Glut of repossessed houses could depress prices ‘by up to 25%’

Villa05

@Cookie The report is from the central Bank

The somewhat surprising finding, contained in a research paper by Central Bank analyst Yvonne McCarthy, suggests that contrary to widely held beliefs unemployment and negative equity are not the sole drivers of mortgage distress

Ref: Stats, Brendan B makes this point on the thread also if you look at the link

According to Table 4, 56.7% of those in arrears are in positive equity. Only 33.4% are in negative equity.


56.7 + 33.4 = 90.1 ?

I suspect 9.9% is LTV 100% (+/- 5%) ie It would be impossible to put an exact value on a property not currently on the market, therefore they would put a value range rather than exact value.

either way its a report from a "credible" source with fact and figures, something you and I have been crying out for in this thread

cookie1977

Villa05 wrote: »

@Cookie The report is from the central Bank


Ref: Stats, Brendan B makes this point on the thread also if you look at the link



I suspect 9.9% is LTV 100% (+/- 5%) ie It would be impossible to put an exact value on a property not currently on the market, therefore they would put a value range rather than exact value.

either way its a report from a "credible" source with fact and figures, something you and I have been crying out for in this thread

I see a significant difference between a central bank report and a report by someone from the central bank.

The_Conductor

cookie1977 wrote: »

I see a significant difference between a central bank report and a report by someone from the central bank.

The Central Bank Analysts do not issue personal opinions- they are reports that are fed up the line, opinions/observations/comments from colleagues are sought- and only once that its agreed that everyone is singing off the same hymn sheet- is the report published.

Analysts do not do solo runs.

cookie1977

I'll say it again and quote the Irish Times:

The somewhat surprising finding, contained in a research paper by Central Bank analyst Yvonne McCarthy, suggests that contrary to widely held beliefs unemployment and negative equity are not the sole drivers of mortgage distress.

and

Ms McCarthy’s study...

This is not a central bank report it is a research paper by an employee. I write research papers. I also work for an organisation. The research papers I write are not from my organisation they are my own research while I work for my organisation although I note on the papers that I work at that organisation. My organisation also writes reports which it is able to stand over. I stand over my own research reports, my organisation does not necessarily do so.

Finally there are still flaws in the data which do not appear to have been addressed yet by the author. I've yet to see a flawed report by the CB being released.

cookie1977

Anyway leaving all that aside as a paper (and as Villa says) it is good to get more information. I note in her conclusion that yes while 75% of those in arrears have the someone in the household employed the data show that...

...many of these borrowers have experienced a significant drop in their income or a change in employment conditions. Furthermore, some of these borrowers are in fragile employment, i.e. they are on a temporary contract, have been with their employer for a short time or have a history of unemployment

Which to me does explain why they are in arrears.

Villa05

Maybe I'm guilty of reading too much into this report, but could it also show the divide in the country i.e. the gap in income between those who lost their job during the bust + new entrants to the labour force-V- those that held onto their jobs during the bust

There is a huge income difference Avg 35k -v- Avg 65k

johnnyskeleton

Other factors to consider:

You could be fully up to date on your PPR and in full employment, but be in arrears on your BTL's.

Possibly people who lost their jobs with no chance of a new one, or emigrated, have voluntarily surrendered their properties between 2008 and now and the banks have sold them on individually.

Some people who lost their jobs are in receipt of mortgage interest protection repayments i.e. social welfare pay almost all of the interest on their payments.

Others had employment protection insurance

Others agreed a moratorium or other restructure with the bank (http://www.thejournal.ie/mortgage-arrears-restructures-1256248-Jan2014/)

Arrears can be as little as one month's missed payment, or as much as several year's worth of repayments. There doesn't appear to be any attempt to match the percentage of people in serious arrears (over a year) to unemployment.

Raffeal

Cuddlesworth wrote: »

If I was to look at it honestly, if I had the cash to buy a property (around 250-300k) and had not worked for property management companies in the past, I would be right in there amongst the gravy train.

If it was my entire savings, I wouldn't. I can't help but feel that this current rush is fueled by retirement cash piles, since we are not a big proper retirement fund country. At least not for our current later generations.

The Government have weighted the deck in the investors favour here, they continue to prop up prices as much as they can and the zero capital gains tax give away really is a great deal. If you compare property to a so called risk free investment like German bonds, or Irish bonds, you have to pay tax on the coupon (interest) plus any gain. In that scenario investing other people's money in Ireland is a great deal. Pension and hedge fund managers can just invest anywhere, Ireland with it's government bonds being just better then junk, ticks the boxes and you'll get your commission.

The same was said about Argentina and that didn't work out for the customers of the investment managers. The investment managers did find though, they didn't put their own money in. They're doing the same here, Blackstone and others aren't doing any proprietary trading, apparently to avoid conflicts of interest. They invest their own funds in banks instead, who lend their customers more money to go buy the structured property investments Blackstone are selling.

Raffeal

cookie1977 wrote: »

That's pretty disgusting and this type of behavior was sign posted a mile off well before the PIP's actually launched. I had thought though that the PIPs would only charge/get paid if they were successful hence why there was concern that they'd milk the easy cases and leave the majority of the problem cases aside? Maybe that's only payments from the banks side. 3500 (before the slight reduction) is a crazy fee top charge for an unsuccessful case.

3,500 grand for this type of work is a disgrace, it's little more than glorified form filling. There's no reason at all for a person to be unable to prepare the vast majority of their own paper work. The one PIP document I've seen was almost the exact same as the financial statement the banks make you fill in when you enter into their arrears process. My brother in law wanted to know why he could fill in one but was being charged to fill in another. A few phone call's later and the charges were significantly less.

moxin

According to the Central Bank, mortgage lending fell 3% in 2013.

http://www.independent.ie/business/irish/lending-to-households-falls-41pc-on-back-of-dropoff-in-mortgages-29969423.html

Villa05

600 BTL's rumored to be brought to market by Danske, Newstalk reporting it is the first in a number of batches to be released

DANSKE Bank is rumoured to be on the cusp of selling about 600 buy-to-let properties around the country belonging to owners in mortgage arrears.

Such a sale could either bring hundreds of houses onto the rental market or test the property market, which is currently seeing prices rise in some areas thanks to a shortage of properties for sale.

http://www.independent.ie/business/irish/danske-set-to-sell-600-buytolet-properties-29987331.html

Usual warnings apply regarding Source(s)

The_Conductor

Villa05 wrote: »

600 BTL's rumored to be brought to market by Danske, Newstalk reporting it is the first in a number of batches to be released



http://www.independent.ie/business/irish/danske-set-to-sell-600-buytolet-properties-29987331.html

Usual warnings apply regarding Source(s)

Its actually not news. Also- they're not 'being brought to market' per se- they have been offered to a significant number of investment groups as a going concern- with a projected ROI in the region of 10%. Aka- they are selling the entire lot to a single buyer- with the sale structured as a property letting business. The properties seem to be mainly in Dublin with a small interesting number in Galway (and a smathering elsewhere). Perhaps the Dublin and Galway properties might be separated out- and the others jettisoned.

All-in-all, the way its reported in the Indo is deeply misleading.

cookie1977

Are they mainly in Dublin? Bloomberg reported this first and they seemed to think they were from around the country.

http://www.bloomberg.com/news/2014-02-06/danske-said-to-plan-600-irish-homes-sale-as-retreat-gathers-pace.html
I would have thought that if they were mostly in Dublin they would have specifically reported this. Danske had lots of commercial in Dublin but I didn't get the impression that they were heavy in Dublin on BTL property too.

lima

It would be too good to be true if BTL's were put onto the market like this. Unfortunate Kennedy-Wilson and the likes have probably bought them already. Pr**ks are also saying that rent is too low in Dublin. Sure only where would you get it :rolleyes:

The_Conductor

cookie1977 wrote: »

Are they mainly in Dublin? Bloomberg reported this first and they seemed to think they were from around the country.

http://www.bloomberg.com/news/2014-02-06/danske-said-to-plan-600-irish-homes-sale-as-retreat-gathers-pace.html
I would have thought that if they were mostly in Dublin they would have specifically reported this. Danske had lots of commercial in Dublin but I didn't get the impression that they were heavy in Dublin on BTL property too.

600 units- wouldn't be considered to be 'heavy' by any means- very minor in fact- compared to other lenders.

cormie

It's a sad world we live in when homes are being released to people to "invest" in before people to live in and call their home.

Bob24

cormie wrote: »

It's a sad world we live in when homes are being released to people to "invest" in before people to live in and call their home.

Well said.

Having said that, I am not sure I would go as far as saying "world" ... We are clearly not the only one but it is more of a country thing. Some countries in Europe have policies to help people become their own landlords at affordable prizes. I see many interests represented in the policies of the Irish government around property, but I find it hard to see how the one of low and middle income first time buyers is represented.

ezra_pound

Bob24 wrote: »

Well said.

Having said that, I am not sure I would go as far as saying "world" ... We are clearly not the only one but it is more of a country thing. Some countries in Europe have policies to help people become their own landlords at affordable prizes. I see many interests represented in the policies of the Irish government around property, but I find it hard to see how the one of low and middle income first time buyers is represented.

Have you ever heard of social and affordable housing scheme?

D3PO

Bob24 wrote: »

I see many interests represented in the policies of the Irish government around property, but I find it hard to see how the one of low and middle income first time buyers is represented.

well to start with not everybody should be able to afford a home. Its a privledge not a right. With that in mind why should we have policies in place for low income buyers ?

we have a social housing scheme and quite frankly if your on a low income then you should not be able to afford to buy a house.

MouseTail

Bob24 wrote: »

. I see many interests represented in the policies of the Irish government around property, but I find it hard to see how the one of low and middle income first time buyers is represented.

what do you suggest? Outside the existing social, shared and affordable housing sgemes?

Bob24

ezra_pound wrote: »

Have you ever heard of social and affordable housing scheme?

I might not be fully up to speed, but hasn't this been scrapped? And did it ever represent a substantial part of the market?

Bob24

D3PO wrote: »

well to start with not everybody should be able to afford a home. Its a privledge not a right. With that in mind why should we have policies in place for low income buyers ?

we have a social housing scheme and quite frankly if your on a low income then you should not be able to afford to buy a house.

MouseTail wrote: »

what do you suggest? Outside the existing social, shared and affordable housing sgemes?

To clarify, I never meant to say every single person or family should have the right to own a house.

Having said that, I think the fact that we have 3 times more mortgage defaulters here than in Greece is pretty telling about how affordable property prices have been in Ireland compared to other countries (and I am aware of the drop in the past years, but with what has been happening in the past few months, I am wondering what lesson has been taken from it).

techdiver

ezra_pound wrote: »

Have you ever heard of social and affordable housing scheme?

I would not qualify for any of those schemes as my household income is too high (€93,000 approx). Also in my opinion I would also deem houses in Dublin to be too expensive for us to buy.

If a combined income of €93,000 with no debt cannot "responsibly" afford a house, then who can?

moxin

D3PO wrote: »

well to start with not everybody should be able to afford a home. Its a privledge not a right. With that in mind why should we have policies in place for low income buyers ?

we have a social housing scheme and quite frankly if your on a low income then you should not be able to afford to buy a house.

Just take another look at what you wrote.

To qualify for social housing in Dublin, your income must not exceed €32,000. Now 32k is a lot of money in take home pay and one can live comfortably on it, hardly low pay in the scheme of things. It ain't minimum wage.

High prices are the problem, not the incomes.

The Spider

techdiver wrote: »

I would not qualify for any of those schemes as my household income is too high (€93,000 approx). Also in my opinion I would also deem houses in Dublin to be too expensive for us to buy.

If a combined income of €93,000 with no debt cannot "responsibly" afford a house, then who can?

Em, absolute nonsense, you can afford a house in Dublin.

http://www.daft.ie/searchsale.daft?s%5Bcc_id%5D=ct1&s%5Ba_id%5D=ga2&s%5Bmnp%5D=&s%5Bmxp%5D=200000&s%5Bmnb%5D=3&s%5Bmxb%5D=&s%5Bmna%5D=&s%5Bmxa%5D=&s%5Bpt_id%5D=1&search=1&s%5Ba_id_transport%5D=0&s%5Bsearch_type%5D=sale&s%5Brefreshmap%5D=1

Or do you mean you can't afford a house in SCD the most desirable partof the country, you can also afford a house if you move outside and commute in.

People want superstar lifestyles on mediocre wages, 93,000 for a household isn't that much if you'r aim is SCD, that's two people one earning 50 and the other 43, alright wages, but not enough to buy in Foxrock, Dundrum etc.

The Spider

moxin wrote: »

Just take another look at what you wrote.

To qualify for social housing in Dublin, your income must not exceed €32,000. Now 32k is a lot of money in take home pay and one can live comfortably on it, hardly low pay in the scheme of things. It ain't minimum wage.

High prices are the problem, not the incomes.

€32,000 is graduate wages in the IT sector, so no it isn't a lot of money.

moxin

The Spider wrote: »

€32,000 is graduate wages in the IT sector, so no it isn't a lot of money.

Who said graduates? Get away from your obsession with SCD.

Graduate or not, for 32k a year. Thats €26,000 net pay a year, about €2,170 a month. Its alot of money to live on yet due to very high house prices the local authorities deem a person on this wage as in need of social housing. Crazy stuff.

spockety

The Spider wrote: »

Em, absolute nonsense, you can afford a house in Dublin.

http://www.daft.ie/searchsale.daft?s%5Bcc_id%5D=ct1&s%5Ba_id%5D=ga2&s%5Bmnp%5D=&s%5Bmxp%5D=200000&s%5Bmnb%5D=3&s%5Bmxb%5D=&s%5Bmna%5D=&s%5Bmxa%5D=&s%5Bpt_id%5D=1&search=1&s%5Ba_id_transport%5D=0&s%5Bsearch_type%5D=sale&s%5Brefreshmap%5D=1

Or do you mean you can't afford a house in SCD the most desirable partof the country, you can also afford a house if you move outside and commute in.

People want superstar lifestyles on mediocre wages, 93,000 for a household isn't that much if you'r aim is SCD, that's two people one earning 50 and the other 43, alright wages, but not enough to buy in Foxrock, Dundrum etc.

€93K per year would put that household firmly in the top 10% of household earners.

I think that if the market wasn't rigged, a couple earning €93K would easily be able to buy a house in a decent area. The ones you posted, ex council houses in Finglas etc., on €93K per year? Gimme a break!

Until the rigging is taken out of the market, you cannot blame people on decent earnings for being angry about the state of it.

techdiver

The Spider wrote: »

Em, absolute nonsense, you can afford a house in Dublin.

http://www.daft.ie/searchsale.daft?s%5Bcc_id%5D=ct1&s%5Ba_id%5D=ga2&s%5Bmnp%5D=&s%5Bmxp%5D=200000&s%5Bmnb%5D=3&s%5Bmxb%5D=&s%5Bmna%5D=&s%5Bmxa%5D=&s%5Bpt_id%5D=1&search=1&s%5Ba_id_transport%5D=0&s%5Bsearch_type%5D=sale&s%5Brefreshmap%5D=1

Or do you mean you can't afford a house in SCD the most desirable partof the country, you can also afford a house if you move outside and commute in.

People want superstar lifestyles on mediocre wages, 93,000 for a household isn't that much if you'r aim is SCD, that's two people one earning 50 and the other 43, alright wages, but not enough to buy in Foxrock, Dundrum etc.

Ok, take bad areas about and see how many decent properties you are left with. Most of those properties you list there are are in Finglas or worse, with an odd good area. We lived near Finglas before and ventured up to the village on occasion and it's not somewhere I'd want to pay that money for. Added to that the complete lack of decent public transport available around there and repeated anti-social behaviour we experienced on buses, doesn't add up to the money for those properties either.

Also, considering we are in the top 15% or so of earning households in the country (not all of whom live in Dublin), who exactly is buying these properties in SCD and parts of NCD, including Clontarf, Raheny, Killester etc?

I'm sorry, but there is a massive gap between Ballymun and Foxrock, but many half decent middle class areas are out of reach and at those price points people are clearly once again over extending themselves.

The Spider

techdiver wrote: »

Ok, take bad areas about and see how many decent properties you are left with. Most of those properties you list there are are in Finglas or worse, with an odd good area. We lived near Finglas before and ventured up to the village on occasion and it's not somewhere I'd want to pay that money for. Added to that the complete lack of decent public transport available around there and repeated anti-social behaviour we experienced on buses, doesn't add up to the money for those properties either.

Also, considering we are in the top 15% or so of earning households in the country (not all of whom live in Dublin), who exactly is buying these properties in SCD and parts of NCD, including Clontarf, Raheny, Killester etc?

I'm sorry, but there is a massive gap between Ballymun and Foxrock, but many half decent middle class areas are out of reach and at those price points people are clearly once again over extending themselves.

Look it is this simple, people are buying in those areas, they have the money to do so, I'm sorry but I don't think 93 grand a year is that much, our household income is 150 plus and they're outside of what I'd pay, but then again I'd prefer to have a small mortgage.

People who I work with are earning multiples of what I am, my wages would be middle of the road, those guys are buying houses in SCD to beat the band.

93'000 is not going to get you a decent house, even in say Rathfarnham and I use that as the outlier of SCD, like I say, buyers dictate the price, if people weren't prepared to pay those prices then the prices would be lower.

I looked at 4 bedroom houses in Cabinteely and Clontarf in 2012, they were going for 350'000, seems reasonable in hindsight.

Like I say if you moved ut an commuted or settled on an area like Blanchardstown you'd get the house you want.