Irish residential property market crash.

[Centurian]

I see that today even the Sunday Independent is being forced to accept reality and reports that "the full ramifications of the residential property market crash, now 21 months old and continuing apace, have yet to be seen."

[mairteenpak]

The thread might read "Irish Banking Crash"

[Centurian]

The thread might read "Irish Banking Crash"

Both crashes are related unfortunately....

[mairteenpak]

The Banks could be in bigger difficulties than the home owners ( borrowers)

One institution would lend you all you needed to buy a site and built it @ 12% compound on the basis of a 10% deposit if you could show a 25% projected profit margin. needless to say they did a roaring trade and their loan book grew.

That was effectively 100% finance given that stamp duty was 9% unless you were building under licence.

It worked well if you could turn the site quickly, of build and sell quickly.

Another institution would lend you 80% of the value of what you had and 80% of the value of what you were going to buy, all at about 5%.

Roll two years interest and 9% stamp duty in there, and the profit wedge could disappear even in good times. In bad times it would amount to carnage.

[Treehouse]

The housing market will bounce back in a month or two.

You see, we have a young, educated workforce, lots of immigrants, a shortage of supply of houses, huge demand, limited free land, a vibrant knowledge economy, we're the second richest country in the world, divorce is on the rise boosting housing demand, people know that renting is dead money. All in all, it could be described as a new paradigm. Ireland is different and a has unique set of circumstances never before seen in any economy across the globe.

Ergo, prices to start rising by August. Take it to the bank.

[patslatt]

The Banks could be in bigger difficulties than the home owners ( borrowers)

One institution would lend you all you needed to buy a site and built it @ 12% compound on the basis of a 10% deposit if you could show a 25% projected profit margin. needless to say they did a roaring trade and their loan book grew.

That was effectively 100% finance given that stamp duty was 9% unless you were building under licence.

It worked well if you could turn the site quickly, of build and sell quickly.

Another institution would lend you 80% of the value of what you had and 80% of the value of what you were going to buy, all at about 5%.

Roll two years interest and 9% stamp duty in there, and the profit wedge could disappear even in good times. In bad times it would amount to carnage.

i've heard that one of the smaller national financial institutions was always prepared to be lender of last resort for any builder's deal. I won't name if for fear of triggering a rush by depositors to withdraw savings.

The institutions you mentioned surely do not include the top three banks?

[mairteenpak]

Which banks have money to lend at the moment on property on an LTV of 75%?

[mairteenpak]

Most of them would lend you 75% against what you owned and were buying.

[hopi watcher]

I see that today even the Sunday Independent is being forced to accept reality and reports that "the full ramifications of the residential property market crash, now 21 months old and continuing apace, have yet to be seen."

You really are wishing the place into difficulties. Do you run a pawn shop or something?

[mairteenpak]

I am afraid the time for wishful thing has long passed. A dose of reality is what is required.

The banks are not lending, and their hopes of a happy ending rest, on people buying and paying through the nose as they did before. The problem is their salvation is linked to people borrowing and the banks are not lending. Its is as simple as that.