Lenihan calls bottom of property market & other terrifying tales

[H.R. Haldeman]

There was just a terrifying interview with Brian Lenihan on 6-1.

For starters, Lenihan called the bottom of the property market. So we now have a Minister for Finance calling the bottom of a market...how much further through the looking glass can we get than that?

But even more worryingly, he openly said that if property prices fall much more from today then we are in "serious trouble". My God, this means there is no slack built into NAMA to accommodate more falls from today. It hadn't occured to me the scheme was this rigid and I didn't expect Lenihan to so freely admit as much. This is mind-blowing to me since another 20% - 40% off today's prices is a near certainty. Christ.

As evidence for his position, Lenihan said further price falls are not likely since yields were at historic highs and were among the highest in Europe. Now, correct me if I'm wrong, but aren't yields a function of rents and selling prices? With plunging rental prices (reflecting day-to-day decimation on the ground) and sticky selling prices (reflecting continued delusion among sellers) isn't it obvious that yields only appear high and/or "normal"? Whereas in reality, the asking prices are so out of whack that nominal yields are meaningless.

Finally, Lenihan said we need property to increase in value 10% in 10 years for NAMA to break even. He said this was a modest expectation. So if property falls just another 20% in the next 2 years, that would mean that in the next 8 years after that we'd need the property to increase by some 35%!!! In other words, another bubble between 2011 - 2019. Jesus H. Christ. And even if property IS at the bottom (lol) and flatlines for a couple of years, they are still banking on normal HPI in the 10 years immediately following a massive property crash. Is there a single historical precedent anywhere in the world for this? Surely not.

I am significantly more disturbed about NAMA than I was at lunchtime. FF's wilful self-deception is truly terrifying.

[Wakeupcall]

They are deluded man!

[bormotello]

There was just a terrifying interview with Brian Lenihan on 6-1.

It was not message for you
It was message for FF supporters with single-cell brains

[draiocht23]

Even more alarming - he didn't call the bottom of the property market. He said he was trying to establish a floor.

Instead of allowing the market to bottom out to a sustainable level, FF is again meddling and creating an artificial floor.

[mr_anderson]

A typical example of a decision-maker who is far removed from the realities of the marketplace.

The only way for those in an ivory tower to have their feet on the ground is to topple it.

[the impossibilist]

Now, correct me if I'm wrong, but aren't yields a function of rents and selling prices?

Yeah, but this is Ireland. And Ireland is different.

[ang]

I'm beginning to think ff actually believe their own spin. Just as they say they couldn't predict the crash, why would they think they can predict the bottom.

[Cassandra Syndrome]

Come on folks. Lenihan is a legend. What with all that business acumen, his PHd from the London School of Economics, is he not the second coming of Adam Smith?

PS - Start building a bunker NOW, buy gold and silver, 1 year supply of food, a shotgun and some mucky magazines....

[Akrasia]

Even more alarming - he didn't call the bottom of the property market. He said he was trying to establish a floor.

Which is worse.

First of all, he will fail, and secondly, how the ******************** can he lecture us about ireland being a high cost economy and us having to cut our wages and costs to compete internationally, if he is deliberately trying to prop up the property/rental market (the single biggest expense for most families, and one of the higher costs for businesses trading in the irish economy and also a large cost for the state in rents and land acquisitions for infrastructure and social housing)


How on earth can he expect people to take large cuts in salaries when he is going to introduce a property tax, and also do everything in his power to keep rents and mortgage repayments un-affordable (even at pre-crash incomes)

FF are insane, and they need to be removed from office.

[colos]

Anyone want to hazard a guess as to the effect of the new social housing policy on said property prices?