Article: Academic suggests stamp duty on Property transactions should rise significan

The_Conductor

Frank Quinn of the Blackrock Further Education Institute, who is credited with calling the previous property bubble- has highlighted serious issues with the current booming market, and in particular has pointed to the 39% increase in transactions over last year, this year todate, along with the increases seen especially in the greater Dublin and Cork regions- need addressing now.

His opinion is that driving investors out of the market- in favour of owner occupiers- will assist measures.

Just an observation- but even with rents at the levels they are at- yields are down to below 5% in a majority of cases, and investors now make up lower than 20% of the market. So- he is most probably far too late with his prescription.......

Anyhow- without further a-do.........

Link to the Examiner article here

An analyst who predicted the property crash has warned the Government may need to increase stamp duty to prevent another housing bubble.

The warning from Frank Quinn of the Blackrock Further Education Institute comes as a study conducted by sales website Myhome.ie states property sales for the first half of 2014 were up 39% on last year. The study follows a report from the Central Statistics Office which found residential property prices rose 12.5% in the year to June.

“The problem is that bubbles happen all the time, and the time to stop a bubble is at the initial stage,” Mr Quinn told RTÉ, adding that the Government may have to make a “difficult decision” to increase stamp duty to drive investors out of the market in favour of owner-occupiers.

The myhome.ie study, based on analysis of the Property Price Register, says there were 15,864 sales across the country between January 1 and June 30.

There were 5,240 sales in Dublin alone between January and June — an increase of 32% on the 3,966 sales recorded for the same period last year. The amount of money spent on property in Dublin rose by 46% to €1.8bn.

There was a total of 1,694 property sales in Cork during the same period, while Galway (851), Kildare (649) Wicklow (537) and Meath (525) followed.

Terenure was the capital’s biggest selling area, with 178 of Dublin’s 5,240 sales taking place in the Southside suburb.

Of Cork’s 1,694 sales, which saw €275.1m spent, 336 were in the city, with the rest elsewhere in the county.

Every county in the country saw sales figures rise according to the study, while the amount of money spent on property in each of the 26 counties was up in all of them bar Carlow, where the amount spent fell back by 8%. The authors suggest that this was influenced by the one-off sale of Oakley Wood in Tullow for €2.1m back in March 2013.

Angela Keegan, managing director of myhome.ie, said the study was evidence that confidence is returning to the property market.

According to the study the biggest percentage increases were recorded in the midlands and western areas. Cavan led the way with sales up 114%, though the report’s authors believe that this was helped significantly by the sale of 43 properties in a development in Cavan town. Other counties that recorded notable sales growth were Kilkenny (68%), Offaly (67%), Laois (62%), Mayo (57%), Sligo (50%), and Westmeath (49%).

The counties with the lowest number of sales were Monaghan (141), Leitrim (145), Longford (152), and Carlow (157).

The most money was spent in Dublin (€1.8bn).

MouseTail

I'm not convinced its time to pull this out of the hat. Whilst its true it would take some heat out of the market, it could be counter productive and act as a disincentive to new development. There is also the issue of the political unpopularity of it, particularly on foot of property tax.

daveirl

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Villa05

MouseTail wrote: »

I'm not convinced its time to pull this out of the hat. Whilst its true it would take some heat out of the market, it could be counter productive and act as a disincentive to new development. There is also the issue of the political unpopularity of it, particularly on foot of property tax.

One would think that property is the only investment in ireland. Have ye ever heard of ryanair, kerry group. glanbia. smurfit. How have they performed over the last 3 years

The_Conductor

MouseTail wrote: »

I'm not convinced its time to pull this out of the hat. Whilst its true it would take some heat out of the market, it could be counter productive and act as a disincentive to new development. There is also the issue of the political unpopularity of it, particularly on foot of property tax.

I'm not even convinced it would take heat out of the market.
Investors are winding down in the residential market- as yields are not supported by purchase prices- even with rents at their current high levels.

The proposal this guy has- is to specifically target investors- in order to free up supply for owner-occupiers. As such- it may have had an impact 1-2-3 years ago, but now, its moot- market forces are operating as they should- and investors are no longer interested in property in the manner they have been.

The_Conductor

daveirl wrote: »

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Unfortunately- the places people want to live- are also the places where there is a constraint on the availability of land to develop, on the one hand- and an aversion to high density housing units on the part of consumers, on the other hand.

Does not compute.......

In addition to all of this- with the best of will in the world- you are looking at an increase in supply 2-3-4 years down the road, particularly given the aversion of Irish lenders to lend to the construction trade.

The_Conductor

Villa05 wrote: »

One would think that property is the only investment in ireland. Have ye ever heard of ryanair, kerry group. glanbia. smurfit. How have they performed over the last 3 years

How have they performed?
They have out performed.
Most are at PE valuations of historic proportions- some of their shares increased by between 30 and 40% last year alone.
With an expectation of a massive increase in QE by the ECB- fund managers are gorging themselves- and expect the party to keep going on........
The current bubble in the residential property market- is a whimper in comparison to the mayhem happening on the stock exchanges.

In addition to all of this- the stock exchanges, are increasing more and more volatile. European and US regulators are trying to understand better why volatility has increased as it has- and commentators such as 'The Economist' are suggesting increased use of high-frequency-trading platforms, may be one of the reasons behind this (there are proposals in the US to regulate this trading type a lot more rigorously- as automated hf trading has been fingered in two recent halts in trading (New York Stock Exchange and Chicago).

Last years returns (where the NASDAQ rose over 30%- and similar rises were seen in other indexes) were exceptional in nature- but appear to have caused some normally prudent traders to throw caution to the wind (which in itself is also reflected in the recent volatility).

So- yes, there are other investment opportunities out there- but who is to say they are any more prudent than buying residential property, or commodities, or T-Paper, or indeed any other asset type. You roll the dice, you take your chances......... At the moment any bystander can only conclude that the odds are in the houses favour.

The manner in which odds are stacked against investors- is seen in the effectively negative rates for holding German sovereign paper, the historically low rates for peripheral paper (esp. Portugal and Ireland), the ongoing collapse in commodity prices (even the Ukrainian crisis hasn't impacted on gas prices- and metals are in big trouble), and at a lower level- the aversion of consumers to take out new debt- to expand domestic economies).

gaius c

Just let the CGT exemption expire. That'll help somewhat and hopefully they'll be able to resist the temptation to extend it another year.

sarkozy

If it's true that investors aren't currently seeing as much value in investing at current prices, surely actions to promote long-term stabilisation of the property market is beneficial to investors long-term? Much has been made of yields here. They've dipped to 'only' 5% (if this is true) when investors want 8%. The question is whether it's desirable to have yields of this level at all?

I doubt it. 5-8% yields only promote short- and medium-term investment strategies by individuals and funds in order to shore up their portfolios. This leads to instability. Taking decisive action to lower yields to 3-4% would encourage long-term rental market investors, which would contribute to a more professionalised rental sector. In conjunction with solving supply and improving tenancy legislation, this would have the effect of stabilising the whole sector to within realistic long-term parameters which should be of benefit to everyone.

Contrary to what we believe, booms are bad, and the professional rental sector isn't necessarily a return to the Land League days.

daveirl

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Villa05

The_Conductor wrote: »

How have they performed?
They have out performed.
Most are at PE valuations of historic proportions- some of their shares increased by between 30 and 40% last year alone.
With an expectation of a massive increase in QE by the ECB- fund managers are gorging themselves- and expect the party to keep going on........
The current bubble in the residential property market- is a whimper in comparison to the mayhem happening on the stock exchanges.

2008 was a warning, Wait till all this goes belly up

The_Conductor

Villa05 wrote: »

2008 was a warning, Wait till all this goes belly up

It is inevitable- but in all probability the party will go on at least for another year or two. As you're probably aware, the ECB announced a 40 billion QE at their meeting this week- more money to slosh around............

Simply printing money isn't good enough- it has to be targeted at specific sectors where it can create employment and long term wealth for people and economies.

MouseTail

The_Conductor wrote: »

As you're probably aware, the ECB announced a 40 billion QE at their meeting this week- more money to slosh around...........
.

Mario Draghi proposed it, it wasn't agreed. I would love to see it happen, even if it is a bit late.

The_Conductor

MouseTail wrote: »

Mario Draghi proposed it, it wasn't agreed. I would love to see it happen, even if it is a bit late.

I'm not sure that its even warranted- the issue is sectors of the economy who need credit- are expressly excluded from the credit markets. Some steps to ease the credit crunch for the SME sector- is definitely warranted. Pouring cash into the greater economy- in the name of increasing liquidity- is not.

Ireland is undergoing another asset bubble- the last thing we need is a further boost in cash sloshing around- yet, that is what is being prescribed........?

gaius c

The_Conductor wrote: »

I'm not sure that its even warranted- the issue is sectors of the economy who need credit- are expressly excluded from the credit markets. Some steps to ease the credit crunch for the SME sector- is definitely warranted. Pouring cash into the greater economy- in the name of increasing liquidity- is not.

Ireland is undergoing another asset bubble- the last thing we need is a further boost in cash sloshing around- yet, that is what is being prescribed........?

The theory is that throwing cash at the system will see it "trickle down" to ordinary Joe Soaps who will then spend it and bring the economy back up to speed. It needs to come all the way down to the bottom of the pyramid to work.

However, "trickle down" isn't working and the money is getting stuck much higher up the pyramid and it's being used to "secure" future means of wealth generation and thus ring fence ordinary Joe Soaps away from both the money & future wealth, pretty much the opposite of what it was intended to do.

The_Conductor

The manner in which they plan to inject 40 billion into the system is "through the purchase of highly rated Eurozone government debt"........ Aka- they're going to buy German bonds......... Nice for Germany........ damn all use for anyone else.......

MouseTail

The_Conductor wrote: »

The manner in which they plan to inject 40 billion into the system is "through the purchase of highly rated Eurozone government debt"........ Aka- they're going to buy German bonds......... Nice for Germany........ damn all use for anyone else.......

Not really, Germany is opposed to QE, it is France stands to benefit the most, or rather Hollande.

daveirl

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gaius c

The_Conductor wrote: »

It is inevitable- but in all probability the party will go on at least for another year or two. As you're probably aware, the ECB announced a 40 billion QE at their meeting this week- more money to slosh around............

Simply printing money isn't good enough- it has to be targeted at specific sectors where it can create employment and long term wealth for people and economies.

ECB rate cut today but they poo pooed the notion of further action.

MouseTail

gaius c wrote: »

ECB rate cut today but they poo pooed the notion of further action.

Hadn't seen the news today. That's a surprise move. In A&P terms its
happy days for tracker holders, and bad news for first time buyers.

The_Conductor

Its only a cut of 0.1% (from 0.15 to 0.05)........
Its symbolic more than anything else.