Wednesday, October 29, 2008

The Fall

We call it Autumn on this side of the world, but the Americans know it as The Fall. Quite a few of our emigrants who left in the '80's went to the USA. When they came back, always with more money than those of us who had remained in Ireland, they had a lot of american sayings and spoke of dollars, which we could understand, and the Fall, which we couldn't initially. Innocent days.

The property market here is still stalling or falling, depending on who you talk to. No-one is saying it has hit bottom yet. Estimates vary between a further drop of 5-25%! Quite a difference. Economists are always at polar opposites. The best economist joke I know goes as follows:
Two economists were out deer-shooting when they came upon a large buck. The first shot 10 feet to the left. The second shot 10 feet to the right. The deer ran off and the economists shook hands and said " On average, we got him right between the eyes."

The frustrating thing about the Irish property market at present is that there are plenty of people who want to buy a home at the moment, but they cannot get the funding to do so. Over the last few years, here as elsewhere in the world, credit was thrown at home-buyers with little or no constraint. Now some of the best-qualified borrowers cannot get approval for a mortgage. In some cases, people who were approved last month do not get an extension of that approval for next month! This is mainly because the Irish banks are already over-exposed to the property market through their huge developer loans. But they are also starved of cash. Our government has initiated a Bank Guarantee for all deposits, but has not recapitalised the banks by taking a shareholding in them. As this remains a possibility, no-one else is buying bank shares, so the banks have no cash. So they are not lending. So people are not getting mortgages. So homes cannot be bought/sold. More worrying, very little cash is available to small/medium businesses, so trade is falling and job cuts are looming. Redundancy will lead to an inability to pay a mortgage. In this market, a quick sale at anything approaching the value of the house over the last 3 years is not an option, so banks are already fast-tracking repossessions. This is becoming a much larger phenomenon than ever before. We do not have any bank houses for sale at the moment, but we are trying to sell a couple of homes where the lender has already started the legal process. There is huge pressure on some people. They cannot afford to take too much of a drop in price or they cannot pay off the bank, but unless they drop the price substantially, they will not sell.

As you can see from the pictures, taken today, we are in the middle of Autumn/The Fall, but with the unseasonal North wind, it is very cold. That hasn't stopped the rain though! Kilcash Castle can be seen from the Clonmel/Kilkenny road, but the usual lovely backdrop of Slievenamon is invisible.

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