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Archive for December, 2011

The empty place setting

The Poles – those lads who helped build this country in the 2000s, whose home country’s economy will grow by 4% this year,  where debt:GDP is 57%, where Dell relocated to, whose train facilities are like something from the 21st century, which is hosting Euro 2012; but enough, it’s Christmas – have a rich treasure of traditions. Some are superstitions like sitting down and standing up if you are going on a trip and have had to return to the house to get something you’d forgotten; or if you meet a “one for sorrow, two for joy” magpie, you must bow and ask the magpie how it is today. They give sweets as a gift if you were going on a trip, they throw water at each other at Easter. They celebrate a “name day” in addition to your official birthday. So if your name is “Justyna” the 26th September is your name day, and you get gifts that day in addition to your “official” birthday.

Today is Christmas Eve and for the Poles, it is the second biggest day of the year, only surpassed by New Year. And today is rich in tradition: there is fasting – you can have a cup of tea, but that’s your lot! – until the sun goes down; but then there is a fabulous meal with a standard 11-dishes. Now some of the dishes mightn’t be too palatable to our tastes like the jellied fish but then again our sausages and black pudding aren’t very popular with Poles either. When setting the table for this evening’s feast, the Poles will set an extra place at the table.

The meaning of the extra setting might be different in different Polish households: in some, it’s for the ghosts of the dead, particularly the recently dead; in others, it’s for a guest that might, or might not, turn up. But generally it’s for those that can’t be with us this year, for whatever reason.

In Ireland today, and particularly tomorrow, there will many missing; sons, daughters and in some cases whole families who have had to emigrate to find work and an income to sustain themselves.

But having reflected on those missing this year, it is to be hoped that in 2012 this country gets back on its feet and creates the conditions needed to sustain the nation. Thankfully politicians are no longer talking of emigration as a positive feature which releases the pressure on unemployment. And forced emigration is beginning to be seen for what it is – a fundamental failure in leadership to provide.

We live in God’s own country, with a climate which is almost by design, an average of a couple of degrees below what is comfortable to the human body; so we’re always provoked into consciousness; a country where the rain gives us an ever-changing art-gallery of skies. And where the communities of people make this a most special place. I hope there are less empty places at the table next year.

Thank you

It’s hard to know the appropriate time to acknowledge those that bring this blog to life, Christmas or New Year. But given recent comments and messages on Twitter, perhaps now is a good time to say “thank you” to the commenters that inform, educate and entertain. Whether it’s the new Wild Geese (or should that be “Wild Tigers”?) or those at home making sense of the mess, all have enriched the debate and I hope fostered understanding of what is a traumatic national experience. Thanks also to those who have sent private messages to the blog – using the contact form at the bottom of the About tab – messages which have generated stories, insights and exclusives. Thanks to Japlandic for providing images (which will be featured in a review next week).

And whilst not strictly gratitude and recognising this has something of the Skibbereen Eagle about it, it seems the decent thing to acknowledge the cast that shapes the reality reported on here – at NAMA, the owlish Brendan, the hawkish Frank and the aquiline (see below) John and beyond, the redoubtable Mr Justice Peter, the sometimes-bohemian Sammy, the underrated Vincent, the Jack Russell Professor Patrick and of course Noddy and Big Ears.

 

Christmas arrangements.

For the last couple of years, December has seen a hotbed of activity in terms of NAMA and the banks. Remember the clandestine court hearings last year, to which journalists had to hoof through the snow in Dublin at top speed following tip-offs, only to be turned away by the judge? And the previous year, NAMA was created on 22nd December. This year, we’re still waiting for the Department of Finance to publish its review of the €3.7bn error in the national debt, the Anglo HQ in north Dublin Docklands might change hands and speaking of Anglo, the courts will remain open in Kiev next week – they celebrate Christmas according to the Julian calendar on 7th January – so we might find out the identity of those behind Lyndhurst Development Trading SA – the company which emerged on the scene this week with a massive claim against a Quinn shopping centre – if Anglo can successfully get access to the diplomatic back-channels opened up after 9/11.

So there may be a few news stories over the next few days, but in the main there will be reviews of 2011 and a look forward to 2012. Commenting will remain open as normal, but please bear in mind the commenting guidelines, particularly if you are a new commenter.

I wish you all a safe, peaceful and happy Christmas. Nollaig shona dhuit  (and for good measure, Wesolych Swiat Bozego Narodzenia)

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(The new properties added in November 2011, click to enlarge)

NAMA has today published its now regular monthly list of properties subjected to foreclosure action. The full list is here, the list of new properties added is here, and you will find previous editions of the monthly list which was first launched in July 2011, here.

You should read the full list of NAMA’s terms for accessing the lists here. But in summary, this is what you’re looking at:

(1) Real estate property subject to loans in NAMA to which receivers have been appointed. The receiver’s website is shown against each property.

(2) This is all the real estate foreclosed sorted by country, and then region.

(3) Not all of the property may be for sale.

(4) Contact the receiver with enquiries or expressions of interest in the first instance. Only pester NAMA if you’re not getting any response from the receiver and make allowances that receivers will be busy with queries, particularly after a new release of foreclosed property.

(5) If you think there are mistakes on the list, contact NAMA.

What’s new?

Tom McFeeley’s apartment block in Stratford (east London), properties of Cork developers to whom NAMA appointed receivers in October 2011, property in Furbo in County Galway. After the avalanche of Northern Ireland shown on the October 2011 list, there is none in November 2011.

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In terms of top prize for political incompetence in 2011, you’d be hard-pressed to find a better example than the farce that has surrounded the issue of Upward Only Rent Reviews (UORR) in commercial leases; remember both Labour and Fine Gael had promised to abolish UORR terms in existing commercial leases so that tenants would no longer have to pay rents which were set in better economic times, and particularly at the peak of the Celtic Tiger when commercial rents were twice today’s levels.

The commitment stymied the commercial property market where transactions dried up as neither buyer nor seller knew what rental terms would apply after the Government’s intervention. And Minister for Justice, Equality and Defence Alan Shatter issued frequent updates where he re-affirmed the commitment, and for many months the stock response to requests for updates from the justice ministry was that a bill would be brought before the Oireachtas before Christmas 2011. And a framework including detailed legislative provisions went to the Attorney General in October 2011.

Then on 6th December, 2011 it was Minister for Finance, Michael Noonan who announced the Government was abandoning the proposed changes. Minister Shatter skulked around the Oireachtas avoiding the justified criticism of what looks like legal amateurism. So UORRs in pre-February 2010 commercial leases look set to remain, though there is a Supreme Court case, Kidney v Charlton, which is set to be heard on 27th January 2012 in which the constitutionality of UORR provisions in older leases is set to be tested.

Commercial tenants are not happy; Retail Excellence Ireland issued a particularly bad-tempered criticism of the Government’s decision. And today, a new banner has been unveiled atop Korkys shoe shop on Dublin’s Grafton Street. The new banner (old version can be seen here) is self-explanatory and givenGrafton Street is only a couple of blocks from the Dail, it is likely to be seen by many politicians including those who made the ill-fated commitment earlier this year.

UPDATE: 22nd December, 2011. Tenants on Grafton Street have produced a video to accompany the launch of the new banner.

 

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Given Sean Quinn’s involvement in property in the 2000s which led to the former tycoon accumulating a portfolio reportedly worth €500m, and given Sean’s systemic borrower status at Anglo where he now allegedly owes nearly €3bn – and since Anglo is 100% owned by the State, that means Sean owes us nearly 2% of Irish GDP – it is a bit of mystery as to why NAMA did not move to acquire his loans. Arguably he was more a property “investor” rather than a “developer” but when it comes to buying shopping centres, for example, the distinction becomes blurred because if you’re not physically trying to change the configuration of the centre or add an extension, then you’re generally trying to change the mix of tenants and revenue model so as to maximise your income.

Last year, Paddy McKillen found NAMA on his tail despite Paddy’s protestations that he was an investor rather than developer; NAMA in response claimed Paddy’s €2bn+ of loans made him “systemic” even if the loans weren’t for traditional development. But in the case of Sean Quinn, NAMA has sat on its hands. Strange, that.

And so it falls to Anglo, or IBRC as it is now known having merged with Irish Nationwide Building Society, to pursue Sean for the repayment of €2bn+ of loans, reportedly secured against Quinn assets including the Quinn property portfolio. The properties are scattered across at least six countries including the Ukraine, where Anglo is meeting incredible resistance in enforcing its loan securities. Indeed, it is being suggested by local Ukrainian press that “machinations to block them [Quinn group in receivership] from taking control of the properties are being orchestrated not by Ukrainian groups, but by Sean Quinn, an Irish former billionaire, or his family”

And so in the Ukrainian capital,Kiev(or Kyiv) there are at least two Quinn commercial properties which Anglo is seeking to physically take possession of – the Ukraina shopping centre and the Leonardo business centre.

The Ukraina shopping centre (also known as the Shopping Mall Ukraine, or Univermag Ukrayina) is on Peremogy square in central Kiev– pictured here. It has 400,000 sq ft of retail/parking space and houses Ukranian and international retailers – it’s akin to the Jervis shopping centre, it’s not the biggest or swishest of shopping centres. It was redeveloped in the early 2000s and sold to the Quinn group in 2006 reportedly for USD 59m (€45m). It is said to be worth €60m today and is also said to have a annual rent roll of €8m.

The Leonardo business centre – pictured here – is also located in prime central Kiev . It has 300,000 sq ft of office and retail space – there’s a brochure for the building here. It has some top-notch tenants including Reuters and Commerzbank. It was also acquired by Quinn Property in 2006, reportedly for USD 95m (€73m).

Alas for Anglo, it is finding out that Kievis not Dublin. Last month, poor old Robert Dix, formerly of KPMG in Dublin but now chairman of Quinn Finance which we (the State, through Anglo) control, had an open letter to the Ukrainian prime minister Mykola Azarov published in Ukrainian media (print, such as the Kyiv Post and online – see below) making a desperate plea for support in taking possession of the shopping centre. Indeed Quinn Finance seems to have set up a dedicated website – www.univermagukraina.com – complete with thunder and lightening sound effects (I kid you not!) to publicise its campaign to take possession of the shopping centre. It is today reported that it is seeking the assistance of the local police to take possession of the shopping centre since “burly” security guards are sending Anglo’s representatives (or more accurately, representatives of the Quinn group in receivership) away with a flea in their ears.

Transparency International ranks Ukraine as one of the most corrupt countries in the world – it was ranked 134th out of 178 countries in 2010, with a ranking of 1 being least corrupt. In Ukraine you bribe the woman behind the counter at the post office so that she doesn’t steal your parcel, you bribe the policeman so that he doesn’t confiscate your car, you bribe the judge so as to avoid prison. In Ukraine journalists go missing and are found beheaded in the woods, political leaders get poisoned with dioxins which transform matinee idols into the Elephant man, and the latest outrage involves the former prime minister, Yulia Timoshenko who was recently jailed for seven years on corruption charges which the EU says are politically motivated – last week a video emerged showing the ill Timoshenko in what the authorities said was her jail cell, with the attention of seven doctors, a flat screen TV, air-conditioning ensuite bathroom with top of the range shower but Timoshenko protested the video did not show her usual conditions in prison. An Taoiseach Enda Kenny is reported to have raised the subject of Sean Quinn’s Ukrainian properties with current Ukrainian president Viktor Yanukovich in September – Enda might as well have threatened to invade the Ukraine for all the good it did.

The open letter from Quinn Finance (to which Anglo has appointed receivers) to the Ukrainian prime minister in November 2011

“Dear Mr. Azarov,

The deplorable virus of raidering (sic) has begun attackingUkrainewith new force. The memories of the recent arrogant raidering attacks on business are still very fresh for all of us. Today this malicious practice continues to manifest itself in such cases as the attack on the Kyiv’s legendary shopping mall “Ukraina”.

We, the Swedish company Quinn Holdings Sweden AB, are currently locked in a fight to retain the control over this enterprise, in which we own almost 93 % of the shares. Yet, taking into account the circumstances of our case, we have all grounds to assume that we are in danger of being deprived of our property.

In April of the current year an unfounded lawsuit was brought against Quinn Holdings Sweden AB, which resulted in the attachment of all shares of the shopping mall “Ukraina”, owned by the abovementioned foreign company. The market value of the shares in question amounts to tens of millions of US dollars.

Moreover, an additional lawsuit was filed against Irish Bank Resolution Corporation—an Irish bank, which is owned by the Government of theRepublicofIreland, and which earlier on financed the purchase of the shares of “Ukraina”—the main objective of which is to invalidate the mortgage agreement for the building of the “Ukraina” shopping mall.

As a result of a series of unlawful activities on the part of the former management of the Mall and other persons, numerous obstacles, which make it impossible for us, the owners of almost 93 % of the shares of the “Ukraina” shopping mall, to exercise our lawful rights, have been and continue to be created. Despite having the status of the majority shareholder, Quinn Holdings Sweden AB has been literally stripped off of their power to control the running of the enterprise.

This issue has received extensive media coverage inIreland, including on the premierIrishStatetelevision channel. It is also receiving international media coverage. This week the matter was featured in the Financial Times.

For more than two weeks now the newly appointed acting director of “Ukraina” shopping mall, whose appointment was approved at the general shareholders meeting by both majority and minority shareholders, is unlawfully denied access to his place of work.

The situation has almost reached the point, beyond which the shareholders of “Ukraina” shopping mall risk loosing the control over the enterprise irrevocably. Our efforts to protect our rights and our property continue to be obstructed by outrageously crude actions which systemically violate the law.

With the support of the Irish bank Irish Bank Resolution Corporation, which is today state-owned, we have invested considerable financial resources into the shares of the Mall. We assumed all the risks and responsibilities for the shopping mall “Ukraina”, became an example of the growing trust of foreign investors to doing business inUkraine. Tomorrow we can loose (sic) everything. We appeal to you, Mr Prime Minister, with the request to take this matter under your personal control.

Yours sincerely,

Robert Dix,

Board Member,

Quinn Holdings Sweden AB”

UPDATE (1): 5th January, 2012. Colm Keena at the Irish Times today reports that IBRC is “pursuing” Lyndhurst in Belfast and the British Virgin Islands.  The pursuit in Belfast is said to have involved IBRC (formerly Anglo) obtaining an injunction before Christmas preventing Lyndhurst from disposing of its interest in a company that runs the shopping centre. It is further reported that the case is back at the High Court in Belfast today where a continuation of that injunction is to be sought. Meantime in the British Virgin Islands, it is further reported that IBRC is also taking certain legal actions, details of which are not published, in order “to prevent the shopping centre slipping from its grasp” but it is stated at the top of the article that IBRC is trying to establish who is behind the company. Of interest is the claim that “a Quinn family company called Demesne Investments Ltd, with an address in Mr Quinn’s native Derrylin, Co Fermanagh, had an interest in debts due from the operator of the Kiev property [the Ukraina shopping centre] but these appear to have been transferred to Lyndhurst, via an intermediary”

UPDATE (2): 5th January, 2012. The BBC has an extensive report on court proceedings in the High Court in Belfast today where  Mr Justice McCloskey approved the continuation of injunctions against four companies,  Demesne Investments Limited (UK), Innishmore Consultancy Limited (UK), Lyndhurst Development Trading SA (British Virgin Islands) and Galfis Overseas ( Belize) which prevents each of these four companies from dealings in debt relating to the Ukraina shopping centre in Kiev (Kyiv, Ukraine). Inishmore is said by the BBC to have been set up in 2011 and its sole director is Peter Quinn junior, a nephew of Sean Quinn (see here for the map of the Quinn family tree). The suggestion is that Demesne had loan agreements involving the Ukrainian shopping centre and these were assigned to Inishmore in April 2011 and then they were further assigned to Lyndhurst in October 2011. Lyndhurst then, under what appear to be highly suspicious circumstances, obtained a judgment in the Kiev commercial courts on 26th December – IBRC has apparently complained about the judge’s conduct of the case which seems to have been highly irregular. Cutting to the chase, Anglo (IBRC) is seeking control of the Ukrainian shopping centre to help satisfy the €2.8bn that is said to be owed by Sean Quinn to the bank, and on the other hand other companies, some of whom are clouded in the corporate secrecy offered by the British Virgin Islands and Belize, are seeking to take control of the shopping centre. Lastly, it was suggested today by Anglo’s barrister that matters may be brought before the court pointing to fraud, contempt of court and breach of fiduciary duty.

UPDATE (3): 5th January, 2012. Colm Keena has filed a report for the Irish Times in which he says that Anglo (IBRC) has secured a Norwich Pharmacal order  to force the Belize authorities to disclose the identities of those behind Galfis Overseas Limited, and that Anglo is pursuing a similar order against Lyndhurst in Belize – Anglo may well need get Eamon Gilmore involved to deal with the BVI authorities who, after 9/11, have come under increased pressure to reveal beneficial owners of companies allowed register in their secretive jurisdiction. It is reported by Colm that Galfis is pursuing an office block in Moscow, the €140m Kutuzoff Business Centre.

UPDATE: 14th February, 2012. Having appealed a decision by Kiev’s commercial court to a higher court and having last week lost that case, Anglo (or IBRC) has made applications in Dublin’s High Court which could see the Quinns placed behind bars for contempt of court. Anglo is claiming the Quinns have breached an order obtained in Dublin’s High Court last year preventing the Quinns from disposing of, or dealing in, the property assets in their former empire. The claim now by Anglo is that Sean Quinn, his son and his nephew have breached this order and are accordingly in contempt of court. The matter is to be heard in Dublin on 24th February, 2012 according to Dearbhail McDonald at the Independent.

UPDATE: 27th February, 2012.  There will be a hearing in the High Court in Belfast on 27th March 2012 regarding the Kiev properties formerly in the Quinn Property group. In Kiev, it is reported in the Kyiv Post that a commission has been set up to investigate the goings-on in the company which controls the shopping centre, and according to the Kyiv Post quoting the commission “in November 2011, a group of people illegally seized control of the department store” And back in Belfast’s High Court last week, it was reported that a hand-writing expert is now to be brought in to examine claims that Sean Quinn junior’s signature had been forged on a company document in Kiev.

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Embattled Minister for the Environment, Community and Local Government, Phil Hogan has this evening announced an agreement between his ministry and NAMA whereby NAMA is to make available 2,000 dwellings – apartments and houses – for use through leasing arrangements in 2012. The housing will be made available to local authorities and unspecified “volunteering” housing associations.

Amazingly there is no pretence at the political interference in  NAMA’s operations – the statement has the chutzpah to say “Minister Hogan and former Minister for Housing, Willie Penrose TD have put considerable pressure on NAMA in 2011 to achieve a greater social dividend in the housing area” – so much for the impression that NAMA might have been independent of the political process! I fully expect Northern Ireland’s Minister for Finance and Personnel, the sometimes-bohemian Sammy Wilson, to be on the blower to NAMA tomorrow morning demanding cheap/free social housing for Northern Ireland.

Of course it is a scandal that there are a crudely-estimated 98,000 households (and rising) on housing lists in the State, which at the same time has, in the national sense, some 300,000 vacant dwellings. We have already seen a small number of developments bulldozed by local authorities which gives a perception that we really don’t know what we are doing. In  practice, some housing will not be suitable – because of location for example.

What is surprising about the announcement today is that so much property is now to be made available by NAMA, yet only a short few months ago, it was suggested that NAMA’s property was in the main not appropriate, it was suggested that NAMA had met with housing associations and reviewed the portfolio and found there was little of practical use. What has changed?

Of concern on here is the issue of the terms under which the housing will be provided by NAMA. An ongoing concern is that government departments will “bring pressure” on NAMA to gift benefits to their departments which are otherwise required to deliver savings so that the national deficit can be eliminated. Our political leadership should be concerned at ministries acting individually to take bites out of NAMA’s potential to deliver on its primary objective – to maximise the value of the assets under its control.

If a house is worth €100,000 on the open market, then that is what NAMA should charge for it, and not a cent less. Of course there is nothing to stop the Government seeking a dividend of €25,000 per house from NAMA, a dividend which can then be considered by the Government as a whole and the spending of that dividend can be prioritised across ALL government departments, not just those who “bring pressure” on NAMA. In this way, the integrity of NAMA’s primary objective is maintained – dividends are deducted AFTER calculating net profit – and at the same time, the Government can take advantage of NAMA to deliver benefit in a structured way which recognises the priorities of the government as a whole.

NAMA has not issued any statement, and has not yet replied to a request for comment.

UPDATE: 21st December, 2011.  NAMA has not issued a statement but it is understood that it will offer the housing on an “arms-length and commercial” basis.

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Millionaires? “Property” millionaires? In 2012? At the same time as the Government is levying a new flat tax of €100 per home on 80% of the homes in the country. Surely this is a case of over-indulgence in the mulled wine. You’d think…

Although the Government’s capital programme has been cut back in 2012, there is still a meaty schedule of infrastructure works – road-building and the like. And it remains an unaltered feature of Irish infrastructure spending that land which is compulsorily acquired is paid for through the nose. An acre of land might be worth €6-15,000 in terms of its existing use, but once the State decides it needs it for infrastructure, that price can rocket to well over €100,000 an acre. Not convinced? Why not ask the Limerick land-owner who pocketed €10.4m for a contribution from his land-holding so that a tunnel scheme might have been built; indeed €56.5m was spent on land acquisition in that one Limerick scheme alone.

Of course there are arguments about valuing land which the State compulsorily takes from citizens so as to improve the general infrastructure of the State. But these issues were dealt with, decades ago, when the Kenny Report was produced in 1974. In essence, it recommended that landowners be paid a 25% premium on top of the existing value of their land if there was compulsory acquisition. Successive governments – Labour, Fine Gael, Fianna Fail – all welcomed the recommendations in the Kenny report but somehow, never managed to get around to implementing those recommendations. And by the way one recommendation was a register of  property sale prices which we may eventually get by the middle of 2012 – almost 40 years after Justice Kenny started his deliberations! And I’d be willing to bet that without the IMF breathing down our necks it mightn’t even be happening by 2012.

But what about implementing the rest of the Kenny report? How much would that save in 2012? €160m, the estimated sum to be collected in the flat property tax? Indeed might an urgent reform of compulsory purchase procedures not only yield more than the €160m which the flat property tax is projected to bring in, but also give the State a cheaper and more competitive means of doing business, as well as giving society in general a sense of fairness? The losers would be landowners who might have received a premium of over €100,000 an acre for their land in excess of what it was worth with its existing use; but even they would receive a 25% premium, worth €1,500-4,000 an acre.

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This morning has seen the publication of the ninth CSO residential property price indices for Ireland. The inaugural series was published by the CSO on 13th May 2011 and covered the period from January 2005 to March 2011. This morning’s release covers the month of November 2011. Here’s the summary showing the indices at their peak (various months in 2007 depending on type of property and location), the NAMA valuation date (November 2009), a year ago (November 2010), December 2010 (end of last year, start of this year), last month (October 2011) and November 2011.

 

Now that the Permanent TSB/ESRI has abandoned its quarterly house price index, the CSO’s isIreland’s premier index for mortgage-based transactions. It analyses mortgage transactions at eight financial institutions : Allied Irish Banks, Bank of Ireland, ICS Building Society (part of the Bank ofIrelandgroup), the Educational Building Society, Permanent TSB, Belgian-owned KBC, Danish-owned National Irish Bank and Irish Nationwide Building Society. The index is hedonic in the sense it firstly groups transactions on a like-for-like basis (location, property type, floor area, number of bedrooms, new or old and first-time buyer or not) and then assigns weightings to each group dependent on their value to the total value of all transactions. The index is an average of three-month rolling transactions.

Last week, the Government presented to the Dail some stamp duty figures for property transactions in 2010, which gave some reason to hope that we might find out from the CSO today the 2010 split of cash-to-mortgage transactions. Unfortunately the CSO doesn’t yet have this information. However Niall O’Hanlon from the CSO said that the organisation expects to receive monthly data in stamp duty returns from around the middle of 2012, and that this will allow the CSO to produce a regular analysis of the size of the market including the split between mortgage and cash based transactions.

As for the key questions:

How much does property now cost in Ireland? The CSO deliberately doesn’t produce average prices. The former PTSB/ESRI index did, and claimed the average price of a property nationally hit the peak in February 2007 at €313,998, inDublin in April 2007 at €431,016 and outsideDublin in January 2007 at €267,987. If, and it is a big “if”, you were to take PTSB/ESRI figures as sound and comparable to the CSO series, then these would be the average prices today:

Nationally, €168,669 (peak €313,998)

In Dublin, €199,325 (peak €431,016)

Outside Dublin, €154,176 (peak €267,987)

I don’t think the CSO would be happy with this approach but it seems to me that the PTSB/ESRI series as represented by its historical indices closely correlates with the performance of the CSO indices.

What’s surprising about the latest release? Apartment prices inDublin were up 4.7% in the month (though still down 16.1% in the past 12 months). Apartments nationally were up 2.7% in the month (though still down 16.9% in the past 12 months).

Are prices still falling? Yes, and the 1.5% month decline nationally in November  2011 is in the same range as the 2.2% decline in October 2011, the 1.5% decline in September 2011 and the 1.6% decline in August 2011.

How far off the peak are we? Nationally 46.3%% (48.3% in real terms as inflation has increased by 4% between February 2007 and November 2011). Interestingly, as revealed here,Northern Ireland is some 44% from peak in nominal terms and 52% off peak in real terms. Are forbearance measures by mortgage lenders, a draconian bankruptcy regime and NAMA’s (in)actions distorting the market? Or are cash transactions which are not captured by the CSO index so significant today that if they were captured, the decline in the Republic would be even greater?

How much further will prices drop? Indeed, will prices continue to drop at all? Who knows, I would say the general consensus is that prices will continue to drop. This is what I believe to be a comprehensive list of forecasts and projections for Irish residential property [house price projections in Ireland are contentious for obvious reasons and the following is understood to be a comprehensive list of projections but please drop me a line if you think there are any omissions].

What does this morning’s news mean for NAMA? The CSO index is used to calculate the NWL Index shown at the top of this page which aims to provide a composite reflection of price movements in NAMA’s key markets since 30th November 2009, the NAMA valuation date. Residential prices are now down 25.3% from November, 2009.  The latest results from the CSO bring the index to 829 (20.6%) meaning that NAMA will need see a blended average increase of 20.6% in its various property markets to break even at a gross profit level.

The CSO index is a monthly residential property price index. Irelanddoes not yet have a publicly available register of actual sale prices, but legislation to give effect to such a register is presently before the Oireachtas – read the latest on the House Price Register here. There are three other residential price surveys, based on advertised asking prices or agent valuations – for the latest see here. Lastly the Department of the Environment, Community and Local Government produces an index based on mortgage transactions, six months after the period end and not hedonically analysed.

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