CIARA O'BRIEN
House prices continued to decline in the second quarter of the year, two new surveys showed today.
Property site MyHome.ie said property prices fell 4 per cent over the three months, bringing the total fall since the peak to 40 per cent.
Prices for Dublin homes are down 46 per cent from peak levels.
The survey also showed that, based on average mix adjusted asking price, the average house price is now €249,000, compared with €260,000 three months ago.
In Dublin, the average price is the €286,000 compared with €302,000 three months earlier.
Author of the report Annette Hughes, director at DKM Economic Consultants, said the fall was disappointing but not entirely surprising.
"At the moment our best hope for 2011 is that some moderation in the rate of decline in asking prices will begin to emerge over the second half of the year," she said.
"While the worst of the recession is over, serious challenges remain. Significantly lower demand and difficulties accessing mortgage credit are adversely impacting on the market. The absence of any firm evidence that property prices have bottomed out combined with concerns about imminent interest rate rises, spending cuts and new taxes and charges appear to be making consumers reluctant to make major purchases." .
MyHome.ie is owned by the Irish Times.
A separate study from Daft.ie said the average house price was now below €200,000, with asking prices down 5.1 per cent on average during the quarter. The property website puts the national decline at 47 per cent from the peak of the market.
Its survey said the average asking price for a home was €196,000 in June.
Dublin saw a steeper decline than the average, falling by 5.7 per cent in the past three months, while Cork, Galway and Limerick cities saw prices fall between 5 per cent and 6 per cent over the same period, and Waterford city prices were down 9 per cent.
"The second quarter of 2011 has seen one of the sharpest adjustments in prices since the correction started four years ago," said Daft.ie economist Ronan Lyons "With successful auctions of distressed properties at 60 per cent or more below peak levels, the sharp fall may actually reflect increased realism on the part of sellers."
He said other factors were intense competition due to high stock levels, and difficulties in obtaining a mortgage.
The Daft.ie report is based on an analysis of the database of properties posted for advertisement on Daft.ie up to June 30th 2011.
Monday, July 4, 2011
House prices continue decline - The Irish Times - Mon, Jul 04, 2011
Will the Nama mortgage work? - The Irish Times - Mon, Jul 04, 2011
FIONA REDDAN
There aren’t enough cash buyers out there for all of Nama’s stock but is the agency’s plan to help buyers the best way to get the market moving?
GIVEN THE NUMBER of first-time buyers and families looking to trade up who are sitting on the sidelines, waiting for the property market to stabilise – or the banks to start lending again – a mortgage which protects against negative equity seems like a good idea. But how will the latest proposal from the National Asset Management Agency (Nama) work? Is it just another measure aimed at propping up a market which is in freefall, and should the Government really be intervening in the property market?
After all, it has intervened in the past with some pretty disastrous consequences for the entire country.
The negative equity dilemma has been talked about for some time, but last month, Brendan McDonagh, chief executive of Nama, gave a clear indication that the agency is working with both Bank of Ireland and AIB on delivering a product which would protect house purchasers from a future drop in house prices.
For McDonagh, one of the “key impediments” to the lack of activity in the property market is the fear that house prices will continue to fall further. Indeed the market is at a stalemate, with just €577 million lent out in the first quarter of this year – more than 50 per cent down on a similar period in 2010 and more than 93 per cent down on the peak in 2006.
April’s auction of properties in receivership was one of the few bursts of activity in the market. There was a huge level of interest in the first Allsop-Space property auction and those bidding on the 82 properties spilled on to the street in front of the Shelbourne Hotel at one point. A second auction takes place in the same venue on Thursday. However, it’s worth noting that an auction of distressed properties in Cork last month was a flop, with only two of the discounted lots sold under the hammer.
Fire sales apart, with so little activity, it is hard to gauge the true state of the property market, although indices such as that from the Central Statistics Office suggest that it is still declining. And, with interest rates set to rise, the employment market uncertain and the economy still in the doldrums, there is no reasonable expectation that prices will start to rise again in the future.
Against this background, it will be very difficult to get the market moving again. After all, it’s not the first time that new products have been launched in an effort to re-energise the property market. Remember Ray Grehan of Glenkerrin Homes’ interest-free loans at The Grange in Stillorgan? Or the rent-to-buy schemes that enabled prospective home buyers to rent their preferred property before committing to a purchase? And there have also been similar products to Nama’s proposal unleashed on the market.
In 2009, Ulster Bank launched the Secure Step mortgage which offered home buyers a guarantee on 15 per cent of the property price in five years, if prices continue to fall. The guarantee was offered by developers and so was restricted to certain housing developments, but it was withdrawn in April.
This time around however, Nama’s proposal has been welcomed by many as a way of getting the market moving again.
“The concept is good, it’s badly needed,” says Frank Conway, a director with Moneycoach.ie. “It’s someone in power saying that there is a need to address the funding issue.”
The aim of the scheme is clear. According to McDonagh, the main criteria is that it “generates sales of property controlled either by Nama debtors or by receivers, yet provides an incentive to purchasers to invest at current prices in the knowledge that there will be a mechanism in place which will offer them protection against the risk of negative equity in the future”.
While it is still being fine-tuned, it appears that the scheme will offer purchasers a protection against prices falling by up to 20 per cent over a number of years. As the seller, Nama will agree to sell for 80 per cent of the purchase price now, with the possibility of getting the full amount a few years later.
So if, for example, you intend buying a property worth €300,000, you will get a mortgage for €270,000 from either AIB or Bank of Ireland, and will contribute a down payment of €30,000 yourself. However, you will only draw down 80 per cent of the mortgage, ie, €216,000 – during the initial term. Once this period passes, if prices have stayed level, or even increased, you will then have to complete financing for the full amount from your bank.
If, on the other hand, prices continue to fall, and once the review period has passed your house is actually worth less than the amount you paid for it, then Nama will waive this amount.
The scheme is designed to enable Nama offload its properties, and so initially may be restricted to developments under Nama’s control, or of its receivers. This means that it would likely be available only for apartments, given the relative scarcity of houses built during the boom. Apartment complexes in Dublin which are in Nama include Elm Park in Blackrock and The Grange in Stillorgan.
However, according to a Nama spokesman, in principle Nama would look at widening the applicability of the scheme, and perhaps partnering up with other developers/banks.
For the would-be first-time buyer, who is standing on the sidelines of the property market but anxious to make a move and fed up with paying rent, the product has its appeal. After all, who wants to join the thousands of homeowners who are literally stuck in their homes because of negative equity?
Moreover, a significant volume of sales should help put some kind of a floor on the market and give a better indication of just where prices are at.
However, if it is restricted to certain properties it may be less attractive – increased demand for theses properties may artifically push up prices – and it also raises the question of whether someone would not be better off negotiating the discount upfront.
The other issue is whether the Government, through an agency such as Nama, should be doing anything to offer “incentives”, which may be seen to be propping up prices, in a market that not so long ago was a bubble.
Nama doesn’t have much of a choice. At the moment, access to credit is severely constrained, and while it may improve following the – hopefully final – imminent recapitalisation of the remaining banks, Nama still has considerable stock to offload if it is to fulfil its remit of being wound down in seven years.
As Conway points out, despite an increase in interest in buying property – and his firm is seeing a 30-40 per cent jump in applications this year – the funding situation has actually deteriorated. With the banks cherry picking only the best credit bet, first-time buyers, many of whom have been put on rolling contracts or are in uncertain employment, have been particularly badly hit.
So it’s a catch-22. If people can’t get funding – and there aren’t enough cash buyers out there for all of Nama’s stock — then Nama can’t offload its properties, so the only way to dispose of them is to help out on the funding side.
While Nama may end up getting less than it would like for the properties, at least it would get them off its books.
After all for Nama – and therefore the taxpayer – 80 per cent of something is better than 100 per cent of nothing.
Is it just another measure aimed at propping up a market which is in freefall, and should the Government really be intervening in the property market?
Thursday, June 30, 2011
My favourite sign - "Let By" (us of course). Nest, Mitchell St, Clonmel is let!
Hot on the heels of the sale of the Renault garage, Carrigeen, Clonmel, we have let the former Nest Boutique, in Mitchell St, Clonmel.
This 3-storey shop premises incorporates a Ground Floor of 1,400sq ft, Basement of 550sq ft, 1st & 2nd floor of 1,000sq ft each.
It is a double-fronted unit with a huge profile to Mitchell and Abbey St.
Fitting out starts next week.
Former Renault Garage at Carrigeen, Clonmel is Sold!
The Clonmel commercial market continues to recover.
Following our recent lettings in The Ormonde Centre, to DV8 and 6th Sense, we have now finalised a sale of the former Renault Garage at Carrigeen, Clonmel.
Comprising a state-of-the-art 8,000sq ft car showroom and workshop, on a high-profile 1 acre site, close to Tesco on the N24, this is one of the premier commercial locations in South Tipperary.
The property met with many and varied interests. The eventual purchaser will reveal his plans for the property in due course.
Monday, June 20, 2011
Outlet centre may only sell out-of-season clothes
TIM O'BRIEN
THE KILDARE Village outlet centre has been told that selling up-to-the minute fashions is in breach of its planning permission, planning sources have confirmed.
The determination from An Bord Pleanála was sought by rival retailer David Jones, who operates a number of shops at the Whitewater Shopping Centre in Newbridge, Co Kildare.
The board’s decision, taken at a meeting at the end of May, effectively ruled that Kildare Village centre had only planning permission to sell out-of-season clothes at discount rates and that sales of new products and in-season merchandise in the centre “would constitute a change of use”.
The board said the original permission for the outlet centre had been contingent on it not introducing new products which would be in competition with high street locations.
This was in the interest of protecting existing retail cores in towns and villages, in compliance with traffic management and retail planning guidelines.
Kildare Village is home to some of the best-known fashion brands and regularly offers discounts in the order of 60 per cent. Brands include Polo Ralph Lauren, Furla and DKNY, while internationally renowned Irish fashion designer Louise Kennedy has also opened a unit there.
The village is one of a collection of nine such operations across Europe, operated by Value Retail. Founded in 1992, Value Retail has about 900 outlet boutiques featuring leading fashion and lifestyle brands, located close to some of Europe’s capital cities and intended to be destinations in their own right.
The Whitewater Shopping Centre is Ireland’s largest regional shopping centre and is in the centre of Newbridge.
It incorporates more than 70 top stores including Debenhams, Marks Spencer, Zara and HM, as well as well-known high street brands such as Karen Millen, Coast, Tommy Hilfiger and Pepe.
According to planning sources, the determination from the board is not the first time out-of-town shopping centres have been corrected for breaching conditions on the type of goods offered.
However, the sources said enforcement could be problematic, requiring as it would a specialised knowledge of fashion and retail.