House prices to increase for up to 10 years

The Daft.ie report stated that the first six months of 2017 in Ireland the house prices has risen more than all of last year. They will continue to rise for the next five to ten years unless signification measures are taken.

The house prices are moving up 12 percent higher than a year ago with an average of €2,000 a month. This leaves Dublin on the forefront of the housing increase.

Housing prices increasing means more people wanting to sell their home with more than 6,000 homes listed for May. That has been the highest total since middle of 2008. However, this increase of property for sale is not even close to meeting the demand of the market.

With the government reviewing the Help-to-Buy scheme, fear comes as this may lead to another surge of people wanting to buy.

A Daft.ie economist Ronan Lyons warns the rates in Dublin are going to increase faster than any other part of Ireland. He said this was because, “we’ve regulated ourselves out of the volume of homes that are needed”.

The possible cause …

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A loan may be offered to vacant-home owners

In reference to Loan scheme aims to bring vacant homes into use by Paul Melia on 29 June 2017 in Independent.

A possible solution to the shortage of housing in Ireland: a local authority loan could be offered to property owners of vacant housing. This solution came about when it was heard that 80,000 vacant housing was available in high demand urban areas from the 2016 Census. About 100,000 units are vacant in non-urban areas, excluding holiday homes. Data shows Ireland’s vacancy rate is at 9 percent while UK is only at 2.5 percent.

Chairman of the Housing Agency Conor Skehan worries about the impact on Ireland’s competitiveness if the housing shortage issue is not addressed. Affordability is essential to Ireland’s competitiveness and the housing costs drives wage costs so if housing is imbalanced Ireland’s competitiveness may be in trouble.

The one stipulation of this loan is it has to be affordable housing. This could raise the issue to some houses in areas not usually affordable.

This loan, however, can be just what an owner needs to get a …

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Airbnb claims it is not affecting long-term letting

In reference to Airbnb cannot beat revenue from long-term letting, company says by Colin Gleeson on 28 June 2017 in the Irish Times.

On Wednesday, Airbnb spoke to the Oireachtas housing committee claiming that their service does not affect the long-term letting in Dublin. The reason- on average an Airbnb host has to rent out their place well over 120 nights a year to beat the money made from long-term letting. This means hosts would rather long-term let their place than short-term let, if the goal was profit.

Critics of the company are claiming that property owners are ditching the long-term letting and going exclusively to short-term lets. This would not be helping Dublin in this case due to the massive housing shortage.

Patrick Robinson, the Airbnb director of public policy for EMEA, came to the committee with vast amount of information on hosts, statistics, …

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Is there or is there not another housing bubble?

In reference to No evidence of another Irish housing bubble, IMF says by Peter Hamilton on 26 June 2017 in the Irish Times.

The answer is no but close monitoring is needed. A Washington-based company, the International Monetary Fund (IMF), has confirmed there is no housing bubble in Ireland. Even with the quickly rising prices of property and an increase of mortgage approvals, IMF realizes this is significant but it is not a housing bubble… yet.

There is no statistics to show there is an imbalance of the pricing of houses. However, there is an increase demand for housing that could lead to an imbalance, especially with the Central Bank’s mortgage lender rules and the help-to-buy scheme for first timers. IMF has recommended close monitoring of the market to make sure a bubble is not formed.

The likeliness of this increase of housing demand should …

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Lending is Down in the UK

In reference to Lending levels in UK slow, data from banking industry shows by William Schomberg and Elizabeth Piper on 27 June 2017 in the Irish Examiner.

In the UK, borrowing has been at its slowest growth rate in over a year and a half. Banks have also been offering fewer mortgages which may be a sign of an economic slowdown in Britain.

The numbers are not lying. In one month’s time, consumer lending growth went from 6.4 percent in April to 5.1 percent in May. British Bankers’ Association naming it the weakest increase since October 2015. Mortgages went down from 40,686 to 40,347 in May which has been the smallest amount of mortgages since September.

Could this be a result from Brexit?

Since Brexit started, tension has been rising in Britain. The wage growth has …

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Central Bank of Ireland: Keeping the countercyclical capital buffer at zero?

In reference to Irish Central Bank maintains countercyclical capital buffer at zero by Peter Hamilton on 27 June 2017 in the Irish Times.

The Central Bank of Ireland decided to keep its countercyclical capital buffer at zero. Only if the current credit conditions remain restrained.

What is a countercyclical capital buffer?

A countercyclical capital buffer (CCyB) is a quarterly decided rate that applies to banks and investment firms. It’s a capital requirement designed to help banks save during the good months to prepare for the bad months. The CCyB will increase if the credit growth is excessive then is released during a period of systematic stress.

Currently, the Central Bank of Ireland said it will remain at zero.

Bank of England, on the other hand, has raised its buffer from zero to 0.5 percent. This leaves bank having to raise an altogether buffer of 11.4 billion euros in 18 months. The Bank of England is also planning on raising the buffer to 1 percent by the end of the year.

The Financial Policy Committee (FPC) of the Bank of England …

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Soon to see more regulation among housing

In reference to Greater regulation of our building standards would make it easier to fund social housing by Charles Barry on 26 June 2017 in Independent.

The house building of Ireland is continuing to rise but not without trouble. High demand means there is a chance builders are only looking at their output volume and not the quality. This led to numerous issues that have came up in late 90s and early 2000s – breaking health and safety regulations, pyrite, poor building quality, and contractor bankruptcy.

Regulations have since come up to avoid these issues with Building Control Amendment Regulations and Construction Industry Register Ireland. Even with these regulations in place, it can not completely solve the problem.

There is a similar situation in the UK with about the same building laws. A recent study found that 66 percent of the underlying issues of buildings are caused by poor workmanship.

To help alleviate this issue, the Dáil approved a motion to improve regulation for buildings. It improves the standard and quality as well as support to homeowners …

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Another bank bailout in the European Union

With reference to E.U. Commission Approves Billions in Aid for 2 Italian Banks by Jack Ewing on 25 June 2017 in the New York Times.

On Sunday, the European Commission took quick action when two small Italian banks, Banca Popolare di Vicenze and Veneto Banca, were heading towards bankruptcy. To avoid Italian residents losing confidence in the banking system the E.U. allowed the Italian government to bailout the two banks for billions.

The plan is 4.8 billion euros in cash and 12 billion in guarantees of depositors. The two banks only account for 2 percent of Italian deposits.

The reason to go this route is because the majority of the Italian banks are consisted of problem loans and very little capital. Fear if these two banks fail it will cause a panic. Italians might lose faith in the banking system and could cause people to withdraw their money and banks will shut down.

The investors of this bank in senior bonds will keep their investment, however, junior bond investors will lose theirs as well as shareholders.

Despite this large …

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Only one in three approved homes have been started

With reference to Work has yet to start on 23,000 homes in capital which have permission by Paul Melia on June 26 2017 in Independent.

To keep up with the rising demand of the housing market around 30,000 to 35,000 houses need to be completed every year. With 7,975 houses completed and 5,261 under construction, that leaves around 64 percent or 23,700 of the approved homes yet to begin. In Dublin particularly, 5,643 out of the 7,277 or 77 percent approved have yet to start as well.

Speculations on why this could be is developers with not enough funding or they could be hoarding the land expecting the housing prices to further rise, claimed Society of Chartered Surveyors and State bad-bank Nama.

With 36,936 homes approved, it leaves two out of three home plans not being started. Since there is currently a housing shortage, talk of imposing a holding property tax has been circulating. With this shortage of houses there has been a significant increase in housing and rent, especially in Dublin.

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Warren Buffet saves the day for a Canadian mortgage lender

In reference to Warren E. Buffet Comes to the Aid of a Big Canadian Mortgage Lender by Michael J. de la Merced on June 22, 2017 in the New York Times.

Warren Buffet, a man commonly referred to as one of the world’s most successful investors but how did he get this title? Quick and decisive decision making. He goes in while the confidence is low in a company and desperate for money. He then invests in the company to keep them afloat but with a very steep cost.

A Canadian mortgage lender, Home Capital Group, has hit rough times. They are one of the top lenders in Canada for borrowers with poor credit history and who are self-employed. This company was consistently making high yield loans attracting numerous investors. However, rumors almost closed the company.  Ontario Securities Commission accused the executives that they were withholding information from investors because apparently there was an inquiry about fraudulent information in the loans.

This sent investors running and shares in the company dropped a significant 33 percent. As money was flying …

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