Why are we waiting and what are we waiting for?

Why are we waiting and what are we waiting for?

We have been told by successive governments that we will get a property prices register, it was listed in the 2009 programme for Government. The actual legislative backing was done in the Property Services Regulation Act 2011 (see part 12), which took two whole years to go from bill (suggested law) to act (actual law).

We still don’t have this register. The delay was that it was a legal issue, in the area of data protection, then it was a practical issue in terms of collating the data – all of which we have but it is in different places (the Property Registration Authority, Ordinance Survey Ireland, Land Registry, Dublin Castle Stamp Office etc.).

One cannot help but wonder if such delays would wash in the collection of taxes? Perhaps yes, which is why we were stuck with an unfair and ridiculous-at-heart flat rate household charge.

The deadline we were last promised by Tom Lynch, head of the PSRA (Property Services Regulatory Authority) now seems to be once again delayed, until late September.

Here’s the bit I don’t get though… This story from November 2011 quotes him as saying that it will be ready by June 2012, in fact, it specifically states ‘before the end of June’. But Mr. Lynch was either misquoted, misunderstood or backtracking because the waiting game is once again in season.

The register is being hailed as a cure-all for our property woes, and while anybody would agree with transparency, the implied socially balancing virtue of the database is perhaps overplayed. Let us not forget, this is information – not action. The actual market is about interaction and transactions. The UK has had a good and transparent register for years and they still went through the boom-bust cycle. 

As did many states in the USA, as they probably will in Australia and as we are probably going to do again some time here. Don’t think so? Have a read of Fred Harrison’s seminal book ‘Boom Bust – the depression of 2010‘, he predicted the property downturn at first in the early 90’s because he has shown that the cycle is about 18 or 20 years.

The typical pattern (and it has repeated almost without fail for several centuries) is for a big bust following a boom, recovery begins, it hits a mid-cycle ‘mini-crash’, then recovers and goes berserk. The British are no fools, and within living memory they have several examples of this so the question isn’t perhaps that it exists, by rather why it persists.

Based upon that cycle (if you hold that it is true) you’d go fill your boots with property then sell in the early to mid 2020’s, but don’t, because this time it will be different – or will it?

One thing we can be sure of is that delayed or not, we’ll at least have the information to hand so that we can figure out where it went wrong with better accuracy, but that won’t prevent it from going wrong. The point to remember is this: property is unpredictable in performance and unlike other goods, supply doesn’t always meet demand and that is a creator of instability in the market (too little supply in the early boom, way over-supplied going into the bust).

For that reason we are still holding firm on the line that cities are the superior choice for a purchase and that in rural areas (obvious exceptions being one off houses where there is no easy substitution) renting may be the better choice in the medium term.

What do you think? And do you reckon the property price registry will make much of a difference?

@karldeeter

Irish Mortgage Brokers

http://www.mortgagebrokers.ie

 

 

There are 12 comments for this article
  1. James at 11:24 am

    It is Long, Long, Long overdue and yes it will, help bring clarity to realistic property values. Values and asking prices that presently are still over inflated.

    Estate Agents, all of them bar a tiny minority will lie to the buyer if they think they will get away with it. They will sweeten you up to the eye balls with the stuff that’s just lovely to hear except for the fact most of the time it is usually airbrushed lies and they will relish in another persons ignorance.
    They will only tell you what you want to hear and anything to make a sale.

    Most of them don’t have a clue anyway, and half of them don’t even know what a BER certificate is or will try to brush you off if you ask for one.

    In addition to the long awaited register I would strongly advise those seeking to buy, to go on a reconnaissance of the property, not once but twice, morning and evening.
    If it is a vacant or unoccupied property which a lot of them are, take a little gander around the back.

    Check Nt, St, East or West Facing because most likely the agent will tell you it’s a lovely South or West facing garden on an overcast day when there is no sun when in fact it is probably the opposite.
    If the property is occupied don’t be shy to ring the bell, would be sellers love to talk and in most cases will invite you infor a look around and chat.
    Go talk to the neighbours, you’ll get lots of useful information and it’s so easy as they love to talk and get an idea of what their new neighbour might be like.

    After you have done that and only that and assuming you like what you see, then
    and only then make your appointment with the agent to view. You will be in possesion of a lot of valuable infomation and will quickly asertain on the day if the Agent is giving you the old blarney, which they probably will.

    At the end of the day 1st impressions count and you will need to genuinely like what you are looking at but it’s also nice to know that you are not being told lies either.

    Hope that helps some of you young ones out there because remember this will possibly be the biggest financial outlay of your life and it’s important to get it right because you will be paying for it for a long long time.

    Best Wishes

  2. Tony Murray. at 9:59 pm

    Problems with a register:

    If pure economic interest is to be served then lots of people need to be left with housing need unmet- plain and simple. People must be at the behest of the Private rental sector – as investment property must be facilitated to maintain and increase in value. Yields in the rental property sector will suffer and investments will suffer if there is no one out there desperate to rent. People suffering or sector suffering – for me it depends on which side of the coin you fall on. Food Chain!

    Vincent Browne programme hit on this issue squarely during a recent discussion on property. I felt that there was a disorientated half muted avoidant response by the spokesperson on property interests and this reflected how central the question of vulnerability to collapse the rental sector is if the government withdraw supports.

    Scarcity creates the engine for the economic vehicle. Put the fear of the streets in people and they’ll be running along at even greater speed to rent a Rot – at any price (sorry, a ‘fair rent’ that reflects market conditions as the spokesperson did mention.

    Comments, Corrections and Criticisms welcome

  3. Tony Murray. at 5:21 pm

    If you figure out who is the main holders of property in the country at present you may begin to offer an explanation as to why the register is delayed and a number of other things to do with the supply of property onto to the market – or lack of.

    For example: if Nama, receivers, and banks were the main holder of properties (which may be likely), and the prices had fallen much lower than publicised – which I suspect is the case – then it would be a melt-down situation for these business entities if the truth got out before they had a chance to flog off some more units to those unsuspecting… And what would Europe think!! They’d be sending in supplies of the ‘God Particle’ not Euro to keep the entire country together!

    Not to digress, who else are likely holders of properties and could stand to lose apart from home owners of single dwellings: yes, buy-to-let landlords! Who are these creatures? Just individuals that speculated on property and expanded their portfolio over-time, or are these persons’ attached to the property industry in some way or perhaps the government or whatever….

    Perhaps estate agents etc, keep property banks just like developers had land banks.

    Who knows!

    Perhaps none of these are reasons why there is a delay.

    Alternatively perhaps the Gardai are investigating the property game, and have requested a stay on the publication of this register until their investigations are complete. Who is to knows the reason! It could be the revenue too. It could be any number of reasons or just simply that the people that ought to be getting it sorted are not moving fast enough. Take your pick!!

    Whatever the reason, it is not going to serve the interests’ of ordinary buyers in the short term anyway; I would be fairly confident of that much.

    Comments, Corrections and criticisms welcome

  4. c corr at 10:46 am

    They have a Register in the UK : why not in Ireland.
    Something to Hide?
    A register is useful for determining where you can afford to move to, how stable prices are in certain areas, what prices properties actually sell for, and as a check on Agents
    and the prices thay are asking.

  5. Tony Murray at 5:26 am

    If you figure out who is the main holders of property in the country at present you may begin to offer an explanation as to why the register is delayed and a number of other things to do with the supply of property onto to the market – or lack of.

    For example: if Nama, receivers, and banks were the main holder of properties (which may be likely), and the prices had fallen much lower than publicised – which I suspect is the case – then it would be a melt-down situation for these business entities if the truth got out before they had a chance to flog off some more units to those unsuspecting… And what would Europe think. They’d be sending in a supplies of the ‘God Particle’ not cash to keep the entire country together!

    Not to digress, who else are likely holders of properties and could stand to lose apart from home owners of single dwellings: yes, buy-to-let landlords! Who are these creatures? Just individuals that speculated on property and expanded their portfolio over-time, or are these persons’ attached to the property industry in some way, or perhaps the government or whatever….

    Perhaps estate agents may have properties etc; do estate agents keep property banks. just like developers had land banks.

    Who knows!

    Perhaps none of these are reasons why there is a delay.

    Alternatively, perhaps the Gardai are investigating the property game, and have requested a stay on the publication of this register until some investigations are other are completed. Whose to know what is the reason! It could be the revenue too. Or it could be any number of other reasons, or just simply that the people that ought to be getting it sorted are not moving fast enough and need to get a move on!

    Take your pick!!

    Whatever the reason, it is not going to serve the interests of buyers in the short term – I would be fairly confident of that; and that the prices of some properties being being sold are well below what is talked about publicly.

    Comments, Corrections and criticisms welcome

  6. James at 12:41 am

    It is Long, Long, Long overdue and yes it will, help bring clarity to realistic property values. Values and asking prices that presently
    are still over inflated.

    Estate Agents, all of them bar a tiny minority will lie to the buyer if they think they will get away with it. They will bull***t you up to the eye balls with the stuff that’s just lovely to hear except for the fact most of the time it is usually airbrushed lies and they will relish in another persons ignorance.
    They will only tell you what you want to hear and anything to make a sale.

    Most of them don’t have a clue anyway, and half of them don’t even know what a BER certificate is or will try to brush you off if you ask for one.

    In addition to the long awaited register I would strongly advise those seeking to buy,
    to go on a reconnaissance of the property, not once but twice, morning and evening.
    If it is a vacant or unoccupied property which a lot of them are, take a little gander around the back.

    Check Nt, St, Eats or West Facing because most likely the agent will tell you it’s a
    lovely South or West facing garden on an overcast day when there is no sun when in fact it is probably the opposite.
    If the property is occupied don’t be shy to ring the bell, would be sellers love to talk and in most cases will invite you infor a look around and chat.
    Go talk to the neighbours, you’ll get lots of useful information and it’s so easy as they love to talk and get an idea of what their new neighbour might be like.

    After you have done that and only that and assuming you like what you see, then
    and only then make your appointment with the agent to view. You will be in possesion of a lot of valuable infomation and will quickly asertain on the day if the Agent is giving you the old blarney, which they probably will.

    At the end of the day 1st impressions count and you will need to genuinely like what you are looking at but it’s also nice to know that you are not being told lies either.

    Hope that helps some of you young ones out there because remember this will possibly be the biggest financial outlay of your life and it’s important to get it right because you will be paying for it for a long long time.

    Best Wishes

  7. Ken Harper at 5:43 pm

    I don’t understand how a register of prices will make transacting easier. We have just bought a derelict property in Co Donegal and the final price varied from the asking for a number of boundary and commercial reasons. How will the public knowledge of what we eventually paid help sell more properties in County Donegal? Surely access to funds and the general economic outlook in the county will be more influencial?

  8. Eugene Dalton at 2:44 pm

    Lots of address databases exist already with regard to buildings and building types throughout the 26 counties. As always the value of one’s property (business premises and residential home) depends on a number of issues.

    Residential Property:

    In no particular order:-
    1. It’s usage (Commercial/Domestic or both)
    2. It’s square footage.
    3. It’s location
    4. it’s type. (Detached (2 or more Story, Bungalow, Semi-detached, Terraced, Duplex, Apartment/Flat.

    Residential/Commercial Property:
    1. Live-in Bed & Breakfasts.
    2. Residential including Public House.
    3. Homes with creche facilities.
    4. Shops with apartment accomodation within.

    Commercial Property:
    1. Shared Units
    2. Storage only

    Others:
    Derelict Buildings
    Ruins
    Preservation and Protected Buildings.

    I support all those who have struggled in the past to own one’s own property and as we purchased or built these in the past, we were subjected to paying stamp duty and other stealth charges.

    As far as I am concerned if everyone has to pay then lets begin with a base rate for each type. We need a database of ownership, whether the owner passes on the charge to the occupier is not of concern. Land Registry should be able to tell us who own’s where. If NAMA own it let the charge be paid by them, if the Government (us) own’s it let it be added to our tax.

    In conclusion, it is my opinion that we, the buyers have determined the cost price of a property. Our guides were what we thought was a fair price, for if we paid over and above the normal price it’s because we wanted that particular property. Let’s face it, if the price was deemed to be too high, no one twisted our arms into purchasing the properties.

  9. Karl Deeter Author at 2:26 pm

    @Marc – Every time property prices drop the banks are less well off because they have to put aside more provisions and it also takes new properties into the provisioning net that were not there before, I don’t know if that is the reason for the delay but your statement about prices affecting banks is correct.

    @BrendanK – Generally estate agents shouldn’t inspire trust as you are not the client in this transaction, the seller is, their obligation and duty is to the vendor not the prospective buyer.

    I agree that a tax incentive should not be your primary driver for a purchase, that raises the question – then what is? The tax incentive is valuable, so could you not do the sums without knowing the price to see if it makes sense? We made a rent or buy calculator on the site which factors this all in for that very reason!

    http://advice.myhome.ie/2012/02/rent-or-buy-calculator/

    Put in the any rent/property price changes you want (use the little green ‘plus’ button to open the cells for 10 years) and run different scenarios, nobody knows what the future holds so it is best to go with your personal belief on the matter and that tool will do it for you.

    @Alec – I can’t help but think that your anger is justified, this has been over promised and under delivered, whether it is corruption or not I can’t say, inefficiency, a lack of deadline delivery yes, but corrupt?

  10. alec fox at 9:49 am

    the only reason for the delay is because as usual the government is suiting themselves. We got rid of a corrupt govenernment in last lot and guess what we got just as corrupt a government in this lot. They delay for their own benefit and certainly not the Irish people’s benefit unless you earn too much. They want to start building more jails if they are going to bring in more tax and hope for the hse tax to be go through. as i am not alone in saying this country is corrupt to the core and this government is NO better. They are a disgrace. I happyily go on holiday and spend my hard earned money abroad rather than spend in this country. some on knocks at my door well soon enough maybe people will be knocking at their doors.. ooh sah.. im done as its like talking to a brick wall..

  11. BrendanK at 9:33 am

    Karl,
    My wife and I have been looking forward to this register since it was announced.
    We’re first time buyers, based in north Dublin, with approval from a bank. What has held us off buying so far is 1) we still feel a lot, not all, of properties are overpriced, 2) most estate agents we have dealt with somfar do not inspire trust.

    The property register would go a long way to addressing our 2 concerns. No longer would we be wondering if we’re paying way over the odds, or indeed the seller themselves should get comfort at what a reasonable selling price should be.

    Also, we will not be reliant on trying to read between the vague lines of an estate agent wondering how he keeps a straight face as he tells about “character” and “people ringing all day about this property”.

    I think it puts transparency the system and power back to the individual buyers and sellers, away from unscrupulous estate agents who many believe we’re partly to blame for the property bubble to begin with.

    The big shame in our eyes is despite promising this mid way through this year, the delay shoves this ever closer to year end, and of course to the reduction of tax relief for first time buyers. We feel the tax relief should be extended to at least 1 year post the database publication. Despite the incentive of tax relief to purchase, we will not be rushed to meeting this deadline, but will wait until we can get transparency and comfort for the publication of the database.

    Regards,
    BrendanK

  12. Marc Reidy at 9:27 am

    My thoughts are that actual selling prices are far below what has been stated ( 50%-60%), they dont want to encourage more to default as they realise their house is worth far less than they may have thought and to keep paying is pointless. Does this also put the banks in worse position?? Oh and the Government who owns the banks!!!
    For this reason they will delay the price register.

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