“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/

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.

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!

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

“I’ll be back!”

Only if you can avoid Skynet.

http://www.youtube.com/watch?v=zqdxy43ctaA

‘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

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.

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?

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.

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.”

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

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.

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

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”…

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.

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?

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….

“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

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.

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.

http://www.bbc.co.uk/radio4/factual/thinkingallowed/thinkingallowed_20080116.shtml

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.

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.

I say that most politicians take no decisions. This is because the Dáil is impotent. The 15-member cabinet of the day takes all the decisions, and the Dáil rubber-stamps them. Those in cabinet taking decisions think that their primary role is running corporations, not collectively taking policy decisions.

http://www.sbpost.ie/commentandanalysis/legal-eagles-and-government-simply-dont-mix-47773.html

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

“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.

@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.

No problem: just send a jumbo jet to Nigeria.

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

bjg

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.