NAMA cashing in on the gee-gees?

Funnily enough there is a racehorse called Nama which does okay, and crops up from time to time on daily news searches, but today at Goffs auctions in Kildare five foals from Horse of the Year “Sea the Stars” sold for €2.9m and the day seems to have been a sure bet for NAMA as some of the day’s proceedings – in respect of the sale of one foal – are understood to have gone to the agency. Developer Michael Ryan (Mike Ryan), the owner of one of the foals, has not previously been associated with NAMA but it seems that the agency has snaffled the proceeds from today’s sale. Mike Ryan, aged 59 is a former Fine Gael councillor and hails from Dungarvan in Waterford and is credited with developing the Al Eile stud farm.

NAMA has not commented on any involvement in the sale today.

UPDATE: 24th November 2012, It remains unclear if Michael Ryan senior is in NAMA but yesterday in Dublin’s High Court, AIB was granted summary judgement against Michael Ryan junior and Sean Keane on foot of a €2.5m loan to develop industrial units at Waterford Airport Business Park. According to the Irish Times “The loans were to be repaid within two years and Mr Ryan snr provided a guarantee in the form of a charge over the Al Eile stud farm in Dungarvan.”

UPDATE: 19th December, 2012. The judgment of the High Court in November 2012 is now available online here.

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Northern Ireland residential property increased by 1.3% in Q3, 2011 – still down 44% from peak

This morning the Universityof Ulster/Bankof Irelandreleased their long standing quarterly survey of residential property prices in Northern Ireland– the report is available here. Whilst the price of an average home increased 1.3% from GBP 137,814 (€161,242) to GBP 139,691 (€163,438) in the quarter, prices are still down 44.3% from the peak in Q3, 2007 when the average price was GBP 250,586 (€293,186). The number of transactions also increased slightly by 6% in Q3,2011 from 1,062 to 1,133 which lends support to the claim that the Northern Irish residential property market is stabilising. The average price of a home in the Republic is €175,165 (derived from CSO fall from peak and PTSB/ESRI peak prices)

Northern Ireland is a fascinating case to study from this side of the Border because their collapse from peak equals our own (44.2% according to the CSO between September 2007 and September 2011) yet Northern Ireland doesn’t answer to the ECB but to the Bank of England, it has planning authorities and politicians which are set apart from those in the Republic, no Galway tent for our Northern friends, no section 23 and Sammy Wilson is no Charlie McCreevy or Brian Cowen. And yet their collapse from peak is identical to ours.

In fact you could argue their collapse from peak prices is greater than ours since in the Republic, inflation between September 2007 and October 2011 was just 0.8% whereas for the UK as a whole it was 14.9% (there isn’t a UK regional breakdown of inflation). So all things being equal you might expect a home costing GBP 100,000 in Northern Ireland in  October 2007 (their peak) to cost GBP 114,900 today; instead it costs GBP 55,700 which means their real – “real” in the sense of adjusting for inflation – fall is 51.5%, on this side of the Border it has been 44.6%.

The view on here is that Northern Ireland has less distortion of its market place, it doesn’t have NAMA, it has as we’ve seen in recent days a quick and efficient bankruptcy regime, it doesn’t have the mortgage arrears forbearance of the Republic which some say is an unacceptable kicking of the can down the road and all-in-all there’s more action and less wait-and-see than in the Republic. Northern Ireland also has a transparent property market in the sense that the public can see the sales history of any property – that helps price discovery which is even more important to the market in a downturn with a major adjustment.

Speaking of transparency, we will have the biggest property auction ever on 30th November 2011 when Allsop Space put 110+ properties up for sale. A week later on 8th December Osborne King will be holding an auction in Belfast – catalogue here – where 24 properties will be auctioned. Osborne King ran a very tidy auction in September 2011 when it brought 27 properties to the market. The December auction will see a mix of commercial, residential and development property offered with “maximum reserves” – reserves above which the property will be sold, but which may be revised downward on the day, in effect these reserves which Allsop Space also use a buyer-friendly devices which give buyers confidence in prices being sought, so as not to waste buyers’ time. Of course they don’t need price discovery to the same degree as in the Republic – the latest on the Republic’s House Price Database called for in the Kenny Report in 1974 and promised by successive administrations but never delivered, is that we might get a register with a two-year history by next June 2012.

NAMA is exposed to some €4bn of property related loans associated with Northern Ireland developers.

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