Monday, May 25, 2009

Quotes of the Week

"The bottom line is that the Irish property market is heavily entrenched in a deflation spiral and, given the myriad of factors that have led to its creation, it is unlikely to recover any time soon." (Alan McQuaid, Bloxham Stockbrokers, in The Irish Times)

"One has to be critical of interference with the property market generally in normal circumstances, but these are not normal circumstances. There are 60,000 houses around the country with for-sale signs outside them." (George Lee in relation to his suggestion that stamp duty be reduced to 2%, in The Irish Times)

"From now on, there will have to be consistency between a local authority’s development plan and the National Spatial Strategy, regional planning guidelines and ministerial directives, such as those I have issued to a number of councils." (Minister John Gormley, in The Irish Times)

"We have a price in mind which is considerably less than the asking price, but we’re not going to let someone make a silk purse out of a sow’s ear at our expense. We’ll play it cool and see who really wants our money, it’s not a lot, but it’s a sum we can stand over. And we have trends on our side." (House hunter, Don Morgan, The Irish Times)

"This is the fastest rate of decline in national prices that we have seen to date since the index started in 1996. The particularly dramatic reduction in prices for First Time Buyers reflects their reluctance to buy in a market that is still declining and where unsold properties are being reduced further." (Niall O’Grady, General Manager Business Strategy, permanent tsb)

"All borrowers will be required to meet their full legal obligations. There will be a hardening of the approach to these borrowers – taxpayers’ money is at stake and the agency [NAMA] will be expected to protect it in a commercial way and with an independent remit.” (Minister Brian Lenihan)

The Government has stated that Nama will have a clear and strong mandate to ensure that Irish taxpayers do not ultimately end up paying for the over-exuberant lending practices of the past decade. Failure to face up, recognise and deal with the problems in our banking system is simply too costly to contemplate for this and future generations of Irish people.” (Brendan McDonagh, interim head of NAMA)

"The last thing AIB or Bank of Ireland want to see is the entire portfolio of some bankrupt property developer dumped on the market by a liquidator. Not only would the banks have to write off their losses on that particular developer, they would have to write down all the other loans extended to all the other developers to reflect the value of the prices being achieved by the liquidator... If it takes the precipitous collapse of Paddy Kelly to force everybody to jump into the unknown and get on with cleaning up the mess, then it is to be welcomed." (John McManus, The Irish Times)

"AT long last the Auctioneers Bill hit the Senate on Thursday. The cowboys are being reined in. The same cowboys are believed to have beaten a path of protest to the Minister for Finance's door demanding some of the Nama valuation action. Apparently they are fuming that The Irish Times published a report suggesting that our oh-so-honest (but much-maligned) estate agents will not be allowed to give valuations for Nama.Why should they?

These are the guys who deceived the nation with phoney guide prices, who seduced young buyers into auction rooms by quoting artificially low figures in the newspapers. Their record on valuations is abysmal. How could the Government put any trust in their wild guesses at the value of a toxic asset? They were always way off the mark with the non-toxic type. These are the clowns whom an RTE Prime Time programme revealed were indulging in malpractices , including fake bids at auctions and quietly supplying vendors with knowledge of buyers' financial strength. They obtained the information through their own mortgage brokers." (Senator Shane Ross, Sunday Independent.)

"There are about half a dozen developers in the country, mainly in the Dublin region but not restricted to the Dublin region, who really lost the run of themselves. They got us into all kinds of problems over the last five years or so. Looking at projects properly -- realising we are a little country of four million people and we are not the greatest nation in Europe the way some of the developers had convinced themselves we were.'' (Owen O'Callaghan)

Thursday, May 21, 2009

Quotes of the Week

"We are clearly open for business and we are working with our customers, both new and existing, to meet their mortgage needs. We are approving 4 out of 5 applications and our branches are reporting an increase in the number of enquiries from both first time buyers and existing home owners." (Bank of Ireland statement)

"Enabling households to realise their home ownership ambitions is a fundamental part of the day-to-day business of banking. We view the additional 30% capacity for lending to first time buyers in 2009, which is being provided under the terms of the recapitalisation scheme for Bank of Ireland and Allied Irish Bank, as a very significant starting point in the normalisation of the credit flow for house purchase. It is important that first time buyers, in good financial standing, have a line of credit open to them to allow them to make informed decisions in engaging again with the Irish housing market." (Mr. Michael Finneran, T.D., Minister for Housing and Local Services at the C.E.I.’S conference)

"The construction industry has a lot to answer for. Their over-production of property and miscalculation of the market has caused this depression. There is an overhang of 90,000 residential units for sale. We cannot sustain construction for the sake of building jobs. " (Ivan Yates, Irish Examiner)

"The state support of housing benefit is out of control. Mortgage and rental subsidy schemes need to be revisited in the context of the collapse of the housing market. Immigrant accommodation is costing us €52m a year. Why should the state overpay for negative equity loans and unadjusted rents? It is only to prop up bad banks and failed property investors. " (Ivan Yates, Irish Examiner)

"The [positive economic] trends identified in this paper are all positive for Ireland, but the property market here will take a while to feel the benefit. There is still some pain to come and more realism is needed in some quarters." (Margaret Fleming, Director, Investment in Jones Lang LaSalle)

Wednesday, May 13, 2009

Quotes of the Week

"Cheap accommodation, like cheap energy, is a competitive plus for any economy. In fact, if we look at successful European economies, cheap accommodation relative to wages is the basis of a dynamic economy." (David McWilliams, Irish Independent)

"In other words, to make it worth your while buying the house, the price would need to more than half from where it is now. We have to assume that the days of large capital gains on houses are over. Therefore, the average Irish house in these estates is likely to fall by anywhere between 50pc and 60pc in the next few years. And even that is assuming that prices don't undershoot on the downside the way they overshot on the upside." (David McWilliams, Irish Independent)

"Society empowers local councillors through the development plan process to zone land for development purposes. A system under which individual developers, in association with private banking, have reaped substantial benefit. Should their property rights still have primacy over society’s property rights as some pundits argue? The time has come to materially change the way development land is valued. The phrase the “common good”, as per the Constitution, should be given its true meaning and not the common good of property developers." (John Malone, Irish Times)

"It is in everyone’s interest to get the property market moving again. At its peak, the investment market was worth €3bn – this year we will be lucky to reach €300m. That means a drop of €250m in stamp duty revenue alone. And I have not even begun to think about the impact of declining property values on personal pension funds." (Phil Hogan TD, Fine Gael, address IPAV conference)

"People thought that no matter what happened with the property, if it came to the crunch, they could always dispose of it and there would always be a purchaser. The boom facilitated access to the property market for many new investors and now the impact of ever-decreasing capital values is hitting property owners hard across all sectors. A lot of owner managers entered the market on the back of the ongoing rising tide and now find themselves in significant personal and business debt, with lease agreements made in the past three years placing a huge burden on them. It used to be that properties ran themselves and there was always an occupier to fit the type of unit you had. This has totally changed and the need for companies to manage their properties effectively is now more important than ever." (Michael Hogan, managing director of Capital Assets)

Monday, May 11, 2009

Quotes of the Week

"Any move by the Government now to try to discredit Irish auctioneers and estate agents as in some way being to blame for inflated prices, or incompetent to value sites and buildings is utterly unjust and unfair ... It would be highly unethical and improper of the Government to engage entirely foreign expertise whose knowledge of the Irish market is limited." (John Shaw, IPAV President)

"The days of bad planning have to be over at this stage." (Environment Minister, John Gormley)

"We removed the claw back for many of the units because we felt with some of the one-beds there was very little difference between the affordable homes price and the actual market value. We thought it would be unfair to impose restrictions on such buyers. (Paul Maloney, chief executive of the DDDA.)

"It is true that the speed of the depreciation has taken some of our members by surprise, but anecdotal evidence suggests that there is a strong belief that prices have reached, or are very close to the bottom. If there is further depreciation, it is likely to result in an over-correction, which would quickly cause prices to rebound to current values." (Simon Ensor of the IAVI National Council's residential panel)

Thursday, May 7, 2009

Quotes of the Week

"As we can all see, Dublin, Cork, Galway and other places have developed out of control. As our city centre populations decline, the suburbs sprawl. Even now we have the fastest growing population in Europe and space is running out in our cities. The fundamental problem is that we have been building in the wrong way -- at too low a density and with a lack of concern for the required infrastructure/facilities -- with the shortsighted view that it is the commodity of the house that matters, to the detriment of developing sustainable new communities... Many of our suburban housing estates are big cul-de-sacs, leading nowhere and laid out to suit cars". Most of suburbia is single tenure and single use, with a common household size. It can, indeed be a "place of isolation, being boring, monocultural, and lacking a sense of community. To undo this legacy will be nigh on impossible, although the upcoming rise in energy and transport costs may be a suitable catalyst for serious change when the economy allows," he concludes. The stakes are massive, our responsibilities are huge. Will we be known as the generation that squandered the opportunities or the one that created an enlarged cohesive and fair society for our children and theirs?" (Architect Sean Harrington comments in a new RIAI publication entitled The New Housing 2)


"But blaming estate agents is utterly pointless. They are sales people. They sell property. Some are very knowledgeable on their subject and are extremely good negotiators and others are useless at their job. But, at the end of the day, their job is just to sell property. They are not paid to worry about whether or not the buyers will eventually sell on the property again at a profit or a loss. In the same way as estate agents were not responsible (nor congratulated) for the huge profits people made on property investments during the “good old days” they can hardly be blamed now for “putting people into negative equity”."(Isobel Morton in The Irish Times reacting to Derek Brawn's performance on the Late Late Show)

"The signs are that buyers are prepared to move where they perceive real value. The next step for the market will be to get transparency on prices. With legislation currently being pushed through to activate the National Property Services Regulatory Authority, auctioneers can only hope that one of its first moves will be to demand that property prices to be recorded and put into the public domain." (Orna Mulcahy, The Irish Times)

"When we made our offer, we thought the agent was bluffing: there couldn’t be another offer, surely. Who the hell would have money in this day and age? There was indeed another offer, pure and simple. We were just too mistrusting and nervous as hell to realise that, so didn’t get it. Hardball game over. We also made the rookie mistake of having our heads filled to the brim with tales of tricky estate agents looking to squeeze a few extra shekels out of gullible buyers, regardless of inconveniences like telling the truth. You end up parsing each phrase with more care than a diplomat in the Middle East. Well, that one we misread. Estate agents are honest. Damn." (Don Morgan, The Irish Times)

“Current negotiations fall into two categories in our offices in Blessing ton and Baltinglas, offers well below reserve on properties that are on the market for some time and good offers for property that are not yet on the market but identified buyers have an opportunity to buy”. (Simon Murphy of Murphy Real Estate Alliance in Blessington and Baltinglass)

Monday, May 4, 2009

"The banks are being bailed out and they are putting the boot in right, left and centre, destroying businesses. They're not lending and they're getting away with telling lies. The sadness is that our lovely country is being destroyed. And we all have a responsibility for it. We over-expanded; fully accepted. But a lot of people gained from it, people selling land, the Revenue in particular, the Government got a huge boost in revenue from people buying homes. And the sad thing for me is that Anglo Irish has been blamed for so much. Seanie FitzPatrick, David Drumm, they're the best in town. They made mistakes, of course. But there's been too much blame passed on to them." (Paddy Kelly)

"What's wrong with development? Are we so confused in our thinking that we misunderstand what development is? The nicest places in the world have come about through development....Were we wrong to house Compaq in Ireland? But we're being told we were wrong. Were we wrong to house O2? We're being told we were wrong. We're awful. We're developers. Were we wrong to build Smithfield and Clarion Quay? As of now, did we make a mistake to do any of that? As of now, that's what's being printed -- every day of the week." (Paddy Kelly)

"We've worked our nuts off to make thing work and to have performing loans. We're going to be screwed to balance against the developers who messed up. They're hijacking the income from the assets to pay for the revenue they have to pay out on the bond [that the government will use to fund the acquisition of Nama's loans]. Are guys supposed to work out these problems for nothing? Because once something goes into Nama you're effectively no longer involved. The income is ringfenced so they'll take it away and cripple you. This thing is ferocious." (Anonymous senior property development executive)

Friday, May 1, 2009

Quotes of the Week

"They don’t understand why you have to put the assets into Nama when Nama is likely to leave the loans with the banks and manage them like a credit committee." (Anonymous accountant, quoted in the Irish Times, representing anonymous developers who are trying to prevent transfer of their performing assets to NAMA: concerned that the Government would take over commercial properties such as shopping centres, on which loans were being repaid, because they were offered as security for, in some cases, smaller property development loans.)

"When called in to give their professional opinion on a property and its value, agents will make all the right sounds while avoiding saying anything which may later be used against them. In other words, they avoid giving any opinion on the possible sale price until they have first established precisely what price the vendor expects their property to achieve." (Isabel Morton, The Irish Times)

"Tenants are wise and are bargaining hard for discounts on advertised rent. Invariably they get the reductions, as it’s a renters’ market out there." (Irish Times article)

"As a long term proposition property is still a perfectly good asset class, the dotcom crash didn’t mean people stopped sending emails and despite the property crash living in a house/apartment still remains the most popular choice. The advised view (from our firm at least) is for home buyers to make solid long term location decisions that they can, and for investors to run the numbers to determine their target buying prices rather than looking at the market and trying to model your investment to work within the framework of current asking prices." (Karl Deeter of Irish Mortgage Brokers)

"It will take longer here to clean it up but that doesn’t mean that you can’t do good business during this period." (Swedish estate agent, Agneta Jacobsson, addressing Sherry FitzGerald business breakfast.)

"For years, we have been encouraged to ‘‘invest’’ our money in now-decimated pension funds as tax-allowable deductions. Similarly, we have been encouraged, by a coterie of mortgage brokers, bankers and financial gurus, to buy our own homes. Instead of continuing to contribute to these ‘‘black hole funds’’, maybe we should be allowed to switch this pre-tax income to paying off mortgage debt on our principle private residences. The net cost to the revenue would be nominal, as it is swapping one form of tax-allowable deduction for another. Messrs Cowen and Lenihan should give us something to smile about, and let us tackle negative equity with our incomes." (Cahir O’Higgins, solicitor, Dublin 7 in the Sunday Business Post)