A property price database for private homes is the next logical step to reviving the property market, writes PAT IGOE
BUYING and selling a house is well known as easily the most important transaction in most people’s lives. Yet, if you were buying a kettle, it would be easier to get accurate and reliable price information.
The Irish property market has traditionally been starved of accurate information. Privacy has been a major issue. As noted by the Supreme Court in Kennedy and Arnold v Ireland, the right to privacy is one of the fundamental rights of the citizen.
But this absence of official information on house prices is now at last set to change. We think.
It would appear that advice to the last government and also to this Government suggest that publishing certain accurate information on individual house-sale prices will not be unconstitutional.
A possible amendment to the Data Protection Act, excluding house-price information, may be the most that will be required.
The easiest way to see what we have been missing is to examine what others have been enjoying. Britain’s HM Land Registry has a price index that is user friendly and informative. Checking it is a “must-do” for anyone interested in accurate and official prices in any neighbourhood or street anywhere in England or Wales.
Its website, landregistry.gov.uk, is consumer-friendly. Go to “find a property”, pay £4 and print-off a “title register”, which will include the actual prices paid for houses on your road. The records go back to 1995. France, the Netherlands, Belgium, and Norway are also leading the field. Ireland is taking up the rear.
Frank Daly, chairman of Nama, is the latest person to call for accurate house-price information to be published. Speaking last week, he said that it was “now high time we got on with it”.
He noted that we are now one of the few exceptions internationally in not having a public database of information on residential and commercial properties.
He noted, correctly, that the infrastructure is already in place. The information has been supplied by solicitors around the country on a daily basis for years for every house or apartment sold or even passed within a family, when an estate agent’s estimated open-market valuation is also submitted. But there the information is stored.
It is quite a jump from private information from solicitors to the Revenue Commissioners to being published on a Government website.
The Senate elections are the current logjam. Once they are over this month, a select committee can be immediately appointed to take the long-awaited Property Services (Regulation) Bill beyond committee stage. “Progress can be quickly made . . . as soon as the select committee is in a position to deal with the Bill”, according to the Department of Justice, Equality and Law Reform.
If properly implemented and marketed, the change may have a momentous and very helpful effect on the now-moribund property market.
So what can we expect? The Property Services Regulatory Authority, which has existed in Navan, Co Meath since 2007 but which still has no authority, will be given the role of publishing the information.
Its chief executive, Tom Lynch, has said that the register will provide details of all property sales by reference to address, sale price and date of sale. We can only hope that it will be consumer-driven.
Estate agents have also long been calling for a transparent property market where details of sales are available on the internet.
They warn against the new system simply providing broad general information, while Sherry FitzGerald would like to see the system backdated for comparison purposes. This might be open to serious legal challenge.
Even the old reliable Permanent TSB/ESRI monthly survey of prices has had to go quarterly because of a lack of reliable market information. Trinity College’s associate professor of finance Brian Lucey has even described the lack of property data available to improve discussion of the property market as “astonishing and appalling”.
One concern on the promises of the new property market’s transparency is that the property price database will be delayed unnecessarily by bureaucracy.
So far, there is input from many government bodies including the Department of Finance, the Department of Justice, Equality and Law Reform, the Property Services Regulatory Authority, the Central Statistics Office, the Law Reform Commission, the Property Registration Authority, and the Revenue Commissioners.
Now, perhaps, Frank Daly is right – it is high time we got on with it.
Wednesday, April 27, 2011
ANALYSIS: Some very specific lending, regulatory and planning changes need to be made to avoid another property crash in the years ahead
THE CRASH has shown the destructive nature of a property bubble and banking crisis. While there was an international background, very specific Irish beliefs and conditions were behind its severity, as Nyberg has shown. Given the damage caused to our competitiveness, economy and sovereignty, our banks, environment and to individuals’ finances, we must now erect strong defences against any continuing vulnerability to a similar future disaster.
This is not just a question of bashing bankers, burning bondholders, roasting regulators and punishing politicians. It goes far deeper. The relationships between the zoning and planning process and the profits to be made from development also influenced the intensity and duration of the bubble.
We must change fundamental beliefs and the way we organise much of our governance and decision-making. In addition we need independent structures for reviewing, auditing and reporting on the appropriateness of key policies and on the execution of those policies.
In particular there is a range of changes that affect housing and housing finance that should be introduced.
Low interest rates, lower taxes, higher incomes and easier availability of loans stimulate demand and lead to higher house prices until a supply response brings them back in line with long term value.
There are two key roles that the State must play. It should ensure that automatic regulatory stabilisers severely restrict the supply of finance to prevent unsustainable short-term spurts in demand and consequent price inflation until there is a supply response.
It must also have measures in place so that, as in the case of every other commodity, the market is convinced that a readily available supply can hit the market to take advantage of higher prices. Remember car prices did not increase just because there was plenty of easy money.
It may sound like heresy, but increasing house prices are fundamentally bad for the economy.
The house prices to incomes ratio should remain within a narrow range.
If there are signs that it is deviating from the long-term average – perhaps by 20 per cent to 25 per cent – certainly far before the deviation reaches 150 per cent, the Financial Regulator must introduce restrictions on property finance that apply to all lenders, both domestic and foreign. This assumes that incomes have remained internationally competitive. If not, action should be taken even sooner.
The Financial Regulator should also introduce criteria for the valuation of houses for mortgage purposes based on capitalisation of the net rental value of the property. In the absence of other collateral, all lending over 80 per cent to 90 per cent of this valuation should be treated as unsecured and would be subject to higher capital adequacy requirements.
Alternatively, all lenders based and regulated here would be required to take out additional security, by way of mortgage indemnity cover, from a highly rated insurer based outside Ireland, for the excess over 80 per cent of the valuation.
Such action should be backed up by reform of the housing market, particularly in the areas of zoning and planning. As the agricultural price of the land on which the average-sized dwelling stands is less than €1,000, virtually all the site price depends on the implied value of the building permission where the house is located.
While overall political direction is required, zoning and planning have such a large effect on house prices and the economy that an autonomous body, reporting to the Dáil, similar to the Central Bank, should be responsible for all strategic planning decisions.
Decisions should not be influenced by short-term electoral considerations or patronage. The body’s remit should be to restrict all housing developments that impose high servicing and other costs on the economy, as well as on families faced with moving into areas with minimal services and having to endure the cost and strains of lengthy commutes.
On the other hand, its mandate would require that at all times there would be a substantial supply of zoned and serviced land, in all key urban areas where it is most needed, and expensive infrastructure is already in place.
In order that no perceived shortage will arise in future, or that any interests can corner the supply and ensure that there will be competition between site owners, a supply adequate for at least 20 years should be maintained. As part of achieving this objective, aside from zoning new land, the rezoning of brown-field sites and significant areas of existing lower density housing would be prioritised.
The final reform that is required is a revision of our bankruptcy laws. No economy or banking system could function if everyone could walk away from their debts. Banks would always lose money and no sane person would trust banks with their deposits.
After the collapse of the bubble and increased unemployment, there are many in debt to levels that are impossible to escape from. This includes those who borrowed for purposes other than buying a home. The key reform required is a reduction in the period before a bankrupt may be discharged.
In general cases, in the absence of evidence of reckless or dishonest financial behaviour, the period might be reduced to three or in some cases two years.
With similar provisos, in cases in which the debt is almost exclusively due to a mortgage for a home taken out during the worst excesses of the bubble, a court might be permitted to discharge a bankrupt within one year, and in exceptional cases immediately, particularly if mis-selling or misrepresentation could be proved.
Taken together these measures would ensure that both house prices and rents would remain more stable and in line with incomes. Consequently housing would be more affordable for both purchasers and renters. Above all there would be a systemic improvement in the stability of the banks.
Such actions would make it clear that we are determined to manage our economy and finances in a sensible manner and are worthy of remaining core members of the world’s largest and most successful economic area.
Thursday, April 14, 2011
Thursday, April 7, 2011
An office investment for sale near the Phoenix Park will test the level of demand from investors
A MODERN office investment rented by the Health Service Executive (HSE) near the entrance to the Phoenix Park at Parkgate Street, Dublin 8, is expected to test the level of demand from investors when it goes on the market today through Savills.
Michael Clarke of the selling agency is quoting a price of €7.05 million for the four-storey building which will provide a net return of 9.4 per cent after costs.
The sale comes shortly after the HSE headquarters at Millennium Park in Naas, Co Kildare, was sold for almost €9 million in a deal which will show a yield of 9 per cent. Also in the past week the Layden Group paid €9.25 million for an office building owned by the Swedish telecoms equipment maker Ericsson at Clonskeagh in Dublin 4.
The signs of renewed activity in the Dublin investment market comes at a time when some of the main agents are reporting a pickup of inquiries from cash investors who were fortunate enough to have sold properties before the market crashed.
A number of receivers are due to bring development sites and buildings onto the market in the coming weeks.
There is also increasing speculation that Nama will shortly have to begin offloading some of the large number of commercial buildings with distressed loans for which the State asset manager has taken responsibility.
The most valuable properties are likely to be of interest mainly to overseas buyers with the support of European banks. However, large scale sales are unlikely until the Government clarifies whether new legislation planned for later this year will introduce downwards reviews in existing leases.
The HSE office block at Parkgate Street is being sold by KPMG receiver Kieran Wallace on behalf of ACC. It is one of four blocks in Parkgate Business Centre developed by a subsidiary of Michael Murphy’s South Dublin Construction.
The block is on the opposite side of the River Liffey from Heuston Station and close to the recently completed Criminal Courts complex.
Other occupiers in Parkgate Business Centre include the Railway Procurement Agency which rents 4,000sq m (43,056sq ft) in two buildings. The Royal Bank of Scotland is another high profile tenant.
The building going for sale – Block D – was constructed in 1996 and has a floor area of 1,830sq m (19,698sq ft) over four floors. It forms part of a larger block of two similar buildings and is served by two 10-passenger lifts.
The HSE has the use of 21 car parking spaces in the basement.
The block is let to the HSE on a 25-year full repairing and insuring lease from December 2001. The current rent of €715,000 per annum is due to be reviewed at the end of this year.
The HSE has a break option in the lease in November 2016, subject to 12 months’ notice and the payment of a full year’s rental penalty if exercised. The lease has a period of 6.7 years before the break option arises.
Michael Clarke said the sale would give an investor a very attractive cash-on-cash return with income secured by the HSE. The completion of the vast Criminal Courts had generated demand for office accommodation in the immediate area from members of the legal profession.
The HSE building in Naas, Oak House, was sold by agents Murphy Mulhall for property developers Tom Considine and Paddy Sweeney who paid over €300 million for the 370-acre Millennium Park at the height of the property boom in 2006.
Swords accountants Houlihan Cushnahan, acting for a group of investors, paid €8.99 million for Oak House which has a floor area of 3,716sq m (40,000sq ft). The rent of €880,000 per annum will show a return of 9.05 per cent. The lease has more than 16 years to run.
Michael Clarke advised the purchasers in this case.
Defaulting borrowers are finding sympathy in the High Court as the legal battle lines between lenders and borrowers are played out, writes PAT IGOE
CASES of serious mortgage arrears now coming on every Monday before the High Court leave little doubt that the courts are sympathetic to borrowers in difficulty. This is clear from the approach and treatment by the judges where lenders are seeking possession of homes with mortgage arrears. The rights and role of the courts are limited, although the courts are testing these limits. In doing so, the judges are also helping to clarify the legal battle lines between lenders and their defaulting borrowers.
Last week in the High Court, Ms Justice Mary Laffoy heard arguments for a Clare publican, Elizabeth Floyd, that the sub-prime lender Secured Property Loans Limited should not be given possession of her pub/home because of her mortgage arrears. The high interest rate was unconscionable and oppressive, argued her counsel, Brian Sugrue BL. It constituted a penalty and unjust enrichment for the lender.
But, critically, the judge noted that it was for the Oireachtas, and not the courts, to regulate interest charges. While it was understandable that Floyd had an obvious sense of grievance over the level of debt that she was facing, the court had no jurisdiction to give her relief in respect of the high interest charges.
Ms Justice Laffoy clarified a number of significant points. Firstly, she noted that Floyd had received independent legal advice. Secondly, she took into account factors in respect of the interest rate, which did appear high. These included the size and time period of the loan, the creditworthiness of the borrower and the security offered to the lender. These would have to be considered in whether a bargain between a lender and borrower was unconscionable.
Other recent court cases highlight the broad range of defences that defaulting borrowers may argue. They fall into two broad categories. First is the argument that there is a fundamental flaw in the mortgage documentation such that there is no legally binding agreement between lender and borrower at all or that, if there is, that it should be cancelled by the court because of errors.
The array of very carefully-drafted documents which lenders now require borrowers to sign before any loan cheque is produced, have hugely reduced, almost to nil, the chances of this argument succeeding. Alongside this are arguments that the borrower was the subject of coercion or oppression or deceit. But the usually strict requirement of independent legal advice usually sees all of these arguments off.
The second category is considerably more helpful to borrowers where the court can give more time to regularise the position with the lender. The courts come into their own in requiring the lenders to comply with the law’s strict procedural requirements.
In the High Court, the lenders’ first required port of call is the Master of the High Court, Edmund Honohan, brother of the Central Bank governor, Professor Patrick Honohan. He regularly requires the lenders to amend any defects in their court submissions and file necessary affidavits and decides on adjournments of up to 10 weeks. Little or no sympathy is given to lenders with defective court paperwork.
After the Master’s Court, the lender must then go to High Court number 16 where Ms Justice Elizabeth Dunne initially hears most of these cases. She listens to arguments from the borrowers as to their difficulties. Even where the documents are entirely in order, she can and does put “stays” of a further three months or six months and occasionally even longer to give the borrowers time on possession orders. These decisions are on an ad misericordiam basis and require the cooperation of borrowers with the process.
The judge has also punished lenders by exposing them to costs when they have rushed to the High Court in Dublin when a local Circuit Court with lower costs would have been adequate.
Critically, the courts can slow down the process where eviction is the final destination. Where the borrower is engaging with the lender, then the lenders must now give defaulting borrowers at least 13 months after the first mortgage repayment default before even commencing proceedings.
Court 16 is the final line of defence of borrowers and comes after various required procedures under the Financial Regulator’s Code of Conduct on Mortgage Arrears. A revised code came into effect on 1st January this year. All mortgage providers are required to comply with its provisions, including a mortgage arrears resolution process that is as fair and constructive as possible.
In the “last-chance saloon” in the Four Courts, the judges can and do provide some final protections to borrowers in difficulty and require that every reasonable chance be given to save people’s homes. But, beyond that, the original agreement between lender and borrower will be respected.
Transparent house price index? Maybe, but not until 2012 - The Irish Times - This needs to happen sooner than later, IMHO!
PLANS for a national house-price database are still stumbling slowly forward after the Department of Justice told the Minister for Justice, Equality and Defence Alan Shatter that restoring the Property Services (Regulation) Bill would enable its enactment.
It will allow the publication of residential property prices and a database of rents in the commercial sector.
The Government’s summer legislative programme lists it as awaiting Oireachtas committee discussions, so it will be the end of the year at the earliest before this could be passed.
A house-price database would not involve major changes or a large amount of additional work for public servants.
The Property Registration Authority (PRA), which combines the Land Registry and Registry of Deeds, already gathers the information on individual house-sale prices because the fees paid to it for such registrations are based on the price paid for a property.
The PRA has been one of the more innovative areas of the public service, through the use of online services and eConveyancing, and it would be easy for the authority to set up a database showing the average price for a three-bedroom house or a two-bedroom apartment in a particular area.
After all, the information’s already available to it.
While full disclosure of prices would be welcomed, the legislation needed to do this would have to override privacy issues relating to personal information, and it’s difficult to imagine lobby groups, such as farmers, agreeing to this.
The Department of Environment was more casual on the issue of the house-price database, omitting it from its briefing notes drawn up for its new minister, Phil Hogan.
The Property Services Bill will also regulate auctioneers, letting and property managements, and would finally allow the Property Services Regulatory Authority, which is unrelated to the PRA, to do this. It’s been operating on an interim basis for four years.
Tuesday, April 5, 2011
THE NATIONAL Asset Management Agency (Nama) has warned that proposed changes to rent legislation would “significantly impact” on its ability to repay the debt it has issued.
The agency is “very concerned” about the impact any move to allow retrospective rent reviews could have on the value of its assets. Any such legislation would have a “dramatic reduction in the value of the income-producing assets transferred to Nama” because investment properties are valued on a multiple of their annual rent.
In a letter to the Department of Finance, Nama chief executive Brendan McDonagh and head of portfolio management John Mulcahy point out that the loans being transferred to Nama are done so on the basis of their valuation in November 2009, and the loans were “assessed and valued on the assumption that existing contractual lease terms prevail”.
Any change in the law “would mean that Nama would have effectively overpaid and would of necessity be required to continue overpay (sic) the various participating institutions for bank assets that Nama acquired and will acquire from them”.
The letter says it is important to consider the beneficiaries of the changed law.
“This would comprise tenants across all commercial property sectors, including retail, office and industrial property.
“It is widely accepted that the effect of rent on business viability in the latter sectors is nominal.
“We would suggest that the majority of large tenants (some international high street names) are in a position to bear the burden of the contractual rent due to the existence of other profitable stores located both within and outside the Irish jurisdiction,” it said.
“Consequently, such arbitrary action would disproportionately benefit a majority of tenants not requiring such support at significant cost to the Irish taxpayer and fail to direct efforts at the minority of perhaps domestic retail tenants requiring genuine support.”
The letter was sent last May to then minister for finance Brian Lenihan.
It was released to The Irish Times under the Freedom of Information Act.
It added that its review of retail portfolios being transferred to Nama showed landlords had given “widespread support” to tenants, via rent reductions, where the contracted rent jeopardised their clients’ business.
It said that a move to allow retrospective rent decreases would damage Ireland’s perception abroad, in turn damaging the prospects of any future external investment in the Irish market and also damaging the wider investment market.
“The direct implication of this will be to restrict Nama’s future ability to refinance or dispose of their property portfolio to non-domestic investors.
“Such non-domestic investment will be an essential ingredient to the success of the Nama project,” it said.
It also warned that any changes would also affect Irish pension funds and insurance companies. This would erode the value of pension funds, and could result in increased insurance payments by individuals and businesses.
Nama also pointed out that previous interference in “freely-negotiated landlord and tenant arrangements has led to unforeseen and usually unhelpful results”.
It cited the rent freeze in the 1970s in Britain which “led directly to the secondary banking crisis which almost took down the UK financial system”.
It also said that at about the same time in Ireland the minister for finance had directed that all State leases were to have upward and downward reviews.
“We understand that this measure was subsequently rescinded by the OPW after a few years due to its unhelpful and unintended consequences,” it said.
AG urged to tackle rent reviews
By Geoff Percival
Monday, April 04, 2011
ONE of the main representative bodies for the retail industry has called on new Attorney General, Maire Whelan, to tackle the ongoing issue of commercial rent rates by introducing legislation ending upward-only rent reviews for existing leases.
"The new Attorney General should, as an immediate priority, review this decision, with a view to introducing new legislation to remove these clauses from existing leases. Apologists for upward-only rent reviews are unwilling to contemplate solutions. They fail to grasp that Ireland’s economy would be best served by managed rent reductions, rather than the closure of perfectly good retail businesses with the consequent unemployment for staff, bankruptcies of owners and losses for creditors."
Mr Denihan added that "a major adjustment" throughout the economy via prices, pay rates and social welfare payments is underway resulting in "a painful process" and that commercial rents need to be added to this list.
"Landlords should participate in this adjustment, too. Unless this is done, jobs will be lost and otherwise viable businesses will have to close," he added.
This appeared in the printed version of the Irish Examiner Monday, April 04, 2011
From the Independent today:
Tuesday April 05 2011
The seven companies in administration comprise McInerney Group Limited; McInerney Homes Limited; Alexander Developments (North East) Limited; Lancing Homes Limited; Gold Homes (The Wave) Limited; William Hargreaves Limited; and Bowey Homes Limited.
Between them, the seven companies employ a total of 161 staff and are responsible for 32 private development sites, together with a number of social and commercial housing development projects, said KPMG.
It looks as if McInerneys is in it's death throes.
CORK PROPERTY developer John Fleming’s decision to go bankrupt in Britain is now expected to become a major trend and, in turn, a significant headache for the National Asset Management Agency (Nama).
A second high profile property investor, who did not want to be named, has confirmed that he has recently relocated there ahead of filing for bankruptcy. A number of other developers are known to be considering following him.
Nama has been offering developers debt forgiveness packages – although it does not use that phrase – but frustrations with the length of the process, and the absence of an income to date, is causing some to consider filing in Britain for bankruptcy.
“I haven’t received a penny from them,” said a tranche two borrower. “My feeling is why wait 10 to 15 years to go through this process when I can be in and out of bankruptcy in Britain in 12 months? Okay, I’ll be a bankrupt but I can get on with my life then.”
You can declare yourself bankrupt in Britain if a judgment or statutory order is registered against you. Bankrupts emerge with a clean slate after 12 months, although the process can take as little as nine months. In Ireland, by comparison, a bankrupt can remain so even after they die.
Younger developers in particular are considering making the move. “The older guys know there’s no point starting over, but for the younger ones there’s still a chance to come back here or go elsewhere,” said a senior industry source, while a director at a tranche three borrower said he expects a spike in the numbers using UK bankruptcy laws.
Nama sources believe that those developers who have reached the memorandum of understanding stage with the agency will remain within the process. “There’s been no sign they’re preparing to walk away,” the source said. He acknowledged that a number of developers who refused to engage with Nama may be set to leave.
In that respect, Nama chairman Frank Daly’s recent speech at the Licensed Vintners Association was viewed as a pre-emptive strike by the asset management agency. Mr Daly warned the agency is likely to move against some of the 30 developers with whom it is currently engaged.
“It is likely that enforcement action will follow for some of those in negotiation as some debtors are making little effort to progress matters and have not yet adapted to the new realities some 3½ years after the property market collapsed,” he said.
They later moved against 15 properties with links to developer Paddy Kelly. Further actions are expected shortly.
“A lot of guys are washing their hands of things and want to move on,” the director of the tranche three borrower said.
AN “ONGOING mismatch” between supply and demand in the housing market pushed asking prices down 3.1 per cent in the first three months of the year, according to the latest report by housing website Daft.ie.
According to Daft’s House Price Report, the average national asking price for property has fallen 43 per cent since the peak of the market and now stands at €210,000.
Another study published today by DKM Economic Consultants on behalf of MyHome.ie places the average national asking price at €260,000. It says prices are down 4.1 per cent on a quarterly basis, with the market enduring a drop of 37 per cent nationally since its peak, and 43 per cent in Dublin.
Both reports agree that it remains a buyer’s market.
The average time it took to sell a property in the first quarter of 2011 was nine months, the same as a year ago, according to Daft. The average time in Dublin was five months, down only slightly year-on-year.
The MyHome.ie Property Barometer said the average time it takes for a property to go sale agreed varied from three months in Dublin to 13 months in Connacht and Ulster.
“An ongoing mismatch between supply and demand is pushing prices further down,” said Ronan Lyons, economist at Daft.
“Prospective buyers find it difficult to get the finance, while owner-occupiers are often restricted by negative equity. As a result, the market is moving very slowly.”
Of the 3,000 properties posted for sale on Daft.ie at the start of 2010, one in three is still for sale 15 months later, Mr Lyons added. In Dublin, however, the figure is closer to one in six.
In an article accompanying the Daft report, Eoin Fahy, chief economist at Kleinwort Benson Investments, said a “first wave” of house price falls had resulted from bubble prices, unemployment and the tighter supply of credit.
A “new set of problems” may now be on the way, he said. “A second wave of factors may keep downward pressure on house prices.
“This will be mainly due to higher interest rates, but there is also an outside risk to house prices from repossessions and even from strategic default.”
In a strategic default, borrowers have such a negative view of the future “that even those that can pay, don’t pay, as they can’t see why they should pay their mortgages each month when so many others will not”, Mr Fahy writes.
While the Daft report finds quarterly price falls both across the State and in each region of Dublin, the MyHome report suggests that prices are rising in the south part of the city centre, with only modest declines in the west and south of the county.
“The moderating pace of price decline in Dublin is to be welcomed, as is the fact that affordability continues to improve,” said the report’s author, DKM director Annette Hughes.
“The median asking price for a 3-bed semi ranges from €149,000 in Longford to €285,000 in Dublin. The national figure is now €179,000, which is equivalent to around five times’ average earnings,” Ms Hughes said.
Further price drops are likely over the course of 2011, she added, partly as a result of impending interest rate hikes.
The European Central Bank has signalled that it will increase rates as early as the meeting of its governing council this Thursday.
MyHome.ie managing director Angela Keegan said the figures indicated 2011 is going to be another challenging year.
“While the stamp duty changes have attracted trader-uppers back into the market, first-time buyers face some difficult choices,” she said. “They will have to weigh up the fact that prices may fall further with changes in mortgage interest relief which it appears now will be introduced at the end of the year.”
I have read the Daft and MyHome reporst/Press Releases today and cannot help but notice that they are all based on Asking Price.
This has to do with the sites themselves (Property Advertising sites) and with the archaic Privacy laws which prevent us agents from revealing details of transactions to the public.
The real issue here is Selling Price.
Both quote figures as being down 37-43% for Asking Prices.
But what they don't highlight is that in the boom, houses generally made at least and sometimes up to 30% MORE than the Asking Price.
Now, in the bust, houses sometimes make up to 30% LESS than the Asking Price!
So the true divergence in price from boom to bust is being hidden by these figures.
Most good agents have experienced 45-55% drops in Selling Price...but due to archaic legislation, we cannot give you details, sorry!
By Charlie Weston Personal Finance Editor
Tuesday April 05 2011
"My fear is that tightening by the ECB is going to exacerbate the growth, fiscal and financial stresses of the periphery."
Last month Mr Trichet surprised market watchers by signaling an increase in the ECB's key rate as inflation accelerated to 2.6pc in March, the fastest in more than two years.
But the rate hike could prompt an international backlash with a number of economists saying it is premature and potentially dangerous for the smaller eurozone countries.
Some 600,000 Irish homeowners will be facing increases of €15 for every €100,000 borrowed on their mortgages. The rise will be passed on to around 200,000 who have variable rate mortgages, despite a number of lenders already raising their variable rates this year.
Homeowners with trackers will also be impacted as ECB rises are automatically passed on to these mortgage holders. It will be the first time in almost two years that tracker mortgage holders will have faced a rise.
The first eurozone rate rise in almost two years is expected to push thousands more into arrears. Almost 80,000 homeowners are struggling to repay their mortgages, according to the Central Bank.
Ireland has one of the highest proportion of mortgage holders who are exposed to ECB rate rises, with 85pc on either a tracker or variable rate.
This compares with 15pc of mortgages in Germany, according to the Brussels-based European Mortgage Federation.
A Bloomberg News survey predicts the central bank will lift its main rate to 1.75pc by year-end, based on the median estimate of 31 economists.
Michael Dowling of the Independent Mortgage Advisers Federation said there was "no doubt that a rate rise will see more people going into arrears".
He said many households with trackers were just about managing to pay their mortgage at the current record low rates.
The problem for householders was that Thursday's rate hike was likely to be the first in a series of rises, with some economists expecting rates to rise up to six times in the next 18 months, Mr Dowling said.
Chief economist at Standard Chartered in London, Gerard Lyons warned: "The challenge in Europe is the 'one size' does not fit all." Higher ECB rates was "the wrong policy, for the wrong reason, at the wrong time".
- Charlie Weston Personal Finance Editor
Monday, April 4, 2011
Anglo to sell off €4bn in assets
03 April 2011 By Jon Ihle
Anglo Irish Bank expects to dispose of at least €4 billion in assets in 2011 as the nationalised institution continues its wind-down, Mike Aynsley, its chief executive, has told The Sunday Business Post.
The bank, which sold nearly €3 billion of its remaining €36 billion in assets last year, has disposed of €1 billion in assets this year already, according to Aynsley.
That rate puts Anglo on track for a ten-year work-out period and gives an indication of market appetite, as the rest of the Irish banking system seeks to deleverage by more than €70 billion over the next three years.
The Anglo disposals this year have come about through restructuring, refinancing and straight sales of assets in the US and British markets. Aynsley said he did not expect any disposals in Ireland before the second half of 2011, although the bank achieved some in 2010.
‘‘The Irish market hasn’t begun to recover," he said. ‘‘You don’t want a firesale if your funding costs are not going to blow you out of the water. We are very confident that the state funding is there to wind this down."
Anglo has put disposal teams in Britain, US and Ireland as the institution’s focus moves from restructuring and downsizing the bank to how effectively it can recover the loans it hasn’t already transferred to Nama.
Aynsley has established a group recovery management unit to help recover very distressed loans and improve insolvent assets. He has also put together a corporate projects unit to focus on recovering outstanding debt from Anglo’s higher-value, more complex corporate customers.
The latter unit is working primarily on getting back the €2.8 billion Anglo loaned to Quinn Group and associated parties. It is also managing the Arnotts and Champion Sports deals. An update on Anglo’s capital position is expected in May. The bank delivered audited results last week, and Aynsley said he expected its total capital needs to be close to €29 billion, and not the €34 billion provided for in September 2010.
‘‘We’ll still have further impairments, but I don’t think the taxpayer will have to put in more capital," said Aynsley.
‘‘We’re in the guts of the portfolios and know the extent of the problem."
Aynsley, who was paid nearly €1million last year, said he had no plans to resign his job, despite failing to get approval for three successive restructuring plans
A new "floor" in property prices will be found this year, however long that "floor" lasts!