Should we be worried about property bubble re-inflation?

omicron

chopper6 wrote: »

He got a "gift" of 20k from the parents.


Yep me too...i certainly wouldnt be asking my parents to put themselves in financial risk when they should be settled and more or less debt free in thier 60's.

I find it hard to believe that any bank could be fooled into giving a mortgage to someone who has no savings record and 3 maxed out credit cards these days.

sparky42

chopper6 wrote: »

You've gone on about Anglo and the Central Bank...then you mention Jack O'connor :rolleyes:

I'll mention any of the leadership of the Unions, I don't have time for any of the self serving selfish liars, Jackie's salary is tied to a senior public servant levels, he's far from on the average industrial wage, all the leadership figures are.

And again you seem to have a habit of avoiding bits you don't like and focusing on bits that suit you.

Do you think senior public servants in areas of national importance should have contracts that allow for the removal of their 6 figure pensions if it proves that they have failed in their duties. Shouldn't local government level public servants who don't do their jobs face consequences for NOT doing their jobs How about hospital consultants that screw up but walk away untouched?

chopper6

sparky42 wrote: »

I'll mention any of the leadership of the Unions, I don't have time for any of the self serving selfish liars, Jackie's salary is tied to a senior public servant levels, he's far from on the average industrial wage, all the leadership figures are.

And again you seem to have a habit of avoiding bits you don't like and focusing on bits that suit you.

Do you think senior public servants in areas of national importance should have contracts that allow for the removal of their 6 figure pensions if it proves that they have failed in their duties. Shouldn't local government level public servants who don't do their jobs face consequences for NOT doing their jobs How about hospital consultants that screw up but walk away untouched?

How about the Private Self Servants who trousered billions of other people's money then walked away to start a new life?

What about McFeeley,Sean Dunne,John Shee,Harry Crosbie,Seany Fitz?

We're not talking the 100k that Jack O'Conner earns per year...we're talking BILLIONS.

How much does a hopsital consultant earn? A couple of hundred grand a year for being responsible for people's lives?

How much did Seany Fitz get away with?

What about sean Dunne and his "socialite" wife who despite being "bankrupt" have started a multi-million dollar property empire in the US?

Why exactly should the head of the largest private sector union in Ireland be on the "average industrial wage" anyway? His salary comes,not from the taxpayer but from union subscriptions.

Plasterers and bricklayers involved in teh slipshod property "boom" were making more money than him and they were paying a pittance in tax,if any at all.

You have your Public Secyor soundbytes taken directly from Eddie Hobbes....the man who tried to get people to invest in Cape Verde.

sparky42

chopper6 wrote: »

How about the Private Self Servants who trousered billions of other people's money then walked away to start a new life?

What about McFeeley,Sean Dunne,John Shee,Harry Crosbie,Seany Fitz?

We're not talking the 100k that Jack O'Conner earns per year...we're talking BILLIONS.

And all of them should be pursued for what they have done, but most are going to get away with it because the State wasn't doing it's job. We've just seen that from the Anglo trail, the judge himself has said he will take the actions of the regulator into account in sentencing. We paid a regulator to regulate, not to give permission for dodgy deals to a bank, not to bailout as soon as anyone asks questions about his handling.

How much does a hopsital consultant earn? A couple of hundred grand a year for being responsible for people's lives?

And when they screw up and don't face any negative consequences while the tax payer pays for the HSE to bluster it's way through the courts for years until finally settling over appalling malpractice in some cases? Or the University heads that spend tens of thousands on taxis, or new furniture while complaining about being underfunded.

I don't care whether its 100K or 1 billion I want the tax payers money to be spent correctly, with oversight, with value for money and with consequences for when things go wrong. And that's not happening, are you saying you are fine with some of your taxes being wasted simply cause its some part of the public service doing the wasting? Are you fine with a man that played a central role in how badly wrong things went getting €100Ks a year and facing no negative consequences? Is there a ceiling on how much you can get for screwing up before you should be held to account?

How much did Seany Fitz get away with?

What about sean Dunne and his "socialite" wife who despite being "bankrupt" have started a multi-million dollar property empire in the US?

At what point have I ever said that they shouldn't be chased for what they've done? At this stage it's pretty questionable if the legal system and corporate law is up to the task but they should be followed up with everything the state has. By I also want the watchers who didn't watch to face the same chase, that's not unreasonable. There were plenty of warning signs that the Central Bank and regulator got before the crash, and they along with the Minister chose not to listen.

Why exactly should the head of the largest private sector union in Ireland be on the "average industrial wage" anyway? His salary comes,not from the taxpayer but from union subscriptions.

If you believe that he doesn't get tax payers money fair dues to you, I'll just go laugh my ass of over here.
EDITOh and by the way did you notice SPITU might end up cutting it's pension for it's staff of up to 20% over it's pension deficit, maybe he should cut back on his salary then?

Plasterers and bricklayers involved in teh slipshod property "boom" were making more money than him and they were paying a pittance in tax,if any at all.

Plenty of the back of the van ones were doing that, something that again the CIF has/had been working with the Unions to combat as aggressively as they could, but guess who's job it was to do so? That's right the public service from one of the quangos. It was the Unions that demanded so in one of the pay deals. The Unions sit on equal panels with the CIF in those areas, they both want regulated, qualified, certified workers that work to the codes that are there, but it's the job of inspectors to make sure, they have the power and the job to check, why didn't they?

chopper6

sparky42 wrote: »

If you believe that he doesn't get tax payers money fair dues to you, I'll just go laugh my ass of over here.

So where does his salary come from?

sparky42

chopper6 wrote: »

So where does his salary come from?

Some of it is coming from the State, and I noticed you either missed or avoided the issue of SIPTU's 100 million hole in their pension fund. How do you justify him getting a 100K plus when they are telling current and former employees that their pension may be cut by between 20% and 10%?

SIPTU complains about Aer Lingus doing the exact same thing but it's all quiet when they do it?

chopper6

sparky42 wrote: »

Some of it is coming from the State,

In what capacity?

golfwallah

gaius c wrote: »

It's called Foreclosure Stuffing and has little to do with building rates but rather the puny level of transactions strangling supply to the market.

gaius c wrote: »

Good job that you avoided the elephant in the room, the arrears. There's over 100k mortgages that are not being paid. Those people are holding stock they can't afford thus preventing those who can afford them from buying.
It's called "foreclosure stuffing" and it's (temporarily) messing up the market in parts of the US as well.

Should government push for a more aggressive foreclosure policy from the banks as you are advocating, the real elephant in the room would be what to do about the people kicked out of their houses.

Simply propounding “foreclosure stuffing” as the entire cause of the housing shortage, without any mention of the consequences of more aggressive foreclosures is not a realistic option in today’s Irish social / political environment, IMHO. I would be interested to hear how you would propose this issue be addressed.

Let’s just look at the facts for a minute. According to CSO statistics, at end quarter 31/12/2013, 136,546 mortgages were in arrears, of which 96,474 were +90 days in arrears. Of these, 38,416 were re-structured (indicating attempts by mortgage holders to deal with the problem), leaving 58,058 +90 days in arrears without re-structuring.

Then let’s assume, your more aggressive foreclosure policy prompts 10% to start paying again, this would leave 52,250 to be foreclosed, throwing around 141,075 people out of their houses (at an average of 2.7 people per household per CSO figures on "Households and Families - Living Arrangements in Ireland": http://www.cso.ie/en/census/census2011reports/census2011profile5householdsandfamilies-livingarrangementsinireland/.

This is the equivalent of the population of Limerick urban area or the entire County Wicklow now facing re-housing, presumably in the rental sector, which is already short of capacity or in remote areas where there is spare capacity as a result of reckless Celtic Tiger building – not to mention the cost to the taxpayer of this additional level of social housing.

Do you seriously think such mass evictions and re-housings would be politically or socially acceptable in today’s Ireland?

chopper6

golfwallah wrote: »

Should government push for a more aggressive foreclosure policy from the banks as you are advocating, the real elephant in the room would be what to do about the people kicked out of their houses.

Simply propounding “foreclosure stuffing” as the entire cause of the housing shortage, without any mention of the consequences of more aggressive foreclosures is not a realistic option in today’s Irish social / political environment, IMHO. I would be interested to hear how you would propose this issue be addressed.

Let’s just look at the facts for a minute. According to CSO statistics, at end quarter 31/12/2013, 136,546 mortgages were in arrears, of which 96,474 were +90 days in arrears. Of these, 38,416 were re-structured (indicating attempts by mortgage holders to deal with the problem), leaving 58,058 +90 days in arrears without re-structuring.

Then let’s assume, your more aggressive foreclosure policy prompts 10% to start paying again, this would leave 52,250 to be foreclosed, throwing around 141,075 people out of their houses (at an average of 2.7 people per household per CSO figures on "Households and Families - Living Arrangements in Ireland": http://www.cso.ie/en/census/census2011reports/census2011profile5householdsandfamilies-livingarrangementsinireland/.

This is the equivalent of the population of Limerick urban area or the entire County Wicklow now facing re-housing, presumably in the rental sector, which is already short of capacity or in remote areas where there is spare capacity as a result of reckless Celtic Tiger building – not to mention the cost to the taxpayer of this additional level of social housing.

Do you seriously think such mass evictions and re-housings would be politically or socially acceptable in today’s Ireland?

Nobody forced these people to buy properties.

If the house was worth,to them 500k at the time,why do they think because teh market has fallen they should walk away without paying the balance?

and why IF they utterly cannot afford to pay anymore,why do they think they shouuld be allowed to stay there?

If you buy a new car on HP for 20k and stop paying the repayments for 9 months you wont find you have the- car very long.


Why should houses be any different?

Farmer Pudsey

chopper6 wrote: »

Nobody forced these people to buy properties.

If the house was worth,to them 500k at the time,why do they think because teh market has fallen they should walk away without paying the balance?

and why IF they utterly cannot afford to pay anymore,why do they think they shouuld be allowed to stay there?

If you buy a new car on HP for 20k and stop paying the repayments for 9 months you wont find you have the- car very long.


Why should houses be any different?

I have often tryed to explain that this would only be a short term solution. It would drop the price of houses well below the cost of construction again. Who would the winners be those that would buy house at these shortterm reduced rates ( most of whom IMO would be investors). The banks will work through this isuue in time weeding out the won't pay's from the can't pay's. Banks are not necessary filled with the milk of human kindness. Most posters that post this solution were those that expected houses to fall even further early last year.

The reality is that if these people are turfed out of there house's the banks will sell at a 20-30% discount to todays prices, investors will be in like a shot swallow up the houses and rent back to those that are turfed out. The reality is that it may be in the banks best interest to do a deal now with these people. None will get Trackers so most will be no better off. Also most will may have to give up equity in there house. Few banks will do a deal at less than present day value of the house and these are going up all the time.

I do not think anybody will get a 700K house that is worth 400K now for 250K. People made mistake but so did banks. But turfing 50K people out of there houses will not solve the present issue's in the Dublin housing market

chopper6

Farmer Pudsey wrote: »

I do not think anybody will get a 700K house that is worth 400K now for 250K. People made mistake but so did banks. But turfing 50K people out of there houses will not solve the present issue's in the Dublin housing market

But the point is that they are not *thier* houses at all.

They belong to the bank until the moratage is paid off and ALL mortage policies have a clause that "your home is at risk if you fail to meet repayments(or similar wording)".

What is wrong with Irish people?

They havnt got an ounce of sense when it comes to money..."buy to let"..."property ladder"..."starter home"...ridiculous terms lapped up by a gullible populace.

When the Eircom scandel turned into a load of hot air,the people burned actually demanded thier money back! They completely ignored the warning that "the value of investments can go down as well as up" and now they think it applies to 500k they borrowed form the bank.

Now the "buy to lets" are largely stopped paying thier mortages and are lobbying to have the money they borrowed written off...BY THE GOVT/TAXPAYER.

Getting "turfed out" might not solve the housing crisis but it might teach people a bit of bloody sense.

OMD

chopper6 wrote: »

But the point is that they are not *thier* houses at all..

But it is their house. Mortgages are not hire purchase agreements where you only own the goods when you make the final payment. The bank do not own the house unless they repossess it.

Farmer Pudsey

chopper6 wrote: »

But the point is that they are not *thier* houses at all.

They belong to the bank until the moratage is paid off and ALL mortage policies have a clause that "your home is at risk if you fail to meet repayments(or similar wording)".

What is wrong with Irish people?

They havnt got an ounce of sense when it comes to money..."buy to let"..."property ladder"..."starter home"...ridiculous terms lapped up by a gullible populace.

When the Eircom scandel turned into a load of hot air,the people burned actually demanded thier money back! They completely ignored the warning that "the value of investments can go down as well as up" and now they think it applies to 500k they borrowed form the bank.

Now the "buy to lets" are largely stopped paying thier mortages and are lobbying to have the money they borrowed written off...BY THE GOVT/TAXPAYER.

Getting "turfed out" might not solve the housing crisis but it might teach people a bit of bloody sense.

And we will transfer what is a banking issue into a government issue. The following will happen 50K family's/people will be looking for accomodation which the Government will have to provide a rent subsidy. 80% of the houses will be bought by investors who will rent back to government. Banks will sell houses at a 20-30% discount to present prices which is more than likely below the recoverable value from present loan holders. government will have to put more tax payers money into the banks.

Buy to lets are a totally different issue with different variables. NAMA has sold on the so called Doctors and Dentists portfolio at a huge(I think 80%) discount.

We should remember from science to each action there is is an equal and opposite reaction.

gaius c

golfwallah wrote: »

Should government push for a more aggressive foreclosure policy from the banks as you are advocating, the real elephant in the room would be what to do about the people kicked out of their houses.

Simply propounding “foreclosure stuffing” as the entire cause of the housing shortage, without any mention of the consequences of more aggressive foreclosures is not a realistic option in today’s Irish social / political environment, IMHO. I would be interested to hear how you would propose this issue be addressed.

Let’s just look at the facts for a minute. According to CSO statistics, at end quarter 31/12/2013, 136,546 mortgages were in arrears, of which 96,474 were +90 days in arrears. Of these, 38,416 were re-structured (indicating attempts by mortgage holders to deal with the problem), leaving 58,058 +90 days in arrears without re-structuring.

Then let’s assume, your more aggressive foreclosure policy prompts 10% to start paying again, this would leave 52,250 to be foreclosed, throwing around 141,075 people out of their houses (at an average of 2.7 people per household per CSO figures on "Households and Families - Living Arrangements in Ireland": http://www.cso.ie/en/census/census2011reports/census2011profile5householdsandfamilies-livingarrangementsinireland/.

This is the equivalent of the population of Limerick urban area or the entire County Wicklow now facing re-housing, presumably in the rental sector, which is already short of capacity or in remote areas where there is spare capacity as a result of reckless Celtic Tiger building – not to mention the cost to the taxpayer of this additional level of social housing.

Do you seriously think such mass evictions and re-housings would be politically or socially acceptable in today’s Ireland?

They can rent, like all the other people who can't afford to buy.
Talking about social housing is a total red herring because all indications are that the majority of people in arrears are still employed.

You're also not understanding what foreclosure stuffing actually is. Irish bank shares are currently overvalued. Everybody knows this and understands that it's because something like 99.9% of AIB shares are not currently trade-able and the limited supply of shares that are actually trade-able are distorting the market price of the available shares.

It's a similar issue with the property market. Current housing stock turnover rate is something like 100 years which is clearly daft and unsustainable. When it reverts back to something more sensible, prices will probably drop due an end to the strangulation.

Farmer Pudsey

gaius c wrote: »

They can rent, like all the other people who can't afford to buy.
Talking about social housing is a total red herring because all indications are that the majority of people in arrears are still employed.

You're also not understanding what foreclosure stuffing actually is. Irish bank shares are currently overvalued. Everybody knows this and understands that it's because something like 99.9% of AIB shares are not currently trade-able and the limited supply of shares that are actually trade-able are distorting the market price of the available shares.

It's a similar issue with the property market. Current housing stock turnover rate is something like 100 years which is clearly daft and unsustainable. When it reverts back to something more sensible, prices will probably drop due an end to the strangulation.

Comparing AIB share to anything is ridiculous. They are overvalued by a factor of at least 6 if not 8. BOI is traded at what investors consider it value.

Yes at present we have a lack of supply in Dublin however this is more down to lack of supply which has not been taken up due to a cost/build imbalance until now. Even at present developers are not racing to try to start projects. Foreclosures would actually prevent supply start up as if prices fall again builders/developers will not enter the market.

What would happen is that 50K houses would be sold at a discount house prices would drop 20-30% for 12-18 months. 50K houses even if all in Dublin would be about 2 years supply. After 18 months prices would actually rise faster and higher than present values as demand would again rise expodentially. At present not including labour building materials are on par to 2005/6 prices. Labour costs may be about 60% not sure of site costs so houses are more than likly at are still below building costs in Dublin. In the rest of the country houses in major cities/large towns are slightly below costs and while along the west coast property is at least 30% below building costs.

This idea that even if these houses came on the market most would be in the so called desirable area's is moot. Some of those can pay wont pay may be in area's where house values have dropped the most, generally the commuter towns well outside Dublin

gaiscioch

golfwallah wrote: »

All I’m saying is that government has a role in reducing barriers to new construction on the local government side (such as reducing demands for upfront building of infrastructure, which currently make new house building unviable).

So the developer can up sticks and leave the taxpayer, in the form of the local authority, to pay to clean up his mess, a cost which the initial developments levies etc is designed to cover? Do we ever learn?

golfwallah wrote: »

Government also has a role in ensuring effective banking supervision.... The fact of the matter is that the emerging bubble is a human construct (pardon the pun), which government can considerably relieve, if they have the will to so do.

But, then, this would require a measure of thought

On this I agree. However, I would submit that the government has put thought into it and it comes back to this: the state is in debt by billions because of property related debt. The most obvious way to get out of this hole is to use government policy to support another property bubble where, they hope, they can offload the properties they were caught with last time onto somebody else and reduce Ireland's sovereign debt. We are in for another property bubble, one designed by the state's policies, and this is the logic of it. Chillingly, it's hard to envisage the state not being caught to cover the debt next time around either.

In the meantime, somebody earlier in this thread made a very good point about the state still permitting 35-year mortgages, 92% mortgages, buy-to-let mortgages and a variety of other criteria which have the sole purpose of inflating property prices. Prices would decline considerably if the state changed these criteria to, say, 80% of purpose price mortgages, 25-year mortgages and taxed buy-to-let mortgages out of it. The continuation of these state-sanctioned practices indicates the true intentions of the state to keep property prices inflated.

gaiscioch

OMD wrote: »

Currently house prices are about 4 times average earnings. That is pretty much in keeping with long term average.

"House prices" is quite vague. In rural Ireland, I'd tend to agree that good value can be found - if you're lucky enough to find a good-paying job there. In Dublin, however, somebody on €50k would not have much choice when looking for a house for €200k. Bearing in mind that professionals such as nurses, teachers and the like have starting salaries of c. €28k the house-owning future in Dublin for such college-educated people looks decidedly bleak. If you're going to end up in a bad area after spending years in college, what's the incentive in making that education investment in the first place?

The state could use its considerable resources for something more beneficial to wider society such as a fairer spread of jobs across the state. But that would reduce demand in Dublin, which would reduce house prices, which means the state wouldn't get as much money back for its (more expensive) Dublin loan book. So it looks like another property boom in Dublin is the real aim. This is a mess with no medium-to-long term planning at all.

experiMental

gaiscioch wrote: »

On this I agree. However, I would submit that the government has put thought into it and it comes back to this: the state is in debt by billions because of property related debt. The most obvious way to get out of this hole is to use government policy to support another property bubble where, they hope, they can offload the properties they were caught with last time onto somebody else and reduce Ireland's sovereign debt. We are in for another property bubble, one designed by the state's policies, and this is the logic of it. Chillingly, it's hard to envisage the state not being caught to cover the debt next time around either.

This is absolutely ridiculous thinking by the government. There are a million other ways in which to recover from debt, but it is choosing the same way that has plunged them into debt.

golfwallah

gaiscioch wrote: »

So the developer can up sticks and leave the taxpayer, in the form of the local authority, to pay to clean up his mess, a cost which the initial developments levies etc is designed to cover? Do we ever learn?

Why do people in Ireland resort to extremes so much? I didn’t say remove local authority barriers to new construction, but reduce them in line with the new economic environment, to help make new house construction economically viable (i.e. a “win win” approach that is fair to both developers and potential house buyers):

government has a role in reducing barriers to new construction on the local government side (such as reducing demands for upfront building of infrastructure, which currently make new house building unviable)

As I understand it, there are huge local authority bureaucratic and cost barriers to new construction and these need to be reviewed and changed in the interests of all stakeholders. This view is shared by Forfas, Ireland's policy advisory board for enterprise and science, in their report “Ireland’s Construction Sector: Outlook and Strategic Plan to 2015”, for example:
Page xii:

Process rigidities constraining development: Planning system issues that are adding uncertainty and generating unnecessary costs and delays to the development process

Costs of construction/development: Lack of consistency, transparency and in some cases persistently high, development levies

Page xiv:

What we can do is focus on removing obstacles in the way of facilitating development that is in demand. At the same time we must ensure that we have a construction sector that can deliver projects efficiently, competitively and at the highest standards of innovation, quality and professionalism.

Page xix:

The planning system: In relation to the planning system, various organisations and bodies have articulated specific barriers within the planning system. Many of these have taken on a heightened degree of importance in the context of reduced levels of activity in the construction sector and property market. Some issues raised include inter alia: uncertainty and delays in relation to planning application outcomes, including those relating to strategic infrastructure; lack of consistency in approach and meaningful engagement at pre-planning; unnecessary complexity and delays where parallel consent processes are involved; excessive costs and lack of transparency in fee structures; slow adoption of e-planning; and overly restrictive ‘exempted development’ provisions.

gaiscioch wrote: »

On this I agree. However, I would submit that the government has put thought into it and it comes back to this: the state is in debt by billions because of property related debt. The most obvious way to get out of this hole is to use government policy to support another property bubble where, they hope, they can offload the properties they were caught with last time onto somebody else and reduce Ireland's sovereign debt.

And, regarding banking supervision, nobody is proposing the creation of another property bubble – another extreme you have conjured out of thin air. But IMO, it should not be beyond government to demand effective banking supervision from the Central Bank. And Central Bank has questions to answer as regards

ensuring that so called foreclosure threatened properties are “actually really genuinely for sale”.

This would also help to deal with the “foreclosure stuffing” issue, constantly referred to by gaius c.

gaius c

Farmer Pudsey wrote: »

Comparing AIB share to anything is ridiculous. They are overvalued by a factor of at least 6 if not 8. BOI is traded at what investors consider it value.

Yes at present we have a lack of supply in Dublin however this is more down to lack of supply which has not been taken up due to a cost/build imbalance until now. Even at present developers are not racing to try to start projects. Foreclosures would actually prevent supply start up as if prices fall again builders/developers will not enter the market.

What would happen is that 50K houses would be sold at a discount house prices would drop 20-30% for 12-18 months. 50K houses even if all in Dublin would be about 2 years supply. After 18 months prices would actually rise faster and higher than present values as demand would again rise expodentially. At present not including labour building materials are on par to 2005/6 prices. Labour costs may be about 60% not sure of site costs so houses are more than likly at are still below building costs in Dublin. In the rest of the country houses in major cities/large towns are slightly below costs and while along the west coast property is at least 30% below building costs.

This idea that even if these houses came on the market most would be in the so called desirable area's is moot. Some of those can pay wont pay may be in area's where house values have dropped the most, generally the commuter towns well outside Dublin

Speculative wibble.
Lots of impressive sounding facts and figures but sourced from your imagination.

Farmer Pudsey

gaius c wrote: »

Speculative wibble.
Lots of impressive sounding facts and figures but sourced from your imagination.

Not so much from imagination but from old age, I will not call it wisdom but maybe it is only a calculated guess. You quoted AIB shares, in reality anyone that looks at the back of the Sunday Times business section(I buy it for the sport section from it and the Indo I find a little balance) should know the story with AIB compare to BOI or PTSB.

Bank are not full of the milk of human kindness. Anyone thinking that repossessing 50K homes is a long term solution to the present rise in prices has a more vivid imagination than I have.

gaius c

Anecdotes. Same thing.
Come back when you have some citations.

Farmer Pudsey

gaius c wrote: »

Speculative wibble.
Lots of impressive sounding facts and figures but sourced from your imagination.

gaius c wrote: »

Anecdotes. Same thing.
Come back when you have some citations.

Your contributions are detailed and insightfull as usual. You seem to be able to add 2+2 and get any answer you like.

golfwallah

gaius c wrote: »

They can rent, like all the other people who can't afford to buy.
Talking about social housing is a total red herring because all indications are that the majority of people in arrears are still employed.

You're also not understanding what foreclosure stuffing actually is. Irish bank shares are currently overvalued. Everybody knows this and understands that it's because something like 99.9% of AIB shares are not currently trade-able and the limited supply of shares that are actually trade-able are distorting the market price of the available shares.

It's a similar issue with the property market. Current housing stock turnover rate is something like 100 years which is clearly daft and unsustainable. When it reverts back to something more sensible, prices will probably drop due an end to the strangulation.

Certainly, some can rent .... but Ireland’s property rental environment does not currently offer a reasonable, sustainable solution to family housing needs over the long term. Short-term 1 year leases, where rents can be increased way beyond inflation or increases in incomes do not really strike me as a sustainable answer to re-housing up to about 140,000 people (in the 50K properties that are +90 days in arrears and have not re-structured their loans).

Like all big social / political issues, there probably is no single answer and a multi-faceted approach is what is called for.

For example, some progress has been made on removing legal barriers to foreclosures and, since the enactment of the Land and Conveyancing Law Reform Act 2013, there is evidence of increased activity by banks on repossessions:
http://www.irishexaminer.com/ireland/bank-of-scotland-accounts-for-25-of-repossession-orders-last-year-264706.html

Further action by banks on foreclosures should have an impact on prices – time will tell. It should also help shake out the “strategic defaulters” (estimated at 35% in some quarters)

Social housing is part of the answer as well, but it takes time to get onto local authority housing lists and, as far as I know, people already in houses can’t apply for social housing. It was interesting to see on RTE News recently, the CEO of Alone calling for boarded up council houses and apartments to be handed over to them to be re-furbished and used to house homeless people over 65. But a lot more needs to be done than solely relying on the construction sector to provide up to 20% of new house builds as social housing, as per current requirements.

But the bigger issue of how to make property rental a more sustainable model for family housing, with security of tenure and controlled rents, more along the lines of what happens in Germany, for example, is a more difficult nut to crack. Whether or not this becomes more of an issue for public debate over the coming months and years remains to be seen.

jmayo

golfwallah wrote: »

Should government push for a more aggressive foreclosure policy from the banks as you are advocating, the real elephant in the room would be what to do about the people kicked out of their houses.

Simply propounding “foreclosure stuffing” as the entire cause of the housing shortage, without any mention of the consequences of more aggressive foreclosures is not a realistic option in today’s Irish social / political environment, IMHO. I would be interested to hear how you would propose this issue be addressed.

So the alternative is to let people stays in property they can no longer afford and in some cases haven't bothered their ar**es trying to repay their loans ?

I always love how people who are not paying their mortgages deserve a handout and do not deserve to be kicked out of the property, whilst normal renting tenants who somehow miss some rent payments never garner much sympathy. :rolleyes:

golfwallah wrote: »

Do you seriously think such mass evictions and re-housings would be politically or socially acceptable in today’s Ireland?

And do you think that allowing a massive maount of people welch on their mortgages and other debts is a good thing, all the while they get to keep their asset ?

OMD wrote: »

But it is their house. Mortgages are not hire purchase agreements where you only own the goods when you make the final payment. The bank do not own the house unless they repossess it.

Neither does it state anywhere that someone who isn't repaying their mortgage gets to have a debt writedown and get to keep their asset.
A mortgage holder cannot sell the house and pocket the money without the consent of those who hold a lien on it.


Anyway this whole thread discussion about a property bubble re-inflation is hype, as is visible by the fact that the aforementioned AIB bank is not now repaying the Irish taxpayer the money they owe.
It is damm obvious that they cannot afford to repay it and any bullcr*p being pedalled about how it is better for the taxpayer to hold shares instead is exactly bullsh**.
The bank needs to hold onto every cent it can to try and make the books look that little bit better for the stress tests.

And if one of the major high street banks is still on life support, and probably needs another 10 or more billion recapitalisation to cover residential and SME bad debts, then there is no way in hell they can start loads of lending to re-inflate anything.

If someone wants a real view of where the Irish economy is and where it is going then I would say take a look at AIB.

gaius c

golfwallah wrote: »

Certainly, some can rent .... but Ireland’s property rental environment does not currently offer a reasonable, sustainable solution to family housing needs over the long term. Short-term 1 year leases, where rents can be increased way beyond inflation or increases in incomes do not really strike me as a sustainable answer to re-housing up to about 140,000 people (in the 50K properties that are +90 days in arrears and have not re-structured their loans).

Like all big social / political issues, there probably is no single answer and a multi-faceted approach is what is called for.

For example, some progress has been made on removing legal barriers to foreclosures and, since the enactment of the Land and Conveyancing Law Reform Act 2013, there is evidence of increased activity by banks on repossessions:
http://www.irishexaminer.com/ireland/bank-of-scotland-accounts-for-25-of-repossession-orders-last-year-264706.html

Further action by banks on foreclosures should have an impact on prices – time will tell. It should also help shake out the “strategic defaulters” (estimated at 35% in some quarters)

Social housing is part of the answer as well, but it takes time to get onto local authority housing lists and, as far as I know, people already in houses can’t apply for social housing. It was interesting to see on RTE News recently, the CEO of Alone calling for boarded up council houses and apartments to be handed over to them to be re-furbished and used to house homeless people over 65. But a lot more needs to be done than solely relying on the construction sector to provide up to 20% of new house builds as social housing, as per current requirements.

But the bigger issue of how to make property rental a more sustainable model for family housing, with security of tenure and controlled rents, more along the lines of what happens in Germany, for example, is a more difficult nut to crack. Whether or not this becomes more of an issue for public debate over the coming months and years remains to be seen.

Interesting how being subjected to the horrors of the rental market is such a concern when it comes to mortgage payers who can't afford their mortgages and that the whole market needs to be reformed before they dare dip their toes into it.

What about the people who are already in the rental market? Especially the ones who would love to buy but can't because somebody is living in their future house. For free. And preventing it from coming to the market.

golfwallah

jmayo wrote: »

So the alternative is to let people stays in property they can no longer afford and in some cases haven't bothered their ar**es trying to repay their loans ?

I always love how people who are not paying their mortgages deserve a handout and do not deserve to be kicked out of the property, whilst normal renting tenants who somehow miss some rent payments never garner much sympathy. :rolleyes:

No, I have never contended that mortgage defaulters should be allowed get away with it. Post #29 contended that foreclosure stuffing rather than slow building rates was causing the current property “bubble”.

I simply do not accept that the housing shortage issue can be solved solely by mortgage defaulters being evicted (and moving into rental properties). I believe it may solve part of the problem but am more inclined to agree with government's advisory body, The Housing Agency, that the biggest part of the problem is down to shortage of supply of new houses.

The only point I made regarding defaulters was that there is such a large number of people involved that kicking all of them out of their houses over a short period is not a realistic political or social option in Ireland right now.

The present housing shortage is down to many factors (e.g. inflexible and over-expensive building regulation, lack of finance for builders and house buyers, as well as the freeze in foreclosures). And a big loophole that allowed mortgage arrears to build has now been closed with the enactment of the Land and Conveyancing Law Reform Act 2013 last July. No, it’s not going to solve all housing problems but it is a move in the right direction.

jmayo wrote: »

And do you think that allowing a massive maount of people welch on their mortgages and other debts is a good thing, all the while they get to keep their asset ?

No, I do not. But this problem has taken years to build and will also take time to resolve, even with Banks being in a stronger position to repossess since the enactment of the Land and Conveyancing Law Reform Act 2013. Meanwhile, people still need more new houses to be built right now.

jmayo wrote: »

Neither does it state anywhere that someone who isn't repaying their mortgage gets to have a debt writedown and get to keep their asset.

In fairness, I haven’t seen anyone making proposals of this sort. The vast majority of people accept that debts, with very few exceptions, have to be repaid over some realistic timescale, including those that have been re-structured. Otherwise our banking and money systems will collapse. The word credit, after all, comes from the Latin “credo”, I believe (that when I make a loan to someone, it will be repaid).

golfwallah

gaius c wrote: »

Interesting how being subjected to the horrors of the rental market is such a concern when it comes to mortgage payers who can't afford their mortgages and that the whole market needs to be reformed before they dare dip their toes into it.

What about the people who are already in the rental market? Especially the ones who would love to buy but can't because somebody is living in their future house. For free. And preventing it from coming to the market.

That’s democracy – when something as fundamental as housing affects a lot of people and businesses, even through government inertia, it becomes a political issue.

This is especially true, when in a little country like Ireland, huge multiples of annual income are required to qualify for mortgages on inflated house prices.

You have a point about mortgage defaulters “living for free”, while their houses are unavailable for purchase by potential new buyers. Limited progress on resolving this problem has been reported since the Land and Conveyancing Law Reform Act 2013 closed the loophole that prevented foreclosure on mortgages taken out before 2009. I’m no apologist for the present government but when mortgage arrears have built up over years to the current level, it’s going to take time to reverse the situation, no matter who is in power.

Farmer Pudsey

Looking at Mortgage's in arrears there are 137K in arrears of which 40K are less than 90 days. It is quite likly that most of these are just short term issue that will sort itself out that leaves 96K over 90 days, this is reinforced by only 15K between 90 and 180 days. . The figure to look at closely is the over 12 month figure this stands at about 60K nationally.

I wonder what percentage is in Dublin, you would imagine that it is less than 50% of that figure maybe 20-25K houses at the most. It may well be the biggest issue is in the so called commuter belt at the edge of Dublin. As the market is recovering I cannot see the banks doing deals for less than the value of the houses. IMO it should be left up to the banks to decide there policy on this and what is the best outcome for the bank. No point in repossessing to sell at a huge discount which may well be less than a restructured settlement.

The reason the rental market is in a mess is multiple, the biggest at present is lack of supply. It is the supply issue that is the most important to solve at present. However houses in certain area's of Dublin will always remain expensive and beyond most people's reach

wetdarknight2

gaiscioch wrote: »

"House prices" is quite vague. In rural Ireland, I'd tend to agree that good value can be found - if you're lucky enough to find a good-paying job there. In Dublin, however, somebody on €50k would not have much choice when looking for a house for €200k. Bearing in mind that professionals such as nurses, teachers and the like have starting salaries of c. €28k the house-owning future in Dublin for such college-educated people looks decidedly bleak. If you're going to end up in a bad area after spending years in college, what's the incentive in making that education investment in the first place?

The state could use its considerable resources for something more beneficial to wider society such as a fairer spread of jobs across the state. But that would reduce demand in Dublin, which would reduce house prices, which means the state wouldn't get as much money back for its (more expensive) Dublin loan book. So it looks like another property boom in Dublin is the real aim. This is a mess with no medium-to-long term planning at all.

Well said. Jobs should be decentralised out of expensive, traffic conjested Dublin. Win win.

golfwallah

wetdarknight2 wrote: »

Well said. Jobs should be decentralised out of expensive, traffic conjested Dublin. Win win.

Didn't Charlie McCreevy try that not so long ago - it wasn't what people wanted - very difficult to make decentralisation work in the real world!

Here's another view by Dr Alan Ahearne, head of economics at the National University of Ireland, Galway, from the Irish Times recently:
http://www.irishtimes.com/business/economy/what-s-driving-the-rapid-property-price-rise-1.1774334?page=3

I'm inclined to agree that more housing in places where people want them is the main answer. Decentralisation helps as does speeding up the litigation process for foreclosures - but only marginally, IMO.

chopper6

wetdarknight2 wrote: »

Well said. Jobs should be decentralised out of expensive, traffic conjested Dublin. Win win.

How?

You need to improve access to ports,motorways etc and most people dont actually wnt to live in the bog end of nowhere.

The exception of course would be agriculture but almost nobody seems to want to work in that anymore..too much like hard work i suppose.

murphaph

wetdarknight2 wrote: »

Well said. Jobs should be decentralised out of expensive, traffic conjested Dublin. Win win.

...or Dublin should cut the BS and allow high rise development in the docklands and Heuston Gate area and the state should stop starving Dublin of the underground rail transport solutions (tried and tested in hundreds of developed cities around the world) that the city needs.

Cities work because of the critical mass of people but the city needs to be built and developed. It is a function of its people and its infrastructure.

golfwallah

Dr. John McCartney, Director of Research at Savills, is not exactly a neutral commentator but nonetheless he makes the following points that make sense to me (http://www.savills.ie/_news/article/112474/174873-0/04/2014/three-things-that-can-be-done-today-to-kick-start-house-building-in-dublin):

“Everyone knows that there is insufficient housing in Dublin to meet demand, and that this is driving up prices. The focus now really needs to be on how we address this deficit.”
Looking forward, Savills is proposing a number of simple measures which would accelerate the delivery of new housing, leading to more orderly and sustainable price growth:
• Reduce VAT - “Many people are unaware that builders have to pass 13.5% of every new home sale back to the Government in VAT. If this was reduced to 9%, as has been done in the tourism and hospitality sector, some housing schemes which cannot be profitably undertaken at current construction costs would immediately become viable”.
• Reduce Local Authority Development Levies – All of Dublin’s local authorities have reduced development contributions since 2013. However, the reductions have not kept pace with the 50% decline in Dublin’s house prices. Therefore, today’s developers are being forfeit a higher proportion of the sales price of each unit in the form of levies. Further reducing levies and freezing them for a set period into the future would make schemes viable and incentivise builders to break ground on new developments.
• Reduce Density Requirements – Due to demographic factors – not least the 23% collapse in the number of 20-somethings in Dublin since 2009 – housing demand is currently focused on family homes. However, while some local authorities have taken note of this and begun to relax their density requirements, others are still insisting on very high density apartment developments. Given the costs associated with building apartments (e.g. the cost of providing underground parking), and the fact that the strongest demand in many areas is for housing, this inflexibility is currently making development unviable in locations.

The 2nd & 3rd points made by McCartney are echoed somewhat in Dr Alan Ahearne’s piece in the Irish Times (http://www.irishtimes.com/business/economy/what-s-driving-the-rapid-property-price-rise-1.1774334?page=3):

A key part of the solution will be to build new homes in the right places. That means Dublin, not Meath or Kildare. New homes are also needed in the cities and suburbs of Cork and Galway. The proper utilisation of space in urban areas will be vital to delivering new supply. The reality is that our cities have too many commercial property units and vacant spaces where instead there should be townhouses and apartments. As an added bonus, new homebuilding will create much-needed employment and boost the public finances.

And

The Government’s forthcoming strategy document for the construction sector will need to convince people of two things. First, that there is a credible plan to ramp up supply in the right places; and, second, that the authorities have the tools to ensure that house prices in, say 2020, will not be too far above today’s levels – and won’t shy away from using them if necessary.

gaius c

Talk about ignoring elephants in the room. He even acknowledges the demographic collapse in the prime renting/FTB cohort yet his solution is still "build, build build".

golfwallah

gaius c wrote: »

Talk about ignoring elephants in the room. He even acknowledges the demographic collapse in the prime renting/FTB cohort yet his solution is still "build, build build".

And your solution is???

CSO figures just released show that Dublin house prices are up 14.3% on last year:
http://www.irishtimes.com/news/ireland/irish-news/dublin-house-prices-up-nearly-15-in-12-months-1.1778730

golfwallah

Central Bank have indicated that they will be much more pro-active as regards rising house prices, according to this report in Irish Independent:

“There is no way we are going to let things get out of hand again in terms of a bubble,” Dr Honohan told the Oireachtas Finance Committee yesterday.

chopper6

golfwallah wrote: »

Central Bank have indicated that they will be much more pro-active as regards rising house prices, according to this report in Irish Independent:

Ah,the Indo...one of the cheerleaders of the property bubble

golfwallah

chopper6 wrote: »

Ah,the Indo...one of the cheerleaders of the property bubble

This is just a report of what Dr. Patrick Honohan said at the Oireachtas Finance Committee - nothing to do with cheerleading anything.

People are well able to make their own minds up about reports in the media - even as to whether or not to believe what Dr. Honohan says or doesn't say on any issue.

There's really no need for the melodramatics!

golfwallah

chopper6 wrote: »

Nobody forced these people to buy properties.

Nobody has said otherwise as far as I know.

chopper6 wrote: »

If the house was worth,to them 500k at the time,why do they think because teh market has fallen they should walk away without paying the balance?

Neither I, nor anyone else on this thread, thinks that. Don't know where you are getting all this melodramatic stuff from.

chopper6 wrote: »

and why IF they utterly cannot afford to pay anymore,why do they think they shouuld be allowed to stay there?


If you buy a new car on HP for 20k and stop paying the repayments for 9 months you wont find you have the- car very long.


Why should houses be any different?

People are going to stay where they are until they have no other choice.

I am not justifying this, merely recognising the reality that the large number of people affected (about 140,000) make it a real political issue, that has to be addressed, whether you agree or not from your own personal viewpoint.

And there is a big difference between repossessing cars, activity on which has not stalled for about 5 years, and repossessing houses, where very little has happened for 5 years.

Even if the legal processes could be completed quickly, no government is going to stand by while 140,000 people are kicked out onto the street over a short period of time. Repossessions will take time, especially when the authorities are operating on a "case by case" policy on mortgage arrears.

There are no quick fix, simplistic solutions when it comes to housing.

gaius c

golfwallah wrote: »

And your solution is???

CSO figures just released show that Dublin house prices are up 14.3% on last year:
http://www.irishtimes.com/news/ireland/irish-news/dublin-house-prices-up-nearly-15-in-12-months-1.1778730

Definitely increase the deposit required. That will really put the hurt on the 50%+ of buyers not using a mortgage to buy a property.

Seriously, other than not letting folk keep properties they aren't paying for, I think the market should be let sort itself out without state interference because state interference is making things worse, not better.

tralalala

The house prices are not pushed by fundamentals but speculation. Investments not different from the stock market. Since the financial markets sentiments over the euro crisis turned from "PANIC" to "BUYING OPPORTUNITY", all assets in PIIGS countries have been going up, mostly for no reason at all (Greece and Spain which are truly messed up, Irish, Spanish, French and Italian bank shares). Bond yields for European PIIGS countries went down as the market perceives all risks are out of Europe. What happened in the Irish property market is mostly that, a change of sentiment.

Otherwise that would mean that the fundamental demand for houses is up 20% from last year? that doesn't make any sense. Also the prices probably went down to become cheap in central Dublin compared to cities of a similar economic importance.

I would not call it a bubble yet but it could become one. And It wouldn't be good for me as I don't own a property

Farmer Pudsey

tralalala wrote: »

The house prices are not pushed by fundamentals but speculation. Investments not different from the stock market. Since the financial markets sentiments over the euro crisis turned from "PANIC" to "BUYING OPPORTUNITY", all assets in PIIGS countries have been going up, mostly for no reason at all (Greece and Spain which are truly messed up, Irish, Spanish, French and Italian bank shares). Bond yields for European PIIGS countries went down as the market perceives all risks are out of Europe. What happened in the Irish property market is mostly that, a change of sentiment.

Otherwise that would mean that the fundamental demand for houses is up 20% from last year? that doesn't make any sense. Also the prices probably went down to become cheap in central Dublin compared to cities of a similar economic importance.

I would not call it a bubble yet but it could become one. And It wouldn't be good for me as I don't own a property

a change of sentiment is a wide sweeping statement. It transfer it self across most markets. The present rise in prices is only related really to the Dublin market, did this over compensate during the down turn or is it still out of sink. Why has it not transferred to Cork, Galway and Limerick. Is it here that investors should concentrate. Are those that are preoccupied with Dublin not looking at the total picture.

golfwallah

gaius c wrote: »

Definitely increase the deposit required. That will really put the hurt on the 50%+ of buyers not using a mortgage to buy a property.

Seriously, other than not letting folk keep properties they aren't paying for, I think the market should be let sort itself out without state interference because state interference is making things worse, not better.

I agree, best let the market work without state interference – this means removal or considerable reduction (in line with the fall in prices since the 2006/7 peak) of state restrictions that are contributing to clogging up the market and high prices, such as those outlined in this article:

1. Temporarily abolish all local authority levies on house construction – the cost of building houses is artificially inflated in Ireland right now thanks to the local authorities and their levies – up to €60,000 per new build house.
2. Temporarily abolish the 20pc social and affordable housing tax. See above.
3. Abolish the Dublin city and county development plans which call for high density development only, eg: apartments.
4. Immediately channel all of the local property tax revenues directly to the local authorities so they have no excuse for overtaxing home construction in their areas.
8. Temporarily abolish the 13.5pc VAT on new-home sales.

The minister for finance has also been talking about removing capital gains tax relief on properties from 2015.

I don’t think anyone is calling for mortgage defaulters to be allowed keep houses they are not paying for – so that is a non issue. That said, the issue of dealing with mortgage arrears still remains and although it now appears to be getting tackled more resolutely by the banks, it looks like this will take longer to resolve than many people would like.

AlekSmart

golfwallah wrote: »

I agree, best let the market work without state interference – this means removal or considerable reduction (in line with the fall in prices since the 2006/7 peak) of state restrictions that are contributing to clogging up the market and high prices, such as those outlined in this article:

The minister for finance has also been talking about removing capital gains tax relief on properties from 2015.

I don’t think anyone is calling for mortgage defaulters to be allowed keep houses they are not paying for – so that is a non issue. That said, the issue of dealing with mortgage arrears still remains and although it now appears to be getting tackled more resolutely by the banks, it looks like this will take longer to resolve than many people would like.

Taking longer to resolve for sure....particularly as the focus appears to be on yet more sticking-plaster and ointment,rather than addressing ANY elements of the regulatory framework....

http://www.herald.ie/news/rent-aid-to-be-hiked-for-at risk-families-30346541.html

A new protocol in Dublin will allow the Department of Social protection to boost rent supplement payments.

It is understood the extra money - an emergency needs payment - will be paid to landlords for up to 13 weeks to help reduce the threat of homelessness.

The "Emergency Needs" classification at least allows the budget for this to be allocated from a wee bit off the radar...and equally a bit less likely to feature a reciept...;)

flutered

will this be be put on the welfare tab, then more will be moaning about how much the guy/gal on the dole is getting, this needs to be addressed/ yeah cut deeply, giving more ammo to the pro austerity folks.