Dublin property prices 2012-2013

This post is a guest blog by a person who doesn’t want to be named.

The two year period between January 2012 and December 2013 was a remarkable period in the movement of the prices of houses and apartments in Dublin. The period started in January 2012 with house prices dropping by -21.7% from a year earlier while apartments dropped slightly less at -18.4% and yet by the end of the period.

In December 2013 house prices were rising by 15.3% annually with apartments rising further to 20.8% annually. Another feature of this period was the manner in which the prices moved, with house prices steadily slowing down their annual decline all through 2012 and from January 2013 to December 2013 having continuous positive increases in annual prices.

However apartment prices showed a lot more volatility over the period entering positive territory in February 2013 when compared to a year earlier but dipping back into negative figures for the next three months with the result that it was June before apartment prices showed increases on the same month a year …

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RTE Sean O’Rourke Show: Karl Deeter & Ronan Lyons on Central Bank rules

Last week on the Sean O’Rourke Show Karl Deeter and Ronan Lyons (Trinity College & Daft.ie) had a good robust debate about lending rules and whether restrictions were good or bad. This week in light of the actual changes that occurred they had a second conversation on the outcomes.

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An unusual mortgage approval

That banks are lending enough is evidenced in gross lending contraction, that they simply ‘aren’t lending’ is factually incorrect.

We encounter all kinds of strange paths to homeownership with our clients and thought it might be worth showing a recent example which probably never would have made it through without a broker, branch banking typically run a mile from this type of case or don’t spot the angle.

In this instance we had a permanent worker with a child and no savings. This instantly has a few negatives, having children reduces your borrowing capacity and not having savings diminishes any hope left.

With this case in particular though, there were other aspects that swayed it. The client lived with a relative who was selling a property and moving in with a sibling, some of the profits were going to go towards helping our client make a purchase.

A gift alone normally won’t help you get a loan, you have to prove repayment capacity, some lenders will let the whole deposit come from a gift but you still …

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Every little helps (except when it means mortgages)

Tesco won’t be offering mortgages in Ireland despite rolling out a full host of financial services, this is also a departure from the UK proposition in which they are included, something we covered nearly four years ago.

Bothered? Maybe not, but you should be because any market with a functional duopoly is unhealthy, we saw for instance how AIB increased their rates and for 2 or 3 hours their prices were the same as BOI, but then BOI co-incidentally increased their rates by 25 basis points on the same day so the pricing difference occurred once again.

Why would Tesco decide not to enter the Irish market? They claim it’s regulation, one doesn’t need a Professional Diploma in Compliance to realise that much of our regulation is identical to the UK and in foundation is primarily based upon it, …

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Loan refusal statistics: what do they mean?

There are two sets of statistics floating around; on one hand you have the banks who claim that they are lending and also that the demand for credit simply isn’t there – a belief further expounded by John Trethowan. Then on the other hand you have the likes of PIBA who counter claim that 80% of applications are being refused.

So it is important to break down the vital components. First of all, the debate often centres around Small Medium Enterprise (SME) lending; even if demand for that type of credit isn’t there it doesn’t automatically translate into a reduced demand for mortgages. The point being that we can’t compare SME loans/business loan demand to that for mortgage credit.

Secondly is ‘what constitutes a refusal’, and this is where common sense diverges. Even the bank accept that if you seek €200,000 and are only offered €100,000 that it is a loan not fit for purpose, this even goes …

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Irish Mortgage Brokers and MyHome.ie on TV3’s ‘The Morning Show’, 2nd March 2011

We were delighted to feature again on TV’s ‘The Morning Show with Sybil and Martin’ (although Brian was sitting in for Martin) on their monthly property slot.

This week we spoke about the necessity of price drops to get a property sold, it is likely the single most important factor, it is also overlooked that there is often a carry cost or opportunity cost loss if sellers don’t drop prices.

Next month we are likely to cover ’empties’, that will be a fascinating show worth tuning in for!

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The first time buyer conundrum, to buy or not to buy?

At the moment in Ireland there is a conundrum for first time buyers: should you buy now and potentially over-pay on purpose?

It’s an unusual one and it partly related to property prices, it is a combination of taxation changes that will occur from the start of 2012 and expectations of interest rate changes from both banks and the ECB.

The argument of ‘rent or buy‘ is well established, we produced report on it with Peter Stafford (now of the IAVI/SCS) and Frank Quinn of Senior College Dun Laoghaire, but this is different – buy now or buy later isn’t taking the default of renting as an assumed continuous option, rather it is a case of delaying for the sake of market timing.

The changes in tax are on the tax expenditure side, namely TRS (tax relief at source).

Currently it is applicable to a maximum of €10,000 p.a. and the rates applicable are …

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How ‘Shared Equity’ in an arrears cases would(n’t) work

This piece is a demonstration of the way in which a a bank will opt for ‘shared equity’ with a home owner who is in arrears as means to keeping them in the property. It is important to remember, the ‘big bad bank’ wants people to stay in a property with arrears, only during a strong upward cycle do they tend to repossess property rapidly. What you will see next is in effect, a legal accounting trick, and one which actually leverages the individual even more.

So the situation at the start shows the asset value versus the value of the underlying security (in fact it is a little more complicated than this but for the sake of explanation the property and asset are the same value). Then along comes a property crash (we had a banking crisis thrown in for good measure).

Now the borrower is 200% leveraged, or at 50% in negative equity (their …

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