Why would Irish propery recover to pre crash levels?

Liam Byrne

oppenheimer1 wrote: »

If NAMA holds house prices above where they should be by controlling supply, its likely prices will stagnate at this threshold.

Where is this notional "where they should be", and who decides on it ?

What happened to the supposed laws of supply & demand that all those capitalists were in favour of ?

And "unaffordable" is not an emotive word. If the prices are kept / left too high, and interest rates go up and incomes go down, then "unaffordable" is a reality.

Liam Byrne

woodseb wrote: »

most firms will walk away from their debt a whole lot quicker under the banks that within NAMA anyway as NAMA can afford to wait longer for repayment as it is designed for the long term

If they don't have the money, then what's the difference between declaring bankruptcy to a bank and declaring it to NAMA ?

woodseb

fontanalis wrote: »

But what internal economy has Ireland got? At least Japan has some big name companies; Nokia, Toyota, Honda etc
During the bubble the economy followed the property market not the other way around. I'm very pessimistic about the future, way too much debt to be offloaded imho. People on the bottom rungs of the "proprty ladder" are trapped, there's no way in hell some of those places will ever be sold.

which just serves my point that using Japan as an example as why ireland's property market won't recover may not be useful - they are fundamentally different economies in form and function. (nokia is finnish by the way)

btw it was only at the last few years when the economy was driven by the property market, in the earlier 2000s the economic growth bouyed the housing market

it is perfectly valid to have a pessimistic view of housing prices, without a crystal ball i can't prove anybody wrong, and vice-versa.

Liam Byrne wrote: »

If they don't have the money, then what's the difference between declaring bankruptcy to a bank and declaring it to NAMA ?

that was my pretty much my point in response to this post - whether the developers declare bankruptcy is a moot point, being in NAMA won't let them away with it - it'll just be a different entity collecting the assets

NAMA is ensuring the government stays in power, and it ensure the people who took on the most risk get away from their responsibilities

ei.sdraob

woodseb wrote: »

that was my pretty much my point in response to this post - whether the developers declare bankruptcy is a moot point, being in NAMA won't let them away with it - it'll just be a different entity collecting the assets

its not a moot point of the asset(s) is worthless or close to it

then we (taxpayer) have over payed for it

SkepticOne

woodseb wrote: »

it is perfectly valid to have a pessimistic view of housing prices, without a crystal ball i can't prove anybody wrong, and vice-versa.

You could borrow Brian Lenihan's. His says the market is close to the bottom and he's willing to back it up with billions of the Irish people's money so sure is he of its reliability.

woodseb

ei.sdraob wrote: »

its not a moot point of the asset(s) is worthless or close to it

then we (taxpayer) have over payed for it

if the asset is worthless we have overpayed for it - this all goes back to whether NAMA valued them correctly, whether property prices will recover somewhat over the next 10/15 years - its a matter for debate, i don't know the answer but neither will i agree with some of the posters that the economy/prices won't recover because it happened in japan, its a FF plan etc. I guess i don't have as pessimistic view of the future as some people

but just because the developer has declared bankruptcy doesn't mean the assets are worthless it just means he can't pay his debts at that point in time and we know that is the case with the loans going into NAMA - that's why said said its a moot point

woodseb

SkepticOne wrote: »

You could borrow Brian Lenihan's. His says the market is close to the bottom and he's willing to back it up with billions of the Irish people's money so sure is he of its reliability.

that's a fair point - though i've never tried to deny it

ei.sdraob

woodseb wrote: »

if the asset is worthless we have overpayed for it - this all goes back to whether NAMA valued them correctly, whether property prices will recover somewhat over the next 10/15 years - its a matter for debate, i don't know the answer but neither will i agree with some of the posters that the economy/prices won't recover because it happened in japan, its a FF plan etc. I guess i don't have as pessimistic view of the future as some people

but just because the developer has declared bankruptcy doesn't mean the assets are worthless it just means he can't pay his debts at that point in time and we know that is the case with the loans going into NAMA - that's why said said its a moot point

I certainly don't have a "pessimistic" view, I would call it a "realistic" view..

mostly based on past experience of this government

unfortunately there are too many negatives stacked up

Liam Byrne

woodseb wrote: »

if the asset is worthless we have overpayed for it - this all goes back to whether NAMA valued them correctly

But this is the main point; if NAMA values them correctly, the banks don't get enough cash to survive, and we end up recapitalising the banks.

If it values them incorrectly, the banks get the money they need, but NAMA makes a loss.

And given that NAMA terminology views overpaying as "a discount", we're off to a bad start.

silverharp

and just in case anyone thinks that 400K is normal for a nice city apartment, look what 85K gets you in Berlin. Rental yields are around 5% so you can rent this for around €400 per month. I'd be interested to hear what bollox someone to come up with to justify the difference with Dublin prices over the medium term going forward, given that interest rates will go up, taxes will go up and unemployment will stay high.


http://www.europeanproperty.com/sales/property8541-FBNI1634

VACANT APARTMENT IN PRENZLAUER BERG

We have available a very attractive, modern one bedroom apartment in Prenzlauer Berg. The five storey apartment house was built in 1998.

This one bedroom apartment is on the second floor and comprises of an american style, open-plan fitted kitchen; living room; bathroom with tub; bedroom and west facing balcony. In addition this naturally light and bright apartment has the benefit of central heating and a lift.

The property is located in the ever popular area of Prenzlauer Berg. The nearest rail station (Greifswalder) is only 600 metres. The beautiful Volkspark Friedrichshain is approx 2km. The local area has a wide range of cafes and shops.

This modern apartment offers excellent living accommodation at a competitive price.........

ardmacha

and just in case anyone thinks that 400K is normal for a nice city apartment,

But one beds in Dublin are not 400k but 120K.
http://www.daft.ie/searchsale.daft?id=487884

Now the 50% surplus over Berlin may be hard to justify, but East Germany has quite a bit of empty property as it has a declining population.

SLUSK

ardmacha wrote: »

But one beds in Dublin are not 400k but 120K.
http://www.daft.ie/searchsale.daft?id=487884

Now the 50% surplus over Berlin may be hard to justify, but East Germany has quite a bit of empty property as it has a declining population.

That apartmet costs €3400+ per sqm. Sure it is in the city centre but €3400 aint exactly cheap. Factor in that interest rates can only go up from here I would say that this apartment you linked is still to expensive.

ei.sdraob

ardmacha wrote: »

But one beds in Dublin are not 400k but 120K.
http://www.daft.ie/searchsale.daft?id=487884

Now the 50% surplus over Berlin may be hard to justify, but East Germany has quite a bit of empty property as it has a declining population.

and we dont have empty properties?

i will say it again
there are more empty houses in Ireland than there are houses being rented
that is incredible, and unmatched anywhere else in world

we can give everyone in the country between ages of 20 and 25 (about 280K people) a house and there be still some left over

NAMA or no NAMA, the basics of supply and demand just cant be ignored

ardmacha

All the same 1.1 million empty apartments in East Germany is quite a lot in a place with a declining population.

silverharp

ardmacha wrote: »

But one beds in Dublin are not 400k but 120K.
http://www.daft.ie/searchsale.daft?id=487884

Now the 50% surplus over Berlin may be hard to justify, but East Germany has quite a bit of empty property as it has a declining population.

this might broaden it out a bit price per sq/m. might be a bit more to go I think


http://www.globalpropertyguide.com/country-comparison/#result

Belgium €2465
Germany €2882
Ireland €5483
Netherlands €3579

oppenheimer1

SkepticOne wrote: »

Here's a graph of house prices adjusted for inflation over the last 40 years.



I don't think we're returning to pre-crash levels any time soon.

One could theorize that the boom between 1996 and 2001 actually made the country wealthier and overall more desirable place to live. Thus the real "economic value" of land would have increased. Following on from that then one could say the inflation adjusted house price should actually lie at the 2001 price, setting a new base line. To disagree would be to say that all the economic gains between 1996-2006 were based on domestic consumption rather than exports. That is only true for the latter half of the boom imo.

Just a theory though.

ei.sdraob

ardmacha wrote: »

All the same 1.1 million empty apartments in East Germany is quite a lot in a place with a declining population.

quite a lot of them are soviet era apartments worthy of demolition
:rolleyes:

300K empties is enough to accommodate another 1 million people
thats alot of people considering our population is only 4.5m here in Ireland

lets see:

300000 / 4700000 = 0.06 empties per person
now do the maths for Germany with a population of 82m
1100000 / 82000000 = 0.01 empties per person

edit: woot i invented a new metric "empties per person" heheehehe


i swear anyone who still believes in property myths and ignores the incredible and unparalleled situation the Irish property market is in, should be rounded up and spanked

silverharp

ei.sdraob wrote: »

quite a lot of them are soviet era apartments worthy of demolition

300K empties is enough to accommodate another 1 million people
thats alot of people considering our population is only 4.5m here in Ireland

now do the maths for Germany with a population of 82m

:rolleyes:


i swear anyone who still believes in property myths and ignores the incredible and unparalleled situation the Irish property market is in, should be rounded up and spanked

300K includes holiday properties I think. 140K/170K is a number I heard recently. but still very bad

ardmacha

One could theorize that the boom between 1996 and 2001 actually made the country wealthier and overall more desirable place to live. Thus the real "economic value" of land would have increased. Following on from that then one could say the inflation adjusted house price should actually lie at the 2001 price, setting a new base line.

The 1996-2001 period saw real high economic growth and a move to Euro style interest rates, which were lower than the historic average in Ireland. So prices in 2001 were not unreasonable. The property market dipped slightly in 2001-2002, if it had then remained in line with inflation after that then the coutry would be in much better place.

now do the maths for Germany with a population of 82m

Only the East is really relevant there, not all of Germany. In this case the ratio is about the same. I am not saying Ireland is not in a mess, it obviously is.

jmayo

woodseb wrote: »

far be it for me to suggest that a smalll open economy in western europe may be different from a G7 country in asia:rolleyes:

does that position not have anything worth debating?

I'm not trying to stifle debate here any more than you are, but suggesting someone with a valid point is FF is mudslinging and insulting imho

all you have proven here is that if someone disagrees with your viewpoint they must be a FF, builder etc - frankly it doesn't warrant much more comment than that

Well the reason for dragging the example of Japan into this is that their property has not recovered even though there have been two worldwide booms, dot com technology/telecomms and cheap credit/construction, since their bust and yet their property has not recovered.

As said by other posters and even mentioned yourself above, this is an economy that is in top 3 in the world and yet little old ireland with a non existing banking infrastructure, chronic unemployment, no indigenous industry, reliance on FDI, no control over our currency is somehow going to manage what Japan failed to do :rolleyes:

BTW if you do a poll of pro NAMAers I would bet most of them would fit into the ff and ff lite party faithful, the bankers, builders, EAs, etc.

fontanalis wrote: »

But what internal economy has Ireland got? At least Japan has some big name companies; Nokia, Toyota, Honda etc
During the bubble the economy followed the property market not the other way around. I'm very pessimistic about the future, way too much debt to be offloaded imho. People on the bottom rungs of the "proprty ladder" are trapped, there's no way in hell some of those places will ever be sold.

Nokia is Finnish and speaking of Finland we are often compared to them because of periphery and population size.
Funny they have indigenous industry with the likes of multinationals Nokia, Valtra, Ahlstrom, Kone and Fiskars whereas we have a few agri based companies and little else.

woodseb wrote: »

if the asset is worthless we have overpayed for it - this all goes back to whether NAMA valued them correctly, whether property prices will recover somewhat over the next 10/15 years - its a matter for debate, i don't know the answer but neither will i agree with some of the posters that the economy/prices won't recover because it happened in japan, its a FF plan etc. I guess i don't have as pessimistic view of the future as some people

So please tell us what pointers are there to indicate property will rise rather than fall ?

High unemployment, world recession meaning exports a problem, over supply in property market (all types), decreasing FDI due to lack of competiveness and US policies, probable mortgage defaults, businesses closing, no bank lending and increasing interest rates all point to decreasing property prices rather than the reverse.

What other pointers are there to property prices increasing ?

Well so far any plans that ff have made have failed, their management of the banking sector and dept of finance budgets have been collosal failures, so pray tell us all why should we think their plan to get out of this mess i.e. NAMA is any better ?

The reason for highlighting Japan is to show that even with strong economy, and worldwide booms, you are not guaranteed property recovery.

woodseb wrote: »

but just because the developer has declared bankruptcy doesn't mean the assets are worthless it just means he can't pay his debts at that point in time and we know that is the case with the loans going into NAMA - that's why said said its a moot point

The only point we are worrying about is that when the developers/borrowers default as they already have, when NAMA tries to sell the securing assets there is huge shortfall compared to the amount paid to tha banks for the loans, which the taxpayers will have to cover.
Or don't you get that little salient fact ?

ardmacha wrote: »

All the same 1.1 million empty apartments in East Germany is quite a lot in a place with a declining population.

Ah but shure we are different, our bubble was different, our banks were different, our recovery will be different. :rolleyes:

BTW Berlin is the capital of Germany, not East Germany.

Highly Salami

jmayo wrote: »

...when NAMA tries to sell the securing assets there is huge shortfall compared to the amount paid to tha banks for the loans, which the taxpayers will have to cover..

NAMA wont be selling anything until 2020

woodseb

jmayo wrote: »

Well the reason for dragging the example of Japan into this is that their property has not recovered even though there have been two worldwide booms, dot com technology/telecomms and cheap credit/construction, since their bust and yet their property has not recovered.

As said by other posters and even mentioned yourself above, this is an economy that is in top 3 in the world and yet little old ireland with a non existing banking infrastructure, chronic unemployment, no indigenous industry, reliance on FDI, no control over our currency is somehow going to manage what Japan failed to do :rolleyes:

Ireland's economy benefitted from the two worldwide booms you mentioned that passed Japan's economy by - surely that reason enough to consider that prehaps Japan's economic experience may not be illustrative when forecasting future prices

jmayo wrote: »

BTW if you do a poll of pro NAMAers I would bet most of them would fit into the ff and ff lite party faithful, the bankers, builders, EAs, etc.

do the poll then or cut the crap:rolleyes:

we can all make up hypothetical polls to back our opinions....

jmayo wrote: »

So please tell us what pointers are there to indicate property will rise rather than fall ?


What other pointers are there to property prices increasing ?

If you look back through my posts i've never claimed property prices will rise in the short term - i actually reckon they will go a bit lower or stagnate for the next couple of years and then return to growth. The world is coming out of recession and it's not unreasonable to suggest that our economy will receive a boost as the fortunes or our trading partners improve, we also still have a young enough population that will create demand in the future - those are just two reasons - of course there are negative factors - but i can see the probabilty of NAMA making only a slight loss in the long term that can be recovered from the banks

jmayo wrote: »

The only point we are worrying about is that when the developers/borrowers default as they already have, when NAMA tries to sell the securing assets there is huge shortfall compared to the amount paid to tha banks for the loans, which the taxpayers will have to cover.
Or don't you get that little salient fact ?

That's not a fact, its your opinion based on indicative figures given by NAMA months ago and some property price forecasts. We won't know the true figures until transfer and as reported in the Times last week the figure paid may be much lower.

shoegirl

ei.sdraob wrote: »

we can build houses and then demolish them

I suspect that is what might happen. Or withold from the market for long enough to artificially engineer demand.

Or else create some kind of reliable artificial mechanism to keep up a momentum of demand - like totally stop all social housing and force people onto private tenancy and create rent subsidies to reward the landlords at a fixed price regardless of market demand or substantardness . . . oh wait, somebodies done that already . . .

jmayo

Highly Salami wrote: »

NAMA wont be selling anything until 2020

So how exactly will we be funding the NAMA project until then when some of the borrowers defualt on their loans ?

woodseb wrote: »

Ireland's economy benefitted from the two worldwide booms you mentioned that passed Japan's economy by - surely that reason enough to consider that prehaps Japan's economic experience may not be illustrative when forecasting future prices

So according to you during the whole telecoms and dot com boom of the mid to late 90s one of the world's biggest economies with a huge portion of high tech companies never benefitted and they were passed by this boom ?

So according to you Japan never benefitted from the huge world wide credit bubble which saw massive increasee in consumer spending in some western countries including our own and our neighbours ?

This would be the economy that has Sony, Panasonic, Canon, Sharp, Hitachi, Komatsu, Toyota, Nissan, Subaru, Mazda, Mitsubishi, etc etc.
In case you didn't notice these companies produce the tvs, the mp3 players, the cameras, the photcopiers, the suvs and indeed the bulldozers & excavators that the likes of us were buying during our boom.
And yet you claim their economy never benefitted ?

woodseb wrote: »

If you look back through my posts i've never claimed property prices will rise in the short term - i actually reckon they will go a bit lower or stagnate for the next couple of years and then return to growth. The world is coming out of recession and it's not unreasonable to suggest that our economy will receive a boost as the fortunes or our trading partners improve, we also still have a young enough population that will create demand in the future - those are just two reasons - of course there are negative factors - but i can see the probabilty of NAMA making only a slight loss in the long term that can be recovered from the banks

It will take a long time for our economy to recover, we have lost a huge chunk of industry starting as far back as the late 90s.
It was well masked during the building boom, but it means that our real productive exporting base is shot to sh**.

We are not going to be getting the same level of FDI that saw us increase growth in the late 80s to early 90s.
And this young population that you speak of, what are they going to be doing, sitting on the dole perhaps ?

woodseb wrote: »

but i can see the probabilty of NAMA making only a slight loss in the long term that can be recovered from the banks

Speaking of just opinions.
You don't even say what the long term is ?
Is it 20 years, 30 years or 50 years ?
How do we keep things rolling on in the meantime may I ask ?

woodseb wrote: »

That's not a fact, its your opinion based on indicative figures given by NAMA months ago and some property price forecasts. We won't know the true figures until transfer and as reported in the Times last week the figure paid may be much lower.

You are right in one thing there are a lot of things we don't know about NAMA.
And yet we are supposed to bet our future on it. :rolleyes:

fontanalis

jmayo wrote: »

Nokia is Finnish and speaking of Finland we are often compared to them because of periphery and population size.
Funny they have indigenous industry with the likes of multinationals Nokia, Valtra, Ahlstrom, Kone and Fiskars whereas we have a few agri based companies and little else.

.

Fail on my part, but you got my point.
Did anyone see Frontline last night?

jmayo

fontanalis wrote: »

Fail on my part, but you got my point.
Did anyone see Frontline last night?

Talk about delusion both from proeprty developers/investors and the church goers.

Fro once Richard Boyd Barrett looked like the most sane interviewee on the panel.

It is gas to see the neck of these eejits who now want a bailout in affect.
They want the government to use taxpayers money, which is in very short supply, to kick start the property bubble so that they are saved.

3, 4, or 5 years ago when they took the loans and made the initial investments did they invesige giving extra to the revenue to benefit the taxpayers ?
Ehhh no they didn't, but they used all the taxbreaks they could get to line their own pockets.
And there is nothing wrong with making money after taking a risk, but the converse to that is you also can make a loss.
Welcome to true capitalism lads.

They had no answer as to what would be done with the completed property.
After they realised that the audience weren't buying into their bailout cr**, they appeared to shift tack and try and sell it as a way of employing people in construction.
They kept saying they didn't want sympathy, but just a handout of money in affect.
Well here is my deal.
I will give them loads of sympathy, but shag all of my hard earned tax money. :rolleyes:
Ahh screw it they don't deserve sympathy for being greedy and not having any future planning.

I lost money on shares i.e. an investment just like their own, so should I not also get some bailout from the government i.e. other taxpayers?

What next, perhaps everyone that loses at the bookies this week of the Cheltenham festival should demand the government give them some clawback ? :rolleyes:

fontanalis

What did Boyd Barret say? Don't have too much time for him.

nachoman

ei.sdraob wrote: »

good question considering the whole of the NAMA scam is based on the hope prices returning to "normal" (sickening)

Thats pretty disgusting alright

jmayo

fontanalis wrote: »

What did Boyd Barret say? Don't have too much time for him.

Basically he rubbished the ideas of the Irish property developers as just an idea to reinflate the property bubble to get themselves out of a financial fix.
Also he mentioned how some of these developments they wanted finance to finish in order to get themselves out of holes, were actually often not wanted by the local communities in the first place.
He claimed that even though we had the biggest construction bubble in our history there was not real benefical community construction i.e. schools, community centres and the like.
He also made references to public transport.

In comparison to the clowns representing the property developers he was a model of common sense.

Also it was nice that audience member pointed out that one of the property developer spokesmen was a mortgage broker, an industry whose members often massaged figures so that people could borrow more that they could ever cope with it, in order to buy overpriced property.
His response opener said a lot, when he claimed that most of those people were now very happy in their homes.
He did fail to mention these people are often left with negative equity and substandard unsellable units. :rolleyes:

dan_d

It should be pointed out to that mortgage broker that people would be a lot happier in their homes if they had smaller mortgages.
And the level of people's happiness in this situation has zero to do with what mortgage brokers got up to in the last few years...it's irrelevant.