The laws here are very different to the UK. Think you can emerge from bankruptcy in 1 year in the UK. It takes 12 years in Ireland or a complicated court case with your creditors.
Not sure what happens if you hand back the keys and don’t opt for bankruptcy but it’s certainly not as straightforward here.
Is this the ‘flight of capital to the centre’ that McWilliams was talking about? Surely the deposits are safe though aren’t they?
A lot of institutional investors lost a lot of money for clients and for themselves with Lehman Brothers and with Icelandic banks. The deposits are guaranteed but they’re only as guaranteed as the country is.
Will you get a loan after that year rocko?? I doubt it as I said to KIB man I don’t have a better idea because if you bankrupt all the people that owe mortgages we will end up with more unoccupied housed and an ever more fucked up property market, yourself, bandage and sid etc are the financial experts here perhaps ye can suggest a better than some sort of debt forgiveness where people pay so much for their house but do not own them
So should I take my dosh out of the bank and put in the post office or under the mattress Rocko
This ELG Guarantee Scheme has a current end date of 31 December 2010 but it’s due to be reviewed ahead of that date and it will surely be extended further. Much though some of the banks covered by it will be looking to exit it over time in a ‘prudent manner’ because of its associated cost and the fact they regard themselves as having taken positive steps to strengthen their balance sheets, restructure their operations and in some cases raise capital and improve capital ratios etc, the simple fact is that depositors are not going to trust Irish banks and will merely say “that’s great what you’re doing but we’re not in a position to deposit money with you unless this guarantee remains in place”. Now whether this state guarantee is actually worth a shit is another matter but the sentiment to Ireland is so negative at the moment that funds are leaking out of the country at a rapid pace whilst this uncertainty around whether a guarantee extension will be confirmed exists.*
:lol: :lol: :lol: :lol:
03-07 was a fucked up property market
what we’re experiencing is the return to the norm
you won’t need a loan to buy a place soon enough.
we have to get away from this notion that people living in houses they could never afford just need to hang on in there until “de gubbernment” sort all this out
that doesn’t mean we evict them, with the poorhouse, the coffin ship or the side of the road their only options.
there is absolutely no shortage of housing in the country. and the great irish taxpayer is now the biggest landlord/homeowner in the country.
What’ll become of all those houses owned by the taxpayer? Will they be given to ze germans in order to clear some other debt?
Nothing too bad there as I keep saying it’s about all I can think of, I see nothing wrong with moving someone out of a big house they can’t afford to a small house they can afford, I agree the property market was fucked up between 03 and 07 but it still artificially height because of government intervention.
Out of interest what will the bottom of the housing market be they are still looking for €400,000 for 4 bedrooms houses around me but all they are doing is looking for it?
People can only pay what they can afford. The way I see it the banks have two options - take the keys and take a huge hit on the loan they gave out or arrange a reduced repayment scheme for the tenants.
Remember when there was houses going for 1m in Kinvara. Not too long ago either. The non NAMA encumbered banks are liquidating property. 70k for apartments in Mullingar etc.
Surely a good time to buy land for farming though?
The average house price in 1996 was the equivalent of €75,000. By 2005 that had reached €280,000.
Between 1996 and 2005 the Consumer Price Index, which measures the cost of living, increased by 30%. If house prices had kept pace with the Consumer Price Index the average cost of a house In Ireland in 2005 would have been €97,500.
By February 2007 and the peak the average price of a house in Ireland was €311,000. According to the Permanent TSB / ESRI index (not completely reliable but probably the best measure of house prices over the last 15 years) released at the end of July (when I came up with these figures), that had fallen to €201,000.
If we say that the Consumer Price Index has risen by 45% between 1996 and 2009, (don’t have the exact figures but it’s in that ballpark ) that means that house prices won’t be at a realistic value until they reach an average of €108,000, which adds that 45% increase to the 1996 figure.
The current average industrial wage is €32,000. The generally accepted optimum level for house prices is around 3 to 4 times the average industrial wage. If we’re generous and say house prices will fall to 4 times that level, then you are talking about a figure of €128,000, way below the current figure of €201,000. I think they will fall to three times the average salary like they for most of the 80’s and up until 1995.
Here’s a graph of Irish house prices v the average industrial wage since 1977 based on CSO figures:
That’s not even taking into account the massive oversupply at the moment. Taking into account the prevailing economic factors mentioned earlier and especially the unknow number of billions to be taken out of the economy over the coming four years at any rate, there’s no reason to think prices won’t keep falling.
I think there may even be an “overshoot” which means prices fall lower than I projected, and articles like Morgan Kelly’s one won’t help sentiment among buyers one bit.
That’s just my take on it though and bear in mind I am very much not a financial expert.
Interesting sid. Do house prices typically keep pace with the CPI though? Or I suppose more to the point, what are comparable house prices across Europe relative to our average industrial wage?
Morgan Kelly is the Johnny Rotten of economics, fair play to him.
Important question though. How come he sees all this stuff and the other economists don’t. What are the rest of them up to?
there are a few different indicators you can use
a rental yield of 7% on your investment (as you can imagine, we’re way off that)
max. 4.5 times your salary, meaning the average house is within reach of someone on the average wage
the CPI graph above is one I’ve seen a lot, and makes more sense than most.
that graph repeated for countries where they actually try to manage inflation is almost linear.
and our average wage is around the european norm, well below the heights of norway or the UK
(although it’s hard to get accurate figures since our average wage would be skewed by the relatively high proportion of public sector workers)
Bit dated this, but a good indication of where we were headed. Environ report.
Go to page 23 onwards.
And so it becomes apparent why NCC has become TASE. Cleverly trying to shift attention from his taxation proposals.
There’s only one non NAMA encumbered bank and they don’t own property to liquidate. All the banks that got involved with developers are now tied up in NAMA.
I think those house price graphs are a good overview of the problem but there’s a fair bit of regionalisation to be factored in too. No disrespect to the mulliance but there’s a fair difference between demand in Dublin versus demand in Kinvara or Mullingar etc.
The current econcomic troubles probably means that more people will be moving to Dublin in search of work. That’s what tends to happen when employment is concentrated in the capital. I think while house prices are far from stable in Dublin that you will probably see demand returning in Dublin far sooner than in rural areas - particularly for houses as opposed to apartments.
Ya, it’s the people who paid big money for apartments in the commuter belt that are proper fucked. These will probably never recover to even half of their “value” and are probably so badly built they’ll be falling down in 20 years time.