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Archive for August 16th, 2011

This morning the Irish Banking Federation (IBF), which represents more than 95% of mortgage lending in the State, released mortgage lending date for quarter two of 2011 – the data is here and the press release is here. Although the figures continue to paint a picture of a property market that has seized, there is an improvement on the historically low figures published for quarter one.

Overall €624m was advanced during Q2, 2011 which is 8% more than the €577m advanced in Q1, 2011. Most of the increase is attributable to First Time Buyers (up 13% or  €31m) and remortgages (up 65% or €26m). Movers, Buy to Let buyers were both up 5%. Mortgage top-ups went against the trend and were down 31% or €22m.

So quarter on quarter was encouraging, though the value of all categories is still down  50% on a year ago in Q2, 2010. And values are down 90%+ from the peak of €10bn a quarter in 2005 and 2006. It should be said that there appears to be some seasonality to mortgage lending and in each of the past six years (2005-2010 inclusive) there has been an increase from Q1 to Q2, though in the past three years that quarterly increase has not prevented the downward trend in lending.

In terms of volumes, some 3,551 mortgages were advanced during the quarter, up 9% or 292  from the 3,259 advanced in Q1, 2011. Again First Time Buyers (up 16% or 202) and Remortgages (up 70% or 182) accounted for most of the increase. There were 2,643 mortgages advanced for the purchase of property, the remaining 908 were remortgages or mortgage top-ups.

The average value of mortgages continues to decline, down 1% in the quarter from an average of €177k to €176k. First Time Buyers are now taking out average mortgages of €180k, down 2% from €184k in Q1. Movers are taking out mortgages of an average of €218k which is 7% down from the €234k in Q1. Buy to Letters buck the trend and are now taking out average mortgages of €149k compared with €144k in Q1. Mortgage top-ups and remortgages are more or less unchanged. Remember you can’t tell a great deal about the value of property from these averages because they may represent different loan to values (LTVs) eg at the peak mortgages with LTVs of 100% were not uncommon, today mortgages are typically 70-90%.

Q2 was the quarter in the immediate aftermath of the bank stress tests in March 2011, which at the time were held out to have engendered more confidence in Irish banking. However Q2 was a period of intense turbulence in the EuroZone with Greece  to seek a second bailout. The two pillar Irish banks are supposed to be lending €10bn to the economy each year but unlike the UK where the Project Merlin initiative keeps track of new lending, Ireland seems to have an objective with little practical measurement. Lastly commenting on the data this morning, IBF Chief Executive, Pat Farrell, said “current mortgage market activity reflects the general macroeconomic environment.   In these challenging times manageable borrowing and prudent lending are to be expected.”

The analysis of the Q1, 2011 statistics is available here.

[The above statistics tables are extracted from a spreadsheet which is accessible here]

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Sources claim that John McCabe of McCabe Builders and Anglo Golden Circle fame has contracted to sell a site at 11-15 Arlington Street in St James’s in London SW1A 1RD for in excess of GBP 20m (€23m). The site believed to be this one described on the McCabe UK website has planning permission for up to 14 apartments but it is understood that the present intention is to develop seven apartments, each with a gross internal area of 2,000 sq ft. The relevant planning application is understood to be 00/02615/FULL available here. Apartments are fetching in excess of GBP 4,000 per square foot in Mayfair at present but Arlington Street, a stone’s throw from the Ritz hotel, would be considered a less valuable secondary location within London’s borough of the City of Westminster; the speculation is that these seven apartments would fetch GBP 2,500 psf or GBP 5m a pop. The buyer has not yet been revealed. It is understood that McCabe is selling the property under NAMA’s auspices.

This is NAMA’s second reported residential sale in the borough of Westminster. In March 2011, it was exclusively revealed on here that NAMA was selling the loan in respect of 20 Grosvenor Square back to a consortium lead by Richard Caring. That property is also destined to be converted into luxury flats but Grosvenor Square is superior location, presently home to the US Embassy, and the flats there would be expected to fetch GBP 4,000 psf or indeed more.

Neither NAMA or McCabe UK had any comment on the transaction at the time of writing.

UPDATE: 16th April, 2012, Property Week names the buyers as the Smedvig family from Norway who have made money from shipping and oil. The seller is named as Newthorn Properties.

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