Doublespeak of the day

According to the Irish Independent, Minister Noonan was worrying in public last night about the shortage of family homes in the Dublin area. But he also apparently said:

“We need to get property prices up another bit.”

To which the only possible response is: “why”?

If you are stuck in a malfunctioning currency union and can’t devalue, then don’t you want to get all costs down as much as possible, especially if they are going to feed into wage demands? Why interfere with the market in this particular case?

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48 thoughts on “Doublespeak of the day”

  1. Ireland–A Democracy or a Propertyocracy?

    In a democracy power comes from the ballot box. Politics is like war,there are three things you need to succeed. The first is money,the second is money and the third is money.
    The people who provide the vast bulk of money which finances Irish politics are ,the builders,the cowboy developers and the constuction and property interests. They own almost all Irish politicians. The payback for this financing is — a corrupt planning system,no residential rates,mortgage tax relief,section 23/24 etc tax breaks, tax relief schemes for –urban renewal,multi-story car parks,students accomodation,buildings used for third level education,hotels and holiday camps,holiday cottages,rural and urban renewal,park-and-ride facilities,sports injury clinics and child-care facilities, and BES schemes. Feudal commercial property lease law i.e. upward-only rent reviews tied to long leases,which the sovereign signed up,on behalf of the taxpayers,were available to all the politicians friends.
    Many of this group are alumni of The Galway Tent School of Economics. The politicians look after themselves first-then their property interests. The public interest is irrelevant to the politicians.
    When Fine Gael and Labour did their u-turn on on their promise to grant all commercial tenants in existing upward-only rent review leases ,a rent review in 2011 –they were merely being consistent–looking after the interests of their bagmen. Follow the money it always leads to Leinster house.

    Welcome to Europe’s only Propertyocracy,home of the greatest bank and property crash in the history of mankind

  2. Guess who is going to finance the local and European elections for the Leinster house mob?

  3. If economists want to understand Noonan’s thinking, they need to get working on models in which welfare is a function of bank profitability or the like. Forget trivia such as growth and unemployment and focus on the things that matter.

  4. Noonan said the same thing months ago. It must be clear by now that the political cycle requires no further recapitalisations of Irish banks and squeezing property prices up as much as possible feeds directly into the ECB Asset Quality Review and Stress Tests to minimize or eliminate shortfalls.

    Nama is a key part of that squeeze, and let’s be honest about this, that is more or less what it says on its tin. The “foreclosure channel” for supply is in effect closed in Ireland – even on 12,000 buy to let’s with over two years of arrears on them and a central bank governor who denies the very existence of strategic default in Ireland. I think there are currently around 60 BTLs being sold as repos or handbacks per Quarter.

    Let’s not pretend. Denying supply to an eager market, and ramping property prices is government and central bank policy.

    Political animals don’t do long term, or even medium term economic management.

  5. In which case grumpy, what happens if the ECB upsets the apple cart with a more-honest-than-expected AQR and stress test in the autumn? Damaging the real (flow) economy for balance sheet reasons in this manner will then all have been for nothing.

  6. @kevin

    In politics you always play the percentages (if it doesn’t pan out then “nobody could have anticipated that” nearly always provides an excuse) and history suggest to official Ireland that if the right optics are in place, the AQR will not opt to upset the applecart.

  7. Because thousands of people have homes with mortgages more than the house is worth. Because those people can’t sell down to a more affordable home – even though wages have fallen. Because those people can’t declare bankruptcy because the laws here on bankruptcy are draconian. Because we’ve bailed out the professionals using increased taxes and decreased wages on the amateurs.

    Granted, those people are just idiots and we should laugh at them, but oddly politicians actually are vaguely accountable to them and they can’t laugh at them all the time.

  8. The idea that public policy should be aimed at validating the real estate myth,preventing a collapse in home prices from happening is an error of the first magnatude. In the short run a drop in home prices may disrupt the economy, producing undesirable systemic effects. But, in the long run,the home price drops are clearly a good thing. Scarcity is not good news-low prices are.

  9. Prof O’Rourke: The ECB – will, like any political dinosaur, look into its multi-chambered ‘heart’ – wheresoever that organ may be situated within its body-politic, and declare solemnly – “Alles in ordnung” – or the equivalent in the divers tongues of the EZ. It cannot be otherwise. Sure, they will say, “That things might be better with some of the limbs”. “But we have this magic unction. Just keep applying it to all affected parts”. But that’s it.

    For anyone interested in this sort of amoral, spineless, vacuous guff: Identity Protective Cognition – [Kahan].

    There are thousands (literally) of locations within the perimeters of the Nth. and Sth. Circular Roads that are suitable for human habitation. The so-far successful attempt to re-goose some residential property prices in desirable Dublin Area locations is a blatant political ploy – like abolishing college fees; ‘free’ Medical Cards; etc., etc. Works. For a while at least. But so do all Ponzi schemes.

    Who want’s to be the next victim of a slime campaign then? Shatter’s shattered. So it must be Michael’s turn.

  10. The Minister is ‘managing the balance sheets’.
    Fair play to you, Willie! Oops, sorry, Mickey!

  11. My guess would be Noonan’s thinking is something like this:

    Modest house price inflation over the next few years will get some people out of negative equity, thus helping a large voting block and also the banks and consequently general government finances. It will also encourage new housing construction which contributes to employment and economic growth.

    Did he actually suggest interfering in the market to stimulate prices?

  12. Carson,

    From what I heard this morning, he spent most of his time talking about using NAMA as a vehicle to build more houses. NAMA has the land, soem US hedge fund has the capital and Riobard the Builder has the skills to lay the blocks.

    It strikes me that the usual suspect who allege that Noonan is ramping the property market would complain even louder if he engaged in a large fire sale.

  13. Everybody agrees there is a shortage in Dublin. Very very roughly a typical 1200 sq ft house would be built and finished for 140k – 170k. That’s approximate stuff, and without applying canny negotiating for size.

    In or around the non-expensive parts of Dublin, such houses might currently sell for anywhere between 200k – 400k depending on where.

    The gap between those figures is available for margin and site value.

    I am not aware of any sites suitable for residential housing with zero value in or around Dublin. Therefore it is difficult to conclude that houses could not be built in the Capital without further increases in property prices.

    What is far more plausible is that balance sheets (whether Nama or bank) which contain undeveloped sites and underwater mortgages would be flattered by further increases in prices. Also, property owners tend to vote, rather than hang out in Australiua or Canada.

  14. NAMA has the loans unless foreclosed in which case they should sell any land and not be building up a land bank.
    US Hedge funds historically dont and wont fund spec resi development cost of funds far exceeds NAMA’s.
    Bob the ‘builder’ has done a bunk and gone BK in the UK after getting hounded by NAMA for a few bob.
    NAMA has one yep ONE kinda JV with Starwood,they cant pull the trigger.
    http://www.nama.ie/news/nama-welcomes-hugely-encouraging-response-irish-international-firms-extends-deadline-expressing-interest/
    The CSO index excludes cash transactions.
    https://www.daft.ie/report/

    NAMA has control via notes of a vast land bank is the largest land “owner” in Ireland and Dublin has ‘relationships’ with the top builders almost unlimited amounts of capital yet cant put a shovel in the ground…houston do we have a problem?

  15. Housing prices should not outstrip inflation in the long term because,except for land restricted sites,house prices should tend towards building costs plus normal economic profit” Bob Schiller

  16. The Government’s biggest headache is the poor quality of Irish bank collateral. They did not come to the rescue with their eyes tight shut. Out of one corner they thought they saw a short and sharp downturn followed by a quick recovery. Their creditors and paid advisors would have given them a briefing that would be in their self interest and one that had receptive ears in government. The depth and length of the collapse in the quality of bank collateral was something that our politicians and their advisors could not begin to contemplate.
    Noonan is obviously praying and hoping that the banks will not be back for more taxpayer funding. He is fervently praying for the long awaited property market recovery. The people who could benefit from reduced property values do not rate in the eyes of FG Ministers. ’tis the upper middle class, the oligarchs and the politicians that must be saved.
    Tell me what I want to hear and I will pay you well.

  17. No analysis of the housing bubble problem without discussing the effects of how money is created at present.

    For banks, and not the central bank, effectively decide how much money to create. And they also decide how money should be first spent.

    This lays the foundations for the situation we see before us. Banks are systemically incentivised to create as much money as possible and have it collateralised by real world assets, such as houses. This pushes prices up and the system itself promotes bubbles.

    [For some reason we don’t tend to call rising house prices inflation.]

    This chart should show how how prices have little to do with supply and demand, and far more to do with what’s on the banks’ money creation agendas.

    Positive Money have a short video on this topic which is available chart here. [2 minutes long]

    If the central bank were in charge of controlling the money supply we could expect far more stable house prices and a housing market more fit for purpose.

  18. This is joke? Right? Well its not funny!

    Why did Irish residential property prices inflate by 350% from 1995 thru 2006? The fairies? No. Cheap loans and lots of ex niliho money. Please pay attention to that last part – a massive amount of costless, virtual money was created with utterly nothing to back it up – except the rising, rising, rising virtual prices of the properties which were being constructed with all that costless, virtual money. So, when real res property prices decline – what happens to the debt? Ye know what fracking is? Yeah! It leaves a lot of toxic stuff over, and under, the place. You do not remediate that sort of a landscape in a few years. The toxic residues of our 350% res property bubble are Negative Equity and un-payable debts. And a third is forming nicely: repossessions.

    A residential mortgage is a long-term debt. Hence, a lien on one’s long-term, probabilistic income. The original, dull, boring res property mortgage lending model had a default rate of less than 1%. What is it now? Ten times that? Twenty times? Why?

    There is no genuine effort being made by the usual suspects to even acknowledge that there is an intractable mortgage debt problem, due to either the loss of, or decrease in, incomes. You do not put salve on a gangrenous limb. You amputate it!

    @ grumpy: I’ll beg to differ with you on the so-called shortage of res property in the Dublin area. I believe that there are, literally, thousands, of suitable residential properties available between the North and South Circular Roads. Many are in non-residential use. Would need some work – but they are there to be re-developed for domestic use. Bring the folk back into the city. Do not create more ex-urban dormitories that require a car to get around. Is that too much to ask?

  19. It makes absolutley no social or economic sense to cheer inflation in house prices. NONE

    And why is the crisis in social housing, with waiting lists growing by the week, receiving so little attention.

    Regulation of private renting remains feudal; as if feudal is good enough for the serfs.

  20. Propping up asset values while waiting for growth to turn up seems to be the Zeitgeist .

    Companies are not investing so non devaluation growth doesn’t look very likely.

  21. The whole mismanagement of the economy has been, and continues to be an utter disgrace from start to finish and there is no finish, because this mismanagement is going to go on and on and on. From boom to bust. From too much property it is back again to too little property. We all know that this is absurd it is a disgrace. Certain people and groups are being looked after and the vast majority of citizens are being screwed over and over to facilitate this.

    My government the government of my little country, have been playing a blinder against the citizens of this state in order to drive up book values of property because they did not want to ‘mark to market values’ those properties that had been absurdly driven up in price by greedy developers and the greedy, incompetent government who sucked 40% in taxes from every single apartment and house built and there was 90,000 of them being built at the bust. Then, they put a property tax as part of an MOU on all houses even those that had absurd mortgages on them and which were in negative equity. It is like a guy I know who is living in a Salvation Army Hostel but is being charged almost 800 euro USC for his troubles. He would have been better off if he had never worked a day in his life and that’s a fact.

    Debt forgiveness is nothing more than admitting that the values put on loans was absurd in the first instance. It is hard for professors of economics to admit this but it’s a reality. Oh and while I am at it let me also say that from the get go Honohan has made a complete hames of it but is also playing a blinder against the people.

    A large proportion of the Bailout money (the people’s debt) was pumped into banks. However, instead of writing down the values of loans to reflect the injection of capital the bad residential loans and BTL loans were left in the system, Zombie loans, ignored and by god did they rise and have they risen?

    Now, finally Noonan and his buddies have admitted that they have been doing everything in their power to talk up, nay force up, by hook or by crook, mostly the latter, prices of property. They have created a dearth of physical scarcity and, they have created a scarcity of available mortgages by various nefarious means. They are now back to their old, old tricks of being “prepared to work with ‘certain’ builders”. Meanwhile, those trying to buy property cannot get a mortgage so there are thousands fleeing the rental market back to their parents homes. It is so perverse that it is almost delightfully macabre. Imagine the absolute rage they must fell when they hear Ireland’s Rumpole of the Bailey minister for finance, coming out with his market intervention strategies and his, we need to force them a little more. It’s comic and pure unadulterated corruption even thought I freely admit I will gain significantly myself from the mismanagement. Unfortunately, other people are committing suicide over the way this country is being run, so I take no pleasure whatsoever from the shambles.

  22. It’s quite a weird situation with mortgage approvals in February at a 42-year low.

    CSO data shows that the average price of a new house/ apartment in Dublin in Q4 2006 and Q4 2013 was €419,330 and €304,275 while the price for second hand houses was €517,865 and €354,866.

    Median prices would be more useful as in 2006, price inflation in the expensive market would have skewed the average.

    In 2004, Brian Cowen, then finance minister, said that tax and public charges accounted for 28% of the average cost of a new house.

    Affordability has improved because of the fall in interest rates but looking at the multiple for the average wage of an industrial manual worker of €31,000 in 2006 and €32,000 in 2013, the multiple for a new home in Dublin was 13.5 in 2006 and 9.5 in 2013.

    It’s also weird that farmers who account for 4.5% of the workforce can retain a lucrative system that makes development land scarce in a country that is estimated to be 4% urbanised compared with 8% in England & Wales.

    In 2006 the European Environment Agency cited Dublin as a “worst case scenario” of urban sprawl.

    Jerome Casey, in 2003 as editor of the ‘Building Industry Bulletin’ newsletter, said that site costs accounted for 42.5% of a house nationwide. Casey said that typically in the mid 1990s, Durkan Brothers sold apartments off O’Connell Street for £35,000 to £40,000 (€44,440 to €50,790) for which the site cost was £5,000.

    “Currently, both the Irish Council for Social Housing and private house builders are reporting city house site costs at up to 50% of the house price. Outside the cities, site costs can represent up to 40% of the house price. For the country as a whole, site costs may now constitute 42.5% of the house price, an increase of almost 30 percentage points on the pre-boom position. In Dublin that increases to 50%. Overall the Irish figures are grossly out of line with the rest of the developed world.”

    In the US land accounted for 20% of the total cost of a house. In Denmark the figure is similar while in Portugal the land factor drops to 15%.

  23. @ MH

    Rent seeking behaviour rules, in every sense. As Robert B says, it is a macabre tale.

  24. @ Tull and Jim Power

    Nama Are going to use capital from a US hedgefund?
    Why do Nama need capital?
    They have loads of capital aftr the non disclosed sales they have made in the last few weeks.
    Why not just use their own capital and build a load of houses on their Dublin land banks?
    One reason
    Ideology.
    Even though it is the obvious thing to do and is the cheapest way of doing it and would get thousands of construction people back to work it wont happen because it looks like public sector house construction.
    Despite the lies from estate agents on the radio the cost of building a 3 bed Semi D is about 100k. They already own the land.
    As a famous politician once said “That’s alright in practice but will it work in principle”

  25. Eamonn,
    if you can build a semi D in Dublin before your margin for 100k off you go and build it. I would think the product of your labours would make McFeely look like a master builder. In addition, you do have to buy the land and I assume you want to make a profit.

  26. Mr Noonan is one of the world’s greatest spinners–he is in his seventies now–and perhaps it’s time to put on the slippers,pour himself a large glass of double Irish and listen to that old Irish song dedicated to him by Nana Mouskouri;
    ttps://www.youtube.com/watch?v=eSaHKDrzwsI&feature=kp

  27. @ MH

    “It’s also weird that farmers who account for 4.5% of the workforce can retain a lucrative system that makes development land scarce in a country that is estimated to be 4% urbanised compared with 8% in England & Wales.”

    I always think that flying into Dublin. There is so much SPACE compared to Benelux or South East England.

    That 2006 EEA report was covered in the IT at the time

    “As reported in this newspaper, Dublin’s sprawl is being used by the European Environment Agency (EEA) as a “worst-case scenario” of urban planning so that newer EU member states might avoid making the same mistakes. It is clear that the authors of a report by the agency on sprawl throughout Europe, due to be published next month, were quite taken aback by what they found here. They concluded – quite correctly – that it was the result of laissez faire planning policies which allowed development to run out of control. And their message to newer EU member states is that they should seek to avoid making the same mistakes as we made over the past decade.”

    It is not THE worst case- London is going to be really f***ed when the oil runs out.

    Entropy is coming.

  28. Perhaps a reality check is in order. Do we really need more residential housing units? Where should they be situated? Nature of those units? What price range? – based on ‘normal’ residential lending criteria pre 1995, not post 1995, the latter are financially unstable in the short-term and unsustainable in the long-term. Waged-labour incomes are likely to continue to erode, in respect of the proportion needed to pay for accommodation (max must not exceed 32% of gross).

    Concentrate on all existing urban (inner especially) in search for suitable locations with existing buildings which could be re-developed as residential. Not new sites. It is imperative to get more and more families back into the older urban areas – outer urban and ex-urban estates require a car: economically unsustainable.

    Its hard to know what sort of an event will trigger a reality check about residential property. But the longer the political denial and obfuscation and financial chicanery continue – the worse the eventual social outcomes will be. Yellow economic hazard flags have gone up in a few place.

  29. @ Tull
    I am talking about the cost of building a house, given that Nama already own the land. Why would building in Dublin be more costly than anywhere else in the country? Materials and labour should be similar everywhere in Ireland.
    Why dont nama just build family homes on the land they own? Why do they need a hedgefund to get involved? Ideology

  30. @ Brian Woods Snr.

    Rampant Nimbyism and the reaction to Ballymun – – young families with no facilities and no community was unsurprisingly a social disaster – – has prevented high-rise construction.

    Singapore is an island city of 5m – single people can only buy an apartment of a max size etc and it has a very good metro. Car numbers are limited.

    Singapore: 710 km² Dublin: 920 km²

  31. This is from the Irish Independent in May 2000:

    The strategic planning guidelines constitute a mandate for continuing urban sprawl which will create an ever expanding metropolis around Dublin at lower density than any comparable urban area in Europe, DKM Economic Consultants warns in its report.

    According to Colm McCarthy, of Davy Kelleher McCarthy, the predicted number of new dwellings will require that development occurs over an area more than twice the size contained within the M25 around London, which has a population of eight million.

    He maintains that suburban development at six units to the acre would accommodate the required 165,000 dwellings in an area of 118 sq kilometers, or seven miles square.

    “The process of urban sprawl around Dublin has already spread throughout north and mid Leinster, beyond even the large area envisaged by the Strategic Planning Guidelines”, he warns. Due to speak at the Irish Homes Builders’ Association convention in Edinburgh this morning, Mr. McCarthy suggests an alternative policy by aggressively zoning and servicing all undeveloped land within ten miles of the city centre for housing and mixed-use development.

  32. Brian Woods Snr

    If you were to knock down all the unused half empty warehouses within the canals and those within the M50 there would be enough space to solve the current crisis and perhaps 30 years supply of sites. However like you I am wondering about the true nature of this “shortage”. Holding of these properties is merely property speculation. There is a lot of poor quality industrial stuff being left rot or is being let out on short leases to facilitate speculation.

    One thing we do know is that most of the apartments built in the boom are way too small. This was essentially a major planning fopaux again motivated by DCC wanting to make money. Most of these units are totally unsuitable for family living some were as small as 330 sq feet especially the early Zoe ones. In fact. there have already been some tragedies, deaths of children related to unsuitable apartments being used to try and raise small children.

    How many people bought these apartments because of the orchestrated frenzy that was whipped up? They were told “get your foot on the ladder” or you will never be able to afford “anything” ever, again! Now, the same people, are trapped unable to move and they hear Enda Kenny and his minister for Finance telling them that they have been straining every sinew to force up the price of properties and rents. They are really not worried about these people are tehy? Neither are they worried about the 128,000 in mortgage arrears. Essentially, by forcing up rents and property prices what he is trying to do is avoid loans having been to be adjusted to realistic market levels reflecting the impoverishment of the country and the mountain of debt which is now on top of us and getting higher all the time, despite what we are being told.

    Why are Ulster Bank being allowed to run amok down the courts? Is it because, again, it suits the the government agenda of putting the frighteners on “the rest of them”. All this to lessen, at least until after the stress tests, mortgage defaults. Ulster Bank and the other branch of UK banking in Ireland, Bank of Scotland Ireland (BOSI) were right up there even ahead, of the others, inflating property prices by pushing, unsustainable and unregulated mortgages. Now they are allowed to throw their weight around almost with impunity to enforce these perfect little contracts while the Insolvency legislation which was supposedly designed to help people has essentially excluded the vast majority of those people from being helped. Help is you can go bankrupt in a 3 + 5 arrangement in a market where the government are deliberately limiting supply and pushing up the price of property. The law society estimated less than one in ten that needed help under the legislation would qualify. Unbelievable!

    The recipients of mortgages have yet to bring a class action against the regulator and central bank. One of the reasons this has not happened is that the legal profession depend on government to keep the gravy coming in, they are mining the money from the other side of the equation, NAMA, Reits, the Anglo insolvency, the Banks, liquidations receiverships bankruptcies, hedge funds, pension industry, vulture funds. This is a much more lucrative than helping ordinary Joe or Mary to keep a roof over their heads, consequently, that has been left to a small number of independent groups.

  33. Some very good contributions by Robert Browne in this thread, the suggested tag, democracy capture, comes to mind.

  34. @ MH: Thanks for that. I’ll take a pass on Singapore. Not my glass of tea. How are they fixed for fresh water?

    I have absolutely no faith in any economic estimates being published by official sources or the media. I do not believe we need 80,000 new family-sized dwellings. What about those that have been built, but not occupied? I guess they are out in the boonies. Useless.

    The only private or public housing policy model that will be acceptable – for a while anyway, is the current dysfunctional one. A few folk are attempting to emulate Issa of Nazareth as he called upon his family friend Lazarus to “Arise!”

    @ Robert: Thanks for that. Sound sense in what you say. I’d opt for clusters of townlets connected with a public transit network, each with its own set of owner-occupied ‘corner-shops’ – no multiples nor franchises.

    I’m not stuck for words on this issue, just completely shocked at the mendacity. I’m far from convinced that the purveyors of this nonsense are thick or ill-informed. So what are they?

    The residential mortgage lenders seem adamant not to concede (except in extremis) any write-down of individual mortgage debts. Yet are quite quick to securitize non-performing loans and sell them at a steep discount. Am I missing something?

    Public outrage is a funny thing. It is very elastic for a long time: then snaps suddenly!

    Each non-performing residential mortgage (not the BTLs) should be re-visited on an individual basis and written down. Sustainability to be based on: – a 30 year amortizing loan at between 6% and 8% interest; that a 20% cash deposit was paid (even if it was not); that any top-up of the original loan is also deducted out, and that the total operating costs for the property (mortgage repayments, insurance, household charges and RPT) are not in excess of 32% of gross current income. Anything else is not sustainable – within any time-frame.

    I guess residential property prices will continue to be ‘goosed’ for as long as the base interest rate remains below 1%. Could be a while.

  35. The history of Ireland is a long unbroken tale of exploitation of the working population by an amoral, property owning ascendancy. This goes back to the Dark Ages. England and Religion serve merely as grammar and punctuation marks in a decidely home-spun national tradgedy.

  36. The history of Ireland is written in blood–the blood of the struggle between landlords and tenants. All Haughy’s bagmen are sovereign landlords. The current government supported these multi-millionaires and destroyed tens of thousands of sustainable Irish businesses and jobs. Just like Mr Haughey, they are patriots to their fingertips.

  37. In terms of planning one has to suspect this drive to ‘increase supply’ of ‘family homes’ will be a disaster. Family homes in official Ireland terms most likely means soulless estates of 3d semis, designed in an hour on autocad, with more cars parked within its boundaries than houses, where even the corner shop a drive away. Only attractive to it’s purchaser because it offers a chance not to miss out on the state supported Ponzi scheme.

    Anyone talking about family apartments? Near parks, public transport and facilities? No, because to official Ireland apartments are for students, divorced men and the poor.

  38. @John Foody

    Anyone talking about family apartments? Do you really think our planners would have the foresight even the ability to manage such a possibility? I don’t.

    At the moment I know of a 650 sq foot apartment built by TD Mick Wallace which is costing over 2,300 in management fees alone. There is also a property taxes, no “fighting fund”, water charges in the pipeline but already there is no money there to do any repairs. Gates constantly need repairs, lifts need to be maintained and if the roof leaks (it has a flat roof like most apartments god help them. For the owners of such apartments (not me) life is hell. No one wants to go on management committee’s, nobody wants to try and collect money off non paying owners. Welcome to the life of living in an apartment block and it can only get worse as they age ungracefully! Slum’s of the future as the taxi drivers used to say.

  39. In answer to the original question, “Why?” the answer has probably best been articulated by grumpy.

    Here’s what he said again…

    “Noonan said the same thing months ago. It must be clear by now that the political cycle requires no further recapitalisations of Irish banks and squeezing property prices up as much as possible feeds directly into the ECB Asset Quality Review and Stress Tests to minimize or eliminate shortfalls.

    Nama is a key part of that squeeze, and let’s be honest about this, that is more or less what it says on its tin. The “foreclosure channel” for supply is in effect closed in Ireland – even on 12,000 buy to let’s with over two years of arrears on them and a central bank governor who denies the very existence of strategic default in Ireland. I think there are currently around 60 BTLs being sold as repos or handbacks per Quarter.

    Let’s not pretend. Denying supply to an eager market, and ramping property prices is government and central bank policy.

    Political animals don’t do long term, or even medium term economic management.”

  40. @ Robert Browne

    I am no stranger to the pains associated with apartment ownership, I have plenty of colleagues and friends in similar situations. Renting is no picnic either, I know of a landlord that took 4 months to replace a bath that wasn’t fit for purpose and he only acted once the water had caused damage to the apartment below. Apparently water damage is covered by a sink fund, so presumably he wasn’t incentivised to act any sooner. There’s a lot of cowboys and gouging happening in the Dublin rental market. Though I don’t think that would be news to anyone.

    I would still rather live in a well built, well maintained, spacious apartment near amenities than a 3d semi out in the goonies. So would many others if they thought such an apartments existed in Ireland and were reasonably priced to rent/own.

  41. @John Foody

    In most countries lease lengths for residential property is the same as lease lengths for commercial properties,say on average 5 years. In France and the Benelux countries they have 3/6/9 leases for commercial and residential properties. The tenant agrees a rent and signs up a nine year lease. The rent is increased by inflation in each of the nine years. At the end of year three, the tenant can break the lease,likewise at the end of year six and nine. At the end of the nine years the rent is reviewed to market rent.
    In Ireland commercial lease lengths are 25/35 years and residential lease lengths are one year. The Irish commercial and residential tenants are treated like serfs.

  42. This country is perpetuating medieval thinking and Victorian times laws, particularly regarding the rights of tenants being on residential or commercial properties. For a culture that had to endure centuries of ill treatment from rich and stupid elite classes from England, the Irish in their so called republic behave practically the same way. period.

  43. Nama should turn all its properties into social and affordable housing and develop more. Say 30,000 properties at 200,000 a pop. 6 billion. 100,000 on the waiting lists for social housing.
    The world is awash with cash – the global savings glut. The pity is that as economic indicators show an upturn in the Irish economy the speculators will be in to buy up all the properties and push up the price.
    People simply looking for shelter will be left paying the mortgages of the wealthy investors who got in first.
    Investment in real estate is not productive like investment in companies or people and should be controlled and not encouraged.
    The issue is that we live in a democracy. Many owner occupiers can’t see past their own imagined interest in increased house prices to do what is right for society

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