A great post by Colm McCarthy about how we are sometimes better off if the Govt. do nothing, rather than meddle in the market.
As we are all too aware, meddling in inflating the property market by the Govt. was not matched by the necessary regulation on the financial side, so we have ended up with the current situation.
To take it to a logical conclusion, why vote them in if we are better off without them meddling!
www.pfq.ie
A MyHome.ie survey has shown that Sale Agreeds in Dublin during January 2010 have increased threefold over January 2009.
This backs up what we are seeing here in Clonmel and South Tipperary generally.
Prices are down substantially, resulting in many more viewings, offers and sales.
Not all properties have been reduced, with some vendors still hoping for a price recovery.
This looks extremely unlikely in the short to medium-term.
The homes generating the greatest activity are those that have taken on-board the market realities.
From the Irish Times, a piece by Mary Carolan:
DEVELOPMENT LANDS in Athlone, Co Westmeath, valued in 2006 at €31 million have a current value of €600,000, Bank of Ireland told the Commercial Court yesterday in a dispute with a developer over unpaid loans.
The bank was rejecting arguments by Pearse Gately that the sale of these and other lands offered reasonable potential for the bank to recover €17.4 million from the developer under his guarantees of loans.
Mr Justice Peter Kelly said the €600,000 figure was “even more alarming” and put “into a cocked hat” the judge’s own view, from his experience in the Commercial Court in recent years, land values had fallen between 70-80 per cent.
John Hennessy, for B of I, said as well as obtaining the €600,000 valuation for the Athlone lands, the bank had also received a valuation of €4 million for development lands at Sallins, Co Kildare, previously with a peak value of some €17.5 million.
I wonder where the money is gone?
If you are in the building trade, this is scary stuff.
A report by Emmet Oliver Deputy Business Editor, Irish Independent says the following:
The private housing market could be in danger of grinding to a complete halt with one of the two home-registration firms in the country not registering a single house in January.
The Irish Independent has learned that Premier Guarantee did not register a single housing unit in January, with its larger rival Homebond only registering 149 houses, including just 24 in Dublin.
At the peak of the property market in 2006, Homebond was registering 6,122 houses a month or about 72,000 in a full year. Premier, the smaller of the two registration services, was registering about 2,117 houses per month, or almost 25,000 per annum.
Of the 149 houses registered with Homebond in January, 62 were in Cork, 16 in Kildare and 24 in Dublin. In most of the other counties there were less than three houses registered, with many counties only registering a single house.
One of the few things propping up the housing market now is one-off housing which often doesn't depend on insurance from either Homebond or Premier. Local authority housing, which is also continuing, normally has some form of state insurance behind it.
The warranties provided by the companies also protect a homeowner's deposit in the event that their builder goes bust. Homebond has been operating since the late 1970s and has only faced competition from Premier since 2002. Willis Risk Services offers the Premier product in Ireland.
Economists regard the house registration figures as the best indication of housing starts. Once a house is registered with either of the two companies the builder and then the owner has cover for any serious structural problems that arise in the first 10 years after construction.
The collapse in prices, rising unemployment and a lack of mortgage finance has seriously hurt the housing market, with first-time buyers also finding it hard to come up with deposits to make purchases. In some parts of the country the overhang of existing stock will not be cleared for many years.
Banks have changed their loan-to-value rules forcing purchasers to come up with more of their own finance. Credit standards have also been tightened in other areas, for example long-term mortgage loans over 40 years have been restricted along with 100pc mortgages.
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.
