The Property market has reached the bottom!

gurramok

AARRRGH wrote: »

When you add the interest onto the 25k, you're talking at least 50k.

So you can earn 50k in one year by doing nothing.

Yes please.

Exactly. A house purchase is not just for Xmas, its for 25-35yrs of your life!!

SoupyNorman

danielq1007 wrote: »

In alot of places houses are for sale at their construction cost and its hard to see things falling lower than that.

The construction cost also includes the inflated land price so by buying at the builders cost price you are still going to be paying an inflated price.

For new builds especially they should/will be sold off at big discounts.

I'll be dipping my toe in the property market soon hopefully but no matter how much I love a house I'm not parting with a cent until I feel like I've got a seriously good deal. There is no way to know how much you should pay for a property and be safe from negative equity but you can try insulate yourself by waiting a little while longer...the flip side being that you can go in a perpetual state waiting out the next pass over the next horizon anticipating another price drop.

daltonr

danielq1007 wrote: »

I don't know everyone. I think the fact that you buy a house to live in for the next maybe 50 years does it really matter if you wait another 12 months to save 5 or 10%.

What I'd like to do is protect people who really would care about a 10% drop, people who consider that a lot of money, but who get conned by "experts" into thinking there won't be a fall.

These same "experts" who say the falls are bottoming out.
The same "experts" who conned another group of buyers into thinking the bubble wouldn't burst.

Let me put it another way to you, If we're so close to the bottom, does it really matter if you rent for a little while longer, and be sure that you're buying on the way back up?

If things bottom out in the next few months, you've lost nothing.
If things keep falling for years, you've saved yourself.

We're not going to wake up some morning and find houses have jumped 20%.

As for whether houses can drop below their rebuild cost.
I heard that old chestnut over Christmas.
As Obama might say...Yes they can. And do. All the time.
Check out Daft right now. Look at the low end prices in Waterford. Tell me that prices aren't already below rebuild cost. And guess what....they still ain't selling.

The only floor for property is the site value. And there's no floor for the site value.

I predict that in a few years some older houses in rural Ireland will be available for peanuts. I'm seeing houses already where elderly people die and the houses are just empty. Nobody wants them because there are brand new empty houses closer to ameneties etc. People inherit them and just want shut if them. But who wants to buy
an old house with a BER rating so low that they have to invent new letters?

10 years from now people who can't sell some old house they've inherited will jump at 10K or even less rather than have it sit empty costing them tax.
There aren't enough people to fill the houses. So you tell me how low prices can go.

Have you ever played musical chairs with more chairs than players?

-Rd

spockety

danielq1007 wrote: »

I don't know everyone. I think the fact that you buy a house to live in for the next maybe 50 years does it really matter if you wait another 12 months to save 5 or 10%. I think if you see the house you like just buy it. In alot of places houses are for sale at their construction cost and its hard to see things falling lower than that.

5 or 10% could be the difference between a 30 year mortgage and a 25 year mortgage.

jmayo

AARRRGH wrote: »

I'm pretty sure mrgaa1 is an estate agent who doesn't really believe the things he's saying.

Ehh he/she always claims they are not but that they are an investor.
Hell mrgaa1 was on boards mid 2009 telling people there were great inventment bargains to be had out there. :rolleyes:

As I just said on other thread why have we (lots of Irish people and even gombeen politicans like frank fahey) got into this mindset where the proice of property, houses in particular, is a measure of the econmic well being of the country ?

Recovery in economy does not equal houses going back to peak, or anywhere near peak, bubble prices.
And as some poster (can't remeber who) around here claimed we DO NOT NEED house prices to recover in order for the economy to recover.

As for property prices staying at flat level over many years check out Japan post 1990/1991.

The_Conductor

jmayo wrote: »

As for property prices staying at flat level over many years check out Japan post 1990/1991.

Japan is now at 1989 prices (and falling.......)

OMD

jmayo wrote: »

And as some poster (can't remeber who) around here claimed we DO NOT NEED house prices to recover in order for the economy to recover.
.

Well in the medium term it does. If property prices stay at current levels for next 10 years then we are totally screwed thanks to NAMA.

Fighting Irish

house prices will not stop falling for a long while

The_Conductor

OMD wrote: »

Well in the medium term it does. If property prices stay at current levels for next 10 years then we are totally screwed thanks to NAMA.

Its irrelevant what happens with property prices, we'll be screwed because of NAMA anyhow. Once the loans are transferred to NAMA by institutions at market prices, their capital ratios will be so badly impaired- that its going to cost more than another 20 billion just to restore teir 1 capital ratios (and another 6-7 billion to get any lending underway).

It now costs BOI and AIB 5.8% to borrow money. They have not passed this on to consumers and businesses. Its sure going to hurt when they do.......

Freddie59

smccarrick wrote: »

IOnce the loans are transferred to NAMA by institutions at market prices, their capital ratios will be so badly impaired- that its going to cost more than another 20 billion just to restore teir 1 capital ratios (and another 6-7 billion to get any lending underway).

In a nutshell. And if anyone saw the recent Prime Time on the property market, some of these landbanks have fallen by up to 90% of the value at which the loan was initially borrowed. Screwed indeed.

daltonr

Freddie59 wrote: »

In a nutshell. And if anyone saw the recent Prime Time on the property market, some of these landbanks have fallen by up to 90% of the value at which the loan was initially borrowed. Screwed indeed.

And how much will we be paying for the loans secured against these same landbanks?

Perhaps 70% of their face value.

That's 70% of the value of the loan, not the value of the land. The land value is so far from the balance on the loan that a manned mission between the two isn't feasible with today's technology.

That's 70% of the balance of a loan that has had interest accumulating on it. So 70% of a number that is already vastly more than the original loan.
It's entirely possible that for some of these loans, NAMA will actually manage to pay more for the loan than the developer originally borrowed.

And for security? A field in ballygobackwards that's currently under 3 feet of water that has frozen into ice.

-Rd

hinault

daltonr wrote: »

And how much will we be paying for the loans secured against these same landbanks?

Perhaps 70% of their face value.

That's 70% of the value of the loan, not the value of the land. The land value is so far from the balance on the loan that a manned mission between the two isn't feasible with today's technology.

That's 70% of the balance of a loan that has had interest accumulating on it. So 70% of a number that is already vastly more than the original loan.
It's entirely possible that for some of these loans, NAMA will actually manage to pay more for the loan than the developer originally borrowed.

And for security? A field in ballygobackwards that's currently under 3 feet of water that has frozen into ice.

-Rd

I agree 100%.

I think we, as a country need to start to really consider NAMA and the resultant fallout.

The loan values quesstimate €54b is wildly over optimistic in my view.

I think we should as a nation watch what is happning in Iceland : their President has refused to authorise the repayment of loans.
They appear not to want to saddle the Icelandic people with generational debt.

I do take the point that Iceland credit rating is in trouble as a result and that insurance costs have increased and credit swaps have also increased.
But there is a point of prinicple at stake too.

Unlike Iceland, our politicians will do anything to bail out the bankers/developers and saddle the State (ie you and me) with literally generational debt as a result.

Remember the credit storm started in August 2007.

OMD

daltonr wrote: »

And how much will we be paying for the loans secured against these same landbanks?

Perhaps 70% of their face value.

That's 70% of the value of the loan, not the value of the land. The land value is so far from the balance on the loan that a manned mission between the two isn't feasible with today's technology.

That's 70% of the balance of a loan that has had interest accumulating on it. So 70% of a number that is already vastly more than the original loan.
It's entirely possible that for some of these loans, NAMA will actually manage to pay more for the loan than the developer originally borrowed.

And for security? A field in ballygobackwards that's currently under 3 feet of water that has frozen into ice.

-Rd

No that is not true. We are paying 10% above its current value. If it is currently worth €1 then we are paying €1.10 even if it was "worth" €1,000,000 a few years ago.

The_Conductor

OMD wrote: »

No that is not true. We are paying 10% above its current value. If it is currently worth €1 then we are paying €1.10 even if it was "worth" €1,000,000 a few years ago.

However- the issue is that the current value- has been so overstated by the banks own models- as to being meaningless. The nominal values put on the assets by the teams contracted to do so- are still expected to be inflated, however they are so much lower than the banks valuations that they are turning the entire banking sector into a basket case. Far from NAMA rescuing the banks- while its removing odious loans from their balance sheets- its also impairing their capital ratios so badly, that it will make them technically insolvent. Already the market capitalisation of AIB and BOI, even after their recent gains, is less than 70% of the gross amount injected into the banks by the government........

People really don't seem to comprehend how badly screwed the banks are........

OMD

smccarrick wrote: »

Already the market capitalisation of AIB and BOI, even after their recent gains, is less than 70% of the gross amount injected into the banks by the government........

........

That is because there is a chance the banks will be nationalised.

The_Conductor

OMD wrote: »

That is because there is a chance the banks will be nationalised.

Its more a reflection of the nature of the preference shares- no other shareholders will receive anything whatsoever for years to come. The current financing rate for both BOI and AIB is 5.8%- they can't get funds for less than this. They are unable to access funds at reasonable rates. The chance they will be nationalised is certainly a worry- but its one item on a list of worries.

daltonr

OMD wrote: »

No that is not true. We are paying 10% above its current value. If it is currently worth €1 then we are paying €1.10 even if it was "worth" €1,000,000 a few years ago.

Well your first mistake right there was to mention current value. NAMA has about as much to do with current value as I have to do with the Aurora Borealis.

NAMA will look at current loans. Come up with a grossly inflated notion of the current value of those loans. Then pay even more than that estimated value, called Long Term Economic Value.

This is a made up term, you won't find it in books on economics or investing. If you google it you'll only find links to NAMA. As a concept it makes absolutely zero sense. It's just a random stringing together of words.

A thing is worth what it is worth. If it is expected to be worth x in some distant future then it has to by definition be worth less than x now.
The only chance of making a profit is to buy sufficiently cheaply to cover the risk of an asset not reaching it's expected future value.

NAMA takes for granted that property will rise in value, but worse than that, it's paying that future value, so in a best case scenario where property actually does recover within a few years (not gonna happen) NAMA will only made a small loss.

In the far more likely (virtually certain) scenario that we don't recover quickly, NAMA is certain to lose big.

No member of the public that I've spoken to understands NAMA.
It has been a masterful performance by Fianna Fail to get this travesty passed.

NAMA is a bigger deal for the future of Ireland than the Civil War was.

And very few people realise it.

And if you think NAMA has good valuers working for it. IT has been hiring the same Estate Agencies that were telling us there wasn't a bubble, telling us there would be a soft landing, and who still tell us regularly that we've reached the bottom, recovery is certain.

Based on their recent performance alone we know that NAMA valuations will be wildly optimistic. And then you lump the myth of LTEV on top of that?

Ireland is absolutely totally and utterly screwed.

The recession to date has only been an appetizer.

-Rd

Freddie59

daltonr wrote: »

Well your first mistake right there was to mention current value. NAMA has about as much to do with current value as I have to do with the Aurora Borealis.

NAMA will look at current loans. Come up with a grossly inflated notion of the current value of those loans. Then pay even more than that estimated value, called Long Term Economic Value.

This is a made up term, you won't find it in books on economics or investing. If you google it you'll only find links to NAMA. As a concept it makes absolutely zero sense. It's just a random stringing together of words.

A thing is worth what it is worth. If it is expected to be worth x in some distant future then it has to by definition be worth less than x now.
The only chance of making a profit is to buy sufficiently cheaply to cover the risk of an asset not reaching it's expected future value.

NAMA takes for granted that property will rise in value, but worse than that, it's paying that future value, so in a best case scenario where property actually does recover within a few years (not gonna happen) NAMA will only made a small loss.

In the far more likely (virtually certain) scenario that we don't recover quickly, NAMA is certain to lose big.

No member of the public that I've spoken to understands NAMA.
It has been a masterful performance by Fianna Fail to get this travesty passed.

NAMA is a bigger deal for the future of Ireland than the Civil War was.

And very few people realise it.

And if you think NAMA has good valuers working for it. IT has been hiring the same Estate Agencies that were telling us there wasn't a bubble, telling us there would be a soft landing, and who still tell us regularly that we've reached the bottom, recovery is certain.

Based on their recent performance alone we know that NAMA valuations will be wildly optimistic. And then you lump the myth of LTEV on top of that?

Ireland is absolutely totally and utterly screwed.

The recession to date has only been an appetizer.

-Rd

Great post. Says it all about NAMA in a concise, understandable way. Unlike the Government/Developer/EA spin.

OMD

daltonr wrote: »

Well your first mistake right there was to mention current value. NAMA has about as much to do with current value as I have to do with the Aurora Borealis.

NAMA will look at current loans. Come up with a grossly inflated notion of the current value of those loans. Then pay even more than that estimated value, called Long Term Economic Value.

This is a made up term, you won't find it in books on economics or investing. If you google it you'll only find links to NAMA. As a concept it makes absolutely zero sense. It's just a random stringing together of words.

A thing is worth what it is worth. If it is expected to be worth x in some distant future then it has to by definition be worth less than x now.
The only chance of making a profit is to buy sufficiently cheaply to cover the risk of an asset not reaching it's expected future value.

NAMA takes for granted that property will rise in value, but worse than that, it's paying that future value, so in a best case scenario where property actually does recover within a few years (not gonna happen) NAMA will only made a small loss.

In the far more likely (virtually certain) scenario that we don't recover quickly, NAMA is certain to lose big.

No member of the public that I've spoken to understands NAMA.
It has been a masterful performance by Fianna Fail to get this travesty passed.

NAMA is a bigger deal for the future of Ireland than the Civil War was.

And very few people realise it.

And if you think NAMA has good valuers working for it. IT has been hiring the same Estate Agencies that were telling us there wasn't a bubble, telling us there would be a soft landing, and who still tell us regularly that we've reached the bottom, recovery is certain.

Based on their recent performance alone we know that NAMA valuations will be wildly optimistic. And then you lump the myth of LTEV on top of that?

Ireland is absolutely totally and utterly screwed.

The recession to date has only been an appetizer.

-Rd

NAMA has not published values for properties or loans, yet you are saying that these values will be "grossly inflated". This is simply guesswork on your part.

hinault

OMD wrote: »

NAMA has not published values for properties or loans, yet you are saying that these values will be "grossly inflated". This is simply guesswork on your part.

It's not guess work on the posters part.

It's guesswork on the part of the banks/NAMA and the Dept of Finance.

The banks issued loans to developers.
All told the banks stated that €77b loans were made to developers

The govt tell us that these bank loans are in effect worth €47b : but that the State will allocate a valuation €54b to these loan values.

Already we have a problem here.

€77b valuation according to the banks is based on what?
The estimated value of the loan at the time? The value of the loan now?
We don't know how the €77b valuation was derived.

€47b that the govt says €77b loans are now worth, is also guess work.
How was €47b value derived? On what basis does the govt derive "long term economic value"?

I think that the €47b figure is over optimistic : I would suggest that the loans are probably worth something like €20b - anything less than the realisable value €47b will result in NAMA making a loss.

daltonr

OMD wrote: »

NAMA has not published values for properties or loans, yet you are saying that these values will be "grossly inflated". This is simply guesswork on your part.

The central concept of NAMA is so called "Long Term Economic Value".
This is not only accepted by all concerned, it is actually trumpeted by them as the whole point of the scheme.
As I pointed out above, LTEV is a myth. It would make more sense to say they are paying the FluffyImaginoTotalCrap Value,
at least that would convey some meaning.

As for the valuations, we can only go on what we've been told, and the estimates of the values of the loans given by the Minister was grossly optimistic, and those loans have declined in value since then.

We can also go on the performance records of the companies who are on the panel of valuers and again, it's clear we are not dealing with people who are capable of assessing the real value of these assets.

So No. It is not guess work to say that NAMA will grossly overpay.

It's also not quesswork to say that NAMA will lose billions of euro.

Unless you consider it quesswork to say that the Sun will rise in the East tomorrow.

But hey. let's not argue. Let's all just check back in the coming months and years and see who's right.

-Rd

OMD

daltonr wrote: »

The central concept of NAMA is so called "Long Term Economic Value".
This is not only accepted by all concerned, it is actually trumpeted by them as the whole point of the scheme.
As I pointed out above, LTEV is a myth. It would make more sense to say they are paying the FluffyImaginoTotalCrap Value,
at least that would convey some meaning.

As for the valuations, we can only go on what we've been told, and the estimates of the values of the loans given by the Minister was grossly optimistic, and those loans have declined in value since then.

We can also go on the performance records of the companies who are on the panel of valuers and again, it's clear we are not dealing with people who are capable of assessing the real value of these assets.

So No. It is not guess work to say that NAMA will grossly overpay.

It's also not quesswork to say that NAMA will lose billions of euro.

Unless you consider it quesswork to say that the Sun will rise in the East tomorrow.

But hey. let's not argue. Let's all just check back in the coming months and years and see who's right.

-Rd

As I said total guesswork on your part and even more so on hinaults. The valuations have not been published yet (indeed they have not even been done yet). The figures quoted so far are only estimates based on a fall in the property market of 47%. Considering 33% of the properties concerned are outside Ireland, an overall drop of 47% seems reasonable. This is not a 47% reduction from peak price but a 47% reduction on average from the commencement of the original loan. Yes I know the figures will then be increased to reflect long term ecconomic value.

My point is you have not seen one single valuation yet you are saying it is over valued.

daltonr

Hi OMD

Perhaps you could clarify why those of us who think NAMA won't work as described are accused of guesswork, while those promoting NAMA are not?

OMD wrote: »

Yes I know the figures will then be increased to reflect long term ecconomic value.

That my friend is the very definition of over paying.

There is NO SUCH THING as long term economic value it is meaningless, and anyone, who uses the term as some sort of justification for overpaying makes themselves look frankly silly.

If I tell you that I have a bag that will magically create 1 euro per day for the next 100 days. You just get up in the morning, put your hand in the bag and there's your euro. After 100 days it will stop working, but it's still a nice bag.

How much would you pay me for that bag?

Well, there's the €100 it will supposedly create. Plus similar bags without magic powers are currently selling for say €20. So you'd pay me €120 since that's the long term economic value of the bag right?

Well if you offer me €120 I'd take the arm off you, because that's substantially more than it's worth. I'd have made as much from the bag as I would have if I kept it. I get the €120 immediately so I can start using it for other things, and best of all I've offloaded all my risk onto you.

What if the magic stops working after 30 days? It is magic after all.
What if I'm a liar and it isn't a magic bag at all?
What if nobody wants to buy a plain old bag for €20 100 days from now?

Thanks for the €120, so long sucker.

You on the other hand need the bag to reach it's full potential, work perfectly for 100 days, and be able to sell it for €20 JUST TO BREAK EVEN. If the scheme works AS EXPECTED, you only break even.

Oh but Nama passes on risk to the banks. Sure it does. You say that you'll pay me €100 now, and then if the magic does work for 100 days, you'll pay the other €20.
Sounds good to me.

That's not investing. That's charity.
This is the folly of NAMA.

Except NAMA goes further. Despite the fact that the price of bags has been falling for three years, NAMA insists that bags will be up from their current price of €20. So we can bump up the long term economic value.

Indeed, the panel of valuers have a history of displaying a Sex In The City like bag fetish. Cool, suddenly the LTEV is €150. I've got to get me some more of these bags, and a few more gullible governments.

OMD wrote: »

My point is you have not seen one single valuation yet you are saying it is over valued.

And I've already agreed with you. That is what I'm saying. I only disagree about it being a guess. It's based on evidence. I've said let's check back and see which of us is right.
I have seen predictions by those involved of discounts of 30%. That would be a gross over valuation. 40% discount? Still overvalued. 50% discount? probably still over valued.

You seem to be nailing your colors to the mast and saying you don't believe that NAMA will overpay, and I'll stick to my guns and say that it will.

Unless of course you don't want to nail your colours to the mast, and this discussion was just a waste of time?

There's really no need for us to argue about this. All will become clear in good time. Of course by then it will be too late, but hey. That's Ireland's problem, and it's of Ireland's own making.

And here's the kicker. It doesn't even matter whether NAMA pays fair value or not.
Whatever discount NAMA gets has to be made up by the taxpayer afterwards anyway.

If I'm right and NAMA overpays then the taxpayer puts in more through NAMA, and less afterwards.

If you're right, and NAMA gets a discount reflects the real value of the assets, then the taxpayer pays less through NAMA, and more afterwards.

It's the same amount of money. It's the same National Debt.

NAMA is a swindle to make the public think we're INVESTING, as opposed to what's really happening....a massive bailout that we can't afford.

-Rd

OMD

daltonr wrote: »

Hi OMD

Perhaps you could clarify why those of us who think NAMA won't work as described are accused of guesswork, while those promoting NAMA are not?

Because all you are doing is guessing. I never claimed anything about people who support NAMA whether they are guessing or not and I have never said I support NAMA. You have said you are not guessing but you clearly are. Those working for NAMA are making valuations which I suppose always requires an amount of guesswork but at least it is educated guessing. At least they know where the property they are valuing is.

daltonr wrote: »

And I've already agreed with you. That is what I'm saying. I only disagree about it being a guess. It's based on evidence. I've said let's check back and see which of us is right.
I have seen predictions by those involved of discounts of 30%. That would be a gross over valuation. 40% discount? Still overvalued. 50% discount? probably still over valued.

But based on what? You are saying that property bought somewhere you do not know, whether in Ireland or not (as I said 1 in 3 properties are not in Ireland), for a price you do not know at a time you do not know, should be discounted more than 50%. You say this is based on evidence not guesswork. Please show me the evidence.

What it seems like, is you feel property in Ireland will drop by more than 50% from peak and feel this can be used to value the NAMA properties.

daltonr

OMD wrote: »

What it seems like, is you feel property in Ireland will drop by more than 50% from peak and feel this can be used to value the NAMA properties.

Well at least that's a starting point.

You want evidence. Fine.
I'd really prefer to just drop this and wait to be proven right, but let's look at evidence.


1. Some property prices in Ireland have already fallen by more than 50% e.g. in Dublin. The recent Daft report showed asking prices down over 40%. At peak houses were selling for more than asking, now selling for much less than asking. That's a greater than 50% fall.

2. Undeveloped or underdeveloped land which will be a major part of the security for NAMA has dropped in value by anything up to 90% some cases. But let's be conservative and go with McInerney who reckon over 50% down, and over 40% down in the UK (and that was as of last August, we're still falling remember).

House building company McInerney has estimated that the total value of its property in Ireland has more than halved since mid-2008.

In its first-half financial results statement, the company said it had written another €156m off the value of its land bank in Ireland and the UK, having written down €110m at the time of its 2008 results.

Since mid-2008, it has lowered the estimated value of its Irish land to an average of €26,000 per plot, down 52%. It estimates that its UK land has fallen 41% in value.


Now, let's look at where the consensus is forming on what the ACTUAL discounts will be.

Bank of Ireland has increased the discount expected to be applied to loans it transfers to the National Asset Management Agency (Nama) after discussions with the Department of Finance.

The bank’s shares fell by 5 per cent on Monday, after it issued an update to the stock exchange with details of its participation in Nama. The update signalled that the bank expected the discount on its Nama loans to be closer to 30 per cent than previously guided. Prior to the update, some analysts had estimated that the discount applicable to Bank of Ireland’s loans would be as low as 20 per cent.


Less than 30% discount on property related loans. In a market where property is down 40%, 50% or more.

And, as I pointed out before, the property is down 40% or 50% but the discount on the loans is calculated against the balance of the loans which have had billions in interest rolled up on them.

E.g. a €100m property is now worth maybe €60m
The original €100m loan has a face value of perhaps €120 thanks to rolled up interest.

Now, we take all of that, and we add onto it a big chunk of extra money which they try to justify using the myth of Long Term Economic Value.

Finally let's look at why NAMA has to overpay.

After NAMA the government will have to pump more into the banks. The more NAMA overpays, the less that injection will need to be.

NAMA is being spun as an investment (a lie, but a lie that's working).

After nama, the recapitalisation will be a hard sell for the government, so they will want to front load as much of the money to the banks into NAMA, and make the subsequent injections as small as possible.


That's it. Case Closed.
NAMA will overpay.
NAMA is designed to overpay.

You can call it guesswork if you like. To an extent it is, but it's fairly educated guesswork.

I really don't care whether you believe me or not.

You can have the last word on this and make any criticisms of my logic you like. I'm leaving it at that.

-Rd

Freddie59

OMD wrote: »

My point is you have not seen one single valuation yet you are saying it is over valued.

The Government are in for €57bn - am I right? It was accepted that, even at that, they were paying about €30bn over the odds. Wish it away if you must - won't change anything. As Daltonr says, we are screwed. Royally screwed. Interesting to see you defend NAMA though. Are you an EA or property developer?

The_Conductor

Freddie59 wrote: »

The Government are in for €57bn - am I right? It was accepted that, even at that, they were paying about €30bn over the odds. Wish it away if you must - won't change anything. As Daltonr says, we are screwed. Royally screwed. Interesting to see you defend NAMA though. Are you an EA or property developer?

We have no idea what the government is going to pay for the NAMA assets- however its now acknowledged that its going to be considerably less than originally forecast- as the current market values being attributed to the assets is considerably less than the banks and lending institutions were suggesting.

However the flip side of this- is the government are going to have to recapitalise the Irish banks- probably by a comparable amount- as AIB and BOI can only access international finance at 5.8% and higher- which given they are not in a position to get this back from their own customers- isn't financially viable.........

When you factor in the nature of some of the preferential bonds the government are using for NAMA- we won't know a final cost for ~ 15 years.

OMD

daltonr wrote: »

Well at least that's a starting point.

You want evidence. Fine.
I'd really prefer to just drop this and wait to be proven right, but let's look at evidence.


1. Some property prices in Ireland have already fallen by more than 50% e.g. in Dublin. The recent Daft report showed asking prices down over 40%. At peak houses were selling for more than asking, now selling for much less than asking. That's a greater than 50% fall.

House building company McInerney has estimated that the total value of its property in Ireland has more than halved since mid-2008.

-Rd

I am happy to leave it at 2 points
1 You assume all properties were bought at the peak of the market
2 You assume all properties were bought with 100% loans.

They are 2 fairly big assumptions

daltonr

OMD wrote: »

I am happy to leave it at 2 points
1 You assume all properties were bought at the peak of the market
2 You assume all properties were bought with 100% loans.

They are 2 fairly big assumptions

Nope
on both counts.

-Rd

daltonr

smccarrick wrote: »

we won't know a final cost for ~ 15 years.

Spot On.

What we do know is that there will be a cost.
We just don't know how much.

-Rd