Empty Houses

Here‘s a new report from UCD’s Urban Institute by Brendan Williams, Brian Hughes and Declan Redmond titled “Managing an Unstable Housing Market” (summary here.)  It supports earlier calculations from NIRSA (see this post from the Ireland After NAMA blog) suggesting a very large stock of empty houses.

77 replies on “Empty Houses”

This got good coverage on the radio today?

At its core, local and or national authorities right to plan orderly has to supercede individual property rights.
Planning permissions, rather than be applied for, could be ‘imposed’ on land to secure sustainable development rather than permissions be secured within individual parcels of land.

Al

If any of the guys out at UCD want to, they can get their hands on a nice report published by the Royal Institute of Architects of Ireland, which features the transcripts of talks delivered by various experts – the head of the planning institute, various architects and economists (including Bacon) back in 1998, when the big issue was, homes are getting much too expensive for people to afford – what can we do. I remember sitting in the RIAI headquarters one evening in mid 1998, with Frank McDonalds and the rest discussing the new Bacon reports. Of course, something happened then which no one predicted – house prices continued to rise, so this salaries, bonuses and all else it seems. Then for an age, you could get nobody at all, to be concerned, that maybe house prices were too high. The initial determination to do something and tackle the problem dissipated, as citizens began to feel flattered in some way, by the boom-ier prices.

I distinctly remember back in 1998, parents really expressing grief for their children who could not afford homes anymore. But within a short space of a couple of years, those same concerned parents were selling up, and moving to the midlands. Strange to be honest. Now here is the point – it is the same group of people in that 1998 movement to stabilise things, and introduce good planning for sustainable communities, who are behind the CIF’s refutations today in the media – we built to satisfy the demand etc. You have to ask yourself though about the construction industry. The trade unions for instance – were there, at the height of it, for brickie’s etc, when unions were least needed of all. The unions in the naughties were stuck in their negotiating the best price of every block and brick laid on the island. Like it was a hind quarter in the beef market, or something. I haven’t heard a squeek of a proposal or a statement out of the brickie unions, since the crash. Now that brickie’s need a union most of all – dead silence. None of it makes much sense to me. BOH.

@Karl Whelan
The fact that the Irish house mountain continued to GROW for so many YEARS after the crash in late 2006 defies all economic logic. Why build huge amounts more of things that aren’t selling already? The government had to have been acting behind the scenes – especially as the banks got worried about their cash – telling them everything was ok and they would see them right.

We ended up with a Japanese scale bubble because like in Japan the establishment were corrupt, collusive and couldn’t accept the loss of face from admitting to a huge disaster. So they ended up creating an even bigger Godzilla sized one.

@Oliver Vandt
Much of the properties completed post 06-07 was stuff that had already started. And once started it was probably thought better to finish it rather than leave the site unfinished. And for individual developers this strategy probably made since. But collectively they all choose mutual destruction.

Many developers, banks and of course the politicians were in outright denial in 2007. Remember the reaction to Future Shock in April 2007? Remember all the talk of a “soft landing” which at the time was low single digit growth!

Many of the same people who were in denial in 06-07 are still in denial now of the scale of the problem we still face.
The huge oversupply in both the residential and commercial sectors means prices are going to fall for some time yet. And they are going to fall significantly further.

We may still get much closer to Morgan Kelly’s predictions than many believe.

This issue of the extent of vacant housing units is not new.

John FitzGerald of the ESRI had published material on it and the key aspect of the CSO’s analysis of the Census 2006 data, which was published in 2007, was that the number had jumped from 140,000 in 2002 to 266,000 in 2006. County Leitrim had the highest percentage of vacant dwellings (29.3%) while 11.7% of dwellings in Dublin City were vacant at the time of the census.

With 5-year interest only mortgages for investors; capital gains tax more than half of the top income tax rate and overnight queues feeding demand, holding empty properties was a slam dunk, as George Tenet might have said.

The Property Pin forum had estimated the number at 350,000 in 2008.

In related news, Deutsche Bank this week highlighted that house prices in several European countries, led by Spain and Ireland, have further to drop.

The evidence of continuing unrealistic asking prices, is clearly seen on Myhome.ie and Daft.

http://www.finfacts.ie/irishfinancenews/article_1019181.shtml

@ Mike

Would it be more constructive to look at it differently than house prices having to fall, and more to the point: what are keeping house prices sticky?
Nama and LTEV and all that.

Night
Al

Would I be right to suggest that a significant number of the vacant houses will never be sold and were only ever attractive propositions because the market was so inflated?

seeing is believing: Houses on the moon

tour of a ghost village (24 frames per second) or is that 25?

Empty houses I wonder why? Every greedy person in the country just had to get in on the act. Every, barrister, solicitor, banker, industrialist piled in on top of the builder/developers scrum and it quickly became an out of control maul. Meanwhile, the price of any material needed to build anything cost a small fortune, sanitary ware, timber, blocks, concrete etc. Labour suddenly was 200 Euro a day and suddenly workers were doing you a favour for showing up on site. Workers just, had to be, drafted in from abroad and people who worked a month in Eastern Europe for 200 euro suddenly found that they could earn more money in a month in Ireland than in 2.5 years back home compliments of the brickie union, the plasters union, the tilers union. The other ingredients, no financial regulation, government grabbing 40% of every house. Local authorities grabbing ‘contributions’ and banks using every mortgage loan as collateral to leverage up.

However, the builders wage rates were simply chicken feed to those in banking, auctioneering, conveyancing and with the tribunals gravy train rolling on at a steady 2,500 Euro per day for over a decade the money had to go somewhere, and it did. Bank shares and property deals. That is why the NAMA, SPV has had to be rolled out, to replenish the wealth destruction that has taken place among the ‘professionals’ classes not as some innocents on this site believe to sort out the banks and bank credit and get lending flowing in the economy.

The whole building profession has been practically wiped out by all the greed merchants who could not rip off the tax payer for enough and who could not get their hands on ‘enough’ property. Welcome back to reality gentlemen. There is now a thing called oversupply for a minimum of 10 years and with tongue in cheek, I have to say that the only mitigating factor for many is that many ‘investments’ were built in areas where there were no jobs and where there never was going to be jobs. if the investments are in what the planners called PUC’s (prime urban centres) consider yourself lucky, you may get a tenant or buyer at some stage. To remind ourselves of the full extent of the madness. The quantum of retail space in Mr. Dunnes Ballsbridge development was equal to all of Grafton Street and all of Henry Street combined and don’t forget Dublin City Council Planners gave him permission.

Many of these ‘ghost estates’ are dire places and cannot be sold, many are unfinished and have little if any LTEV but certainly have a LTECost. if they are not removed they will have to be guarded and maintained. The NAMA borrowings have to be serviced regardless of what the money is wasted on. Couple this with unemployment of nearly 13% and rising as well as a banking sector which is insolvent and does not want to get involved in property again. A creaky government carrying out nationalisation by default and the full horror story begins to take shape. What about the BTL’s? The commercial properties who’s leases could only rise and never fall? All this taking place, in a world, where Harvard economists are writing about “Eight centuries of financial bubbles and follies”. But that would never happen in Ireland right? We used to have the odd “folly” around the country but now it seems we have 650 of them plus development land. Not to worry we are going to get rid of the lot by buying them up for what they are worth. May I wish you a miracle NAMA.

@Robert Browne – “Every, barrister, solicitor,” etc.

You forgot to mention the enormous amount of money these types will be taking out of NAMA in fees over the next few years. I presume this is to make up for the lack of tribunals, house sales, etc. on the horizon.

These are also the same people who are circling like vultures to see if they can pick up any cheap repo’d homes that families are being kicked out of (and will be more so in the future) that can be ‘added to their portfolio’. I know this for a fact.

Ho hum.

Is’nt it just hilarious how the CIF are now caliming that the only built to meet demand that existed – if the demand existed then the houses would not be empty or at the very least would have sold once but many of these properties have never sold and belong to developers – I mean NAMA…

Is’nt it just hilarious how the CIF are now claiming that they only built to meet demand that existed – if the demand existed then the houses would not be empty or at the very least would have sold once but many of these properties have never sold and belong to developers – I mean NAMA…

I am of the belief that Morgan Kelly got it ‘rong – he was a tad optimistic with his estimates. Bottom – if that’s what you want to call it, is a long way down! My estimate (of 2007 vintage) was -80%. Caution: terms and conditions apply to this estimate! No reason to alter this figure at present time.

Res property prices WILL correct downward, but very slowly. The ‘stickiness’ is due to real fear of severe losses and, for many, the prospect of being relatively poor in a country with such dreadful governance, financial chickanery, and woeful health provision. [If Cuba can provide modest healthcare to ALL its citizens – and we cannot, then those in charge are truly incompetent – or should I say, bought and paid for by Special Interest groups.] You choose

If our legislators had any real political testicles [which they lack]- they could invoke a non-occupancy tax on all res properties completed. Failure to pay this tax will permit the state/local authority to sieze the property for no payment and allocate it as best they can in the public interest. The Constitution has a provision to overide private property rights – ‘…with a view to reconciling their exercise with the exigencies of the common good.’ Art 43.2.2.

NAMA cannot succeed. The amounts of money that would be destroyed in repaying the massive debt overhang cannot be found unless the money supply is itself massively increased – by inflation. Presumably this is what our feckless legislators would wish for. Eventually this may be the only option, but in the interim, deflation, lower real incomes and high real interest rates will have caused widespread social and economic havoc.

We have only arrived at the end-of-the-beginning of the this financial, economic, social, and ultimately political calamity.

B Peter

live in the tip of West Cork and kids fell asleep in the car last Sunday, so went for a drive. Ended up in a tiny village on the farthest west point of a peninsula and found it destroyed. In a tiny place (shop, church, pub) 40 minutes driving from the nearest market town, there are two ghost estates – approximately 40 houses lying empty. There will never be demand here. As social housing, it won’t do as people won’t move here. Even as holiday homes they won’t do – holidaymakers prefer a different type of house. Where were the planners? This little village has been destroyed – the locals will be the first to tell you.

We have now had three major reports into vacant property in the State and although CIF are sticking with 40,000 vacant homes they are at least qualifying this by restricting their estimate to “new homes”.

What is needed very quickly is to understand what is preventing these homes coming on the market. It is perfectly sensible in a capitalist system for developers and banks to keep the vacant property off the market so that prices can recover but there is an emerging fear that the reason the vacant property is not on the market is the expectation by sellers (developers and their banks) that NAMA will fix prices and will not allow prices to fall below that fixed point (remember the over-riding objective of NAMA is not to faciltate lending, it’s to ensure the taxpayer doesn’t make a loss). This latter point is price fixing, unfair competition, mis-use of state aid and distorting the market place.

There is a comparison of the three major reports into vacant property at
http://namawinelake.wordpress.com/2010/03/05/vacant-property-dkm-v-nirsa-v-ucd-part-1-of-2/

@Nollaig

Remember these houses were selling so there was demand, what you have to look at is who was buying them. The investor was squeezing out the occupier so prices continued to rise. Of course every investor’s accountant was telling him/her they could avoid paying tax if they just invested in a Section23 property further driving up prices and “demand”.

@ Issac,

interesting story, thanks for telling it. I did many a planning application for down that part of the country. The expression people in the trade used was, ‘flog ’em as quick as you can’. BOH.

What I mean is, from an economics point of view, to get into the mentality of what actually happened in the small village as Issac described, you cannot look at the developments as houses. Try looking at them, as a box of over-priced apples or hot dogs that one might sell outside a football match or rock concert. That is what was going on. It was someone elses problem afterwards, if you discovered the apple was rotten or the hot dog tasted lousy.

People complain a lot about shoe box apartments, and certainly with reason. But at least they provide some function. Unlike these so-called ghost estates. Shoe box apartments seem to go hand-in-hand with a mobile workforce, like Ryan air flights etc. All of the developers are holding thousands of shoe box apartment units, like excess inventory. You have to put that in the context, of state agencies such as FAS advertising in eastern Europe – come to Ireland, loads a jobs, loads a jobs. When the CIF use the phrase ‘demand’ you have to break that down – and place it in the context of the phoney demand, that agencies like FAS assisted in creating. BOH.

At the end of the day, the residential market – or lack of it – is largely determined by ordinary people, with a coffee in one hand and a newspaper in the other, wondering “will I or won’t I purchase?” If he decides to purchase a home, he knows perfectly well that he is going to have to pay a price which is excessive – and he knows it! We all know it! The diffierence between now and two/three years ago is that then, we didn’t know it. Now we do! All the recognised benchmarking systems in place tell us that current prices are still way too high. Whether you measure by multiple of annual income, by reference to 14-15 times annual rental potential – or potential yield in percentage terms – they’re still too flaming dear – and we know it! An apartemt near me was placed on the market two years ago for 375K. The asking price is now 325K. The gross annual rental on this 1 bed apartment is under 11K. Only a complete fool would pay even 200K. Is it any wonder the market has stalled?

Vendors must start to listen carefully. Ordinary people are aware of what a home should cost. The secret is out – even in spite of NAMA!

Read our lips – WE KNOW!

The answer to the stasis in the residential property market is childishly simple. If prices fall to where they should be, houses will sell.

It’s that simple!

“Every, barrister, solicitor, banker”

Eh can we stop the rather myopic populist anger please? This was a societal issue. You can add taxi drivers, publicans, plumbers, denists, doctors and civil servants on to this list as well. People from every walk of life in this country leveraged up into the property market. I know it doesn’t make as nice a story to hear that the downturn is affecting everyone and not just the “elite”, whoever the hell they are supposed to be, but thats the rather unfortunate reality.

To add to the above briefly, Try looking at them, as a box of over-priced apples or hot dogs that one might sell outside a football match or rock concert. We have all witnessed what happens to those apples etc that don’t sell. After the crowd has disappeared, it would not be uncommon for the trader to hurl the whole box of un-sold apples on the side of the road and lets the crows peck at them. Exactly what has happened with the excess inventory of the ghost estates. BOH.

@ Eoin Bond,

I agree with you, we don’t need the myopic populist anger. I suggested in the ‘Post Bank’ thread very recently, to Karl Whelan, the problem we have in Ireland, is poor debate about economics and society – at lot of which derives from structures we inherited down from previous generations – and in particular from former Taoiseach Charles J. Haughey. As good, bad or indifferent as some of our ministers are today – they have no chance at all of implementing any policy, with some of the structures we have. This is where deputy Pat Rabbitte’s point about poor government, rather than a failure of the political system, comes off the rails a bit. Deputy Rabbitte needs to address that a bit more, but his basic point, is sound.

http://www.irisheconomy.ie/index.php/2010/03/05/recovery-strategy-needs-to-integrate-investment-focus/#comment-38712

But I don’t think Dr. Michael Mulreany, assistant director of the IPA, in his points about change management really understands the full picture. In other to get that ‘better public debate’ that Karl Whelan craves so much, requires the entire culture in the Dail and throughout the permanent government to radically alter. Otherwise, we will continue to have major mess-ups like the Irish Glass Bottle site, and other failures. Because the economics discussion is not happening right across all divisions between individual department silos. If the economic debate could occur, across those divisions, then we would not have statements like former minister for environment, Dick Roche made in late 2006, after the government had purchased the Ringsend land, from itself effectively, at a cost of hundreds of millions. Refer to Elaine Byrne’s IT piece, Not level playing field when it comes to new Gaelscoil, for a more typical parish pump everyday man’s example, of the state renting/buying property from itself at enormous excess cost. Smart economy how are ye? The point is really, the structures and procedures are in a mess – not wholly through the fault of Cowen, Ahern, Cullen, Roche etc. The structures are what they inherited from a legacy regime of Charles J. Haughey, which was all about corruption. He was the master. This is why a pick axe has to be wielded at those structures today. I hope everyone is on board with that.

@ Brian

Yes, I am on board “with that”. However, I don’t think there will be too many on board. There never will be another Irish government as profligate or as voraciously corrupt as the Bertie governments. He used the ‘gains’ of the celtic tiger to buy power. Literally, throwing money and jobs at the Public Sector Unions . It was as if the money was coming off a printing press in the basement of FF headquarters.

All policies implemented by this government to-date have been about maintaining if not expanding the status quo. NAMA is an EU sponsored but Irish paid for bonanza for the professional classes and that is why there was silence and no legal challenges from the King’s Inns brigade. BTW Lenihan is a barrister first and foremost.

So what, if there was a 10% cut in public sector pay? Excluding the 642 special ones. Everyone knows that with deflation running at 5 or 6% annually the reduced salary will soon buy a farm of land with a couple of those empty houses thrown in for good measure.

Going back to the empty houses, the government got a large wedge of tax from their construction. There are a huge amount of people in this country whose mortgages include a legacy element of government taxes, taxes paid for with 30 year mortgages. That sounds like the government not caring if they drove citizens further into the arms of the banks, your problem not ours kind of attitude. But it is about to become their problem.

The mortgage holder borrowed the money paid the government and then the government walked away leaving the mortgage holder with the death pledge at least that was the plan before greed got in the way. Now it looks like a lot of these mortgages on occupied houses and apartments will be coming back to the government owned and run banks.

@ Joseph

I don’t think I ignored them, in any event, their behaviour is pretty toxic. The legal hegemony is even more dangerous than the political one because they prevent the politicians from ever getting to mens rea there is little doubt about who operates the leavers of power, at the moment.

@Dreaded_Estate
But this is a mountain. Many were finished off because the politicians told the banks and the developers to keep on building and they would support them. It might take a few years to clear the backlog…but the banks would not foreclose on the developers in the mean time. Actually that sounds exactly like NAMA. Even more evidence that NAMA is just the continuation of normal business for FF/Megadevelopers/Bankers.

More worryingly, it is certain that FF told the banks and the developers to keep building until the 2007 election and they would see them right. The credit crunch kicked in in early 2007 and the property market started to drop in early 2006. Why did building continue through 2007, 2008 and 2009? Because as in Japan the establishment could count on each other. And they were right – NAMA’s €54 BILLION shows how they look out for each other.

The behaviour of the CIF in claiming only 40,000 empties, and then saying under their breadth they meant only absolutely brand spanking newly minted unsold houses, was deeply dishonourable.
“The latest housing report differs from the CIF’s own figures, which maintain that there are 35,000 to 40,000 new homes remaining unsold.”
http://www.independent.ie/business/irish/dont-blame-us-for-170000-house-surplus-say-builders-2090837.html

There was and is an organised effort to cover this up/minimise it.

So we have far more supply than demand. Persumably in a normal market place meaning low low low prices. Maybe I’m wrong but isn’t NAMA forced to artifically inflate prices. Not only so NAMA itself wont make a loss but also so the Negativity Equity tsuamai isn’t realised.

I have two questions:

1)What happens to a market when attempts are made to keep prices artifically high?

2)Why hasn’t there been riots in the streets over this mess?

@ Just-a-Punter

1. Economic theory of Supply-and-Demand ‘dictates’ that when you set a price ‘floor’, then you have an excess of supply – so says the textbook! Sorry, forgot about the -‘all things being equal’, and all! If you say it in Latin it sounds even better! Any attempt to bring supply and demand back to equilibrium would be calamitous for legislators and bankers. They will both twist, turn, duck and weave like Cassius Clay in the hope that the money supply will inflate enough to re-float the res property market.

2. Sheeple are, well, sheeple. They may be awaiting the arrival of the ballot boxes. But all they will be presented with is an alternate shower of shepards with a new selection shearing sissors. Will take a few elections for the message to sink in. Then watch-out!

Normal service will (may?) resume when res property prices are x2.5 times one’s P60 income, AND you put 20% cash on the table! The resumption of normal service is predicated upon ALL Neg Equity being eliminated from the market. See this happening?

B Peter

I remember Morgan Kelly in his infamous – prices will sink 80% paper, outlined Bank lending as the main driver of property prices. Far ahead of interest rates/population etc…

So given that bank lending is the main driver, and bank lending is non-existent (or very limited) now, will the property market not recover once bank lending recovers?

Or is it the case that banks just want to deleverage and avoid any additional property exposure, so prolonging the downward cycle.

Can I ask does anyone think lending for property can get tighter!? i.e. lower than 4.5 times gross income.

@ Robert Browne,

Yes, I am on board “with that”. However, I don’t think there will be too many on board. There never will be another Irish government as profligate or as voraciously corrupt as the Bertie governments.

In my mind logic does indicate, many decisions made in 1997-2002, 2002-2007, 2007-present, were so bad, they could not have been made by any democracy, no matter how inferior it’s public representatives were, without there being serious structural and procedures faults. Bad, old plumbing I call it. (Notwithstanding deputy Rabbitte’s argument to the contrary) Those structural issues will be there also for the next government. Of most concern, will a new government even recognise structural faults, until decisions have been pushed through? The comment by Noel Whelan, only 1 no. minister on the cabinet has the ability to speak on economic matters, is a true reflection of the problems. In a modern economy, the tourism minister, entreprise minister, transport minister – all of these people need to shout up, in the economics decision making process. Are all departments organised and gear-ed up, to have rapid response capabilities on matters that arise, which require decisions, but are not strictly matters for their department?

The Ringsend land purchase, authorised by the minister for Finance and the minister for Environment in 2006 – why didn’t the minister for Health shout up and say – guys, I have investment opportunities that are more worthy? Atrocious decisions made by government over the last decade or more, (when we had funds to spend) have much to do with government flying blind. Where one department cannot even see what the other is up to. They shoot each other in the darkness. Friendly fire, they call it in Iraq. We have seen too many casualties of friendly fire, during the Celtic Tiger. It is time to re-assess our operations planning. If the Greens could focus on that, more than on implementation of new policy on top of existing poor government processes, I would feel a lot happier. BOH.

@ Robert Browne,

He used the ‘gains’ of the celtic tiger to buy power. Literally, throwing money and jobs at the Public Sector Unions . It was as if the money was coming off a printing press in the basement of FF headquarters.

Robert, what really needs to be done, in relation to ‘Bertie’ soon (instead of everyone using Bertie as the rag doll) is a deep socio-economic research into the Bertie years. They need to figure out, how Bertie Ahern managed to hide so many bad policies, behind the disguise of inward waves of migrants coming into Ireland. FAS being the one example, which sickens everyone – but I mean, in a broader sense. It is clear to me, many inward migrants were on travel excursions for reasons of learning language. There is no doubt, Ireland was one place you could meet almost every other culture – a bit like London in the 1970s or 80s maybe.

But former Taoiseach Ahern managed to cling onto this demographic change, and insist/convince people, (using his very persausive manner) that Ireland was becoming the new Manhattan island for the 2000s. I cannot do that research – someone in a university, with political, social and economic research capabilities has to do it. Never was there a demographic trend, as the inward waves of migrants to Ireland during the Celtic Tiger, put to better use to provide all sorts of political justification for policy. It was like something out of that movie, Gangs of New York. My inclination is, most migrants did not want to come to Ireland, for the Irish per se, but because so many different nationalities and cultures came here also. It was like a world cup, or an Olympics over a period of years instead of weeks. BOH.

@ Brian O’ Hanlon,

“Friendly fire, they call it in Iraq”

I think the correct term is “Blue on Blue”

But are you asking too much of a poor minister? The only qualification a minister requires is votes. He / she could have a IQ of 10 and still be in charge of running a dept.

Where were the senior civil servants who guide a new minister in long term strategic decisions etc? Where they ignored? Or was the minister misguided by them? We may never know.

Remember all the warnings the EU gave Ireland about the overheating property market in the early part of this century? What happened?

But one thing we do know, taxpayers will be paying for this for the next century.

@Sporthog
Irish civil servants are fairly conservative whereas our political system has been neck deep in planning corruption for almost half a century. A massive and massively reckless lending/property bubble is entirely the politicians (and banker/developers) fault until proven otherwise. Likewise the unbalanced nature of our fiscal system was a McCreevy/Harney creation only possible because of the lending bubble. The key politicians in our recent governments are all very smart. Ahern was described as the most cunning of them all by a man who was no slouch himself. Cowen is regarded by all as very smart. McCreevy and Harney are strong willed and very intelligent.

Our politicians were the primary causes of our country’s downfall. In any event when you become the government you take full responsibility for all your actions and inactions. Ahern, Cowen, McCreevy and Harney were no more the victims of the Irish civil service than Bernie Madoff was the victim of his staff.

@ Sporthog, OV,

Where were the senior civil servants who guide a new minister in long term strategic decisions etc? Where they ignored? Or was the minister misguided by them? We may never know.

Look at it a different way. Where are the senior civil servant(s) today who know how to combine together with other departments, to achieve something in coordination? Look at the military as a series of different silos, which all have to get in concert, to do any sort of campaign. No matter how simple. A pretty good example, might be the movie Black Hawk Down. Notice all of the coordination which needed to happen, at all sorts of levels, for successful execution of those operations. I heard Eddie O’Connor of Mainstream Renewable Energy, speak on the Pat Kenny radio program a while ago. He observed, that to implement any kind of off-shore wind energy program, it required at least 5 no. government departments to work together. It requires someone from the Taoiseach’s office almost, he said, to make it work. The funny thing, Charles J. Haughey was one of the few, who could do things like that. Whoever becomes next Taoiseach in Ireland, will need to bring these kinds of skills to the game.

Our ‘army’ of civil servants, it seems are trained and bred for the wrong purpose. They are trained to give outstanding life long service to a department. To shift collosal quantities of paperwork, over a 40 year time span. That is not a force trained for rapid deployment, in my opinion. Senior civil servants, are not trained or encouraged to develop people and communications skills. To go and speak to other department(s). Maybe the ministerial position is too strong? Senior civil servants feel they cannot take initiative, because a minister gets in their way? Robust lines of communication have to be kept open, regardless of who is minister – I don’t see evidence of that happening. Open communication is not an attribute which is encouraged in Irish culture. If anything the polar opposite. The Irish have never been tested in major international conflicts. Then you would see how incapable we are. People forget, what we refer to as ‘project management’, is derived out of challenges undertaken by the US during WWII. Which later filtered down to the civilian population.

http://designcomment.blogspot.com/2010/02/change-management.html

@ Oliver Vandt,

Indeed the buck has to stop somewhere, and it is usually at the ministers desk etc.

Point taken about the people you named being intelligent etc etc. Maybe if we did vote somebody in with a IQ of 10 we might not be in such a mess. Just a thought.

@ Brian O’Hanlon,

Yes I remember the interview with Eddie O’Connor talking about trying to get things implemented etc. Not at all easy. If the civil service cannot work together to get good things going, then how can they work together to stop bad things happening etc.

I remember a neighbour of mine several years ago who bought a car at a auction. The car’s Log book was then sent into the motor tax office for the change of ownership to be completed etc. A week later he got a letter stating the book had been lost by the tax office, please fill in the enclosed form and return it etc. This he duly did. A few days later he recieved a second letter pointing out to him he had to include a fee of 10 pounds for the new log book. So he wrote a letter pointing out that it was not his fault for the missing log book, they had lost it, so they should pay for it and as a result he was not going to pay.

To cut a long story short, the letters flowed from the tax office to himself and back again about 4 times, each time a different civil servant wrote the returning letter. Eventually the large wad of letters landed on somebodys desk who had the authority to look at the papertrail and say ” WTF is going on here, just issue the new book and stop wasting time, effort, money and postage. So he played the game with the Civil service and eventually got his log book.

Pretty much sums them all up.

The difference between the myopic populist anger that now exists and the the myopic populist exuberance that existed in the tiger years is the governement. The latter they encouraged and indeed profited from whereas the former will be their eventual undoing.
The phrase ” you can fool some of the people some of the time but you can’t fool all the people all the time” should be their epitaph.

Deliberate suppression of price discovery I

http://www.rte.ie/news/2008/1016/housing.html

“The Minister for Housing has denied that the Government’s new home loan and equity schemes for those trying to get on the property ladder will put the State’s finances at further risk.

Michael Finneran also denied that the measures were being taken to help builders to offload excess stock.

He said they were purely designed to extend credit to first-time buyers unable to secure finance due to the credit crunch.”

Deliberate suppression of price discovery II

http://www.kildarestreet.com/debates/?id=2010-02-25.555.0

“While the allocations to local authorities for 2010, when finalised, will show a reduction in the provision for the main traditional local authority programme, I anticipate that, through more flexible market-based delivery mechanisms such as the rental accommodation scheme and long term leasing, as well as the continued significant support for the capital assistance scheme in 2010, delivery across the range of social housing measures next year will be of the order of 8,000 to 9,000 units. Of this total, I expect approximately half of all units delivered to come through a combination of leasing and RAS , the other half through new builds and acquisitions.”

Who is the Minister leasing the properties from?

Banks? Developers?

Why lease over 21 years? Why provide an income stream to Banks and Developers when the properties can be acquired now for 20% (?) of the net present value of the leases?

Qui bono?

Not the people who will live in the houses. Not the Citizen/Taxpayer.

Qui bono?

Fine, I can see some progress here.

But the fact of the matter is simple. Those who had cpital sought to use the housing multiplier to lever their capital and get seriously rich. Their demand helped the government to make it easy to finance the “growth” by tax incentives.

The Irish are a seriously greedy and economically inept people.

At the same time, the US was springing the sub-prime crisis, whereby folks who had problems renting, suddenly got to own their own house. Those who were greedy got to dabble in the new property market. But their valuations, even with fraudlent assessors, never got to the heights of those in Ireland. Neither were they misdesigned, even if they were built in ex-urbia.

Sheer folly, this can only be cured by demand revival and that can only happen as DAVE says, after prices have fallen. As Karl Whelan says this will take years. I say it will take decades.

I say that we need to look at our lifestyle needs, career prospects and to make decisions that are made only every three generations or so. Women will be keeping more jobs than men. Men will have to consider working, if at all, from home. Use the internet to make jobs and get jobs. But too much borrowing from the future has occurred. We need far less now and saving will be rampant further depressing demand. Too much was spent using credit that will be paid off with hopes, jobs and lives.

The price of ignorance and arrogance. Learn from this. This was no famine imposed from the outside. Build a genuine society. One that will support everyone. You will have decades before the Greed comes again.

The problem seems to be empty houses in places that nobody wants to live in and perhaps not enough in places where people do want to live ~ urban areas like Dublin, Cork etc. As I said above, houses in tiny West Cork villages far from services won’t do.

Re what Isaac says – the reason that so many bought houses in remote areas with no facilities or services has a lot to do with the widespread and false notion that with property, you simply couldn’t lose. That’s gone now and it has left negative equity tragedies in its wake. Real people with real families staring into a financial abyss! But pretending that a house that could fetch a million Euro at the height of the boom is now worth a mere 50% of that is claptrap and nobody believes it anymore. Morgan Kelly doesn’t believe it! David McWilliams doesn’t believe it! And anyone who takes seriously the lie that because it is selling at a reduced 50% of the original price and is therefore great value is the second biggest fool in Ireland. The biggest fool is the estate agent who has his fingers crossed behind his back hoping that someone will take the bait!

The truth is, that the house that was worth a million is probably now worth 300K – not 500K. Ask David McWilliams or Morgan Kelly.

Reality will dawn eventually – but when?

@ Finbar

“The truth is, that the house that was worth a million is probably now worth 300K – not 500K.”

Any examples of this Finbar? Im basically gonna call “bullsh1t” on you. No house (excusing some bizarre single case, but your post was in a very general sense) that was worth a million at the top of the boom is now worth 300k. Please provide an example or else toddle off to somewhere else where posting complete inaccuracies counts as relevant input.

@ Finbar

I’m pretty sure most people realise the emperor has no clothes at this stage. Though it is understandable that it takes sellers a while to get their head around negative equity, let alone want to have the loss realised.

@ Sporthog,

Eventually the large wad of letters landed on somebodys desk who had the authority to look at the papertrail and say ” WTF is going on here, just issue the new book and stop wasting time, effort, money and postage.

Thanks for that most excellent story. It is a good example which demonstrates the problem we are facing today in Ireland. Imagine the allies were landed on Normandy beaches, and we had to try and defend ourselves. The British have dealt with those sticky situations in the past. The Spanish armada and all of that. Maybe it has taught them about a need for organisation? The renewable energy (utility scale of deployment) sector is one where, that obstacle in the paperwork system can really screw it up. Even best laid plans. I heard Eddie O’Connor speak briefly at UCD not so long ago. He gave a few references of great military campaigns in history. Hannibal crossing the Alps, doing something no one had ever attempted before. O’Connor admitted he doesn’t pay much attention to fellow business people. But he does read about military history, the great leaders and their campaigns. Heinz Guderian was another historical figure he mentioned.

Look at this ‘Empty Houses’ problem we have in Ireland. If we ran an efficient shop, we would have much better information about the situation now. You can look at the ’empty house’ problem like an invading army of numerous problems, coming down the tracks. We have had ample warning period, and yet our defense battalions are no where to be seen. There is an absense of rapid response capability shown. There are good ideas out there. But there are too many bodies divided off in their own little silos, or professional cliques, to make up anything good out of it. Then you hear the odd press release from the CIF. The CIF is a kind of catch-all response unit, for everyone connected with the build-ing industry. But one off the worst possible kind. In its ability to harness the level of thinking available to deal with the problem(s). BOH.

Bond,

Here is an example of a property which has dropped 65% in value.

http://www.irishtimes.com/newspaper/property/2010/0128/1224263284382.html?via=mr

Tom Parlon at CIF says prices are down 50% already and most pundits say another 10% will come off this year (UCD are still saying another 50% to give an 80% fall overall).

http://namawinelake.wordpress.com/2010/02/24/a-real-time-register-of-actual-sale-prices/

Want to see properties that have fallen by 85% in a mature market, try this

http://www.irishtimes.com/newspaper/property/2010/0225/1224265137927.html

One of the biggest reasons that there are so many unoccupied residences is the assumption that the Eastern Europeans were going to stay for good – if they had not, tens of thousands of those homes would be full. Maybe we should look at how to bring people into the country to live in those houses even as the 20-30 year olds follow the Europeans out the door (and in their cases heading for Sydney and Toronto).

We should be aggressively seeking out non-EU nationals to come to Ireland and fill those houses, and provide them with migration cost tax credit offsets (non-refundable, so it provides them an incentive to maximise taxable income) and structure migration financial supports to maximise long term commitment over temporarily plugging holes in the labour needs of unscrupulous operators in sectors like meat slaughtering.

@ Karl Whelan,

There are 3 no. issues which seem to be separate in the current debate in Ireland – but if you joined them together sensibly – one could look at the root cause of all our problem(s), and in turn be able to look for solution(s). By Pat Honohan’s definition of a banking inquiry, this falls under his heading of systemic issues, I believe.

(1) Empty Houses. There clearly was an appetite for investment by the Irish public, (buying lots of unwanted homes). We totally mis-directed that appetite and failed to take advantage of it. Some blame for this must lay at the feet of organisations like the CIF for not being inventive in their thinking. The CIF is still trying to defend an old position instead of finding a new one, in the face of current events.

(2) Banking Crisis. Bank-ing policy in Ireland has to be informed by a different division of layer(s) of risk – a different one from which Irish economists impose on defining the problem. Irish economists’ definition of the problem isn’t good enough.

(3) Infrastructural finance. We need to think of safer routes for investment of peoples’ capital in this country. To enable capital to flow into needed infrastructural project(s). I argue to Edgar Morgenroth, that parts of our bank-ing system need to be treated as basic infrastructure. The ‘investor’ whom we saw in the past as a providers of some kind of ‘risk capital’ needs to be viewed in a different manner, to how most economists want to.

http://www.irisheconomy.ie/index.php/2010/03/05/recovery-strategy-needs-to-integrate-investment-focus/#comment-38933

BOH.

@Mark Dowling:
“Maybe we should look at how to bring people into the country to live in those houses […].”

No problem: just send a jumbo jet to Nigeria.

Unfortunately the authorities seem to be keener on sending people the other way.

bjg

@Mark Dowling
You’re right. If we swap the Irish population with a larger but much less paid foreign one all our problems are solved. Instant wage competitiveness and no house mountain. I’d say our establishment would love it although it would be hard for them to find such submissive citizenry. They’ll keep much of our civic society though. Economic collapse, budgetary collapse and bank collapse and still most of them just moan privately or worse hush everyone else.

@Michael Hennigan
As you say The Property Pin (especially a poster called 2Pac I believe) can take a lot of credit for highlighting this.

@Jagdip Singh
Thanks for that.

@ Mark Dowling

“Maybe we should look at how to bring people into the country to live in those houses even as the 20-30 year olds follow the Europeans out the door”. Are you serious?

I would prefer to knock every single house to the ground rather than pay foreigners and that is what they are to come and live in the mistakes. Should our sons and daughters genuflect to these people coming into occupy the empty houses? Why not offer them to the taliban, a lot of them have become homeless lately? This is the economics of the madhouse and we have enough of that in the country at the moment! Don’t panic, it is only bankruptcy, we will survive it without the Great Plantation of Ireland 2010 – 2013.

Granted, their are developers and bankers champing at the bit for this idea you are not alone.

In fairness, your idea might have a certain symmetry to it for the government. We already sell the country every time we sell debt on sovereign debt markets. I suppose it is only another small step to bring in foreigners to whom we are selling government bonds, put faces on them, a roof over their heads. Once we make our intentions in this regard clear it should entice a host of new counties to bid for our bonds and reduce spreads. May as well educate them and their children, seeing that our own are going, pay for their health service and give them unemployment benefits also. If that does not get the economy going the rest of us can also bail out and join our children.

@: Bond. Eoin Bond: ‘Any examples of this Finbar? Im basically gonna call “bullsh1t” on you. No house (excusing some bizarre single case, but your post was in a very general sense) that was worth a million at the top of the boom is now worth 300k. Please provide an example or else toddle off to somewhere else where posting complete inaccuracies counts as relevant input.’

Mine, Owen!

Many of you appear not to grasp the reality (apologies if I am incorrect about this). What we have is a dreadful debt predicament – not a credit crisis. If it were a credit crisis, then it would resolve fairly quickly.

A debt induced recession is not new: 1933 => is a good example. It took a global war to resolve. Want to try the same trick again? No, I thought not. How about a Debt Jubille? No! OK – so what DO YOU want to try? Inflation? Any advance on inflation? You cannot exit a debt induced economic recession absent the removal of the debt. Not a chance!

If your economic Model-in-Use is annual incremental growth (over the long term), then this level of growth CANNOT and MUST NOT be less than the incrementing debt that parallels the growth. Unfiortunately, we have allowed the inverse; debt growth is exceeding aggregate economic growth. This spells disaster.

Someone called Solow had this theory about ‘Residuals’. Substitute fossil fuels and very advanced technology to ‘lever-up’ these high density energy sources. Presto! – you’ve got your exponential aggregate economic growth. Oops – forgot about the darn credit/debt bit! Not to worry, exponential economic growth will take care of that. Well, as Baily said to Gogarty, “[It] will like ****.”

What we are experiencing is the effect of a credit famine on the level of economic activity. It causes a shut-down. Just wait until the Export-land Model (re fossil fuels) kicks in. Oil is above $80 again! I hope this is only a temporary adjustment.

B Peter

@ Robert Browne,

I picked up on your comment previously about NAMA and legal fees.

http://www.irisheconomy.ie/index.php/2010/03/02/postbank-and-anglo-not-comparable/#comment-37982

But I didn’t realise, it was like what Vincent Brown’s describes in his SBP column today. Notice the continuous legal dynasty, that is government in Ireland, for so long. We have 4 no. lawyers in the front bench right now, or at least did, until Willie got the boot for swearing a false affidavit. I think it is worth repeating some statement(s) of mine from above.

Look at the military as a series of different silos, which all have to get in concert, to do any sort of campaign. No matter how simple. A pretty good example, might be the movie Black Hawk Down. Notice all of the coordination which needed to happen, at all sorts of levels, for successful execution of those operations.

[break]

I heard Eddie O’Connor of Mainstream Renewable Energy, speak on the Pat Kenny radio program a while ago. He observed, that to implement any kind of off-shore wind energy program, it required at least 5 no. government departments to work together. It requires someone from the Taoiseach’s office almost, he said, to make it work. The funny thing, Charles J. Haughey was one of the few, who could do things like that. Whoever becomes next Taoiseach in Ireland, will need to bring these kinds of skills to the game.

[break]

He gave a few references of great military campaigns in history. Hannibal crossing the Alps, doing something no one had ever attempted before. O’Connor admitted he doesn’t pay much attention to fellow business people. But he does read about military history, the great leaders and their campaigns. Heinz Guderian was another historical figure he mentioned. BOH.

@ Jagdip

i dont deny that some houses have fallen by the 65% example you provide. However, they were at the upper and more illiquid end of the market (ie the house in your example was worth 5mio). Thats why i specifically do not believe that a house that was worth 1mio is now worth 300k.

@ Isaac “As I said above, houses in tiny West Cork villages far from services won’t do.”

Reminds me of the govvernments decentralisation policy!!

Having worked in property in the Cork region I remember during the boom thinking to myself how the hell are builders or buyers going to cope in these peripheral locations if there are changes in the market.

The government has a lot to answer for on the subject of vacant housing. They knew we had no control over our interest rates and they were going down at a time they should have been going up. They knew how reliant we were becoming on the housing sector and yet they continued with a policy of incentivising the propery market instead of trying to deflate it with their short term policitcal strategy.

The question now is how do we resolve it and I think NAMA should have a big part to play here and quickly through getting rid of some of the stock through social housing or even knocking it if it is in the arsehole of nowhere and doesn’t have a chance of being economical. We need to get to the bottom as fast as we can so we can work our way back up, at the moment everything seems to be in limbo. I would have preferred another option to NAMA but it appears we are stuck with now so might as well use as best as possible.

@Eoin Bond
Apartments down 66% in the Dublin commuter belt in Nov 09. Property supplement says down 40% generally in Dublin at that time – so that means 50%.

“The fact that today’s asking price is 66 per cent lower than the original 2007 price illustrates how deeply values have fallen in some provincial areas. Prices in the Dublin suburbs have dropped generally by around 40 per cent and in a few instances by up to 50 per cent.”

http://www.irishtimes.com/newspaper/property/2009/1119/1224259098941.html

BPW
I am sorry about your house. In view of your astuteness, you seem to agree with me on many things, (!) I presume that you could have sold had you so wished, but are so well off that you did not choose to do so. Fair enough. It is still not too late, as the falls to come will equal those to date in % terms, in Ireland anyway. If others are in neg equity then living payment free for a year or so makes sense.

Oil is an interesting question. Commodities in general have increased for a simple reason, there is nothing else worth buying, unless it is land in cheap food countries. This reflects the flight from fiat currencies that will only intensify.

Fiat is fine if we are well governed. Clearly we are not, although I suspect that there is an attempt underway to make a world government out of the debt problem. Others clearly think so and have been greedier than ever.

The increase in cost of commodities may continue for some time as some are inelastic in demand and China and India have a long way to go. maybe 100%? Not all equally and oil is overvalued a little/ Conservation can improve so maybe 50%? Over a decade. The oil companies will try to see to that with the odd war here and there and restricting refinery capacity. Venezuala etc may all suffer the odd earthquake or two.

Bond
Believe whatever you like! Just do not expect the rest of us to join in your fantasy! You should ask for help in adjusting to reality, as it may come as a shock. Ask people you respect what is likely to happen. Try not to delude others. Now is a time for the bitter truth. Make appropriate lifestyle decisions. The FIRE economy is dead. Make out while you can. Find a bolthole before the villagers light the torches and gather pitchforks….

Empty houses are an asset. Put them to use by dropping prices to sell. Drop rent. This is going to take a long time to resolve. A LONG TIME!

More provocatively (?) a question for someone:
Can the IMF run out of money if the banks are 98% in number and value, bust?
If so, Who is going to provide more debt, MORE DEBT, to so called sovereign governments?
What will those governments do as their deficits widen?

Bond and others, please don’t bother to answer just think?

Eoin,

Before you go telling people to toddle off for peddling “bullsh1t”, have a nice icy drink and cool off your personal remarks.

Asking people to justify the drops in the market is near-impossible because we don’t have a coherent sales price database, again part of a wider disinformation policy.

But I personally know of a 3-bed semi in Clonskeagh that has not yet been sold. The owner got an offer for 350,000 last month. These houses were selling at close to 900k at the height of the bubble so this is close to the quoted figure.

Now, the owner has not yet sold, but if we are to value the “worth” at the highest big, then that house is very close to what you described as bov1ne manure.

Take it down a notch, Eoin.

@ Ribbit

apologies if you think im going OTT on that comment, but ill agree to tone it down a bit if everyone else agrees to stop with what i believe to be spurious generalisations.

As for your comment that “Asking people to justify the drops in the market is near-impossible”, well so is everyone free to just come up with whatever numbers are in their head? C’mon, there’s got to be some onus on people to be able to back up very eye-catching claims, or at the very least caveat these claims with something along the lines of “i wouldn’t be surprised with” or “i think the real picture could be this”…

@ De Roiste,

Very well made point I think:

The government has a lot to answer for on the subject of vacant housing. They knew we had no control over our interest rates and they were going down at a time they should have been going up. They knew how reliant we were becoming on the housing sector and yet they continued with a policy of incentivising the propery market instead of trying to deflate it with their short term policitcal strategy.

I listened to George Lee speaking on an old podcast from 19th December ’09 yesterday. Lee made a very similar point. You can listen to the podcast yourself. But I think Lee’s point was – if you can imagine a telecommunications line technician stuck out on a pole, somewhere in a region, phoning a report back to base – we need to tell the European commission from our end, what our problems, as we experienced them, have been in Ireland. There is a problem with the single currency he suggested, we need to identify what the problem is, and we need to report the fault to base. We cannot do that without a proper banking inquiry. We have to figure out this problem for ourselves, so that it can never happen again. The scale of losses of wealth in all sectors, to all people, has simply been too huge. I can never again happen. It is time to dispense with all of the political side stepping, and proceed with the job as described by George Lee.

Saturday View December 19th 2009
Rachel English with guests : David Mc Williams, George Lee, Maureen O’ Sullivan,Barry Andrews and Eugene Phelan

http://www.rte.ie/radio1/podcast/podcast_saturdayview.xml

Last week I heard Micheal Finneran, a junior minister, talk about an odd scheme to enter 20yr leases (for social housing) on properties that developers can’t sell.

As it was a radio interview, I may have picked him up incorrectly but it seems that councils have already loaded up a couple of thousand units and plan to do more. It seems to me that this would largely involve moving people from privately provided social housing in to new units. So it shifts the problem from developers to private landlords.

Does anyone have detail on this scheme? It seems like an expensive way to access unsellable units. How much it this costing (what are the lease details)? What is the occupancy level of the units required to date? and a whole host of other questions. Given the long durations of the leases and total (20+yrs) costs, I’d like to understand exactly what Michael Finneran is up to.

Eoin,

Okay, fair enough, dude. A good comments point depends on people being honest with their sources, as well as polite.

Which would make this place better than FF on two counts 😉

@ Ahura Mazda

I think he was refering to this. (my comment above).

“delivery across the range of social housing measures next year will be of the order of 8,000 to 9,000 units. Of this total, I expect approximately half of all units delivered to come through a combination of leasing and RAS , the other half through new builds and acquisitions.”

Thanks Greg,

Hopefully some investigative journalist looks into the 20yr leases. It is a questionable use of taxpayer funds for the next 20yrs! I’d expect local authorities will furnish and maintain/insure these properties. The overhead is probably quite significant. Given that the tenants are probably in state paid private rentals, this ‘overhead’ is currently at the private landlord’s expense. It also creates a problem for the private rental sector.

It would be reasonable to see how appropriate the units acquired are. What the decision criteria are. How much we’re paying (how is it determined). How this may vary overtime. The costs of servicing the units. The occupancy rates of units already acquired.

Eoin Bond,

As others have said, because of the absence of a publicly available register of prices (first called for in 1973 in the Kenny Report, promised last October and demanded a week ago by Tom Parlon and two days ago by Labour), I cannot tell you with any confidence that prices at the lower end of the market have dropped by 65%. They may have dropped by 10% or 90%, who knows? The last official ESRI/Permanent TSB numbers were indicating a drop of 30% from peak to the end of December 2009 which in that month alone had a 3.6% drop.

By the way I presume that NAMA valuers will have access to the actual sales prices, both the current ones and when considering Long Term Economic Value premiums, the historical ones. Which I guess will give NAMA valuers which include a number of high street estate agents, a distinct advantage over non-NAMA valuers and the general public. Are we back to insiders and outsiders again?

@ Ahura Mazda

Exactly the point. We will take on thousands of empty properties from “developers”/”investment syndicates”.

We will provide an income stream for twenty years and hand back the properties in “good as new” condition.

This has a number of effects.

It takes the properties off the market for twenty years thereby artificially supporting house prices.

It bails-out the developer/investor.

It gives the lender an income stream on debts which might otherwise be considered doubtful or bad.

I have no doubt that these properties could be bought at distressed prices thereby increasing the stock of social housing in one go.

I think you are right. It would be useful if some newspaper editor assigned a (good) reporter to get the facts, even if FOI had to be used. It just doesn’t pass the smell test.

Who’s getting bailed out? Who do they owe money too? What terms is the State getting? Are any loans covered by NAMA? Etc etc.

I argued about a year ago that local authorities should buy vacant properties at knockdown prices. The need for social housing exists and is presumably rising so they have to do something. Buying the properties would help in bringing the market towards equilibrium. By purchasing the properties money would also flow back to the banks and might save some developers. Leasing for 20 years sounds problematic as I doubt that rents have fallen by as much as house prices and thus the State will pay too much yet again will possibly maintain some zombie developers.

@ PD: Thanks for the comments: I WAS sorely tempted. Two houses up sold for well in excess of 1M!!! But I have to live somewhere (family and all!). Haven’t ‘lost’ anything – yet! And I have been able to pay down the mortgage – thank God! My sons are not so lucky. They should be in Neg Equity soon.

‘If so, Who is going to provide more debt, MORE DEBT, to so called sovereign governments?’

Precient question! I reckon HP – you know, the lads who make those fine printers. Should be fun, but it won’t!

You’d think that some of the commentators on this blog would recognize what is going on. I know they are smart enough to fire-up a spreadsheet and model a few exponentials: aggregrate growth and debt accumulation. Real scary stuff. What bothers me is that they do not appear to have figured out, yet, that modern economic growth is 101%, absolutely dependent, on both inputs of credit and fossil fuels. Looks like its Q = C^0.45 times F^0.45 – and those expos just keep decreasing. Growth? Sure, but in which direction?

I’ll be back!

B Peter

Mother Ireland is skint, elbows out of her cardigan and holes in her shoes. It surprises me that a large proportion of the commenters are suggesting that local authorities should buy ghost estates and use them as social housing. In a similar suspension of common sense all property under water should be bought by NAMA and its close relations. The population of Ireland will decline as the economies abroad recover and those in their 20s’ and 30s’ with saleable skills abandon the foundering ship of state that is now Ireland. I notice that one town down the country cannot afford a public toilet and numerous towns are beset by roads that are potholed to the point that only a 4WD can travel at over 10 kph. The government is now about as useful as it was in 1950s’, it is actually worse as evidenced by the latest cash for clunkers scam. Take out the rosary beads boys and girls, only divine intervention will work now. The secularists amongst us will find a way out but the gov’t will not be part of our solution.

@Eoin
Just a few examples of large drops in the lower end of the market

Were priced at €198k in March 08 and went to €67k before changing to price on application 66% fall
http://www.irishpropertywatch.com/viewSalesPropertyHistory.php?Ext_ID=354769&Site=daft

Down from €120k to €30k
http://www.irishpropertywatch.com/viewSalesPropertyHistory.php?Ext_ID=368113&Site=daft

Wintergarden in pearse street down from €359k to €129k 64%
http://www.irishpropertywatch.com/viewSalesPropertyHistory.php?Ext_ID=9-the-hazel-wintergarden-pearse-street-dublin-2/143255&Site=myhome

And this is pretty close to what you were looking for. Down from €800k to €345k, 57% and still not sold.
http://irishpropertywatch.110mb.com/15_DEC/15DEC_PRICE_DROPS.htm

http://www.daft.ie/searchsale.daft?id=375959&search=1

http://www.irishpropertywatch.com/viewSalesPropertyHistory.php?Ext_ID=375959&Site=daft

Down 62% from €650k to €250k and now sale agreed
http://www.irishpropertywatch.com/viewSalesPropertyHistory.php?Ext_ID=372924&Site=daft

The history of recessions suggests that there is an overshoot, both ways, to house prices. A depression is different.

The problem is that activity slows down very strongly. The only effective role for government is to get out of the way of economic activity. We have seen what their involvement has done to date. By the time a bottom approaches, the government revenue will have, from today’s point of view, collapsed to a lower level. Far lower levels of expenditure will be laid out. Tax rates will be higher and the tax base will be very broad. This very broadening will have driven what is now taxable activity into non-taxable activity, as many more husbands stay at home, having no other choice than to do so and mind children. Travel abroad will once more be rare. Many industries will have disappeared. Cosmetic surgery, waxing, haircare, fashion all will have reverted to a bygone age. Pleasures will be home based. Well maintained etc homes will retain value but deposits will take some time to accumulate and loans over 75% will be very rare.

All of the apparent wealth will have disappeared. But people will actually be happier!

Greg and Ahura Mazda
I agree with many of your points about the long term leasing scheme and I know that social housing providers have raised other concerns about the scheme, particularly about the location and quality of the dwellings earmarked for inclusion in the scheme. Local authorities have also complained that, unlike mainstream local authority tenants, tenants of leased dwellings will not be eligible to buy their dwellings, which will create two tier tenancy rights.

Apart from bailing out the developers, as far as I can ascertain, the logic of long term leasing from the Department of the Environment’s perspective is that it will a) cut the upfront costs of acquiring social housing and b) ensure that tenants don’t have the right to buy. The upfront costs of acquiring social housing in Ireland are very high because (uniquely in Western Europe) government funds 100 per cent of the costs of buying or building social housing and provides no ongoing revenue subsidies. Elsewhere governments provide revenue subsidies which social landlords use to subsidize loans to meet their capital costs. Local authority dwellings are currently sold to tenants at a discount of around 30% from market value. This is very bad value for the tax payer and has been criticized regularly by the likes of NESC but is politically untouchable. Using long term leasing effectively abolishes the right to buy for new social tenants by the back door so to speak.

@ALL
Even Tom Parlon and the CIF are now conceding a 50% house price drop – and they think there are really only 30-40,000 empties!

“CONSTRUCTION chiefs said house prices are now down 50% and have called for a register of house prices.”
http://www.irishexaminer.com/business/cif-calls-for-house-price-register-to-prevent-damage-to-economy-112970.html#ixzz0hhc0LEZM

From:
http://namawinelake.wordpress.com/2010/02/24/a-real-time-register-of-actual-sale-prices/

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