Vultures are a key part of our housing recovery

When we hear talk of ‘vultures’ and ‘vulture funds’ it’s usually in highly negative overtones. That’s why the name-calling exists in the first place, the idea is to imply you have these groups that feed off the dead bodies of an innocent party.

Put this aside and realize that even if a company does feed off the assets of a failed one, that it doesn’t mean the firm that failed was somehow an innocent bystander. Usually they lost their market share and assets as a result of their own decisions and by definition a liquidator would sell these on to somebody.

Whether that ‘somebody’ is a person, fund or regular company hardly matters. What does matter is that we have a housing crisis and that these same ‘vultures’ will likely be delivering about 75% or more of private new housing in Dublin where the problems are most pronounced.

Take a look at some of the numbers in new developments: * Lone Star own 600 acres of land in Dublin with the potential for 7,000 homes: in Adamstown, where it has …

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Economic Factors affecting Irish Property Market (part I)

Background: The Irish residential property market has gone from a period of spectacular growth, to a dramatic crash and lately to recovery in the past ten and half years (2005 – 2015) the period I will concentrate on in this article.

The economic factors which influenced these major upheavals are many and varied such as Interest Rates, Unemployment, Population Growth, Demographics, Wage Inflation, Exchange Rates vs Sterling & the US Dollar, Budget Measures, Central Bank borrowing limits, Credit Availability, Rents, Sentiment & Stock Market performance.

This is not an exhaustive list but it does show the range of factors that can influence property price movements with some having a much more dramatic effect than others. Here I will confine my analysis to the influence four key factors played on residential property prices in Ireland during the period discussed.

These are Unemployment, Migration, Exchange Rates & Sentiment. Firstly I will look at the property prices themselves and how they have behaved during the period.

Property Prices:

In the early part of the period under review (2005 to 2007) property prices increased …

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Independent vs Irish Times

Sometimes it’s interesting to see how two different papers cover the same story.

Here is the Irish Times talking about how crowds failed to materialise at a property sale in Swords.

And then the Indo follows stating that nearly all of the houses sold.

Granted, they were filed on two different days and the Times couldn’t have known the level of sales, but they did point out the crowds didn’t arrive, the rational deduction being that there was ‘no rush’ to buy the homes. The Indo pointed out that 45 of 53 properties sold, that’s almost 80% of what was available in a day or two.

So is there a rush on for these homes? Yes, because 80% of anything with a price tag of a quarter of a million Euro never sells that quick when we don’t have a supply side issue – something Conor Skehan of the Housing Agency is lording over the mere mortals Read More

Today with Sean O’Rourke: talking property 27th September 2013

We spoke to Sean O’Rourke about the increased prices in Dublin and what they do or don’t mean, in our opinion it’s a case of a symptom of dysfunction.

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RTE Radio 1: Today with Myles Dungan, 27th August 2013

We spoke to Myles Dungan on RTE Radio 1 about some concerns regarding the apparent recovery in property prices. We think there are too many issues with supply, banking and transaction numbers to have more than minimal faith in any recovery at present. While the market move may have legs, it appears (at least by our analysis) to be based on bad assumptions.

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Bank rates, onwards and upwards…

Something that is interesting is how people are amazed that banks are jacking up interest rates at a time like this… In fact, it is precisely because of the time we are in that they are doing it, and due to the market environment they face.

Banks have a choice at any time as to where they will put the money they hold, their job is to turn liabilities (deposits, debt, equity finance) into assets and at present there is a golden window of opportunity where any decent (almost any) assets can be lodged with the ECB and the ensuing liquidity recycled.

For the most part this has helped to support the bond market, part of the LTRO was based on this premise, but in Ireland while bond yields are attractive (still above 5%) mortgage rates are not as attractive. Currently the standard variable is less than 5% meaning a person can borrow for cheaper than the nation they live in is able to!

That won’t last, the likelihood is that sovereign rates …

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The Morning Show on TV3

This month the property-watch focused on Central Bank reports that property prices had overshot from 12-26% depending on the model used. This counter to conventional wisdom, so we chatted about this and other topics with Claire Brock, Martin King and Angela Keegan.

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McWilliams vs Murgatroyd

Why have a two handed economist when you can have two one handed economists? (my jokes deteriorate in quality by the day)

Today there are two very different opinions on the property outlook in Ireland from two very different commentators, first up is David McWilliams who wrote a piece in today’s Independent, where he says the nation is a ‘Bankocracy‘ and that property prices have much further to fall – to the tune of a further 45% according to his figures (saying that current avg. prices are €250k and they should be c. €135k). He implores people to look at the fundamentals of the market and price via yields [disclosure: we support his valuation approach, it was the basis of our investor reports].

McWilliams is probably right, the market is not at the bottom, having said that, there is no metric which can gauge bottoms, even in stock analysis you can use Fibonacci numbers or Bollinger’s to look for trends or turning points, but there is no …

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How much of a deposit do I need?

When making a mortgage application this is a question that many first time buyers want to know, how much money do I must I have for a deposit? Well, that kind of depends on which bank provides the mortgage finance!

Lending criteria is different for every bank/building society/lender, this goes for rates, the general underwriting criteria as well as the ‘loan to value‘, the deposit you need is 100% minus the Maximum LTV and that will give you the deposit amount you require. For instance, ICS have a maximum LTV of 92% so the deposit you need – if you are obtaining finance through them – is 100% – 92% = 8%.

What is interesting in that example is that when you go ‘sale agreed’ on a property the estate agent will ask for a security deposit and the balance of 10% at the signing of contracts, this is an example …

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Supply, Demand, & Prices of Irish Property – A talk by Ronan Lyons

Ronan Lyons gave a talk to CFA Ireland on the 9th of July on the topic ‘Supply, Demand, & Prices in Irish Property’.

Ronan is one of the most respected voices on the property commentary circuit in Ireland due to his careful analysis and long term association with the nations largest property website daft.ie (from which he gathers his datasets).

This video (click here to go and watch the full play-list) is required viewing for anybody with an interest in the Irish property market.

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