Firesale yields no flame and very little smoke: REA Auction in the Shelbourne

The room was packed and there was plenty of property for sale today at the Real Estate Alliance national property auction, however,  it seems the crowd was more curious than courageous [likely a good position to take!], and the over-riding theme was definitely that played by the word ‘withdrawn’. Of the 71 lots on offer about twenty were taken out of the auction in advance, and the majority of those that remained were attracting little interest and not getting anywhere near the reserve prices quoted.

In the time spent there we only saw a single property reach the AMV (advised minimum value) and subsequently sell. This is the bit that annoys me is this: on the brochure the AMV might be €350,000 so they start the bidding at €230k, one or two bids go in and now it’s at €250k but nobody goes above that so it is withdrawn!

If you are not going to let anything clear for less than the AMV why …

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Property prices may fall, but finance prices won’t

Unless you are a cash buyer it isn’t a good idea to focus on property as a single cost, in a transaction there are two costs, that of the asset and then that of the finance for the asset purchase. I have done a few comparisons on costs where in two years time where a property has fallen a further 20% from where it is today.

As we expect margins on lending to rise considerably we have factored that in, along with moderate base rate increases. What we have done here is to take a view that prices may have fallen 40% from the peak to now, but they will fall a further 10% p.a. for the next two years, a further 20% from today or over 50% from the peak.

Purchase in 2010 €200,000 90% mortgage over 25yrs [€180,000] @ 4.5% [10yr fixed] base rate 1% margin c.3.5% repayment per month: €1,000 total cost: €300,000 balance after yr. 10: €130,785 Total Interest Paid by year 10: €70,845 …

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Fast Track Repossessions, what does it mean?

There has been an interesting development in the area of repossessions in recent weeks in which a property can be taken back (repossessed) without a full court procedure having taken place. Today we will consider how this will work.

First of all, there are several things which tie in together in 2009 and they form part of reason behind the new ruling. The use of circuit courts to repossess a home used to be commonplace because the decision was set in a court depending on the ‘rateable value’, but the domestic rates system was discontinued in 1978, thus, the hearings started to default into the higher echelons of judicial decision making and today the common court for repossession hearings is the High Court.

The new rule means that a Registrar will decide what is seen or not by the court and a side effect of this is that a house can be repossessed without actually going before a judge. It is important to note that a registrar is not merely a …

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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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Boom Bust, house prices, banking, and the depression of 2010 by Fred Harrison (book review)

I have been quite public about my belief in property tax (caveat being we should have far less income tax/levies etc. perhaps a ‘flat tax’ would be best), and if there is one book that has really helped to shape that opinion quite succinctly it is Fred Harrison’s masterpiece on the topic, and the subject of this review ‘Boom Bust‘.

Fred Harrison saw the property crash in the UK of 1989/90 in 1980, and furthermore, he named a date, he also named a date of specifically 2010 (as a bottom, not as the ‘start’ of a crash) in the mid 90’s. How? It is due to his analysis which goes back to the 1500’s of property cycles, and while I am still sceptical about his ’18 year’ cycle, the one thing that fully convinced me was the basis and need for a more rational and working approach to property and taxation of same, or the ‘democratisation …

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Living in the past, Irish property prices.

Paul O’Connor of MyHat.ie and PropertyWeek.ie has written up a great post on the Irish property market, the single biggest hindrance in the Irish property market is that of it being totally non-transparent when it comes to sales prices, most of us would settle for some opacity but alas, even that is too much to ask for.

Here is Paul’s Take on it:

An auction is a sale conducted in public. As such, prices paid at auction have always been available to the general public, and until auctions themselves became a victim of the market crash, we had become used to seeing auction results reported every week in the property pages of the newspapers.

In contrast, a private treaty sale is conducted in private. It does not specifically imply price secrecy, just that you can negotiate a deal at your own pace …

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How is TRS calculated?

TRS or Tax Relief at Source, is a mortgage related tax relief available to first time buyers. The working elements of it will be described in today’s post.

When you draw down a mortgage, if you are a qualifying applicant, then you can then apply for your TRS by downloading the TRS1p form from the Revenue website. After you send it off it will take a few weeks to process, and then you will get the years tax relief averaged out over the remainder of the year.

For example (we’ll show the calculations later) if your mortgage drew down in January but your TRS only kicked in during March then the relief would be paid as the average of 12 months over 9 months – say it was meant to be  €300 per month (had it started in January) then you’d be getting  €400 per month for the remainder of the partial year.

The …

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Property prices, are we near the bottom?

Are property prices bottoming?

there are a few reasons why some commentators feel we are going to start to see recovery.

1. Many New Developments have slashed their prices to stimulate demand: True, having said that, when all sites start to do this in tandem it creates a new low, similar to the paradox of deleveraging in some ways. The current buyer sentiment can be boiled down to this – the people buying are doing so in areas they desire not in ‘areas where property happens to be for sale’ and for that reason we are likely to see further price drops in new build and less in the second hand market. Developers are also starting to chop prices further as they near liquidation, in talking to some they have said that they know various developments are not going to sell so they are talking to the bank about what price is acceptable because the loss is coming one way or the other.

2. Interest Rate reductions have made mortgages a …

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Profit from the property slump?

An interesting interview on property prices (granted this is on the Asian market), on one hand there is Chris Dillon who is well versed property expert, and on the other you have Bernie Lo (personal admission: he is one of my favourite presenters on Bloomberg!) who is making equally valid counterpoints.

The interesting facet is that the argument for or against property is happening again, up to 2006/7 the argument was purely ‘for’ and from 2007 to now it has been totally ‘against’, the question is whether or not we are reaching capitulation or not, the so called ‘bottom‘ that some commentators are talking about is hard to spot, its like trying to read a road when driving by looking only at your rearview mirror. Having said that, a bottom call currently, is in our opinion, premature even on a global basis.

In Ireland we are seeing the over supply on the new build side become compounded by the existing stock levels for sale, job security issues and hardening criteria in …

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If you are not going to buy make sure you get cheaper rent.

In the current property market sales are down, it is having a big effect on many financial institutions because the decrease in transactions is causing net lending to shrink. This is well established and brokers as well as banks are in the news talking about the ‘changing’ (sometimes we prefer the plain English term ‘crashing’) market.

So if you have decided that you don’t want to buy, or you do and you can’t find a motivated seller (we’ll be doing a post later on how to find motivated sellers) then you have likely come to the conclusion that you will rent for a while. The nice thing about renting is that you can live in the area of your choice with little cost in changing locations (compared to buying in an area). If there are problems with the property then they are the landlords problems and all in all it’s a fairly handy existence.

The downside of renting is that you don’t and will never own the place (assuming the landlord doesn’t offer to sell you the gaffe). And you …

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