Glut of repossessed houses could depress prices ‘by up to 25%’

Villa05

gaius c wrote: »

Just going through the examiner article, that's actually not what it says.
So it's a subset of a subset.

Cheers Gaius, just read it now, Interesting comment from Debt Forgiveness R US rep Ross Maguire conceding that repossessions/voluntary sales are inevitable.

Mr Maguire said: “There is a group of people that gave up and they are goosed. It is all well and good to take their house away but what happens to the balance. These people have given up and it’s not good for them or the banks. They are drowning in debt, it’s coming for them at all angles.”

There has been a double digit percentage increase in the arrears cases in the 2 years or more behind on repayments. It would appear from the tone of the article that that this trend is not stopping anytime soon
http://examiner.ie/ireland/central-bank-warns-of-93bn-mortgage-debt-mountain-244926.html

ezra_pound

gaius c wrote: »

Price per transaction is up. Overall Q1 + Q2 drawdown volumes are the lowest ever. I'll let you work out the relationship between the two!
.

No wait.
We're dealing with two things here.

A. Drawdown figures for the ENTIRE COUNTRY are down slightly (about 1%)
B. Mortgage backed sales prices in DUBLIN are up.*

How does this imply that a Dublin market increasingly mortgage backed will not support current prices?

* mortgage backed sales outside Dublin are down.

flintash

gaius c wrote: »

Really? Don't think you can suppose that at all. We're hearing that half the market is cash. How many FTB's do you know that can buy houses in cash?

No I don't have to "admit" any such thing.
The IrelandafterNAMA blog has a piece on where actual drawdowns are.
http://irelandafternama.wordpress.com/2013/08/17/more-negative-evidence-re-the-supposed-pick-up-in-the-housing-market/
Davy have a piece on how actual drawdowns were way way down in Q1 and in Q2 were well down on the MIR spike too.
http://www.davyselect.ie/news/article_5206.html

While you're arguing about mortgage aprovals I thought this is the real deal:
http://www.ibf.ie/gns/publications/research/researchmortgagemarket.aspx
or what am I missing here?

ezra_pound

gaius c wrote: »

Really? Don't think you can suppose that at all. We're hearing that half the market is cash. How many FTB's do you know that can buy houses in cash?

No I don't have to "admit" any such thing.
The IrelandafterNAMA blog has a piece on where actual drawdowns are.
http://irelandafternama.wordpress.com/2013/08/17/more-negative-evidence-re-the-supposed-pick-up-in-the-housing-market/
Davy have a piece on how actual drawdowns were way way down in Q1 and in Q2 were well down on the MIR spike too.
http://www.davyselect.ie/news/article_5206.html

Down 1.1% is that way down? Not when prices in country side are falling.

So mortgage lending nationally down 1.1% and Dublin mortgage backed prices up 10.6%.

ezra_pound

flintash wrote: »

While you're arguing about mortgage aprovals I thought this is the real deal:
http://www.ibf.ie/gns/publications/research/researchmortgagemarket.aspx
or what am I missing here?

Good stuff. Pity it doesn't do regional breakdown.

ezra_pound

I believe that as Dublin stabilises/recovers it makes sense that banks will want to focus collateral exposure there rather than in depreciating areas (especially seeing as their mortgage book collateral is bust).

This will increase willingness for banks to lend to Dublin purchasers. In turn it will improve quality of collateral backing mortgage loan books.

Boom__Boom

I'd be very reluctant to be drawing too many conclusions on the overall state of the market based on mortgages being up 15% from last year,when you consider that the number of mortgages for the complete year is likely to be somewhere around 10% of what is was for 2006.

ezra_pound

Boom__Boom wrote: »

I'd be very reluctant to be drawing too many conclusions on the overall state of the market based on mortgages being up 15% from last year,when you consider that the number of mortgages for the complete year is likely to be somewhere around 10% of what is was for 2006.

What level should this be at I wonder? Five times current rate/ half of 2006 rate? I don't know but I presume 2006 level is not an aspirational benchmark.

Boom__Boom

ezra_pound wrote: »

What level should this be at I wonder? Five times current rate/ half of 2006 rate? I don't know but I presume 2006 level is not an aspirational benchmark.

Obviously not aspirational - Used 2006 as it is the compete other end of the scale - 114,000 mortgages.

I would say that an "ideal" level of mortgages would probably be based on demographics and the key function would probably be the population between the ages of 25 and 35.

Overall I'm just very wary of vested interests using a very small amount of transactions to draw very big conclusions.

The fact that more than 50% of sales are for cash is another indication that the market is a serious distance away from operating "normally"

ezra_pound

Boom__Boom wrote: »

Obviously not aspirational - Used 2006 as it is the compete other end of the scale - 114,000 mortgages.

I would say that an "ideal" level of mortgages would probably be based on demographics and the key function would probably be the population between the ages of 25 and 35.

Overall I'm just very wary of vested interests using a very small amount of transactions to draw very big conclusions.

The fact that more than 50% of sales are for cash is another indication that the market is a serious distance away from operating "normally"

Absolutely. I wonder what normal ratio of mortgage backed sales to cash sales is normal?

At any rate we're not going to go from 6000 /9000 (last year mir) ftb mortgages to say 40000 in one year, so we're obviously only hoping for incremental changes.

Likewise if unemployment hits 13.5% next year I'll be happy rather than disappointed that it's not under 10%.

ezra_pound

Boom__Boom wrote: »

Obviously not aspirational - Used 2006 as it is the compete other end of the scale - 114,000 mortgages.

I would say that an "ideal" level of mortgages would probably be based on demographics and the key function would probably be the population between the ages of 25 and 35.

Overall I'm just very wary of vested interests using a very small amount of transactions to draw very big conclusions.

The fact that more than 50% of sales are for cash is another indication that the market is a serious distance away from operating "normally"

Absolutely. I wonder what normal ratio of mortgage backed sales to cash sales is normal?

At any rate we're not going to go from 6000 /9000 (last year mir) to say 40000 in one year, so we're obviously only hoping for incremental changes.

Likewise if unemployment hits 13.5% next year I'll be happy rather than disappointed that it's not under 10%.

gaius c

ezra_pound wrote: »

Down 1.1% is that way down? Not when prices in country side are falling.

So mortgage lending nationally down 1.1% and Dublin mortgage backed prices up 10.6%.

Following through from your point, it means that the rest of the country is still falling like a stone and that's not quite what the stats say either.

For a good illustration of how broken the property market is and how the mortgage overhang is actively inflating the market and restricting supply, check out a thread on this forum added today. There's two houses for sale. One of them basically isn't actually for sale and the other had a speculative bidder who wasn't serious about selling his own place bidding up the price on that one too.

ezra_pound

gaius c wrote: »

Following through from your point, it means that the rest of the country is still falling like a stone and that's not quite what the stats say either.

For a good illustration of how broken the property market is and how the mortgage overhang is actively inflating the market and restricting supply, check out a thread on this forum added today. There's two houses for sale. One of them basically isn't actually for sale and the other had a speculative bidder who wasn't serious about selling his own place bidding up the price on that one too.

It does not necessarily imply prices elsewhere plummeting. It could imply that while prices elsewhere still negative increasing mortgage drawdown concentration in Dublin and price increases in Dublin.

Threads sound interesting. Will check it out. Thanks.

cookie1977

gaius c wrote: »

Price per transaction is up. Overall Q1 + Q2 drawdown volumes are the lowest ever. I'll let you work out the relationship between the two!

That's a bit of a rowback from your previous position (without any proof at all) that "drawdowns were up 14% simply because approvals were up 14%". The devil is in the details and frankly, you're being a speculative above as people claiming that NAMA have a secret hoard of empty apartments.

Oh and I nearly forgot, that report saying FTB's are "up" is an industry VI spinning folksy anecdotes. The numbers don't back up his spin.

Sorry lads. You're all over the shop.

The stabilisation is caused by an increase in Dublin. Separate the 2 stats and you have an increase in dublin and a continued slow down in the countryside. The only one all over the shop is you refusing to acknowledge that we're focusing here on Dublin and not the rest of the country.

You might not like the data and perhaps the IBF are talking up the figure more then they should but the stats are valid:

This report is based on statistical information
supplied to IBF/IMC by the mortgage lending
institutions listed herein. PricewaterhouseCoopers
has reviewed the collation of this report by IBF/
IMC
This data relates to loans granted by IBF/IMC
member institutions listed which are secured by a
mortgage on residential Irish property. We estimate
that the data covers well in excess of 95% of the
mortgage market and includes residential mortgage
lending data from the following institutions:
AIB group
Bank of Ireland Mortgage Bank
Bank of Scotland (Ireland)/Halifax*
EBS Building Society
Haven Mortgages
ICS Building Society
KBC Bank Ireland
Irish Nationwide Building Society**
Permanent TSB
Ulster Bank
*Not included in data series after Q1 2010.
**Not included in data series after Q1 2011.

NewRunnerRoy

Has there been any information published on the breakdown of where the homes attached to long term mortgage arrears are located? I would imagine the commuter belt hosts a large number of these properties but I would like to see actual figures.

Tea drinker

lima wrote: »

I went to see a property today for 230k. Knowing that repossessions need to occur, I choose to wait until prices are further corrected before I make a commitment to purchase by first property. Repossessions can't come soon enough.

Depending on what part of Dublin you are in, this may be an incorrect approach. SCD is rich enough to have troughed and will continue to bump slowly up. Also I am convinced there will be no downwards repossession related affect on House prices.

gaius c

Karl Deeter pretty much confirms what I've already said about the price volatility in Dublin being due to the small number of transactions. It's a good article. Well worth popping over to the Journal and reading the rest of it.

What are price levels telling us?

There is no optimism when looking at transactions year to date, in 2012 there were 15,926 transactions in the year to September, in 2013 the figure is 16,840 that 5.7 per cent increase is marginal, but look underneath them, what are price levels telling us?

In 2013 just over 6,000 of the properties sold year to date cleared for under €100,000 last year only 4,800 sold for less than €100,000.

So we have this ‘recovery’ where more properties are selling for less this year than last year? Something seems to be missing…

Property market year to date is about €3 billion when you strip out errors in the registry (such as terraced house in Ballyfermot which apparently sold for €55,690,000!), forecasting mortgage draw downs you’d expect third quarter to come in at about €1.35 billion in the year to date. This implies that over half of the market is being traded in cash only, a trend more common in South America and Asia.

Every part of the process is riddled with dysfunction, that any part of the market can see double digit increases is a symptom of dysfunction, not a sign of success.

Some will cheerlead the rise but the beneficiaries are the incumbents, this spares no thought for those who have yet to buy, it doesn’t consider that a shortage of rental properties – where prices are going up – come at a cost to somebody.

The incumbents sit tight, while over 100,000 are in arrears (many two years and more) and those properties are not coming on the market. While separately 19,000 buy to lets are over a year in arrears and are not on the market.

Tea drinker

Dysfunctional for whom?
When will it "function" Where will the magical number of needed new builds come from? (As Karl himself says are needed)
Nope, market will continue to (dys)function as is, no way will there be large scale repossessions.
Expect a few high profile cases of repossession and a regiment of crack troops from the bleeding hearts brigade will be parachuted in.
Most of the defaulters will start paying after their mortgage holiday is over. Forget about change here EVER.

gaius c

Tea drinker wrote: »

Where will the magical number of needed new builds come from? (As Karl himself says are needed)

To take that meaning from his article suggests that you're purposely ignored 95% of the article because his view of what is needed is a good deal more nuanced than that.

ezra_pound

I don't think any of us would claim that the property market is not dysfunctional. That does not mean that Dublin property prices are in for a fall. Karl does not make that claim in the article either.

gaius c

ezra_pound wrote: »

I don't think any of us would claim that the property market is not dysfunctional. That does not mean that Dublin property prices are in for a fall. Karl does not make that claim in the article either.

Neither did I btw. Go back and read my posts on the matter. What I said was that commutersville needs to drop more and this would take the pressure off Dublin. 10% rises are not sustainable in Dublin and if it continues, a second crash will follow.

Villa05

Tea drinker wrote: »

Nope, market will continue to (dys)function as is, no way will there be large scale repossessions.

If the Irish were still in control I would agree with you, simply because we are not any good at self governance and unable to make tough decisions when needs be. If this situation continues the mortgage market is dead, who would lend in the face of such onerous terms.

Our creditors are not going to tolerate a situation where people who are not paying for their mortgage are allowed to stay in the securitised home indefinitely. The troika have been banging on about this for some time and change will happen, just like the introduction of the property price register.

ezra_pound

gaius c wrote: »

Neither did I btw. Go back and read my posts on the matter. What I said was that commutersville needs to drop more and this would take the pressure off Dublin. 10% rises are not sustainable in Dublin and if it continues, a second crash will follow.

We don't believe that there will be ten per cent rises either.

You several times referred to overpaying for Dublin property at the moment I.e. property prices are too high by your reckoning and will in future fall.

ezra_pound

As previously discussed we are at odds over the extent to which commuter belt will cool Dublin.

gaius c

So you see a dysfunctional Dublin market with a sudden 10% rise and then stability immediately after despite the inherent dysfunction still being present? I really find it very difficult to get a handle on what your position is because it makes very little sense.

Who is "we" btw?

lima

Tea drinker wrote: »

Depending on what part of Dublin you are in, this may be an incorrect approach. SCD is rich enough to have troughed and will continue to bump slowly up. Also I am convinced there will be no downwards repossession related affect on House prices.

Not being from the area and only been over there once or twice, I have no wishes to buy in 'SCD' , however I do acknowledge that people originally from that area and people up from the country who want to be seen as middle class/posh all want to live there, so that coupled with extreme lack of stock will cause upward prices.

ezra_pound

lima wrote: »

Not being from the area and only been over there once or twice, I have no wishes to buy in 'SCD' , however I do acknowledge that people originally from that area and people up from the country who want to be seen as middle class/posh all want to live there, so that coupled with extreme lack of stock will cause upward prices.

It's not that shallow really. I'm from south side but have moved to good area of north side. What we are really seeing in Dublin is location fundamentals like transport and services like quality schools etc. Coming to fore. The area I'm in now would have all of this yet is not scd. I believe that it is experiencing similar demand to scd.

Scd is not focus of increases because of snobbery but because it is focus of these fundamentals.

Cuddlesworth

lima wrote: »

Not being from the area and only been over there once or twice, I have no wishes to buy in 'SCD' , however I do acknowledge that people originally from that area and people up from the country who want to be seen as middle class/posh all want to live there, so that coupled with extreme lack of stock will cause upward prices.

To have upward prices, you need money to fuel them. I might be crazy here, but I'm not seeing where its going to come from.

uberalles

Villa05 wrote: »

If the Irish were still in control I would agree with you, simply because we are not any good at self governance and unable to make tough decisions when needs be. If this situation continues the mortgage market is dead, who would lend in the face of such onerous terms.

Our creditors are not going to tolerate a situation where people who are not paying for their mortgage are allowed to stay in the securitised home indefinitely. The troika have been banging on about this for some time and change will happen, just like the introduction of the property price register.

There is no political will IMHO
Its a politicians job to get reelected and who of them is pro eviction?
Even FTB repro is so so slow as half of their mates and ilk own FTBS

Supply is so low. Ive almost given up on getting a family home

Villa05

uberalles wrote: »

There is no political will IMHO
Its a politicians job to get reelected and who of them is pro eviction?
Even FTB repro is so so slow as half of their mates and ilk own FTBS

Supply is so low. Ive almost given up on getting a family home

It is not a political decision.

It will be voluntary sales in return for partial debt write-off (the extent of which will be determined by the mortgage holders income). This will be the predominant solution in areas of high demand such as the main cities and areas of high employment. If a reasonable solution is declined it will go to court.

In areas of low demand other solutions such as split mortgages, possibly multi generational mortgages, reduced payments with term extensions, even interest only

This is about loss minimization, whatever happens the losses will be substantial and further interest rate hikes are inevitable for those paying their mortgages and new entrants.

There is no solution that will be positive for house prices in the medium to long term. If we leave non payers in their home with no consequences, more will follow and we will have a cash only market.