Thursday, September 06, 2012
Lars Frisell thought it would be easy to find an apartment to rent in Dublin, the epicentre of western Europe’s biggest real estate crash, after he moved from Sweden to become chief economist at Ireland’s central bank.
Three months later, he’s still looking, joining students, hi-tech professionals, and would-be homebuyers competing for space and pushing up rents in the Irish capital.
"You’d think that there’d be so many apartments and so many houses available," Frisell told a gathering of Irish accountants last week. "There’s not."
The property crash has encouraged people to rent rather than own their properties, lifting the number of households in rented accommodation by 47% in five years, the Central Statistics Office said. That creates a chance for real estate investors to profit from higher rents.
Kennedy-Wilson Holdings wants to own more than a thousand homes in Ireland after purchasing a 210-apartment block close to Google’s European headquarters, said Peter Collins, the Dublin-based managing director of the group’s Europe arm.
Kennedy-Wilson teamed with Canadian insurer Fairfax Financial Holdings to buy the apartments for about €40m in June.
Average rents have fallen about a quarter since the market’s peak, less than the 50% fall in prices. In Dublin and Cork, rents have risen on an annual basis for the last six quarters even as prices fell, according to Daft.ie.
Rents for three-bed properties in Dublin rose 12% to €1,709 a month in the second quarter from a year earlier, while the average rent across all property types rose 1.8%.
Monday, September 10, 2012
Property crash driving rent inflation | Irish Examiner
Monday, September 3, 2012
Residential property prices down 13% on last year - The Irish Times - Fri, Aug 31, 2012 via @elaineedwards
NATIONAL RESIDENTIAL property prices fell by 13.6 per cent in the year to July but rose by 0.2 per cent in the month.
This compares with an annual rate of decline of 14.4 per cent in June and a decline of 12.5 per cent in the 12 months to July of last year.
The slight rise in property prices in the month of July compares with a drop of 1.1 per cent in June and a decline of 0.8 per cent in July 2011, according to the residential property price index published by the Central Statistics Office yesterday.
In Dublin, residential prices fell by 0.3 per cent in July and were 16.6 per cent lower than a year ago.
House prices in the capital were down 0.2 per cent in the month and were 16.7 per cent lower than a year earlier.
Apartment prices were 19.6 per cent lower compared with July 2011.
Residential property prices in the rest of Ireland (excluding Dublin) were up 0.3 per cent in July compared with a drop of 1.3 per cent in July of last year. Prices were 12.1 per cent lower than in that month.
House prices in the capital are now 56 per cent lower than at their highest level in early 2007, while apartment prices are some 63 per cent lower.
Residential property prices in Dublin are 57 per cent lower than at their highest level in February 2007.
In the rest of Ireland, the decline in the price of residential property since that time is 47 per cent, while overall the national index is 50 per cent lower than at its height in 2007.
Davy chief economist Conall Mac Coille said the data reflected transactions in the first half of 2012. New mortgage lending had hit a fresh low of just €974 million, well down on the €1.26 billion in the same period last year.
Prices reflected a “dysfunctional market”, with a very low level of transactions, particularly in rural areas.
Davy said anecdotal evidence suggested cash purchases accounted for up to 40 per cent of transactions, given weak lending, and that a lack of supply had supported prices in the Dublin area.
The firm noted census data that showed the number of households with a mortgage and in unemployment had increased from 14,757 in 2006 to 50,792 in 2011.
“We retain our view that repossessions will have to rise and, coupled with weak mortgage lending and a slow recovery in the economy, house prices will fall further.”
Merrion Economics said it did not see a major improvement in the housing market until there was clear evidence that Ireland’s jobless rate had peaked and was on a sustained downward trend.
“Furthermore, the uncertainty of how a proposed property tax will be calculated is also likely to weigh negatively on house sales/ prices in the run-up to December’s budget.”
KBC chief economist Austin Hughes said it was far too early to make any definitive judgment, but the broad picture emerging was one of a “tentative stabilisation”.
“There is a consistent message across a range of domestic economic indicators that things have stopped getting worse, though that doesn’t mean there will be a dramatic turnaround.”
Property website MyHome.ie, which is owned by The Irish Times, said it was “a little surprised” at the figures, adding that a cautious approach should be adopted when analysing them.
“The new property register, which will record actual transaction prices, is due to go live next month and that is a very welcome development,” said Myhome.iemanaging director Angela Keegan.
Aoife Brennan, head of research at Lisney, said she was not surprised at a monthly decrease in the Dublin index.
For some time, the agency had believed the CSO index was “lagging the market” by about six months.
“Consequently, we believe that the CSO index is under-playing the fall in residential prices.”
PRSA database will end house price guessing - The Irish Times - Thu, Aug 30, 2012
WANT TO KNOW how much the jumped-up Smiths paid for the semi on the same street as yours? Next month the new database of house prices will allow you to find out what your neighbour forked out for their house. This will be done by typing an address into the State-run database to be operated by the Property Services Regulatory Authority, the CEO of which is Tom Lynch.
With solicitors obliged to complete conveyancing promptly for stamp duty purposes, the registrations will be updated on a constant basis. From then on interested parties will no longer have to guess the selling price or try and decipher what precisely is meant by “in the region of” or “close to the asking price”.
The shame is that Fianna Fáil didn’t deliver on its pledge to set up the database when the market was hopping. In 2007 and 2008, house sales were around 400,000 per annum; by 2008 they had fallen to about half that number. They subsequently dropped to around 130,000 and when the PRSA launches the new service in a few weeks it is expected to show that between 80,000 and 100,000 houses were sold from the starting date in January, 2010 to last month.
Dire level of home loans in distress becomes all too clear - The Irish Times - Wed, Aug 29, 2012
THE BOTTOM LINE: THE FULL extent of the distress in Irish home loans was laid bare in the latest set of figures published last week by the Central Bank, including for the first time mortgages that slipped into early arrears.
All the banks, with the exception of Permanent TSB, once the country’s biggest mortgage lender, have individually reported results for the first half of the year (Permanent TSB publishes its figures today). If you line the figures up, a clear picture emerges of just which lenders have the most distressed owner-occupier mortgage books.
The Central Bank’s figures to June show that 10.9 per cent, or 83,251 out of 761,000, of Irish home loans were in arrears. By value, the equivalent figure was 14.7 per cent or €16.5 billion of total mortgages of €112 billion.
All told, 168,000 mortgages were in some form of financial difficulty at the half year.
Residential mortgages at the former Irish Nationwide Building Society, now managed by Anglo Irish Bank – sorry, Irish Bank Resolution Corporation – win by a country mile the title of Ireland’s worst home loans.
Described by IBRC chief Mike Aynsley as “Ireland’s answer to subprime”, Irish Nationwide’s €1.4 billion owner-occupier mortgage book is performing horrendously. About 44 per per cent of this book was either in arrears of at least 90 days or impaired.
The best-performing book is at National Irish Bank where the bank’s low-risk policy of avoiding high loan-to-value mortgages left 90-day arrears at 3.5 per cent by number and 5.5 per cent by value of its €2.6 billion owner-occupier Irish mortgages in June.
Also, at the sunnier end of a grim scale are Bank of Ireland and AIB. The country’s two biggest banks – which are respectively 15 per cent and 99.8 per cent owned by the State – have better-performing home loans.
Bank of Ireland’s arrears of 90 days or more stood at 7 per cent of its €21 billion owner-occupier Irish mortgages (or 9.2 per cent by value) in June, while AIB’s arrears of 90 days amounted to 9.4 per cent of the bank’s €32 billion owner-occupier Irish mortgages (or 12.9 per cent by value).
These are below the average arrears figures for the industry at the half-year published by the Central Bank. Given that owner-occupier mortgages at the two banks account for just under half of the €112 billion checked by the Central Bank, this implies that arrears levels across the other lenders are far worse than both their figures and the industry average.
Of the other big home lenders, Ulster Bank and Permanent TSB as the two fiercest competitors in the mortgage market during the boom years – and Bank of Scotland (Ireland) to a lesser extent – have far greater levels of stress in their mortgage books.
Royal Bank of Scotland-owned Ulster Bank uses a classification that it calls “risk elements in lending” (reil) to describe impaired loans and loans in arrears of at least 90 days.
In the UK bank’s half-year results, RBS put 13.4 per cent (by value) of Ulster Bank’s £19 billion (€24 billion) mortgage book in the reil bucket. The bank does not, however, break out figures between owner-occupier and buy-to-let mortgages and the £19 billion figure includes mortgages in Northern Ireland.
Ulster Bank’s 90-day arrears are said to be below the Central Bank’s average but the mortgages advanced by subsidiary First Active, an aggressive lender of 100 per cent mortgages during the go-go years of the boom, pushes the arrears over the Central Bank’s average figure for the industry. (First Active was subsumed into Ulster Bank in 2009.)
Arrears at Belgian-owned KBC also rank above average. Almost 16 per cent of its €9 billion home loans was non-performing, or in arrears of 90 days or more, on June 30th.
Lloyds disclosed in the half-year results that 22 per cent of €8 billion in mortgages at the former Bank of Scotland (Ireland) were impaired, but the UK bank has not provided any breakdown on the level of 90-day arrears.
That leaves Permanent TSB – and more will be revealed today – but arrears on the State-controlled bank’s Irish home loan book, which totalled €18.7 billion of loans last December at the half-year, are said to be well above the Central Bank’s industry average.
Permanent TSB was until this year an afterthought when it came to the efforts to repair the banks. Given that the bank is almost fully State owned, one of the worst-performing mortgage lenders and the biggest Irish banking problem yet to be solved, the forensic oversight to be taken of its restructuring by new management – as set out in the latest set of EU-International Monetary Find targets published last Friday – is long overdue.
It will also be the biggest beneficiary of any EU-approved deal agreed this autumn to carve out soured mortgages – the third wave of asset purges from the Irish banks after the transfers to the National Asset Management Agency and to “non-core” units of the banks.
This deal aside, with the extent of problem home loans now clearer, the next task for the banks is to work them out, loan-by-loan.
Burlington Hotel on market for one-quarter of 2007 price - The Irish Times - Wed, Aug 29, 2012
DUBLIN’S BURLINGTON Hotel, bought by property developer Bernard McNamara at the peak of the property boom in 2007 for €288 million, is back on the market with a guide price of €65-€75 million.
Agent CBRE Hotels is handling the sale on the instructions of Paul McCann of Grant Thornton, who was appointed receiver by Bank of Scotland (Ireland). The Lloyds-owned bank is using loans specialist Certus to run down its banking operation in the Republic.
Mr McNamara has been one of the biggest casualties of the property crash with overall debts of €1.5 billion.
The Burlington is the second largest hotel in Ireland after Citywest in Co Dublin, with 501 bedrooms and extensive conference and banqueting facilities on a 3.8-acre site on the city’s south side.
The hotel is understood to have made profits of between €5 million and €6 million last year when the room occupancy rate was running at 70-75 per cent. A sizeable proportion of the profits come from the extensive banqueting hall, which can accommodate 1,500 guests.
Paul Collins, of CBRE Hotels, said yesterday there had been a remarkable recovery in the Dublin hotel market, and city hotels were now among the best-performing in Europe.
After buying the Burlington, Mr McNamara planned to boost the overall value of the site to €1 billion by developing a mainly office and retail complex extending to 33,300sq m. Shortly afterwards the property market bombed.
Hotel experts expect the Burlington will be of interest to the investment partners of several international hotel chains such as the Sheraton, Hilton, Hyatt, Marriott and Crowne Plaza. The major hotel groups seldom acquire hotels, preferring to manage them under their own brands for investment partners.
The €65-€75 million being sought for the Burlington equates to a valuation of about €130,000 to €150,000 per room. In the recent sale of the Morrison Hotel on Dublin’s Ormond Quay to a wealthy Russian businesswoman for €22 million, each of the 138 bedrooms cost just over €159,000.
One of the lowest valuations in recent years – €76,142 per room – was paid for the Four Seasons Hotel in Ballsbridge in June 2011. The sale to a private UK property company, London and Regional, for €15 million – a quarter of what the hotel cost to develop – reflected the fact that the then unprofitable Four Seasons had a long-term management agreement with the international company and the hotel pays an annual ground rent of €700,000 to the RDS.