NAMA: Will it stabilise the market or reflate the bubble?

NAMA: Will it stabilise the market or reflate the bubble?

NAMA and the property market: Will it just reflate the bubble?So far the main focus of NAMA has been what impact it will have on the banks. But probably the greatest impact will be the change it will have is on the Property Market. So are the possible outcomes of NAMA?

Scenario 1:
The Government takes on developer loans; Irish banks get cash and start … lending money to house buyers, who get 90% mortgages and buy house(s). A new property boom starts and in five years time with back in a familiar place with X billion in bad property loans – albeit bad mortgages, rather than developer loans – but more debt none the less

Scenario 2:
Banks will have to repay international lenders and bond holders with the money they receive from the Government. With jobs losses, increased taxation and a possible NAMA levy, housing finance availability will be reduced and fewer people will be in a position to take out mortgage. Although it may be a slow road back to recovery this should help and result in stabilising the property market.

Have your Say

  • Will NAMA just reflate the bubble? Or will it stabilise the property market?
  • Should we support or reject NAMA?
There are 67 comments for this article
  1. joe soap at 7:20 pm

    with regard to nama it appears that 2 solicitors employed by nama were also directors of a builing company that still owe a decent man 1000000 euro this speaks for itself

  2. Francis at 1:10 pm

    John,

    I assume your ability to predict with such exactness was at work over the last 3-10 years when every one in the Irish herd was buying property like it was a sure thing investment. Now it seems you have joined the new Irish herd who believe property prices will and should fall further.

    Perhaps some perspective is in order, most people got in wrong in the last 5 years and most people are getting it wrong again. History repeats.

  3. Eyeball at 1:25 pm

    Well wow good response …a little immature Bananarama…Ok Well lets just go through what you said…I have given a detailed comment with regard to Nama and why its in the governments interest to get a floor under the dropping price. Which is exactly what Nama will do. What do you come back with Developers and banks and I agree wholeheartedly that this is what Nama is intended for but as a side effect it will stablize the house prices have a look at the ERSI or it was, but I think that with xmas coming up you will see a lot less of the negative and more positive spin from the government and with Lisbon getting the go ahead there will be more positivity. So if your going to piss and whine about it and not bother reading the comment bananarama. All I said was I believe its a good time to buy if you have the cash available which I have. there is an old saying that when there is blood on the street it is not the time to take action as there will be too many people doing the same. But to act just before the blood is shed is when you get in there first.

    So lets just be clear I don’t advise anyone getting a hugh mortgage or getting a 2nd property if there are going to go into a crap load of debt. Just saying if you have a few bob go for it.

    As for “C” at least you gave an opinion which I disagree with . I suppose the proof is in the pudding. But there has been less than 50 repossessions in the last 2.5 years since the downturn and these are people unable to make payments for up to 2 years. If you read the small print on Nama there is a provision that the bank cannot repossess as easily as it used to. They have to try to work out alternative arrangements first to help the home owner ..That my friends is now in Nama. Check it out for yourself. So that is why if your a sane person who even wants to move. Why would you bury yourself in negative equity. Doesn’t make sense. But I do take the point that it will happen for some people and I do feel for them.

    On the point of the house being repossessed and going into Nama…That my friend is what is happening. If the house defaults it will go to Nama where it will be used as a rental house for some family or whatever. But more evidence about an upturn is the new appartments that went for sale on the southside of dublin beside where the new Luas stop is going the developers took 90% off the market as they believe that they will get more next year when the Luas stop is built. So I am not alone in my thinking that we are at the bottom of the barrel

    As for the breadline comment all I am saying there is if there are an increased number of people losing there homes ..These homes go to Nama aka the government and can be used to home people who have fallen on hard times.

    As for going to prison..Not a chance all a person has to do is declare bankruptcy. Read up on it mate. You declare bankruptcy the bank takes the house and any other assets. You get a clean bill but you cannot get loans for 10 years. As for this as my bailout plan. No I think ahead I have tennants…A relation who has said they will rent it for the next 3 years at least. So that money comming in is pure profit cha-ching

    Yeah I was reading about the acceleration … but its only one report .. as I have already got this place for a good deal less than 50% off the bubble price I think it will not go down too much more if it does I still have a 10 – 15% buffer which I bought under. With the money made on rent I am sure will easily offset this. and its not short term I will be keeping this apartment for at least 20 years..and even the most negative pessimist has said that house prices will rise again in that time span. Even if it is only at the rate of inflation.

    As for your last comment. I will not go bankrupt as I said I had this money so as a Long term investment I cant lose…

    [quote]When there is blood on the street its too late so strike now and make some blood[/quote]

  4. C. at 9:08 am

    Eyeball,
    You’re wrong on EVERY single point you made.

    [i]”Someone who bought in the last 5 years will not sell for 50% than what they bought. They just wont do it. “[/i]
    They will when they have no job and rates/taxes/levies go up.

    [i]”…at worse case if the house is repocesses it will go into Nama.”[/i]
    Bizarre claim. Just plain crazy.

    [i]”There are plenty of people on the breadline looking for rented accomadation and the government will place these people in it.”[/i]
    And that’s good for rental yield because….? Answers on a postcard please.

    [i]”…(if prices decline further there) is a strong possibility of people just throwing there house keys into the bank letterbox… “[/i]
    This is a shocking claim. This can not be done in Ireland. You will just end up in prison with a larger debt. Did you seriously buy property with this as a ‘get-out’ plan?

    [i]”In may house prices dropped by 1.5% nationally which is the smallest decrease in the last 2.5years. It will be interesting to see the house price diffrential for Q3 of 2009.”[/i]
    Prices declines have accelerated.

    [i]”I for one am hoping to make a quick book out of this disaster. Fortune favours the brave”[/i]
    Good lad. Bankrupcy favours the greedy.

  5. Wishu werehere Bertie at 5:41 pm

    Goodman eyball sure your right del boy once said “he who dares wins” as well…

  6. Banamarama at 1:48 pm

    eyeball
    “1 Nama – Nama need to keep the prices settled”
    Nama will do nothing for house prices. It is not designed to do so. It is designed singularly to give taxpayers money to banks and developers who made some foolish mistakes while they were blinded by greed.
    “2 Someone who bought in the last 5 years will not sell for 50% than what they bought.”
    If they have to sell they will sell for what they can get at the time (market price). if that is less then 50% of what they bought for then they will have no choice.

    I didn’t bother reading the rest of your post

  7. eyball at 11:00 am

    I cant believe the nay sayers in here. I have just purchased an appartment for 145k 2.5 years ago it was work 299k. The guy selling wanted 175k. I put an offer in of 130k and haggled to 145k The property market is bottomed out. It is no longer a sellers market. There are deals out there for the person willing to take a chance. For people waiting for it to drop further its not going to happen and the two main reasons why is:
    1 Nama – Nama need to keep the prices settled
    2 Someone who bought in the last 5 years will not sell for 50% than what they bought. They just wont do it. There is no point and if its a case where they are in financial bother you will find that banks are more considerate when dealing with these people . IE working out a better structure to pay the mortgage during the time of crisis and at worse case if the house is repocesses it will go into Nama. Look at point 1. Name needs to keep the price settled. There are plenty of people on the breadline looking for rented accomadation and the government will place these people in it. So as I say prices will not go down any further if it does there is a strong possibility of people just throwing there house keys into the bank letterbox and saying …Congrats your the owner of a house worth 150k with a mortgage of 300k. This happened in the UK in the 80s and I bet that is why Nama has been brought in. Sure the level of decrease is shortning by the month. In may house prices dropped by 1.5% nationally which is the smallest decrease in the last 2.5years. It will be interesting to see the house price diffrential for Q3 of 2009. I for one am hoping to make a quick book out of this disaster no point in the politicians, banks and developers getting everyone. Fortune favours the brave

  8. Zhabi at 2:14 pm

    Some of the politicians who boasted about their wonderful “Celtic Tiger” plus a plethora of greedy bankers should have been arraigned on treason charges, found guilty and shot. Since that didn’t happen, there is no corrective to prevent the same disaster happening again in the future…and not the distant future either!!!

  9. Two Coats at 3:48 pm

    Irish property prices are not yet down by 40%. Nationally, prices are down by 23.23% since they peaked in January 2007. In Dublin prices are down by 27.21% from their peak in April 2007 and in the commuter belt prices are down by 29.07% since they peaked in November 2006.

    So, even if property prices were to bottom at the international mean property price fall of 46% referred to above by uncle buck, they still have to drop by a significant amount nationally (almost double in fact) to reach this level.

  10. Colette at 11:49 am

    I concur absolutely!

  11. Colette at 11:49 am

    I concur absolutely!

  12. Colette at 11:33 am

    NAMA should be flushed along with the **?!! bank that got us into this mess. Any other business, so badly managed, would go to the wall AND BE LEFT THERE. Whats so special about Anglo Irish? is it where the big boys keep their pocket money? Do they think we are stupid??? They have us over a barrel because we pay prsi – we’ll have them over one at the next election! Can’t come soon enough

  13. Screwed at 10:13 am

    NAMA will bail out developers but what about the people that are now up to 100k in negative equity? The government couldn’t care less about common tax payers. The property developers and banks are their main concern. I’ve an apartment and no w reckon it’s worth 2/3 of the purchase price. Should be interesting if we ever try to trade up to have room for kids. Great country this. Run by morons… run by a governmnetwho will not step aside despite the people they supposedly represent wanting them gone… Bleak future for this generation and probably a few more to come…

  14. John Judge at 8:41 am

    If you can’t get a mortgage, there’s a reason.
    Job viewed as unstable / salary multiple too high / LTV too high etc.

    Once upon a time, banks threw money at every Tom, Dick and Harry who saw an on the TV and decided it would be great to have somewhere.
    Those days are over. Ask your parents their experiences of buying a house.

    The banks want to see references, stable jobs, savings records and deposits. If you don’t have all of them, work at getting them.

  15. jmc at 3:25 am

    @ Keith Elliott

    As a bank shareholder I hope that banks will not lend to people who such as yourself are clearly financially illiterate.

    “I don’t care what it costs, I just want to buy one. Using 92% of someone else’s money, of course.”

    If you pay 10k of rent next year and the house you want to buy drops by 20k are you better off renting or buying?

    Answering a question like that correctly should be a requirement of getting a mortgage.

    The naivety and stupidity of your position is staggering.

  16. Tommy Your Friendly Local Engineer at 12:44 am

    There will be 400,000 empty homes in Ireland by the end of 2010 and if you really wanna buy you need only find one who needs the cash right then.

    No Rush !!

  17. oggie at 2:15 pm

    Mary, if only we could reject NAMA. There is no mechanism for us, the people it is going to affect, to decide on it.

    It seems the Government is hellbent on fiddling with the property market but I fear their latest gamble will be in vain with so many other factors deciding when things will bottom out (unemployment, emigration, oversupply). It’s like they’re betting the house on ‘0’

    Huge downward corrections needed, I know homeowners don’t like to hear it, but what sort of life are we contriving for future generations if we let house prices remain at these insane levels

    PS – Mickey, you should do stand-up LOL

  18. Al White at 2:14 pm

    Interest rates will not remain at this all time low for more than another year,as the European economy improves we will be caught with higher rates while our economy (in real terms) continues to shrink,therefore houses must come down further to allow for this eventuality.
    Until public finances and pay are tackled then there will be little money to pay for property-better to rent at present

  19. Bob at 12:55 pm

    Banana republic, corrupt government.

  20. risketto at 11:18 am

    I am no economist, but did my calculations and this is the result, working with the assumption of an interest rate of 3,20% (currently 3 year fixed):

    Current property price 200K, savings 60K. Mortgage of 140K, with 57K in interest. Total 257K

    If price falls by 10% in a period of 2 years (I this is is a pretty modest expectation): 180K, savings 60K, mortage of 120K and interest of 49K; I save 28K

    After paying 2 year rent at 18K, I am still 10K better off.

    So as much as I want to own my house like yourself Keith, common sense say to keep the money in the bank building up interest for my pocket instead.

  21. Mickey at 10:37 am

    Patrick

    Does the Minister really have a Teddy bear and train set?

    WOW thats cool……….. I want that too 🙂

    Do you think I could get one if I ask Social Welfare to supply it?

    LOL just kidding with you. The bad news is that the morons are running the country and the system is rigged so that we cant do much about it except complain and we will be looked back at blankly.

    We need a 1916 type revolution to take steps in eradicating corruption but the question is who will do it? Just take a look at the candidates and we all realise the end is nigh!!

    In between all this try not to loose heart and have fun as much as you can because the Government Banks NAMA estate agents and solicitors will be sure to end it all for everyone. HAve fun and laugh it all off to keep grounded.
    Cheers

    🙂

  22. daltonm at 10:32 am

    Your kind of calculations presume that interest rates will never rise beyond 2.5%, they will, and that’s a fact.

    A rise of one percent = 789.52
    A rise of two percent = 901.81

    Stress tested at another 2%.

    Interest rate 6.77% = 1145.96. It doesn’t look as appealing now imo.

    If you think that it’s an unlikely scenario that interest rates will not rise to 5, 6, 7 or even higher in the next 3 years then you are seriously misguided.

    Historically 5% and above is the “normal” interest rate – 2.5% rates are “bubble” rates.

    And who pays this mortgage for your “couple” one of whom is on the dole when the rates rise? That’s right the taxpayer.

  23. Mickey at 10:28 am

    Yes you are quite right and when the shoe is on the other foot, YOU will then be able to rent out a second property when you buy one and expect OTHER people to pay YOU rent !!!! You got it in ONE well done!!.That makes good sound business sense and thats what we need to turn the economy around ( Turn it around only in favour of Banks and Developers mind you, not for common people who draw dole or sponge from social welfare as assistance should only be given to Banks and Developers like what NAMA is correctly doing and the Minister for Finance is correct in what he is doing because HE says so thats why!) You should be working for a BAnk NAMA or an Estate Agent because that makes sense that YOU should not pay rent. Rent only applies to OTHER people. Best of luck you buying your property and long may you get a tenant to rent it from you and be greatful to you as their landlord. If there were only more like you the country would be back to boom time. !!! dont give a penny out keep it under your mattress it will keep you warm in the winter.

  24. Belle at 9:07 am

    @ Colm,

    thats only bad news for the construction sector in the next years, well, and for the farmers of course and the Planning Department of the County Councils (God forbid that they have to twiddle their thumbs!?). Given the level of emigration in the next future and the numbers of empty houses all around the country, I don’t see house prices rising in the next 10+ years.
    Even though there are the likes of Keith, who would still borrow a lot of money to buy property. You could offer me any property in Ireland for 50% off “peak” in Bubbleland and I wouldn’t touch it with a Bargepole! Not, as long as the same people and their cronies are running his country!

    This Government is useless – I have given up all hope by now. And their so called “consultants” are even more useless, if the only thing they can come up with is NAMA!

    Imagine, this Government hopes it can burden all their greedy and thoughtless expenses on generations of taxpayers – but half of the taxpayers they want to take for a ride, emigrated at that stage? I myself are certainly tempted, to leave these Dummies in Government and Bankingsector behind, once and for all.

    Wouldn’t it be nice if the people who got us into this mess would have to pay for their wrongdoings themselves for once? Or declare bancruptcy. Simple as that. Enough is enough!

    God, save this country!

  25. mary at 9:02 am

    We should REJECT NAMA. Its a System to Bankrupt the Country. It will try to Inflate a Dead Horse (The Banks). It will destroy ourselves and our children and create Inflation making our money worthless by creating Liquidity and doing a Double Shuffle with the OVERLOADED Taxpayers of Ireland. Getting them to try to Bail out the Banks with one hand and the Developers with the other. The Taxpayers won’t know what hit them. They will be dumped with all the shite that was created by the Inneficiencies of the system. They are already Victims of the Public Service and all they entail. Have you ever come across a Public Servant who made a decision on anything? without passing the buck right on down the line, to NEVERLAND.

  26. Mickey at 1:26 am

    Hi

    Can I ask you about the maths of this? If what you say was to happen, how then with an average Industrial wage of 35k euro x 3 salary, which amounts to 105k euro plus 10% of 150k as deposit savings, ( the 150 k being the price of the house) of 15K added to 105k is 120k so there is a shortfall of 30k.

    Does NAMA pay the rest? or our Mammies and Daddies?

  27. Mickey at 1:11 am

    Yes I think Nama is great it will help to increase property prices back to the good value levels *e.g 750,000 euro for a ground floor one bed/studio appartment in North Co Dublin which represents good value for money. An estate agent told me this so it must be true. Also I think the Government are never wrong about anything. Also I think family should make a collection so their daughters can get on the property ladder. Wake up, house prices are on the up and you better have your money ready to pay the developers what they want, or else get out and leave room for all the people who are happy to take out mortgages for over a million euro if they earn a good wage say 20,000 per year. Also I think there should be a tax on people who are on low income or unemployed and the more money you earn the less tax you should pay. Unions should be stopped from having a say about anything and they should shut up. ALL the public sector should be saked and prevented from claiming dole. Dole should only be given to Developers and Estate Agents and solicitors who are the only people entitled to anything and everyone else should just go away and shut up.eThe Government is great and Minister Lenihan God Bless him knows what he is doing because he is a barrister and they know everything AND he goes to Mass so he must and can only be right about everything.Irish people should be proud of him and when on holidays abroad they should tell the savages in other countries that Ireland is the best place in the world to be and that we are all happy to pay extra to get the country out of the mess caused by unemployed people and spongers in the state. Schools and Hospitals should demonstrate how they are going to make money for the economy and what they propose to do about providing education and health care to people who live in nice areas of Dublin only and not be too concerned about anyone else at all. I think people should pay a tax to supplement the Developers costs in selling on proerty and also pay an enquiry fee to estate agents to cover their time in answering the phones to people wanting to buy houses. If you want to buy a house then you must have money otherwise you dont want a house or indeed need one. Just go away and let the house prices rise again so we can all live happily ever after and do what we are told to do by the Government so shut up and obey Fianna Fail and do what you are told. Have you no respect for Ireland? Stand to the NAtional Anthem of |Ireland and be proud to be irish because this is a great country and Brian Puberty is the funniest man in the world by virture of the fact that he is irish and has an edge over us all. Bono is great as well and he is good to the poor he tells people to give generously what more could anyone ask of bono than that. So shut up the lot of ye and pay up or get out.I am sure everybody will agree with me and Priase to Lenihan the great hero of modern Ireland who will save this country from the hands of spongers who do not pay or assist the developers and assist the BAnks. I think Mr Fingleton should keep his million euro after all he earned it and the rest of yiu did not. I think he should have been paid 55 million tax payers money just for being so nice alone and also the Financial regulator was terribly misunderstood.

  28. John – is sitting and waiting at 11:38 pm

    Keith,
    You say you’ll spend 10k in the coming year on rent… and you’d rather buy now than waste money on rent.

    How about you wait a year….. spend the 10k on rent… buy a property in a year when its 20k cheaper…. and treat yourslelf with the 10k you’ve just saved.

    Suit yourself though

  29. C. at 9:50 pm

    250,000+ empty units.
    Massive unemployment.
    Emigration.
    Falling rents, falling yields.
    Wage cuts.
    Rising taxes, levies.
    Contracting Public Sector expenditure.
    Potential property tax.
    Stricter credit control.

    And the average home is still 6 to 7 times average earnings? 40-50% further to go.

    NAMA has two main functions. 1) to provide the Irish Government with borrowings of ECB cash without breaching EU regulations, 2) to recapitalise the banks at the taxpayers expense. In five years time when you look back at the explosion in our National Debt, the additional 100 billion euro will be the cost of this corrupt FF government to you and your children.

  30. O’Toole at 8:46 pm

    250,000 empty units.
    Massive unemployment.
    Emigration.
    Wage cuts.
    Falling rents, falling yields.
    Rising taxes, levies.
    Contracting Public Sector expenditure.
    Insecurity.
    Interest rate increases.
    Potential property taxes, water rates, carbon taxes.

    And the average house is still a multiple of 6 to 7 times average earnings? Still another 40-50% to go, assuming no undershoot.

    NAMA is designed to do two things. 1)finance the Irish Government borrowings with ECB cash without breaching EU rules. 2)recapitalise the banks at the taxpayers exspense. In five years time when you look back over the growth in our National Debt, the additional 100 billion euros will be what a corrupt FF government cost us and our children.

  31. damo at 7:39 pm

    emer, if there not people like keith queueing up to buy homes last few years we would not be in the mess well not as bad a 1 anyway,i blame the people who bought the houses at mad prices and civil servants,ie financial regulators,central bank and local planning sections more then the bankers/developers, rent is not as dead money as you think, house prices say will fall at least another 10% but more then likely 20-30% so say 10% 25,000 on 250,000 house that would cost you 40,000-45,000 in mortgate repayements and remember you are getting tax credit against rent otherwise more tax be paid out of wages to this corrupt government

  32. Mick at 7:11 pm

    The goverment should help the home owners with their mortages across the board then the homeowner will have the spending power to get the ecomony going.

  33. Kevin Flood at 7:04 pm

    NAMA is silly as are all Government Purchases.
    Remember the Gas Co bought when it was bankcrupt like the banks now.
    Farmleigh the states b&b valued at 20 Million bought for 40 million.
    Gross overpayments to unacountable public servants.FAS ???
    The ladies in Moore St. would deal with the economy better.
    The opposition? have no ideas so we are stuck between a rock and a hard place. A donation to St. Luke is our only chance.
    Somebody help.

  34. wise owl at 6:42 pm

    Unless there is a “miracle” pot of money from China or elsewhere, the housing market will slow right down to levels last seen in the 70s
    lack of cash, rising unemployment, rising taxes and lack of confidence will all contribute,

  35. Damien at 6:18 pm

    Thanks for the link. What an excellent and sensible article. NAMA may be the only thing on the table but it is the wrong choice unless it is amended. House prices have not reached bottom yet. Even with the falls they are well overvalued. The last thing we need is another property bubble. Time people started seeing houses as homes and not investments.

  36. Al White at 6:04 pm

    PRICES WILL CONTINUE TO FALL UNTIL SUCH TIME THAT NAMA STARTS TO TURN A PROFIT.
    The issue for all in the country is that the tax payer and less well off will continue to bail out property developers and builders who continue to live in luxurious homes with all that goes with them due to the profits they made during Berties boom time
    If these people paId back what they owed with interest then NAMA would not be needed -make them sell up their assets and pay back their loans THEN PROPERTY WILL STABILISE

  37. Brendan Hussey at 6:03 pm

    NAMA is a vain attempt (last roll of the dice) by FF to put a floor on property. FF thinks all they have to do is create “confidence” in the market and we’ll have another property bubble. It will not work! With the amount of oversupply, empty second homes, interest rates set to rise, unemployment and now emigration it is impossible to prevent prices falling further. I am one of the people on the average Ind wage. Even if a bank were crazy enought to loan me enough, I still would not dream of buying a house at todays prices. Long live the house crash. For too long these crazy house prices have lined the pockets of the elite, and allowed for a passing of wealth from the younger age group to the older age group of Ireland.

  38. JohnJohn at 5:52 pm

    Ohh and yes NAMA will stabilise this because things have gone way underspeculative as a result of the lack of credit. it will balance this out and make a return for the government in the mean time. Unless the above is too pricey and you recon a 400pm mortgage is more relistic for a modern house. now do your calculations on and this relative to the buliders reward for risk and you’ll find its well into neg ground were we would need a minimal wage of good knows how low and a national wage average of somewhere well below 20k to sustain. We need nama and we need the ECB, we need yes for lisbon and our present government to sort things out.

  39. O’Reilly says at 5:43 pm

    James is totally correct in his assumptions

  40. JohnJohn at 5:40 pm

    Do the calculations! there are good houses out there in good estates in good parts of the country, which you could fund and pay a mortgage on while on the dole and survive while your partner works part time if thats not value for money what is?
    my example:- A 200k 3 bed semi with 35yr mortgage at 2.5% rate costs 688.00pm if this is not value for money or affordable i dont know what is.

  41. O’Reilly says at 5:40 pm

    Nama is a very sick joke to bail out Banks and Developers. Rest assured the Banks will not give out mortgages unless the applicants are guilt edge. The Banks ruined the younger generation by throwing money at them. Now that the loans are been called in – the younger generation are finding it difficult to cope with the pressure.
    This Government has not got the moral or social authority to rule Ireland. Every day a new scandal unfolds. One wonders what next one will be?. If I could emigrate I would, rather than pay for the Bankers and Developers. Shame on the Green Party to keep propping up the worst ever Fianna Fail coalition. Fianna Fail are in power far too long, we should be protesting peacefully all over the country calling for a general election. Power corrupts – absolute power corrupts absolutely.

  42. Banamarama at 5:34 pm

    If you spend 10,000 in rent in one year and the average price of property drops by more than 10,000 then you are saving, even without taking into consideration savings on mortgage interest. Rent is not dead money it is the landlord that loses in this scenario, rents are coming down interest rates can only go up from here (with or without ECB rate increase)

  43. Tommy Your Friendly Local Engineer at 5:25 pm

    Some hard numbers are needed here.

    At the peak gross house values in Ireland were around €300bn and there was around €120bn of borrowing against this. They arew now worth around €150bn and there is still €120bn of borrowing against this .

    This is what you call their Residential book

    By around March 2010 the housing stock shall be in negative equity on the aggregate.

    From March 2010 onwards banks shall have to provision against this negative equity EVEN if NAMA takes development and commercial off their books , are we supposed to bail them out with NAMA 2 , filling this balance sheet hole too ??

    The banks certainly think we owe them that whereas previous FF leaders like DeValera would have reactivated the Broy Harriers to deal with these gangsters .

  44. Colm at 5:07 pm

    The biggest factor which will impact on the property market is not NAMA but the 80% tax on land transactions for development. That means farmers will have no incentive to sell sites (be it for one house or 50). The greens have basically nationalised land and as a result there will be an artificial constraint on the market. The land available for new homes will dry up and prices of second hand houses will rise in response.

  45. Banamarama at 5:05 pm

    NAMA will far do far more damage to ireland than a no vote. Vote no to Lisbon, bring down this government before they put NAMA through.

  46. Emer at 4:55 pm

    Good god I can’t believe what I’m reading here. This is a property page blog people! Someone simply says that they are looking to buy a house and are called a twat and tosser!!!! Seriously… If you find the only way to get your point across is by insulting someone else you are obviously not as intelligent as you think you are.
    Anyway my view is, Keith there are banks/building societies that are still lending you just need to shop around. If you feel that now is the time for you to buy then so be it. At the end of the day your right rent is dead money some people might see interest as dead money also but I’d sooner pay interest on my own mortgage than someone else’s. Rates are at an all time low and are going to increase.
    House prices may drop again but this is your decision. Nobody knows by how much and for how much longer. Good luck and hope you make the right choice. And by the way to say its people like you that have this country in the state it’s in is ridiculous. It’s the greedy BANKER, BUILDERS and INVESTORS that thought by buying a house to make a profit was the way to go. Not the normal Joe soap that just wants a roof over his head.

  47. 33 at 4:29 pm

    NAMA is a bailout of bankers, developers, and their political supporters.

    The property market is slowly reverting to the mean – prices will continue to fall for many years.

    The Greens should pull the plug on this government and stop NAMA. But they are too self-interested to do that, so we’ll have to do it ourselves.

    Voting No to Lisbon is a brilliant opportunity to trigger the fall of the government and thereby stop NAMA.

  48. Patrick at 4:25 pm

    I actually live in Ireland and commute to London mid week for work and so the absurdity of what they have done is in clear contrast to the British model. They failed me 22 years ago when I left the first time, I returned with my family 5 years ago and now they’ve failed my kids. Do those in Ireland who inherit their seats in the tin pot Dail have the DNA to manage a country? It’s bizarre that they all get paid so much money and the best they can do is NAMA? I’m angry and frustrated. I watched the debate live on the Internet last week. Some edjit called O’Dowd called some green pretender called Gormley the DALINAMA…the man who absolves the developers and the banks from their sins…it was the only thing worth watching or hearing in the whole debate.

  49. Wishu werehere Bertie at 4:22 pm

    http://www.irishtimes.com/newspaper/opinion/2009/0915/1224254555311.html

    Nuff said, delude yourselves all you want

  50. Sean at 4:22 pm

    Nama is an attempt to prop up insane property prices rather than allowing them to fall to more realistic levels. There have been calls for the banks to start lending again, but this time to do so “more responsibly”, but what most people want isn’t really responsible lending.

    In the past, a couple going to a bank looking for a mortgage would have been offered a mortgage of twice the main income plus the other income. The average industrial wage is about 33-34k per year, so using traditional banking practice, a single person would have been offered a mortgage of twice that(2×34=68k), while a couple would have got maybe 102k((2×34)+34=102k). But then property prices went into orbit, the average house price now is 250-300k, so a single person now needs a mortgage of over 7 times their annual income and a couple, over three and a half times their combined gross income.

    So what do we want from the banks, by traditional standards, a couple on the average industrial wage would qualify for a mortgage that is less than half the value of an average home and their single counterpart would need to find nearly 200k more, for an average house. By any traditional measure, any bank lending 250-300k to a person earning 34k isn’t lending responsibly, but unless they do, average earners will never be able to afford an average house. The only solution if banks are to lend responsibly and at the same time, people are to be able to afford to buy homes(assuming that there isn’t to be a huge surge in wages), is for property prices to come down much further, yet NAMA seems to be designed to put a floor under property prices and prevent the sort of readjustment that is necessary. So with NAMA in place and the chances of large property price falls reduced, houses will remain unaffordable to the majority of first time buyers unless the banks ignore commonsense lending and start lending irresponsibly again, either that or few mortgages will be granted and the property market will remain in the doldrums.

    The banks when granting mortgages of 7 times income, also need to consider that interest rates won’t continue to remain as low as they are at present, which is a major concern if you’ve borrowed 7 times your annual income at a time of rising unemployment.

    Do we want our banks to lend responsibly or do we want them to take more risks by lending more than they should, so that people get mortgages that are big enough to enable them to actually buy houses ? Answer that question and the NAMA question is answered too, as NAMA will refinance the banks and allow them to lend so that people can pay the inflated property prices, but with responsible lending by the banks and without NAMA, the average size mortgage and property prices will be lower

  51. James at 4:18 pm

    @Keith
    I think you are absolutely crazy.

    Rent may be dead money but so is interest to a bank and in the current market you will be paying far more to the bank in interest than you will paying in rent to your landlord.

    The market is showing absolutely no signs of stabilizing.
    The economy is still contracting, incomes are still falling, unemployment is still rising and interest rates will start to rise in the next 6 to 12 months.
    Coupled with the glut of unsold and un-rented properties I see no signs for even stabilization for another 18 months.

    In that time we will probably fall another 30%+. Whatever about rent being dead money, buying now will result in far more dead money for yourself.

  52. paddington at 4:17 pm

    what about option 3 – NAMA will bail out banks but the fall in house prices to pre-bubble levels will continue, as unemployment increases, lending returns to traditional 3 x salary, 10% deposit etc.

    Average industrial wage is ~35K. An ordinary worker will be able to buy an ordinary house in an ordinary area in dublin for 150K in next few years.

    This is the best thing that could happen for the future of our country as it will allow us to become competitive again.

  53. Steve at 4:14 pm

    Lets hope Nama works.The bankers need to be given more time-with their know how of the financial system,they can turn it around and end this recession much quicker than people think.Minister Brian Lenihan noted yesterday that the economy had bottomed out last quarter,Nama is the spinach that our economy needs.Its just a matter of the banks getting some money before they start lending again,thus pushing up house prices.

  54. uncle buck at 4:13 pm

    As some one selling a house im sorry to rain on the parade of the person waiting for prices to drop another 30-40% – many property bubbles have burst previously all over the world and the mean property price fall is 46% – below that figure, sellers with debt cant afford to sell and have to stay in their houses paying off their mortagages. We’re down 40-50% now which is typical for a bubble thats burst but now what happens is it bottoms out – continuing at the same price level for a number of years before it makes small gains in line with inflation of 3-4 % a year or whatever. If he’s waiting for it to collapse by 80% he’ll be waiting a while to buy!

  55. Patrick at 4:12 pm

    The Irish Government are neither qualified by experience or qualification to make such decisions. They act as if their grand plan has some basis, it doesn’t. They have not made new lending a condition of the bond issue nor have they taken sufficient board control to force the banks hand. They are useless morons. I hope Lenihan thinks about the damage he has inflicted on my children’s inheritance when he is playing with his teddy bear and his train set tonight. They are neither statesmen nor scholars. Billions for Banks no shillings for schools should be their strap line.

  56. Wishu werehere Bertie at 4:12 pm

    Basic economics in developed modern countries have a simple formula:

    Overpriced housing = higher wages = price inflation = lack of economic competitiveness thus: sustainable affordable housing is good for overall economy

    Basic gombeen politicans and the voters who support them have a slightly different model:

    Overpriced housing = good for my pocket = end

  57. Keith Elliott at 4:05 pm

    James,

    In 12 months, myself and my partner will spend over €10,000 in rent. I would rather spend that 10k on a property now! Research has shown that prices are begining to reach a stable platform especially for 3 bed semi’s in central Dublin postcodes. I think there will be more bargaining leverage to be had now then in 12 months so when you add it all up, it would be more prudent for me personally to buy now.

    The fact of the matter is, I would rather live in my own place paying a mortgage then spending money on rent.

  58. Fruity Metcalfe at 3:58 pm

    I concur with Mick. Keith you are indeed a twat! Property is still overpriced in this country and the attempt to put a floor under it by way of NAMA is as treacherous as it is pointless.
    In fact property has to come down if the country is to become competetive at all.However as long as there is a queue of lemmings who want instant negative equity it will delay the slow process of normalistion. We will have stagnation,I was going to say like Japan except we don’t make anything here anymore so it will be a hell of a lot worse.Our exports are mostly driven by brass plate or tax avoiding multi-nationals.That leaves us very vulnerable indeed. Nuff said!

  59. James at 3:54 pm

    @Keith Elliot
    You would be crazy to buy any property in the next 12 to 18 months. Prices still have a long way to fall.

  60. Tony Murphy at 3:50 pm

    NAMA will destroy the country.

    It is an attempt by some of the elite in the country to protect their property investments and bank share holdings.

    Others in the decision making positions take advice from Bankers – which isn’t really a good idea. These bankers have an agenda which is not in the National Interest.

    A serious house price correction is required. The real value of property must be found. To me, it looks like the finance minister is going to decide what the price of a house is going to be for the next 10 years.

    Politicians are stupid.

    The housing market is broken. Immigration and tax will ensure it remains broke for a very long time.

  61. Daniel Duggan at 3:48 pm

    In a normal market a house should sell for 12 to 14 years rental income where a rental year is taken as 11-months. For example, a house rents for €1500/month x 11 x 13 = €214,500. Can you buy a house that rents for €1,500 for €214k? Like hell you can, for that you get a grotty 2-bed bike-on-the-balcony flat in D11 that rents for €800/month.
    The market is still way over priced, to buy now you have to be naive or just plain blind greedy and hoping an idiot will buy the property from you later at a higher price.
    We have a recession, therefore buy only when the price to rent ratio is in single digits, that is pay the equilivant of 9-years or less rent for the property.
    Meanwhile, rent and be in a position to move should your circumstances change or a good opportunity arise elsewhere. Those with houses they can not rent-out or sell will be stuck where they are, perhaps drawing the dole.
    Owning a house is not all is cracked up to be, there are pluses and minuses to both renting and owning. I’m speaking from experience and am currently very happy to rent and have cash available should sanity ever return to the market.

  62. Keith Elliott at 3:47 pm

    Mick,

    Its quite simple my friend. I want a house, you will at some stage want a house too. The banks indeed messed things up but you and I my friend have no other way to secure finance for such unless our hopeless friends in the bank release money to us! To clarify, I am not a dodgy politican, banker or lunatic. I am simply a consumer who wants to live somewhere.

    I shall see you in the line for a Mortgage!

  63. Mick O’Ceallaigh at 3:40 pm

    Keith Elliot you twat, it’s because of idiots like you we’re in this mess. We need responsible banks, not banks pandering to the whims of morons like you. Read a book you hopeless tosser.

  64. D regan at 3:36 pm

    [b]Nama – A magicians slight of hand[/b]

    The banks will manage the loans on behalf of Nama.In 3-4 years, the banks will advice NAMA that the loans/developers/ builders are not worth pursuing. Then an “agreement” will be reached with individual developers so they can walk away. e.g. pay NAMA 20c in the euro and keep the land.There will be reports etc about how this is the best outcome, and who was to know the property market would not recover.
    Fianna Fail will then say it was the banks, and nameless civil servants who did these deals, and it had nothing to do with them. And we will be left with the biggest transfer of wealth from the taxpayer to an elite land/ property owning class.
    I support the idea of Nama reluctantly, but the risk is falling totally on the taxpayer.
    1)The valuations are absurd, as property values are at least 60% below peak.
    2)There is no clause in NAMA legislation that all owners of the debt will be pursued to bankruptcy, and it should be a requirement that no sweet heart deals are done. i.e. The loan obligations will only transfer to the estate of the developer/ builder.#
    3) The legislation musts the money back in the hands of those, who messed up so spectacularly. It should be given to the productive economy, engineers, science, etc where we can start making things again.

  65. paula lee at 3:35 pm

    Nama will work if the banks are made stick to working in best interests of economy – which will conflict with making money for shareholders.

    For example – NAMA is like clearing a credit card for a spoiled wife, and if they continuing spending without care, very soon same mess but even worse. Will the banks cop on???
    VERY VERY big job for the government to keep the *ankers that run the banks in line!!!!!!!!!

    “we are all” – refers to honest tax payers that are paying, literally paying the price for high society in this country, and are expected now to pay more!!

  66. James at 3:34 pm

    Personally, I don’t think there is anything NAMA can do to stop prices falling significantly further.

    Myself and my wife are waiting to buy a house but we have no intention of buying for another 12 months. Or until property prices are down at least another 30% to 40%.

    I think anyone buying now on the back of NAMA improving the prospects for the market is crazy!

  67. Keith Elliott at 3:28 pm

    I just hope the banks start giving some money to people like me. there are dozens of my friends who want a house. They have stable jobs and in some cases they have deposits but the banks are turning them done!

    Its about time the banks kick started this property market again by lending money to the 1000’s of young professional that want to buy homes!!!

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