Today with Sean O’Rourke on ‘coming out of negative equity’

We spoke about the up and down sides of coming out of negative equity 0n Today with Sean O’Rourke on RTE1 where Keelin Shanley was sitting in.

There are winners and losers in every economy, and many things in economic terms come with a series of trade offs. So to think that rising house prices are a good thing is only taking the view from one pre-determined set of assumptions, there are many losers when we create winners and that needs to be remembered. We are hopeful that those points were well made.

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Property recovery: Stratified and Pockmarked

I can’t believe I’m about to say it…. But today I’m writing about niche recoveries in the property market, not the ‘whole’ market but rather that of giving an example of where we are seeing opportunity from an investment perspective. It is lonely territory because I have been so totally bearish on property for so long that a hint of bullishness is uncomfortable for me at this stage!

Recovery isn’t a destination, its part of a larger cycle, for every boom there is a bust, and for that reason we have spoken in the past about what recovery ‘might look like’ rather than ‘when’ it will occur.

The hallmarks of what a residential property recovery might look like are, in our opinion: property price stability in a range that is closer to traditional multiples of the average wage of the prospective buyer, a return of some inflation, rent price stabilisation (ideally tracking inflation) with yields at or above 6 to 7% and supply/demand dynamics in balance.

We don’t have any of those …

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Property market meddling is a mistake

I am dismayed at Brian Lenihan’s new measure that we are told will be implemented in the Budget regarding the provision of loans from the Government to ensure first time buyers can get mortgages for properties on which the banks can’t/refused to provide mortgages.

This is an attempt to put a floor under the housing-correction, and it is also a flawed error meddling with a market that is going through a perfectly healthy correction. I am aware that since it only applies to new builds it only benefits members of the CIF and actually acts as a handicap to private seller. If I wish to sell my house I will be at a distinct disadvantage to somebody who has a ‘new house’ to sell, this is a distortion and is of no benefit to the buyer who may in fact not wish to purchase a newly built house.

Effectively the Government has decided to provide loans that the banks won’t, in the past we used to refer to these loans as ‘sub-prime’, this was where a person could get a …

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