewing have your funds in place, close offers will be considered.Tel 00353 861558212

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The roof falls in on Ireland's Millionaires Row

 

In 2007 Shrewsbury Road in Dublin was the sixth most expensive street in the world. Now, post-crash, homes have been abandoned and the tycoon residents have run for the hills

...

The sharpest drop has been at the top of the market."

== ==

"...where prices have crashed by 50% or more."

"... the sixth most expensive street in the world, ahead of Beverly Hills's Carolwood Drive and St Moritz's ritzy Via Suvretta. ...where prices have crashed by at least two-thirds. 'It's right in the centre of things; it's a street that's always achieved top prices'..."

/source: http://www.guardian.co.uk/world/2010/dec/0...-crisis-bailout

 

At some stage in a crash, you see that: The High End falls more, because wealth has been destroyed for everyone and even many of those who had money find they have to downsize their commitments. Some jeave the country for greener pastures elsewhere. While others are afraid to buy, and no long see property as a one way bet.

 

Niall O'Farrell, the founder of a chain of formalwear shops, Black Tie, who stars on the Irish version of the television show Dragons' Den. O'Farrell is trying to sell his house – initially for €14m, although the price has been drastically cut in recent weeks to €8m.

 

Derek Quinlan, the property magnate who part-owns Claridges hotel, is also looking for a buyer for his Shrewsbury Road residence, priced at €7.5m, after quitting Ireland in favour of Switzerland a year ago. Nobody is biting. A house hasn't changed hands on Shrewsbury Road for two years.

 

The UK is probably AT LEAST 18-24 months away from this realisation. It happens closer to the end than the beginning of the slide. And it takes time to destroy long-held confidence.

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This is a useful informal tool for tracking trends in the residential property market in Dublin. After massive spikes in the supply of properties to buy and to rent over the past three years, the supply is now falling, particularly for rentals.

 

While property prices are still falling, rents have stabalised and are in fact now rising again.

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Ireland is not the only country suffering from this phenomenon. Many countries around the world are experiencing the “fall” of house prices. I believe that the government of every country is striving hard to prevent this for after all it is them that will have a hard time if the “fall” continues. Let us all hope that they will come up with an effective and efficient solution to this soon.

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Interesting Bubb, I'd love to get your take on the Irish property market. We had 14 years of rapidly rising property prices from 1994 - 2008, and we have had nearly four years of even bigger falls from 2008 to now. House prices have dropped between 40-50 percent since 2006 and are now back to 2001 levels. It has been argued that the falls have been so big because Irish banks are trying to reduce the size of their loan book and are not lending for property. The level of mortgage lending in Ireland fell from EUR 40 billion in 2006 to just EUR 2 billion in 2010 - that's a 95% drop in lending! So virtually the only buyers out there are the cash buyers who are bottom feeding. How much further do you think prices can fall?

It is hard to make much of a comment without seeing long term charts going back 2-3 Long cycles.

 

You say:

"Falls have been so big because Irish banks are trying to reduce the size of their loan book ."

 

And that is the action that usually leads to the bottom - forced selling 3-5 years after the peak.

 

Even so, the lows might stretch to 6-7 years, or property might "bump along the bottom" for most of/ all of the first 7 years of the next cycle. We saw something like that in Japan after its long cycle peak.

 

/note: I will also post this on the Irish property thread, if I can find it.

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Martin Walsh on Residential House Prices

This post was written by Gregory Connor

 

This article by Martin Walsh in the Irish Times has some convincing analysis (unfortunately the graphics are not shown in the on-line version), and some thought-provoking comments on the Irish government policy conundrum regarding residential house prices. As Martin Walsh notes, to minimize expected future (state-owned) bank losses and Nama losses, policymakers must hope that prices have now fallen to their steady-state equilibrium level. But for the purposes of restoring competitiveness, continued house price decreases would be better.

 

“… it seems that there is a real dilemma at the heart of national policy. Do we prioritise competitiveness by bringing house prices back into line with incomes or keep them inflated in the hope of reducing further losses to the banks and Nama (National Asset Management Agency), as well as containing the extent of negative equity?”

 

Most importantly, by most long-term metrics, current house prices in Ireland still seem to be above sustainable levels.

 

What actions (if any) should Irish policymakers pursue regarding stabilizing the residential housing market, and to what ends?

 

/more- see comments: http://www.irisheconomy.ie/index.php/2011/04/25/martin-walsh-on-residential-house-prices/

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http://www.cso.ie/releasespublications/documents/prices/2011/rppi_may2011.pdf

 

 

In the year to May, residential property prices at a national level, fell by 12.2%.

 

The same rate of decline was recorded in April and a decline of 13% was recorded in the twelve months to May 2010.

 

Residential property prices fell by 1.2% in the month of May.

 

This compares with a decline of 1.0% recorded in April and a decline of 1.2% in May of last year.

 

In Dublin residential property prices increased by 0.4% in May and were 11.5% lower than a year ago.

 

Dublin house prices increased by 0.3% in the month and were 10.9% lower compared to a year earlier.

 

Dublin apartment prices fell by 0.3% in the month of May and were 14.8% lower when compared with the same month of 2010.

 

The price of residential properties in the Rest of Ireland (i.e. excluding Dublin) fell by 2.1% in May compared with a decline of 1.2% in the same month of last year.

 

Prices were 12.5% lower than in May 2010.

 

Overall Decline

 

House Prices in Dublin are almost 46% lower than at their highest level in early 2007.

 

Apartments in Dublin are 53% lower than they were in February 2007.

 

The fall in the price of residential properties in the Rest of Ireland is somewhat lower at 38%.

 

Overall, the national index is 41% lower than its highest level in 2007

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