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I have been getting very negative vibes from various professionals - accountants, insurance brokers, solicitors, estate agents. The big worry is that they don't see work coming down the line.

An estate agent I know sold 2 houses last month, normally he would sell about 12-20 a week. That is a lot less work for solicitors, financial advisers and all the rest. Also serious hole in tax take.

Someone I know who arranges mortgages says there is no shortage of demand, but with the tightening of criteria people cannot get a mortgage.

To take a real example of a house were an elderly person died. It was for sale at 450,000 for over a year, was marked down to 360,000 and sale eventually agreed at 315,000. Persons apply for an 80% mortgage and surveyor comes out to place a value on it. He values it at 225,000 so sale falls through. Valuer gets his fee, applicant loses.

Strikes me that there is something that stinks here. The question is are the valuers being safe and covering their own backs, or as is rumoured they are being advised by those who employ them to value conservatively or lose work!

If such rumours are right then the market is being forced lower than would normally happen. Why? Who gains? Strikes me there is a funny game being played out.

Another tale of a business person with a secured loan and the Bank having the audacity to tell him he had inadequate assets due to the decline in values of property. What a cheek, but my colleague widened the arguement and thanked the Bank for advising him of how exposed they were due to the property crash and that he would have to consider somewhere more secure to bank.

I hear little that is good coming out of Banking. Their actions caused much of this problem and right now they will do anything to survive. Given how important they are to the overall economy I think we need to have a good look at how they operate and how they are regulated. That is not an area that I know much about but something is very wrong.

Squire wrote:

An estate agent I know sold 2 houses last month, normally he would sell about 12-20 a week. That is a lot less work for solicitors, financial advisers and all the rest. Also serious hole in tax take.

Someone I know who arranges mortgages says there is no shortage of demand, but with the tightening of criteria people cannot get a mortgage.

To take a real example of a house were an elderly person died. It was for sale at 450,000 for over a year, was marked down to 360,000 and sale eventually agreed at 315,000. Persons apply for an 80% mortgage and surveyor comes out to place a value on it. He values it at 225,000 so sale falls through. Valuer gets his fee, applicant loses.

Strikes me that there is something that stinks here. The question is are the valuers being safe and covering their own backs, or as is rumoured they are being advised by those who employ them to value conservatively or lose work!

If such rumours are right then the market is being forced lower than would normally happen. Why? Who gains? Strikes me there is a funny game being played out.

Another tale of a business person with a secured loan and the Bank having the audacity to tell him he had inadequate assets due to the decline in values of property. What a cheek, but my colleague widened the arguement and thanked the Bank for advising him of how exposed they were due to the property crash and that he would have to consider somewhere more secure to bank.

I hear little that is good coming out of Banking. Their actions caused much of this problem and right now they will do anything to survive. Given how important they are to the overall economy I think we need to have a good look at how they operate and how they are regulated. That is not an area that I know much about but something is very wrong.

So houses are now not being sold because banks are knee-jerking and not giving out mortgages..? They've gone to the other extreme if your example above is widespread and such a radical shift in midstream horses can't be good at first glance but does it mean a boost for other areas of the economy - the rental market for example ? because those people and families not being given mortgages still have to live somewhere.

Could it be just a knee-jerk to the prospect that was there for the banks - debts secured on overpriced property? Or could the market be getting fixed by these institutions and if so isn't that illegal enough to put them behind bars? And wasn't it illegal in the first place to be allowed to dish out the likes of sub-prime mortgages at all?

Over and over I am being told that there is demand for mortgages, but over and over I am told that the applicants do not reach the criteria and often the valuation sinks it. Now you can say the house prices should drop, but you may as well bay at the moon. Yes they will drop but painfully slowly.

There are all sorts of rumours around and probably many aggrieved people, but we seem to be in the reverse mentality of the boom to put it charitably. With housing adjustment usually takes quite a few years, but if the prices plummet then we are back with assets that may once again rise rather than in the doldrums for 4 years. Cui bono?

It may mean more demand on rental or as is happening houses that were for sale now being forced into rental because they cannot sell. If you want to buy the house to live in there is not a lot of gain in this equation. Rental is fine if you are a young couple, but not if you have a family. Where is the security, in 6 month lets?

Anyway ISEQ is at 4509

Zhou_Enlai wrote:

I have been getting very negative vibes from various professionals - accountants, insurance brokers, solicitors, estate agents. The big worry is that they don't see work coming down the line.

Its true on all the above. I would know alot of accountants solicitors and estate agents and they're all in the same boat. Increase in liquidations is good in the short term for insolvency professionals, but firms are taking a much larger hit from the winding up of good annual fees. Solicitors are in alot of trouble, particularly those firms who dealt with the developers alot, I have heard of several large firms which are beginning to lay off qualifieds and not offer new contracts to those finishing their apprenticeships. Estate agents are in a terrible place at the moment. That said, until the property boom estate agents never earned half as much as a Chartered Accountant or Solicitor anyway, so perhaps it is just reverting to how it was.

Squire wrote:

...

Another tale of a business person with a secured loan and the Bank having the audacity to tell him he had inadequate assets due to the decline in values of property. What a cheek, but my colleague widened the arguement and thanked the Bank for advising him of how exposed they were due to the property crash and that he would have to consider somewhere more secure to bank.

That's a good one. Fair play for their quick thinking.

Quote :

I hear little that is good coming out of Banking. Their actions caused much of this problem and right now they will do anything to survive. Given how important they are to the overall economy I think we need to have a good look at how they operate and how they are regulated. That is not an area that I know much about but something is very wrong.

Banks. With friends like these, who needs enemies.

The 100% mortgage thing was a fiasco. Banks saw a get rich quick opportunity and threw everything at it. Unfortunately this gave people access to far more money than was safe. IMO 100% mortgages should be illegal.

It also created a sudden extra demand for houses. Nothing really changed much over those years, salaries, fuel costs, food costs in any big way. Interest rates did I suppose, but that affected repayment ability as opposed to borrowing ability. The introduction of 100% brought thousands of punters into the market who were otherwise not eligible. Sure that can only lead to one thing..and it has.

When has a bank ever put 100% working capital into a business ? Never I'd say. So why put 100% into someones pocket to buy a 3 bed house ? The notion of an indestructible asset. Yet it is destructable after all.

Every type of asset is capable of collapse. Of course people will forget that again and we'll have another bubble of something else in the future, perhaps we have one in the price of energy already occurring. It is the constant tale of economic history.

johnfás wrote:

Every type of asset is capable of collapse. Of course people will forget that again and we'll have another bubble of something else in the future, perhaps we have one in the price of energy already occurring. It is the constant tale of economic history.

Sage words, johnfás. Markets tend to go through continual cycles of boom and bust. The average cycle lasts about 18 years with 14 years of gains and 4 years of losses. The good thing is we have managed to survive all market lunacies and emerge stronger. Humanity has continually improved and strengthened in its history, we will prevail through this.

July's Live Register has been released today with some major figures jumping out. The standardised unemployment rate is now 5.9%, but it is very likely that this figure will be revised down in the next Quarterly National Household Survey.

There was a seasonally-adjusted rise of 10,600 on the Live Register in July. The Live Register now stands at 226,000.

Full Report Here.

I wonder how many companies who came in Ireland just for taxes will stay if they find cheaper taxes in Central Europe.

arnaudherve wrote:

I wonder how many companies who came in Ireland just for taxes will stay if they find cheaper taxes in Central Europe.

There's not too many that did that, there are a myriad of other reasons why Ireland attracted so much FDI, Central Europe still has higher corporate tax rates than us and many of the zero percent tax rates come with more conditions than our universal 12.5% rate.

It is also often not worth uplifting an organisation of several hundred people, which is still profitable, to gamble on the fact that a new office with new people, all who will have to be trained, will do as good a job.

Yes it make sense when you are manufacturing t-shirts, but not so much with other sectors. It will obviously make sense in some circumstances, but there is a large risk attached to moving and they're often not worth it.

johnfás wrote:

It is also often not worth uplifting an organisation of several hundred people, which is still profitable, to gamble on the fact that a new office with new people, all who will have to be trained, will do as good a job.

Yes it make sense when you are manufacturing t-shirts, but not so much with other sectors. It will obviously make sense in some circumstances, but there is a large risk attached to moving and they're often not worth it.

Exactly, and we have a great legislative framework surrounding head-quarter activities in companies. Very few other countries are as propitious for head-quarter locations as Ireland. Ireland is a brilliant EU base for any MNC.

There have been a few economic releases today so I thought I'd update this thread by posting some comments about them.

Visitor numbers up strongly

That's very encouraging since it'll boost the economy, help the balance of payments, improve contact with the rest of the world and assist rural areas. It's very encouraging since the rise comes in spite of unfavourable exchange rates.

Mortgage growth back to 1991 levels

This is quite a turn-around from the times when credit growth was almost 30%. This is a sharp reduction on the heights from 2003 to 2006 and is particularly ominous for the housing sector. It would suggest that house prices will continue to be marked down in light of less available demand and lower volumes.

IEA states that exports are down 1%

This is not good news and not the sort of thing we need at this moment in time. We need to see strong growth in the exporting sectors so this is a cause for concern.

Some very gloomy stuff altogether.

Would you say good quality houses are going to be available for a low price?

I think bad quality houses are more likely to be available at a low price...

arnaudherve wrote:

Would you say good quality houses are going to be available for a low price?

There are many good-quality houses available for low prices in Ireland now. The property supplements are full of well-built houses in good locations with great public transport being reduced. The overall price of houses has fallen by about 20% since May 2006, with a further 15% decline in prospect.

Maybe it's a stupid question, but I suppose there are also huge regional differences. Like between Donegal and Dublin for instance.

arnaudherve wrote:

Maybe it's a stupid question, but I suppose there are also huge regional differences. Like between Donegal and Dublin for instance.

Massive. I'm from Dublin and I'm used to seeing huge prices on the property pages. I bought the Irish Examiner which is full of ads for property in Cork and the difference was huge. I never saw such low prices when I got that paper. The difference would be about 20% on average.

Some very gloomy economic news today. Here's a flavour of today's melange of misery;

Maufacturing hits new low

The manufacturing sector has hit some rocky times this past while. It is something we need to strengthen to ensure that we ride out the difficulties our housing sector is experiencing.

If you are thinking of buying a house unlike shares the housing market is unlikely to drop and then bounce. It will probably fall and then wallow for a few years. So you don't necessarily need to jump in to get maximum benifit, but well build houses in desirable locations will sell well ahead of the pack.

Very tight credit and rising interest rates mean that most people cannot afford the asking prices so buyers market with those who need to sell accepting low offers. But with new construction dropping and low sales we are building up a reservoir of demand and a housing stock that is no longer increasing. Crazy way to run an economy, boom and bust cycles, so wasteful.

Yes there is too much anxiety in those boom and bust cycles.

Some economic news for today:

Public finances 2.2 billion euro behind target

Service sector weakens further in July

Pension funds down 18%

Some good economic news for today;

250 jobs created in Athlone

Ard-Taoiseach wrote:

arnaudherve wrote:

Would you say good quality houses are going to be available for a low price?

There are many good-quality houses available for low prices in Ireland now. The property supplements are full of well-built houses in good locations with great public transport being reduced. The overall price of houses has fallen by about 20% since May 2006, with a further 15% decline in prospect.

low prices??? Maybe a lot less than they used to be, but we need, for all sorts of competitiveness and stability reasons, to get house prices back within the 3x income range... and KEEP them there. Since the average industrial wage is in the region of 35K, that means joint average income of 70K, which means yer average 3 bed in average parts of the Dublin near-commuter belt... say... Lucan, Citywest, Blanchardstown, Castleknock, Swords, Shankill, Bray, Greystones, should be about 210,000 euro.

We either have a ways to fall, OR, prices could stagnate for ten years while we let inflation have its wily way with the value of the average industrial wage. But given pay freezes and lending shortages........