Was the Minister questioned by RTÉ tonight concerning comments made regarding Mr.Derek Quinlan and compounding issues that may arise as a result of Mr.Quinlan's new tax residency in Switzerland?
The comments were made in an interview broadcast earlier today on Matt Cooper's Last Word radio programme.
Valuation only makes sense if there is an active market. Given the fact that our banks are not lending, there is not an active market. Under those circumstances it makes as much sense to say that property prices have fallen by 99% as it does to say that they have fallen 75%.
However, if they have fallen 75% there are a whole bunch of €300 k houses that can now be picked up for 75k. If this were actually the case then there would be an awful lot more transaction than they are- families on social welfare could conceivably afford properties, as could the minimum wage workers and the low paid. Why is there not a deluge of transaction? Because there is no functioning market and it makes no sense to put a market valuation on something if the most basic precondition is lacking- access to mortgages.
There are however a small tickle of transactions taking place. This limited market is the nearest thing we an find to a fair value measurement. If someone wants to make a claim as to what is happening in the property market, then those figures are perhaps the most relevant.
As for economists, they is never a shortage of commentators whose analysis consists of taking an existing trend and working out what would happen if things keep moving in the same direction. Thus we had morons in the 1980s telling us that the Japanese were going to take over the world and hired guns in the 90s telling us that dotcoms were a new paradigm and the old rules could be thrown out. In this decade, we were told by none other than Goldman Sachs economists that Oil was going to $200 dollars that it would stay there, we were told that house prices would only go one way, and we were told not to worry about de-industrialization because we would still have all the "smart jobs".
Why not look a what actually happens in housing busts? Prices fall, they bottom, and they take off again. There is nothing new under the sun. One thing that is particularly old and all too common is to take a piece of economic data and to make a comment on it that is more about one's political objectives than the actual underlying economic reality. Obama has been doing a lot of lately, Lenihan is all the time at it, and the Opposition....well.....no surprises there. The sad fact is that in Irish politics, it doesn't matter whether what an expert says makes sense or not- it only matters whether what he/she says accords with or disagrees with your political objectives. Shameful.
If ther was an active income stream from borrowers, NAMA would not be necessary.Originally Posted by SPN
What happens when the developers completely stop paying for the loans taken out to buy vastly over-priced land that will never realise an economic gain?
In fairness, its not really a fib. What you're leaving out is the important detail that many of those loans are expected to default, leaving NAMA in possession of the properties given as collateral. The value of those properties is expected to be much less than the value of the loans.
Cutting to the chase, NAMA gives the State a vested interest in trying to keep property values as high as possible - so that the loss on its loans is minimised. Its sort of a Hobson's choice.
Now, let me say, I don't think the State has the capability to keep property values high. They'll just be like King Canute ordering back the waves. But its less than accurate to pretend that, by keeping these properties off the market, NAMA will not be attempting to prevent property prices to fall to more realistic values.
However, banks know they have a duty of care to their clients and I'm sure that this should prevent them lending irresponsibly.
To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.
To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.
Because RTE are worse than Pravada at this stage.
A poster of some consequence...
That's not quite it. Banks are increasing their loans for property by rolling over the interest for developers, which is helping to keep prices at an unrealistic level.
If prices fell to a realistic level, then we certainly would see an active market.
However, banks know they have a duty of care to their clients and I'm sure that this should prevent them lending irresponsibly.
To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.
To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.
Seenitallb4 , I maintain that there is always a market out there, presenlty the sellers are not reacting to realism. EG last year if a propety was on the market for say €300k , the property is now reduced to €250k but still wont sell,
Now if realism kicked in, if that propety was reduced to say €160, I would garuantee that it would sell , and banks would lend to that purchaser.
In truth the banks have capital to lend , it is just that they know that propety is still overvalued by sellers , most estate agents know this also.
Your analysis is correct.
Your talking about 1 loan..1 property....is Lenihan suppose to know about every loan..every property thats up on the market?? and whos to say the CBRE valuation is right?? they got plenty of things wrong before
However if you have to put in a 25% deposit then the yield is different.
OTOH I purchased a prop 1 yr ago for 47k spent 6k in refurbing it valued immediately after at 65k and vaued last week at 90k................so what is the real vaue as would take 80k if needed to sel quickly which is why value is so subjective.
In UK at moment a woman had her property downvalued by valuer for a remortgage and 1 week later same valuer valued same property 15% different.
Recently I enquired to an agent about some houses not to far from me. Pre crash they were on the market for €650-750k. He said he would be willing to do an all cash deal at around €200k to shift the thing, less if I was willing to take more than one.
A poster of some consequence...
LinkBack URL
About LinkBacks
Reply With Quote