Negative Equity bites Irish (BBC)

gurramok

http://news.bbc.co.uk/2/hi/business/7649453.stm

Play the vid, the interviewed calls it as it is.

bbc wrote:

The 30-year-old had been working for a successful property development company in the city.

And as a sideline, he had also used equity in his own home to secure buy-to-let mortgages for two flats.

But as Ireland's property market slowed, he took voluntary redundancy from his job ("I jumped before I was pushed," he says).

And with the average cost of a home here being about 30% lower than a year ago, he found himself in negative equity - owing more on the rental properties than they are worth.

Firetrap

This guy is very confident he'll have another job soon. They should call back in 8 weeks and find out.

GeturGun

Banks not lending to first time buyers so they can't buy his properties.
Well boo hoo for him.
First time buyers are the very people that he probably outbid in the first place to get his investment properties.

[speaking from bitter experience as a one-time first time buyer and subsequently doing a very modest trade-up]

LEIN

Some bad carma came back to haunt the greedy fcuker!

gurramok

And as an 'investor' , he can write off the entire mortgage interest plus upkeep\maintenance on those apts/flats against tax unlike FTB's. (this tax incentive should be scrapped as we have a chronic oversupply in rental properties)

It just shows how FTB's were at a competitive disadvantage to investrors/speculators for the last 7 yrs. :mad:

copacetic

GeturGun wrote: »

Banks not lending to first time buyers so they can't buy his properties.
Well boo hoo for him.
First time buyers are the very people that he probably outbid in the first place to get his investment properties.

[speaking from bitter experience as a one-time first time buyer and subsequently doing a very modest trade-up]

errmmm, shouldn't any first time buyers he outbid be feckin delighted they didn't end up with the apartments that he is lumbered with?

GeturGun

copacetic wrote: »

errmmm, shouldn't any first time buyers he outbid be feckin delighted they didn't end up with the apartments that he is lumbered with?

Not necessarily, not if they bought it as their PPR and are living in it.

Do-more

Homeowners are defaulting on their mortgages, so the banks aren't getting paid,

I'd take issue with this statement in the piece. There is no evidence of widespread defaults by home owners. In fact the problem for the banks would appear to be unrealised bad debts from developers. I'm glad to see that the front page article in today's Sunday Business Post indicates that the bank's need to come clean about their debts. It's only when this issue is addressed that the market can find it's bottom and a rational market can be establised again.

Development land coming to the market now would suggest that prices for land have already fallen as much as 60% from the height of the market and more is certainly possible especially if the banks have to liquidate these assets over a relatively short timespan.

That's where the pain will come from for the banks.