Latest figures suggest a 75% fall in land values

Patrick Koucheravy, Economist, CBRE Ireland.

5th Oct 2010

Patrick Koucheravy, Economist at CBRE Ireland, commenting on the latest Daft research on the Irish property market.

In 1961, the poet Robert Frost was reportedly so blinded by the glare of the sun at JFK's inauguration that instead of reading his prepared poem for the occasion, he recited from memory The Gift Outright, sixteen lines on the relationship between the people of the United States and the land they were destined to inhabit for better or worse. It begins, "The land was ours before we were the land's." While the relationship between the people and the land looms large in the national psyches of both the US and Ireland, it is still easy for us to take the land for granted. In the property market, recent discussion on the impact of the bursting of the Irish credit and property bubbles has been primarily concentrated on house prices with little reference to the knock-on impact on land values.

Reporting on changes in the Irish property market in recent years has focussed primarily on the values of buildings, both residential and commercial. But considering the establishment of NAMA - with its estimated €6 billion in loans associated with land in Tranches 1 & 2 alone and more to come - and the scale of the problems in our banking system that originate with loans on land transactions, the connection between the value of homes and the value of land has never been more relevant and important to understand.

Due to a lack of large development land transactions since the onset of the recession, it is hard to pin down an overall average land value per acre in Ireland. We do know, however, that the huge drop in land values that we've seen over the past two years comes as a result of not only falling house and apartment prices but also three further factors: lower residential densities demanded in the market, an oversupply of zoned land in many local authority areas and a lack of funding for land purchases. The Daft Report has been instrumental in estimating changing trends in the former. As of September 2010, asking prices have fallen by 40% from peak according to the Daft Report, with a fall of 3% over the three months of third quarter.

As far as residential densities are concerned, as prices have fallen across the board for houses and apartments for sale, the buyers that remain in the market are looking to get more for less; more bedrooms, more space - in essence, lower densities than would have prevailed during the boom years. Additionally, developers are not willing to take the risk associated with building high-density developments; higher density means more units to sell and also requires a longer turnaround than individual homes. In 2007, a suburban town in the greater Dublin area would have seen planning for a density of upwards of 25 residential units an acre (higher density was seen as a solution to a perceived housing shortage). In the current market a density of 8 to 12 units per acre is more realistic. The lack of funding to facilitate transactions exerts further downward pressure on prices.

We can get a sense of the changes in land values by using some simple arithmetic. For example: where before a developer may have been able to expect to sell 25 units at an average of €370,000 each, a total of €9.25 million in revenue per acre, now the same developer would be able to only expect to build around 12 units per acre at an average of €195,000, total revenue of €2.34 million. Just based on these average asking prices from Daft and falling densities, we're looking at a drop in revenue per acre of 75%. Not only does this figure ignore VAT, building costs and a margin allowing for developer profit and risk, it is based on Daft asking prices and not the final sale price of the house or apartment. If buyers are still negotiating sellers down from asking prices, then the decline in land values is even more staggering. So, although house prices have fallen by 40% from peak according to the Daft Report and commercial property prices in Ireland have declined by up to 60% in the most recent cycle, the knock-on impact for land values is even more pronounced.

As previous Daft Report guest bloggers and we at CB Richard Ellis have frequently stated, a national house price database is essential at this stage. So too is a true accounting of the number of vacant residential units in the country, which we are set to receive from the Department of the Environment in the coming weeks. With this information, not only could we engage in more robust analysis of the residential property market, but we could also assess the impact that house price movements are actually having on land values.

While funding is limited for all property investments these days, there is almost no appetite for funding of land deals at the banks; the few transactions that are occurring are primarily cash deals at huge reductions from prices that might have been achieved just three years ago. Every sector of the property market is different, but it is extremely unlikely that land values will improve until we see improvements in rents and prices in other market sectors, which of course rely on the macroeconomic situation, specifically job creation and business expansion. The next cycle will be no different in that respect.

In no previous property cycle in history have we seen land values rise until it again becomes profitable to build. Rents must rise, prices must rise and only then will banks lend to land transactions, leading to a recovery in land values. Land prices followed property prices down. Land will eventually follow them up as well.


HIGHLIGHTS:

Stock of Properties
Asking Prices, Residential Sales

Stock and Flow of Properties
Stock and Flow of Properties


SNAPSHOT:

Average asking prices across Ireland in Q2 2010
Asking Prices in Q3, 2010

Discuss This Article

  • Good info

    Posted By: Pharmg185 Date: Tuesday October 5, 2010 @01:04AM

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  • Re: The Daft House Price Report Q3 2010

    Posted By: NAMAwinelake Date: Tuesday October 5, 2010 @07:34AM

    "So too is a true accounting of the number of vacant residential units in the country, which we are set to receive from the Department of the Environment in the coming weeks."

    No you're not. What you will receive (late) from the Planning Minister is a partial picture of some estates. It's likely to conclude there are 100,000 vacant units compared with 250-350,000 units identified in other studies.

    According to Prof Rob Kitchin at the National University of Ireland at Maynooth

    "It only has reference to post-April 2007 housing estates where there is vacancy above 10%. It therefore a) excludes estates where vacancy is below 10%, b) excludes unoccupied/unfinished one-off housing, c) it assumes that estates started prior to April 2007 are both finished and have occupancy levels above 90%. There are lots of houses in pre-2007 estates that are empty; the same with one-offs...In other words, its a partial survey and well need to wait for census 2011 for a fuller picture"

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Anonymous Poster Date: Tuesday October 5, 2010 @11:10AM

    Very informative article. Congratulations to daft. I am a little perplexed with myhome.ie report. It would appear to be to be a little out of a skew. Their research methodology is not fairly weighted against all the relevant factors

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Carl Date: Tuesday October 5, 2010 @07:47PM

    The Gov said it could not introduce a property tax - due to the lack of a national house price database.

    And you want one ? Or both ?

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  • Re: The Daft House Price Report Q3 2010

    Posted By: pauline dugan Date: Tuesday October 5, 2010 @08:44PM

    I agree it's a little 0ut of skew, whatever that means. The figures were they rentals of townhouses or single family homes?. I'm a widow born and raised in Dalkey, and have plenty of sibling still living there. I own a house with a mortgage in Clearwater , Florida and would love to sell it and return home. But I think we are worse off here than Ireland. I was home in May 2010 and couldn't believe the prices of real estate. My mortgage is underwater and there's no way I'm going to give it away so I 'm stuck here until such a time as the econmy picks up if ever.
    But I like to hear about whats going on?

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Someone who really knows Economics Date: Wednesday October 6, 2010 @01:59AM

    How long until they bring in a Debt Forgiveness Program for the People of Ireland who were fooled and very painfully ripped off into buying in the last 5 years, thanks to the banks and to the governmement?

    If we are going to see the country recover from this recession, the government has no option but to Write Off 50% of the amount owed by people on their mortgages taken in the last 5 years only.
    Last number showed 145billion owed on mortgages, so 50% hair cut means prob 60 or 70 billion Euro, almost half of the anual GNP of the country in order to have people spending money in the economy again.

    Yes it looks costly, but so does the 50billion that the banks are getting from us without any intentions of even giving some back to the economy by lending to us again.

    At least those 75billion that the goverment would write off would come back to the economy, because people will have more money to spend as their monthly payments would reduce by half, and in return tax receipts would increase, further reducing the fiscal deficit and creating jobs.

    Its a once off costly measure, but one that will really pay off in the short term, instead of the 10 years of none or little growth that we face otherwise

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  • Re: The Daft House Price Report Q3 2010

    Posted By: dave Date: Saturday October 9, 2010 @01:08AM

    forget it. Im not paying for your mortgage to be written off. I dont care if it takes you the rest of your life to pay down your debt. Would you have given me a 'once off payment' had the price of your house continued to rise? And yet you now expect me to pay higher taxes so that your mortgage can take a 60% haircut! Im an ordinary paye tax payer who didnt lose his mind when banks were offering money left, right and centre but instead decided to rent and to save money, something your kind would never dream of doing. Borrow borrow borrow from tomorrow. Thats all you people ever did. and now you want to worm your way out of it. Not a chance. Like I said, you can go in and out of your job and pay down your debt until the entire bill is paid.

    Yours etc,

    Dave

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  • Re: The Daft House Price Report Q3 2010

    Posted By: paul the realist Date: Saturday October 9, 2010 @12:36PM

    No chance having debt forgiveness, maybe some chance of debt for equity swap, so basically the bank owns say 50 percent and the owner owns the other 50 percent. where to people think all this magical money for debt forgiveness will come from?, it would have to be paid by the tax payer.

    Nobody forced people to get massive mortgages, people bought into the Bertie dream and its now turned into a nightmare, well thats life, you live by your own decisions, grow up and take responsiblity for your actions.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Michael Date: Wednesday October 13, 2010 @01:12PM

    Sound very self serving without much economic analysis. Take responsibility for your debts and work to pay them back. Someone who knows economics should recognise the moral hazard of individual debt forgiveness.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Sean Date: Wednesday November 3, 2010 @12:00AM

    If someone INVESTED in a HOUSE ( property ) 5 years ago, turns out it was a bad investment. If someone BOUGHT a HOME in the same period they should be better-off DEFLATION.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Michael C Date: Saturday December 18, 2010 @01:31AM

    Everyone who bought and sold property, did so at agreed prices, and buyers signed on the dotted line when getting a mortgage. The Irish were much touted as being successful due to a young educated workforce, therefore how can you say you were fooled into paying such high prices. Basic arithmetic showed that house prices were stupidly high. I put up with renting for years in Dublin and refused to buy into the hype, as did many of my friends. Eventually most of us called it a day in 2006 and left the country.
    Some bought out of desperation at ever increasing prices and I genuinely fell sorry for these people, but an equal number of people bought into the get rich quick deal. My boss constantly told me how he earned more each month from his 2nd house appreciating than from his job!
    Remember for every loser there was a winner. Someone sold the land that another bought. (Anyone remember the Ballsbridge Jury hotel sisters walking away with a couple hundred mil.) That's called capitalism. The wise won big and the foolish lost a lot.
    If you had made money you wouldn't offer it back, so it's ridiculous to expect other
    taxpayers to pay off your mistake.
    Hand in the keys to the bank and leave the country! Else hope for high inflation to help eat away at the debt!

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Patrick Koucheravy Date: Wednesday October 6, 2010 @12:29PM

    @NAMAWineLake

    Good point, well made. You have a fantastic blog, by the way.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Redsled Date: Thursday October 7, 2010 @10:53AM

    Debt forgiveness is not an option. Nobody forced people to take out ridiculously high mortgages that they knew they would not be able to service. Are you seriously asking citizens to bail out the gambling debts of their neighbours? I don't think so.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Brendan Date: Thursday October 7, 2010 @12:58PM

    Debt forgiveness = Money back in pockets of people to employ/spend/buy this would give the economy a huge shot in the arm. Its a great thing for the ordinary person, But because its for the ordinary person I dont think it will happen.

    This is not a country for the ordinary person, we are nothing but a target to hit when ever the goverment needs money.

    Debt forgiveness would free so many of our people from the huge mental stress they are under, this would help the buyers their children and even grandchildren.
    All our children.

    It would help everyone.

    Do our boys dont have the balls to do it ? I dont think so.

    And they dont have the IQ for it either!

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  • Re: The Daft House Price Report Q3 2010

    Posted By: someone who really knows economics Date: Thursday October 7, 2010 @08:56PM

    By the way, those 60 or 70 billion could be spread over the term of the mortgages, 25-30 years, so that would really only cost the exchequer around 2.5 billion a year which is nothing compared with what goes into the ungratefull banks every year.

    The people would apreciate it by spending it in the economy again, giving it all back to the government in the form of taxes reducing the deficit by a large amount.

    As to those who would say oh thats not fair cos i didnt buy in the boom years, whats not fair is the banks getting bailed out but not the people, this will in deed benefit you in the way that you will not loose your job in the next few months nor have to emigrate cos more people would support the existing jobs and economy by spending much more money in it.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Anonymous Poster Date: Monday October 25, 2010 @08:51PM

    Grow up, the bill has to be paid, we can't debase our way out of this mess cos of the euro and you can't expect people who couldn't afford to borrow in the first place to bail higher earning heavy borrowers out. The disgusting inequality of what you are proposing seems to be entirely lost on you. People living in two bedroom semi-detached dereliction would be subsidizing people in 3 and 4 bedroom luxury homes? Any proposed 'debt-relief' would necessitate repossession which isn't realistic!

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Rob Kitchin Date: Thursday October 7, 2010 @11:44PM

    As NAMAwinelake notes, the new survey by the DEHLG is of unfinished estates built since 2007, not vacancy (it was not designed to measure overall vacancy but to get a handle of the most problematic part of the housing market - unfinished/ghost estates). It should give an indication of the housing pipeline, in the sense that it'll tell us how many of the houses in the unfinished estates are unsold and how many are under-construction. That, of course, is not the same as potential oversupply, which the DEHLG itself reports is 122-147K above a 6% base rate. Census 2011 will give us a good picture of vacancy.

    Where we have a real gap in our knowledge at the moment is with respect to vacancy/oversupply with respect to retail, offices and industrial property and, as you note, development land (although Frank Knight report agricultural land values). HOK Savills reported in August that 23% of offices in Dublin, some 784,000 sqm is presently unoccupied, we have no idea about the rest of the country. CBRE report on retail space, as you know, but not vacancy - given that retail park and shopping centre space doubled from 2005 to 2010 to over 3m sqm, it's likely that a sizeable proportion is still awaiting occupation. This is all going to affect land prices because until supply and demand of existing residential and commerical properties align the demand for land is going to be in the doldrums.

    Your estimate of a 75% drop in land value seems about right, and maybe more in some areas. It should be also noted that there is a geography to land prices and it'll hold up more in and around the cities than it will in rural areas; and it will also come back more quickly in and around large urban centres. In many rural areas it will revert to agricultural prices, especially as the DEHLG gets local authorities to dezone the huge excesses of land zoned around the country (Ciaran Cuffe has said he intends to dezone 70% of land over the next 6 years).

    We not only need a house price index, we need much better housing and land data at local scales, collected and outputted in a timely fashion.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Dan Date: Friday October 8, 2010 @11:40AM

    Taking results of surveys on the country as a whole entity is ludicrous. What is required is a much more localised examination of the figures to include local population figures and the ratios between vacancy/occupation plus the availability of services in those areas. ie schools,third level education, hospitals, retail, public transport, sports and leisure. Then and only then will we get a true picture of the sustainability and viability of housing needs/wants into the future. Remember the services we have now are the only ones we will have into the foreseable future. Nothing more will be built! The same goes for housing, what you see now is it. With our present rigid labour costs in the construction industry added to the draconian levies/charges part v etc, it means that contruction is totally uneconomic.It will be for a long time. And for those renting! get used to it, you will be doing so for a long time as housing in desirable areas fills up and demand for these desirable areas rises (and it is) owners will be less likely to sell. Only those forced to sell will. Contrary to popular belief not every homeowner in the country is in negative equity, not everybody bought at the height, As Colm Rapple, A highly regarded commentator, stated on radio, 45% of houses have no Mortgage at all, Over 25% are paying less 500e/month with another 10% in local authority/sheltered housing. The future is not all bleak.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Mike Date: Sunday October 10, 2010 @01:48AM

    Ia there anyway to buy a house in ireland for old folks like us that have not a lot of money, will ing t o live anywhere in the country of Ireland, we are in the same position here with a morgage as high as the price we paid 22 yesrs ago, outr big worry now is health and no family here in Usa, due to the tragic loss of our sone fifteen years ago.
    Any and all replies would be welcome.
    have worked on homes all my life and /thankk god am still able to do same, sadly no one can afford workers now.
    My age is 67, would be happ to fininsh inside of home but would need to be able to pay for it.
    thank you for reading

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Mick Date: Friday October 29, 2010 @12:54PM

    Mike,

    Try the rural resettlement scheme. Do a google. They could help you.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Noel Date: Sunday October 10, 2010 @01:41PM

    This report must be flawed. A three bedroom house is less expensive than a two bedroom house in Galway city ?

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Someone who really knows economics Date: Monday October 11, 2010 @04:37PM

    Paul, Dave and Redsled, i too was lucky enough not to have bought in the boom years, i am simply looking at this in a national perspective and i prefer to see my business return to normal sooner rather than in 10 years time.

    Your selfish views on a debt forgiveness program just show that many wouldnt be in favour of it purely because they couldnt stand to see the next door neighbour breath fresh air again.

    However what your narrow minds can not forsee is that this would be in your best interest as well, i didnt see you protest against the 50billion that the banks will cost with little or no benefit to the real economy.

    Yet you opose to an insignificant 2.5billion anual mortgage subsidy from the state which would give a huge boost to the real economy and would help to secure your jobs and possibly those of your family members.

    Iceland is already looking at this by the way and i believe that it will go forward there, why not do the same year and save the country from a lost decade?

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Paul the realist Date: Tuesday October 12, 2010 @01:23PM

    I said debt for equicty swap would acceptable, that way there mortgage bill gets cut in half (as you wish) if then sign over 50 percent to the bank, so they own half and the bank owns the other half, so they can "breath fresh air again".
    People who bought during the boom bought thinking they could make money on there house in the long run, at someone elses expense, simple, it works both ways, they did not give a rats for the last 10 years while there house prices went through the roof, they where only too happy to take the money. Now things have turned full circle and they are upset, well thats the deal they signed up for, who knows in 10 years they might break even, best of luck to them.

    And just for your information I wrote a strongly worded letter to my TD on NAMA and the rest, just as I have here.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Anonymous Poster Date: Tuesday October 26, 2010 @10:29PM

    What? we should pay more tax, so 'they' can buy more imported goods? ...to kickstart our economy? Your take on debt forgiveness is not economics, its the redistribution of losses without the redistribution of assets....and does not represent a path to economic growth but a true case of beggar thy neighbour. We need wealth creation; not a process of foreign borrowing where sme's take a cut of the borrowed money (further weakening the banks' balance sheet with phantom deposits via the multiplier) while the bulk of it gets shipped overseas unrepaid.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: PotatoeMan Date: Thursday October 14, 2010 @09:19AM

    Paul the realist is correct it is a debt equity swap and not as most people interpreted it from the media reports as a write down.
    The notion that house prices will rise because more are not being built is flawed. No one is buying due to high unemployment, emigration and the realisation that house prices ten times the average annual salary are unsustainable (It should be 2-4 max). Don't forget we have a small population for the size of the country.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Redsled Date: Sunday October 17, 2010 @08:27PM

    There are, no doubt, plenty of companies willing to do a debt equity swap with house-holders, but this is a commercial decision and should not involve the state. The state simply cannot afford to bail out house-holders. Any involvement by the state would distort the market for far longer and slow down any hope of recovery since it would have a negative effect on confidence. You would know that if you really did "know something about economics".

    For the record, we cannot afford the unlimited bank bail-out. I would go further, NAMA should never have been pushed through by way of Statutory Instrument, it should only have been passed (or not) by way of primary legislation.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: A comment Date: Monday October 18, 2010 @01:52PM

    Good report.
    Do you think that the people that made poor property decisions in the boom would not make them again if they had their debts forgiven, maybe in other ways? A fair chunk of Irish people are not good with handling disposable income, and never will be, they buy stuff they cannot afford without thinking about tomorrow. We forget that since we live in a low tax economy we have to make personal provisions for tomorrow, because the government certainly cannot. I suppose its a result of having never had much money before 1997.

    Many people that are now in trouble are as a result of genuine circumstances. Many people that now find themselves in trouble are those that deliberately lied about their earnings to secure a bigger mortgage. Lies always come back to bite you on the ass. Will those lessons be learned? I think not.

    However if people can continue to service their mortgage as best they can, in 2-3 years time the market will have bottomed out and *slowly* start to grow again, albeit at a very low rate, 1-2% per annum. There will come a time when (mortgage outstanding=property value) and the negative equity trap will be escapable. Banks could capitalise on this and allow good customers to move house bringing their negative equity with them, keeping in mind their ability to repay. This will get the market moving again, however slowly.

    Property value growth will happen in Dublin and high employment areas first, it may happen extremely slowly in places like of Letrim. In my opinion, savvy investors will do very well in Dublin picking up property at prices that will appear a steal five years down the line. Old reliables like Ranelagh, Rathmines etc. will be locations where rental income can be banked upon. Mark my words.

    Anyhow my point is, things will get better, just hold on....

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Dan Date: Tuesday October 19, 2010 @12:26PM

    Could`nt agree more, good accomodation in good areas will always win out. Patience allied to some hard work and honesty will get most people through this phase.
    The over use of the word `value` when refering to property prices is quite misleading. Price is price, value is relative, comparing past `value` to todays price is doing nobody any favours. Put in a nutshell, value and price have two totally different meanings

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  • Re: The Daft House Price Report Q3 2010

    Posted By: RAYMOND Date: Wednesday October 20, 2010 @06:12AM

    Did anybody see the the new Cowen report. The country is going down the tubes. Good bye Ireland ,welcome back poverty.

    Raymond

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Someone who really knows economics Date: Wednesday October 20, 2010 @10:22PM

    Redsled, how would a mortgage forgiveness or subsidy for 2.5bn a year for 30 years distort the housing market? Isn't a 3 or 4 year 50bn bank bail out not more distorting to everybody?

    Please explain me cos im not that smart?

    The rest of the country is now able to buy houses for nothing, the subsidy above mencioned would not distort the market at all and is virtually insignificant to the taxpayer, with huge benefits in return.

    It will actually revitalize the house market, people will be able to trade up or down and move homes at current prices if they wish, because the negative equity part of the loan will be slowly wipped out by the subsidy.

    Stop talking nonsense, it is possible to return to growth we just need ideas like these to go ahead asap

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Redsled Date: Monday October 25, 2010 @10:19AM

    Hi There,

    No problem, let me explain it simply for you.

    The problem with a blanket debt forgiveness is that it provides a disincentive to people to pay off their mortgage. That in turn saddles somebody, ultimately the taxpayer with those debts. There will be no certainty in the market so prices will not find their equilibrium. Saddling taxpayers with this amount of debt will slow down, economic activity or stop it altogether.

    Please remember, negative equity is only a bad thing if you bought your property as an investment. If you bought it as a home, prices will recover in time, but you will have to service your loan. If, on the other hand, you bought as an investment, that was a risk you took and that is just the nature of risky investments.

    To suggest that offering blanket forgiveness would help economic activity is based on no fact whatsoever and reminds me of the classic "soft landing" predictions so popular a couple of years back. This is clutching at straws and simply will not happen. The only way out is to create wealth in the country by producing more goods that people abroad value. Producing houses is not an export and never was. It was a circular argument, building houses to rent to migrant workers who were building the houses.

    Hopefully that clears it up for you.

    Redsled

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Peter Paul Date: Thursday October 28, 2010 @07:31PM

    Keep in mind also that any debt forgiveness would artificially maintain house prices at their unsustainable high levels of the previous few years. That's nice if you're trading sideways, selling one house to buy another, but completely locks off the housing market for first buyers (young people starting on one or two modest salaries) as well as making Irish homes unattractive purchases for foreigners (whether retirees wanting to return to the 'ould sod', independent professionals looking for a secure and comfortable home base, or the second-home market).
    Market distortion is bad. It's bad when overheated market and cheap credit distorts it, and it's bad to forgive conscious bad decisions. Two wrongs don't make a right.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: NO1FAN Date: Tuesday November 2, 2010 @04:12PM

    I'd be very interested to see the figures for the past four weeks, the next four weeks etc. I know it's a traditionally slow time for house sales, but any estate agent selling a house in current climate, has made it in their profession! The expected massive drops didn't really happen yet, however, I do find that the time seems to be coming around again when you can almost name your price if you've got money in the bank or have finance approved. Not quite, but in my recent experience, the scenario that the you're in a great position being a cash buyer didn't really occur in Dublin as many had predicted. I do believe this has been the case for over a year, outside dublin where you take the price offered or potentially end up waiting a year for another buyer to come along, and probably offer a big chunk less than the earlier offer. With the budget looming, between pay cuts and tax hikes along with more social charges, people's paying back power will be drastically reduced. I believe also that banks will be forced to stick more rigidly to the old formula regarding a loan being a maximum of about two and a half times yearly salary. I can see prices returning to 2000 levels before activity in the market picks up. The banks will level out their earnings, despite lending substantially smaller amounts, by steadily increasing their interest rates and charges. Those who don't want to believe this is true- don't think of this as a collapse, rather it's a correction in the market. It was foreseen by the rest of Europe who could not understand the logic of Ireland's house prices. Soon we'll be back to normal, not sure how recent home buyers will be helped out, but I guess, a fair way is to go the american route- if you hand back the keys, that's it- no more mortgage- and that's the way we can all move on.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: PC Date: Monday November 8, 2010 @10:36AM

    "The rest of the country is now able to buy houses for nothing" - incorrect
    "stick more rigidly to the old formula regarding a loan being a maximum of about two and a half times yearly salary " - correct
    House prices are still inflated.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: NO1FAN Date: Monday November 8, 2010 @12:23PM

    Interesting piece in today's Irish Times. (8th Dec 2010) morgan kelly has what I think is an in.depth look at the overall picture, and probably for the first time spelt out linking several factors in the current crisis, one of those factors being the housing market and a prediction. I cannot understand why such a piece has not been written before. It makes perfect sense and applies logic to the current situation in a seemingly unbiased way.
    It spells bad news for mortgage holders who are currently struggling, and shows the domino effect which is to befall the housing market. It will be cruel on many people, but it should be a part of our history which should not be repeated. We are very well on the way to properties selling for a quarter of their peak prices. Don't forget, it's not too long ago when this was their value- approx 15years ago. As the country get's its head out of the sand, interest rates will increase to fund the banks' recoveries. Morgan Kelly anticipates cash sales in housing market, which is something I hadn't anticipated, as the banks' abilities to lend are greatly curtailed.
    So we are faced with the same dilemma. Do we sell or wait. So far, the answer has proven itself to be 'sell'. As prices have been steadily trickling away for the past year, despite some people's views. The only people predicting that prices will steady or rise, are those who have the most at stake. We all wish we'd had a crystal ball 3 years ago, but the next best thing is to apply logic and examine all the available evidence. People should start doing what's best for the situation.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: LR Date: Monday November 8, 2010 @12:43PM

    As much as I'd like debt forgiveness, its never going to happen, and why should others have to bail me out? I've a crappy apartment, which was all I could afford, now its fairly worthless, but life goes on. It was a bad decision and I've to take it on the chin. The priority with whatever money is available to the government should be job creation.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Twoflower Date: Friday November 12, 2010 @12:05AM

    To the person that posted

    "Re: The Daft House Price Report Q3 2010 Posted By: Someone who really knows Economics Date: Wednesday October 6, 2010 @01:59AM"

    His question was: "How long until they bring in a Debt Forgiveness Program for the People of Ireland who were fooled and very painfully ripped off into buying in the last 5 years, thanks to the banks and to the government?"

    -----------------------------------------------------------------------

    I say that it's NO, it is NOT the banks and NOT the government. It was all the Irish people that screwed themselves, their family, their neighborers, their country man...everyone tried screwing everyone for a buck and no one cared and no one cared to pay those prices at the time.

    So SHAME ON THE IRISH PEOPLE, you deserve our own mess, live with it, stop wining like the British and pointing fingers at every one but yourselves that fuel the whole mess and rather make plans to go forward at get systems and procedures in place and for God sake please stop wasting more money on useless reports!!

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  • Re: The Daft House Price Report Q3 2010

    Posted By: NO1FAN Date: Saturday November 13, 2010 @04:55PM

    i think any mention of debt forgiveness should be spelt out. anyone listening to the proposal must think all their christmases have come at once. my guess is that this will never happen. the closest thing in relation to debt forgiveness anyone can expect, will be after having surrendered the keys to a property on which the mortgage has been defaulted, then perhaps the person's affairs will be looked into and i'd imagine it may be decided that they will be unable to pay the balance outstanding.

    the idea of debt forgiveness where someone is in a flash house with 400k still oustanding on the mortgage, having their slate wiped clean, is just too much for a society to stomach .

    look at the thousands who have suffered the misery of a two hour commute each way to and from work. this was done, not to live in the country, but because people looked at the figures realistically and could see they could not afford a house in dublin.

    if debt forgiveness is brought in, then it's a kick in the teeth for all of those who've suffered the misery, while those living for today, have enjoyed their flash homes, fully fitted, top of the range kitchens, widescreen tv, matching bmw's in the drive......

    we've already seen enough misery and unfairness. i certainly don't expect to pay for someone's flash lifestyle, having respected money and credit, after growing up in the 70's.

    the playstation generation has been brought back to earth. the giant pyramid scheme called the celtic tiger has been revealed as a scam. hopefully ireland will learn from this. we may return to our humble origins, and visitors to this country will once again see the ireland of the past. poor maybe, but welcoming and christian in our behaviour (despite perhaps not wanting to pay for everyone's widescreens).

    roll on 2011. i really don't think any of us know what's gonna hit us.
    but if i was a politician, i'd probably put some of my properties on the market.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Slawek Date: Wednesday November 17, 2010 @04:21PM

    And for new buyers..., do you think it's a good time to buy a home?

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  • Re: The Daft House Price Report Q3 2010

    Posted By: me again Date: Wednesday November 17, 2010 @11:13PM

    judging by increase in good homes on websites in last couple of days, my GUESS is that there's still a bit to fall off the prices yet. while they'll have to level off eventually, if you listen to the govt re what's in store for us, then i would have to guess that prices will drop another good bit, in line with average income levels which, overall are gonna be greatly reduced across the board.

    only you can make the decision whether to buy or wait, and then only you can take the blame for the choice, when in a few years time, the price of your house has lowered and you're in difficulty paying your mortgage. or you can blame the bank for giving you the money. or you may decide not to buy and the price could go up. not too many are predicting a rise anytime soon, unless of course you listen to an estate agent. and respect where it's due- they've got a job to do.

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  • Re: The Daft House Price Report Q3 2010

    Posted By: Kevin Burke Date: Thursday November 25, 2010 @12:16PM

    "And for new buyers..., do you think it's a good time to buy a home?

    I wouldn't ....not for another couple - or more - years, when the air has largely stopped coming out of the bubble.

    Prices are (according to DAFT) down 40% from the peak. Well, I doubt many folks are achieving these prices, but if they are I pity the poor fools who paid up. Let's look at the facts.

    (1) A quickly falling population due to the Poles going home, and emigration restarting Big Style....resulting in an even bigger GLUT of empty properties.

    (2) Higher Taxes & Lower wages = Less affordability.

    (3) Speculators have LEFT the market. NO ONE speculates when prices are falling with no logical reason to stop falling any time soon.

    (4) As soon as the world begins to recover, interest rates - like the south - Will Rise Again.

    Ladies and Gentlemen, the short to medium term (next ten years) will not be too unlike the 80's ....I see no reason for the relationship between property prices and earning multiples to be much different to what it was then.

    In short - Property will continue to go - in the immortal words of Status Quo "down, down - deeper and down".

    In case you haven't noticed, there are 4 million men women and children with an estimated 200 BILLION euro bill to pay.


    ** If you think prices will level off any time soon - you are deluding yourself. **

    PS if you are currently renting - DAMAND a decrease - not once, but each year!

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