Of the Week…

Table of the Week

 

This week, the European statistics agency, Eurostat published the latest GDP data for the EU and selected non-EU countries. Nine of the 27 EU countries are clearly in recession with two successive quarters of negative GDP growth, but as we know on here, Ireland too is in recession because although its change in Q4,2012 was officially logged as 0.0% or -0.0%, it is actually -0.047% which confirms a second quarter of GDP contraction.

Salaries of the Week

This was the week that we learned the last accounts for the Irish Film Classification Office were for 2009 and that subsequent accounts hadn’t been filed “due to an oversight”. We learned this week that the latest accounts filed for Ireland’s woeful Competition Authority were for 2010 and are available here. No word on subsequent years. We learned that the average salary for the 46 staff in the Competition Authority, comprising four board members, 38 staff and four secondments from other Government departments was an impressive €68,600 in 2010. Furthermore, the relatively small operation ran up unspecified – no, not building or travel or printing or advertising – administration costs of €139,000 and IT costs of €104,000. Overall, the operation cost us €4.4m in 2010. Its outputs are less impressive, it certainly deals with notifiable mergers but I cannot see evidence of robustly rejecting a merger, ever. There are a tiny number of prosecutions for competition infringements, and yet, we continue to live in a State where medicines are several times more expensive than in the neighbouring jurisdiction, our lawyers are still the second most expensive in Europe after Moscow, our recession-racked economy still tolerates €500-1,000 per hour payments to professions. And don’t even get me started on consumer goods, from groceries to mobile phones.

Quote of the Week

“It really does make me ashamed of my government when they can get wages in the hundreds of thousands annually, but when one of the most important children’s wards in Ireland, for some of the sickest kids in Ireland, has to rely on charitable donations to buy a bucket of paint and a brush. That is one of the sickest things I have ever come across in my short lifetime here” 16-year old Kerry man Donal Walsh who lost his fight with cancer last weekend – in his own words he wrote about dealing with cancer, they’re worth a read here and here.

Rubbish of the Week

A month ago, amid widespread illegal dumping in the Gardiner Street area of Dublin, Dublin City Council was threatening not to collect rubbish from certain areas of the city and let the residents resolve the problem of illegal dumping themselves; how, wasn’t clear but it had hints of a call for vigilantism but in the end, DCC abandoned that hare-brained scheme but have now introduced another – over a week ago, they confirmed they were writing to local authority tenants demanding proof that they had paid for a waste disposal provider. And it seems DCC is even proposing to extend this new scheme to allow its officials knock on anyone’s door to demand proof of having engaged a provider.

Curse of Dragons Den of the Week

The “curse of Hello” where full colour splashes of celebrity lives in the pages of Hello magazine, only to be soon followed by banana skins, revelations of peccadillos and tragedy, seems to have spread to the Dragons Den, the Japanese TV format created which was picked up by the BBC and latterly by RTE. In Ireland, we have seen Dragons Bill Cullen’s motor dealership and hotel operation fall from grace, and more recently Niall O’Farrell’s chain of formal wear and suit hire shops fall victim to the ongoing recession. In the UK this week, the Daily Mail suggested that one of the stars of the UK version of the show, Duncan Bannatyne was facing money troubles, though the scrappy Scotsman was quick to tweet that the Daily Mail story was untrue.

Table of the Week

This week, the NTMA produced its monthly “Ireland has turned the corner” presentation to investors with its laughable spin on an economy still in recession, with 14% unemployment, with retail sales declining (fast), with commercial property rents and capital values declining, with residential property declining, the NTMA still manages to appear positive. Its openness proxy is a good one – this adds together exports (X) plus imports (M) and divides the sum by GDP. In Ireland’s case, we are amazing compared to the other PIIGS, but this ignores the massive in/out flows from multinationals which is a unique feature of the Irish FDI-focussed economy. Anyway, good to know residential property rose for the first time since 2007…..

Old Media swan song of the Week

“Sarah McInerney of The Sunday Times acknowledged that the online version of that newspaper’s Irish edition which she said was known within the company as the “regional edition”, was “not doing well”.” So reported the Irish Times this week

We also had UTV’s management statement for Q1,2013 which noted that its commercial radio operations in Ireland (north and south) were down 8% in Q1,2013 compared to a year previously. That’s a worrying decline for a company that is well regarded commercially but more worrying was the statement “We believe  that we continue to outperform the market” which doesn’t bode well for competitors here, particularly RTE and Communicorp (Newstalk and Talk amongst others) and Landmark Enterpises (the Crosbie vehicle that has taken on the operation of local radio interests previously managed by TCH).

We also had Johnston Press’s management statement for Q1,2013 – you might ask where are the statements for Irish-owned companies but apart from IN&M indicating revenues were down 10% this year on last, we haven’t heard a mig from our own. Johnston Press publishes 12 local titles in Ireland – Donegal Democrat, Donegal People’s Press, Dundalk Democrat, Leinster Leader, Leinster Express, Leitrim Observer, Longford Leader, Kilkenny People, Limerick Leader,  The Nationalist and Munster Advertiser, Tipperary Star and The Echo in Tallaght. Although total revenues were down 11.4% in Q1,2013 from a year previously, it seems the decline is concentrated on advertising and that circulation revenue had held up.

Resemblance of the Week

Colourful Independent TD for Roscommon, Luke “Ming” Flanagan turned up at the Dail this week, a-la-Paris Hilton, with a tiny dog in tow. Julie, which could be a Scottish Terrier but could be some lovable Roscommon-Leitrim mongrel. Perhaps one of these days, the old media might run a feature of politicians and their dogs to judge if owners indeed chose dogs in their own reflection.

Parliamentary insult of the Week

“In truth I have to say that I am fed up to the back teeth with the foot dragging, the whinging, the stalling; sometimes, you might even say the attempt to politically posture on critical issues such as this; the begrudging, the bellyaching that you hear, the conditioning before statements can go out from colleagues. And I’m depressed listening to a tribe of Jeremiahs that infest the political process  and whose first thought is to attack any genuine attempt that is made for positive proposals. And those people of course have nothing to contribute themselves. And I also have to say that I get glum at the whited sepulchers who pontificate to us about a shared society and talk to us about harmony and consensus politics and yet, unless they are taking the lead themselves and are taking everything they want, they strain and stretch every sinew to abstain and obstruct what is going on. And quite honestly Mr Speaker, I think we have reached the stage that if we wait for the last person to board the train, the train will never leave the station“ Peter Robinson, First Minister of Northern Ireland, in the Stormont Assembly responding to criticism of the joint Sinn Fein/DUP “Together: Building a United Community”

Let’s hope Peter’s grasp of the political challenges facing Northern Ireland is better than his grasp of the Good Book. The prophet Jeremiah may well have forecast doom-and-gloom but as it turned out, his predictions were accurate. And a day or two later, the TUV picked up on this when they issued a statement

“Yesterday the co-First Minister branded his critics in the Assembly “a tribe of Jeremiahs”. The image struck me as an exceptionally odd form of insult, particularly as the warnings proffered by Jeremiah proved to be accurate. Given the traffic chaos which is developing at the Maze it is obvious that the warnings of some Jeremiahs have been well founded.”

Tax Home Truth of the Week

“The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing” Jean-Baptiste Colbert, finance minister under Louis XIV in 17th century

Okay, it’s not new but the general absence of hissing over the property tax – yes, there have been a few marches, a handful of occupations but the indications from the Revenue Commissioners is that the tax has been accepted far more widely than its predecessor, the household charge. This time around, the Government has firmly passed responsibility for the tax to the still-generally-feared Revenue Commissioners, it has a 50% discount in place for 2013 and despite it being a deeply unfair tax in many respects, it seems as if it is on track to be accepted by a considerable majority by the filing deadline – 28th May 2013.

Act of Transparency of the Week

In Uganda, a country with a land area three times that of Ireland, and a country to which we provide foreign aid, this week, they achieved a fully computerized Land Registry showing who owns what.  Amazing. In Ireland, we haven’t quite registered all property yet, and there is a sizable amount, particularly in south county Dublin, apparently, that has yet to make it online. So, you just have to wander up to the dusty Public Records Office on Constitution Hill in Dublin and pay your €15 for a photocopy.

Whitewash of the Week

The vehement disdain towards the “anonymous author” that blew the whistle on Garda malpractice in quashing traffic penalty points, was not well disguised. Nor was the anonymous author whom we’ve all known for some time was John Wilson. The report itself is here and there is a lengthy additional report on what the Garda practices are. Heads are still being scratched at how seven separate notices being quashed for the same family didn’t rise to the level of corruption. But mostly we wanted to know why the Gardai were investigating themselves when we have a perfectly good Garda Ombudsman set up for such investigations. Three Gardai face disciplinary action, the report will now be examined by the Oireachtas justice committee but the Garda Commissioner and Minister for Justice Alan Shatter are desperate to draw a line under the whole affair and calls by Transparency International for better protection of whistleblowers seem to have fallen on (the) deaf ears in Officialdom.

Response to debt demand of the Week

And finally, Clare Dooley whose Twitter profile says she assists people suffering in the economic downturn provides a novel approach to demand letters from the banks.

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Irish residential rents up strongly in April 2013

This morning, Ireland’s Central Statistics Office (CSO) has released its inflation figures for April 2013. The monthly headline Consumer Price Index (CPI) was flat in April 2013 compared to the previous month, and is still only up a modest 0.5% year-on-year. April’s results mirror those of Sept 2012-March 2013 and continue a subdued annual inflation trend seen in recent months compared with the 2%+ that pertained before January 2011.

Housing has stopped being the biggest driver of annual inflation, mostly because mortgage costs have been declining – by 6.8% in the past year, as ECB rate cuts and greater scrutiny of variable mortgage interest rates take effect. Just a few months ago, mortgage interest was rising by 20% per annum, and as mortgage interest costs account for over 5% of the basket which measures inflation, the impact on inflation was substantial.

Energy costs in homes on the other hand, which account for over  5% of the total basket examined by the CSO, have risen by 4.4% in the past 12 months, mostly driven by the 9% price hikes at the ESB, and in October 2012 at Bord Gais.

Elsewhere, private rents rose by a stonking 1.0% for the second month in a row – this after modest increases in February and January but bigger increases in previous months: 0.7% in December, 0.6% in November, 0.7% in October  and  0.9%  in September 2012. Over the past year, such rents are up by 5.0% according to the CSO – there is some small rounding in the figures above which show 5.4%. The results today are supported by the PRTB index launched yesterday which shows actual rents nationally up by 2% in the past year, and the Daft.ie asking rent index which suggests rents are up nearly 3%. There are no doubt regional and property-type variations, yesterday’s results from the PRTB suggested rents on apartments in Dublin were still declining but houses were increasing.

It seems that in our financial crisis, the big correction in rent took place in 2009 with a 19% maximum decline, compared to a decline of just 1.4% for all of 2010. Since the start of 2011 there has been a 9.3% increase (mostly recorded in February and October 2011 and February and September/October/November  2012 and March/April 2013).

Rent assistance levels have not been affected by the recent Budget 2013, neither the rates nor contribution have changed.

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New PRTB rent index shortchanges us all

The old media is today claiming that the new residential rent index from the Private Residential Tenancies Board provides for the first time an index of actual rents rather than the asking rents that Daft.ie tracks. That claim is rubbish, as the CSO incorporates private rents in its monthly inflation figures, and the source for their figures, are estate agents across the country providing actual rents. Apparently the PRTB index will support the findings of the CSO index and confirms residential rents are up modestly over the past year, 2% according to the old media which is in line with the 3.4% increase in the CSO index.

The PRTB index is not yet online but it should be available here later today. It has been produced with the ESRI – no, don’t groan – and in the near future, not today, the CSO will provide a facility whereby you can look at types of property is all parts of the country, so if you want to see what a two-bedroom apartment costs in Athlone, you’ll be provided with averages and an index to indicate if prices are increasing or decreasing.

“This is all great” I hear you say, so why are we being shortchanged?

It recently emerged in the Dail that the PRTB had provided the Minister for Social Protection Joan Burton with a complete listing of ALL residential property rented in the country including address and rent amount. The listing did not contain the name of the landlord and tenant, and apparently in this way, according to Minister Burton, no data protection laws were broken.

The Opposition tried to get hold of the database, but was told that the information had been provided by the PRTB to the Department of Social Protection pursuant to Section 146 of the Residential Tenancies Act 2004 and Section 261 of the Social Welfare Consolidation Act 2005. Minister Burton suggested to the Opposition that they might contact the PRTB themselves for the data, but because the Opposition is not the Minister or a Local Authority and therefore can’t rely on the 2004 Act, they’re not likely to be successful.

So, perhaps today, we will get a small additional chink of light refracted through the dubious lens of the ESRI, but there is no data protection impediment to getting the full listing of addresses with rents, so that you would have true transparency. If you can see what a particular property sells for on the Property Price Register, why can’t you see its rent.

The parliamentary questions and responses seeking the underlying data are here:

Deputy Pearse Doherty: To ask the Minister for Social Protection further to Parliamentary Question No. 586 of 16 April, 2013, if she will make available the file of data received from the Private Residential Tenancies Board, data which she says does not give rise to data protection implications, but which presumably provides addresses, details of accommodation and rent costs.

Minister for Social Protection, Joan Burton: As part of the review of rent limits, the Department has received information from the Private Residential Tenancies Board (PRTB) from its register of tenancies. This data exchange is provided for by legislation under Section 146 of the Residential Tenancies Act 2004 and Section 261 of the Social Welfare Consolidation Act 2005. The data snapshot provided contains details of registered tenancies and does not contain names of tenants or landlords.

There are no data protection implications from the use of this information by this Department. However, the data provided to the Department remains the property of the PRTB.  If the Deputy wishes to access such data he should contact the PRTB directly.

Deputy Pearse Doherty: To ask the Minister for Social Protection further to Parliamentary Question Nos. 136 and 144 on 21 March 2013, in which she stated she had obtained data from the Private Residential Tenancies Board including a snapshot of the PRTB’s database which stores all annual rental values and relevant addresses, if she will confirm the way accessing such information was permitted in the context of data protection legislation

Minister for Social Protection, Joan Burton: The purpose of the rent supplement scheme is to provide short-term support to eligible people living in private rented accommodation whose means are insufficient to meet their accommodation costs and who do not have accommodation available to them from any other source.  The overall aim is to provide short term assistance, and not to act as an alternative to the other social housing schemes operated by the Exchequer. There are currently approximately 86,000 rent supplement recipients for which the Government has provided €403 million for 2013.

As part of the review of rent limits, the Department received information from the Private Residential Tenancies Board (PRTB) from its register of tenancies. This data exchange is provided for by legislation under Section 146 of the Residential Tenancies Act 2004 and Section 261 of the Social Welfare Consolidation Act 2005. The data snapshot provided contains details of registered tenancies and does not contain names of tenants or landlords. There are no data protection implications from the use of this information.

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Irish residential property prices continue to decline – March 2013 CSO indices published

This morning has seen the publication of the Central Statistics Office (CSO) residential property price indices for Ireland for March 2013. 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)
• 12 months ago (March 2012)
• the start of this year (end December 2012)
• last month (February 2013)
• this month (March 2013)

The CSO’s indices are Ireland’s premier indices for mortgage-based residential property transactions. The CSO analyses mortgage transactions at nine financial institutions : Ulster Bank, Allied Irish Banks, Bank of Ireland, ICS Building Society (part of the Bank of Ireland group), the Educational Building Society, Permanent TSB, Belgian-owned KBC, Danish-owned National Irish Bank and Irish Nationwide Building Society. The indices are 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 indices are averages of three-month rolling transactions.

Cash transactions: Even though the launch of the property price register at the end of September 2012, was six months ago, we still don’t have a monthly index covering all reported transactions.  DAFT.ie has begun the work to produce hedonic indices based on all the transactions made available by the Property Services Regulatory Authority, transactions dating back to January 2010. Daft.ie now produces every three months an index based upon the Property Price Register, and as that Register gets more data, you can expect the Daft.ie to overtake the CSO’s own index.

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, in Dublin in April 2007 at €431,016 and outside Dublin in January 2007 at €267,987. If, and it is a big “if”, you were to take PTSB/ESRI prices as sound and comparable to prices captured by the CSO series, then these would be the average prices today:

Nationally, €154,232 (last month €156,855, peak €313,998)

In Dublin, €188,429 (last month €189,396, peak €431,016)

Outside Dublin, €137,531 (last month €141,415, 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? Apartments fell by 7% nationally and in Dublin, and that might reflect low volumes, but all categories in all areas declines. The March 2013 decline of 0.5% is less than the 1.5% decline in February 2013.

 Are prices still falling?After four months of consecutive declines, you would tend to say “yes” prices are still declining. And the decline in Dublin of 0.8% was greater than the 0.3% outside Dublin.

How far off the peak are we? Nationally 50.9% (52.0% in real terms as we have had inflation of just 2.4% between February 2007 and March 2013). Interestingly, as revealed here, Northern Ireland is some 56.3% from peak in nominal terms and 63.2% 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 – note January 2013 Fitch and S&P being inserted shortly].

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 in Ireland are now down 31.7% from November, 2009.  The latest results from the CSO bring the index to 775 (29.0%) meaning that NAMA will need see a blended average increase of 29.0% in its various property markets to break even at a gross profit level.

The CSO index is a monthly residential property price index calculated from mortgage-based transactions. The main other index is that produced by Daft.ie based on the Property Price Register. There are four other residential price surveys, based on advertised asking prices or agent valuations (see below, details here). In addition Phil Hogan’s Department of the Environment, Community and Local Government produces an index based on mortgage transactions, six months after the period end to which the transactions relate, and which is not hedonically analysed – it is next to useless, and as some might say is a reflection of Minister Hogan, the Department will continue to produce these indices at a “marginal cost”.

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We are living through a Golden Age of enlightened governance with the Troika managing our affairs

A theme examined on here before – here and here for example – is the unprecedented benefit to the well-being of this State from oversight by the bailout troika. It mightn’t feel like it to us now, with austerity budget after austerity budget, a collapse in living standards, high unemployment, emigration and scary debts, but really this misses the bigger picture as regards governance – the mistakes were made in the 2000s and the present period is about dealing with the mess from that legacy. When future historians look back at the big-picture history of Ireland, they are likely to conclude that Ireland in 2010-2015 enjoyed a Golden Age of enlightened governance. I say “2015” because, although we will receive the last of the bailout funds at the end of 2013, the Troika will still continue to visit but their reviews and conclusions were become increasingly less significant to the powers that be.

There is still no sign of the new commercial leases register today on the Property Services Regulatory Authority’s website, but no doubt it will be here shortly. Because if it’s not, the Troika will demand answers when it pays us a visit in a couple of weeks for its 10th review mission. The new register is designed to promote competition and transparency in an important area of business. Unless this Government was being frog-marched into delivering it, you can bet that it would never see the light of day outside a soon-forgotten election commitment.

We’re about to get reformed bankruptcy laws, and if you think any Irish government would have scratched its ass and developed reforms, unless forced to by the Troika, then think about the history of the residential property price register. Called for in the Kenny Report in 1974, every single government subsequently praised the concept of a register and promised to implement one, but somehow none managed to do it. Michael Finneran (who? Housing minister in Fianna Fail/Green government 2008-2011) repeatedly promised working groups, progress and delivery and he was closely observed on here, still publicly proclaiming his support for what was then called a “House Price Database” but in private, nada was happening.

We’ll soon have credit registers showing what people owe so that new borrowers can make more informed decisions. We have a version of an independent fiscal advisory council. We have a legal services reform bill and we are supposed to have competition reform in the medical sector. We have the best stress-tested banks in the world, though that is not saying much. We’re meeting deficit reduction targets. Yes, we’re paying back all the bondholders but that was our decision, even if one member of the Troika was pushing it.

And today, we learn that the health minister is being sidelined by the Troika which has had enough of his guff about reforms, cutting the costs of consultants and medicines and the like, and the Troika will now be overseeing the health budget on a monthly basis. Minister Reilly might downplay the indignity of the Troika’s vote of no confidence in his ability to manage the €13bn budget, but if you just take a look at the parliamentary questions and answer below from 26th March 2013, about the outrageous price of medicines in this State, you have everything to know that, without Troika oversight, nothing will change. I, for one, will be sad when we see the back of the Troika.

Deputy Pearse Doherty: To ask the Minister for Health further to Parliamentary Questions Nos 612 and 570 of 12 March 2013, the reason the medicine olanzapine costs consumers €166 in this State compared with €9 in Northern Ireland.

Deputy Pearse Doherty: To ask the Minister for Health further to Parliamentary Questions Nos 612 and 570 of 12 March 2013, the reason the medicine atorvastatin costs consumers €33.77 in this State compared with €2.87 in Northern Ireland.

Minister for Health, James Reilly: The prices of drugs vary between countries for a number of reasons, including different prices set by manufacturers, different wholesale and pharmacy mark-ups, different dispensing fees and different rates of VAT. In recent years, a number of changes to the pricing and reimbursement system have been successfully introduced in Ireland. These have resulted in reductions in the prices of thousands of medicines.

Following intensive negotiations involving the Irish Pharmaceutical Healthcare Association (IPHA), the HSE and the Department of Health, a major new deal on the cost of drugs in the State was concluded in October last.  It will deliver a number of important benefits, including

·        significant reductions for patients in the cost of drugs,

·        a lowering of the drugs bill to the State,

·        timely access for patients to new cutting-edge drugs for certain conditions, and

·        reducing the cost base of the health system into the future.

The gross savings arising from this deal will be in excess of €400m over 3 years. €210 million from the gross savings will make available new drugs to patients over 3 years. Thus, the deal will result in a net reduction in the HSE expenditure on drugs of about €190m.

The Department and the HSE have successfully finalised discussions with the Association of Pharmaceutical Manufacturers in Ireland (APMI), which represents the generic industry, on a new agreement to deliver further savings in the cost of generic drugs. Under this Agreement, from 1 November 2012, the HSE will only reimburse generic products which have been priced at 50% or less of the initial price of an originator medicine. In the event that an originator medicine is priced at less than 50% of its initial price the HSE will require a generic price to be priced below the originator price. This represents a significant structural change in generic drug pricing and should lead to an increase in the generic prescribing rate.

It is estimated that the combined gross savings from the IPHA and APMI deals will be in excess of €120 million in 2013.

The IPHA agreement provides that prices are referenced to the currency adjusted average price to wholesaler in the nominated EU member states in which the medicine is then available.  The prices of a range of medicines were reduced on 1 January 2013 in accordance with the agreement.

The Health (Pricing and Supply of Medical Goods) Bill 2012, which was passed at Committee Stage on the 19th of March, provides for the introduction of a system of generic substitution and reference pricing. The Bill provides that when the HSE is setting a reference price for, or reviewing a reference price set for, a relevant group of interchangeable medicinal products it shall take into account the following criteria:

·        the ability of suppliers to meet patient demand for the relevant item;

·        the value for money afforded by the relevant item;

·        the equivalent prices of the relevant item in all other Member States where the product is marketed;

·        the prices of therapeutically similar items; and

·        the resources available to the HSE.

It is important to balance achieving best value for money for the taxpayer with assuring continuity of supply for critical medical products, particularly in a small market like Ireland. Consequently, the Bill aims to achieve value for money while avoiding disruption in the availability of medicines on the Irish market. This legislation will promote price competition among suppliers and ensure that lower prices are paid for these medicines resulting in further savings for both taxpayers and patients.

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Tom Lynch, CEO of the Property Services Regulatory Authority fails to deliver commercial leases database

Tom Lynch – pictured here – the former Principal Officer in, what was the Department of Justice, Equality and Law Reform and who was appointed in 2006 to run, what was then the National Property Services Regulatory Authority, has failed to deliver again. We were supposed to have a register of all post-Jan 2010 commercial leases by the end of March 2013, but there is absolutely no sign of it, and a request for comment sent to the Property Services Regulatory Authority over the weekend has not been responded to. There is no message on the PSRA website indicating a delay.

The bould Thomas has a history of late delivery. In November 2011 he told the Irish Times in relation to the residential property price register that it would be online by June 2012. In the end, we got a surprisingly basic register at the end of September 2012, and people are still picking errors out of it.

The March 2013 deadline for fulfilling what is another Troika demand to make the Irish property market more transparent, had been signposted for some considerable time, and Minister for Justice and Equality Alan Shatter has been frequently asked about it in the Dail – for example here and here and here, and when most recently asked about it in the Dail, Minister Shatter indicated that we might be seeing details of up to 20,000 commercial leases.

When this Government says that it has met all the targets in the 2010 bailout agreement with the Troika, that’s not totally true; some targets were deferred  in agreement with the Troika and some were missed, like the introduction of personal insolvency legislation. So, Thomas isn’t just not delivering in his own organization but he puts in jeopardy the delivery of terms under the bailout agreement.

Developments will be monitored on here.

UPDATE: 5th April, 2013. The Property Services Regulatory Authority has responded to say the database will not be launched “until the end of May 2013”

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Largest decline in residential property prices for a year – February 2013 CSO indices published

This morning has seen the publication of the Central Statistics Office (CSO) residential property price indices for Ireland for February 2013. 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)
• 12 months ago (January 2012)
• the start of this year (end December 2012)
• last month (January 2013)
• this month (February 2013)

The CSO’s indices are Ireland’s premier indices for mortgage-based residential property transactions. The CSO analyses mortgage transactions at nine financial institutions : Ulster Bank, Allied Irish Banks, Bank of Ireland, ICS Building Society (part of the Bank of Ireland group), the Educational Building Society, Permanent TSB, Belgian-owned KBC, Danish-owned National Irish Bank and Irish Nationwide Building Society. The indices are 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 indices are averages of three-month rolling transactions.

Cash transactions: Even though the launch of the property price register at the end of September 2012, was six months ago, we still don’t have a monthly index covering all reported transactions.  DAFT.ie has begun the work to produce hedonic indices based on all the transactions made available by the Property Services Regulatory Authority, transactions dating back to January 2010. Daft.ie now produces every three months an index based upon the Property Price Register, and as that Register gets more data, you can expect the Daft.ie to overtake the CSO’s own index.

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, in Dublin in April 2007 at €431,016 and outside Dublin in January 2007 at €267,987. If, and it is a big “if”, you were to take PTSB/ESRI prices as sound and comparable to prices captured by the CSO series, then these would be the average prices today:

Nationally, €156,855 (last month €158,323, peak €313,998)

In Dublin, €189,396 (last month €190,998, peak €431,016)

Outside Dublin, €141,415 (last month €142,092, 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? Prices nationally experienced their biggest monthly decline since February 2012. However apartments both nationally and in Dublin bucked the trend with 7.1% and 5.8% increases respectively. It seems the withdrawal of tax relief on mortgages for first time buyers at the end of December 2012 has reduced demand and prices, and although it will still take some months to form a meaningful assessment, the indications are that the withdrawal has generally led to price declines.

 Are prices still falling?After three months of consecutive declines with the declines nationally increasing, you would tend to say “yes” prices are still declining. However the decline in Dublin was 1% and this masked an increase in apartment prices of 5.8% offset by a decline in house prices of 1%.

How far off the peak are we? Nationally 50.7.9% (51.6% in real terms as we have had inflation of just 1.9% between February 2007 and February 2013). Interestingly, as revealed here, Northern Ireland is some 56.3% from peak in nominal terms and 63.2% 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 – note January 2013 Fitch and S&P being inserted shortly].

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 in Ireland are now down 31.4% from November, 2009.  The latest results from the CSO bring the index to 778 (28.5%) meaning that NAMA will need see a blended average increase of 28.5% in its various property markets to break even at a gross profit level.

The CSO index is a monthly residential property price index calculated from mortgage-based transactions. The main other index is that produced by Daft.ie based on the Property Price Register. There are four other residential price surveys, based on advertised asking prices or agent valuations (see below, details here). In addition Phil Hogan’s Department of the Environment, Community and Local Government produces an index based on mortgage transactions, six months after the period end to which the transactions relate, and which is not hedonically analysed – it is next to useless, and as some might say is a reflection of Minister Hogan, the Department will continue to produce these indices at a “marginal cost”.

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Minister announces introduction of commercial leases database in next four weeks

Thanks to the IMF and the bailout programme, Minister for Justice, Equality and Defence Alan Shatter is being frogmarched into providing transparency in the property market. Last September 2013, we had the launch of the Property Price Register which provides very basic information on residential property sales from the start of 2010. It has transformed the property market with punters now having direct access to prices without relying on the limited and sometimes compromised knowledge of estate agents.

By end of this month, we should have basic information on commercial leases which should provide transparency on rent levels across the State.

Last week, Minister Shatter confirmed in a response to the Sinn Fein finance spokesperson Pearse Doherty that the database should be published by the end of March 2013 and that it will contain the rent payable under commercial leases across the State. The Minister did not confirm in his response the scope of the leases, the hope is that all extant leases will be included.

The effect of the publication of the database should be to reignite the outrage about Upward Only Rent Review leases as commercial tenants will be able to see comparable property where rents are less than 50% of the peak levels that are locked into UORR leases. It will be interesting to see if the outrage is channeled into a better campaign to challenge the continuation of such leases, with there being at least some body of legal opinion suggesting that changes can be made, and indeed campaigners against UORR leases might have received encouragement from the recently published IBRC Act 2013 which suspended certain property rights in the common good.

The full parliamentary question and response are here.

Deputy Pearse Doherty: To ask the Minister for Justice and Equality further to Parliamentary Question No. 823 of 6 November 2012, if he will confirm that the commercial leases database will be published by 31 March 2013; the information that will be available; and if he will make a statement on the matter.

Minister for Justice and Equality, Alan Shatter: Section 87 of the Property Services (Regulation) Act 2011 provides that the Property Services Regulatory Authority (PSRA) shall maintain and establish a database relating to commercial property leases. Section 87 further provides that the database shall, in respect of each relevant commercial lease which is in force, contain the following information: the address and description of the commercial property the subject of the lease; the date of the lease of the property; the term of years of the lease; the rent payable in respect of the property, and certain particulars to be provided to the PSRA in accordance with Section 88 of the 2011 Act.

I am advised by the Authority that work on the preparation of the Database is ongoing with the aim of publishing the Database by the end of March 2013.

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Declines in property prices accelerating – January 2013 CSO indices published

This morning has seen the publication of the Central Statistics Office (CSO) residential property price indices for Ireland for January 2013. 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)
• 12 months ago (January 2012)
• the start of this year (end December 2012)
• last month (December 2012)
• this month (January 2013)

The CSO’s indices are Ireland’s premier indices for mortgage-based residential property transactions. The CSO analyses mortgage transactions at nine financial institutions : Ulster Bank, Allied Irish Banks, Bank of Ireland, ICS Building Society (part of the Bank of Ireland group), the Educational Building Society, Permanent TSB, Belgian-owned KBC, Danish-owned National Irish Bank and Irish Nationwide Building Society. The indices are 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 indices are averages of three-month rolling transactions.

Cash transactions: With the launch of the property price register at the end of September 2012, the continuing relevance of a mortgage-only index from the CSO may be short-lived. Already DAFT.ie has begun the work to produce hedonic indices based on all the transactions made available by the Property Services Regulatory Authority, transactions dating back to January 2010. Daft.ie now produces an index based upon the Property Price Register, and as that Register gets more data, you can expect the Daft.ie to overtake the CSO’s own index.

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, in Dublin in April 2007 at €431,016 and outside Dublin in January 2007 at €267,987. If, and it is a big “if”, you were to take PTSB/ESRI prices as sound and comparable to prices captured by the CSO series, then these would be the average prices today:

Nationally, €158,323 (last month €159,291, peak €313,998)

In Dublin, €190,998 (last month €190,035, peak €431,016)

Outside Dublin, €142,092 (last month €144,401, 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? The jury was out as to whether the withdrawal of tax relief on mortgages for first time buyers at the end of December 2012 would reduce demand and prices, and although it will still take some months to form a meaningful assessment, the indications are that the withdrawal has generally led to price declines. However in Dublin in January, 2013, prices actually rose and apartment prices rose by 3.3% in Dublin and houses rose to 0.3% and apartments nationally rose 2.6% in the month.

Are prices still falling? Difficult to say, but it after two months of consecutive declines, you at least have pause for thought. We have a decline in January of 0.6% following the December of 0.5% that follows six months of relative stability. There was an increase of 1.1% in November, a decline of  0.6% in October and increases of 0.9% in September 2012 following a 0.5% increase in August 2012 and 0.2% in July and a decline of 1.1% in June, an increase of 0.2% in  May following a decline of 1.1% in April 2012, it was flat in March 2012 which followed a 2.2% decline in February 2012, 1.9% monthly decline in January 2012, 1.7% decline in December 2011, 1.5% decline in November  2011, 2.2% decline in October 2011, 1.5% decline in September 2011 and 1.6% decline in August 2011.

How far off the peak are we? Nationally 49.9% (50.5% in real terms as we have had inflation of just 1.2% between February 2007 and January 2013). Interestingly, as revealed here, Northern Ireland is some 56.3% from peak in nominal terms and 63.2% 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 – note January 2013 Fitch and S&P being inserted shortly].

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 in Ireland are now down 30.4% from November, 2009.  The latest results from the CSO bring the index to 779 (28.4%) meaning that NAMA will need see a blended average increase of 28.4% in its various property markets to break even at a gross profit level.

The CSO index is a monthly residential property price index calculated from mortgage-based transactions. The main other index is that produced by Daft.ie based on the Property Price Register. There are four other residential price surveys, based on advertised asking prices or agent valuations (see below, details here). In addition Phil Hogan’s Department of the Environment, Community and Local Government produces an index based on mortgage transactions, six months after the period end to which the transactions relate, and which is not hedonically analysed – it is next to useless, and as some might say is a reflection of Minister Hogan, the Department will continue to produce these indices at a “marginal cost”.

 

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UK residential property flat in the month of January 2013

The Nationwide Building Society has published its UK House Price data for January 2013. The Nationwide tends to be the first of the two UK building societies (the other being the Halifax) to produce house price data each month, it is one of the information sources referenced by NAMA’s Long Term Economic Value Regulation and is the source for the UK Residential key market data at the top of this page.

The Nationwide says that the average price of a UK home is now GBP 162,245 (compared to GBP 162,262 in December 2012 and GBP £162,764 at the end of November 2009 – 30th November, 2009 is the Valuation date chosen by NAMA by reference to which it values the Current Market Values of assets underpinning NAMA loans). UK prices are flat over the the past 12 months and are now 12.8% off the peak of GBP £186,044 in October 2007. Interestingly the average house price at the end of January 2013 being GBP £162,245 (or €189,470 at GBP 1 = EUR 1.1648) is 19% above the €159,291 implied by applying the CSO December 2012 index to the PTSB/ESRI peak prices in Ireland.

With the latest release from Nationwide, UK house prices have decline 0.3% since 30th November, 2009, the date chosen by NAMA pursuant to the section 73 of the NAMA Act by reference to which Current Market Values of assets are valued. The NWL Index is now at 781 (because only an estimated 20% of NAMA property in the UK is residential and only 29% of NAMA’s property overall is in the UK, small changes in UK residential have a negligible impact on the index) meaning that average prices of NAMA property must increase by a weighted average of 28.0% for NAMA to breakeven on a gross basis.

According to the Nationwide this morning, the outlook for 2013 is subdued but recent developments in the provision of credit may lift activity slightly

“While activity in the housing market remains muted by historic standards, there have been tentative signs of a pick up in activity in recent months.  The Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pick up in lending activity.”

The UK economy is suffering difficulties almost every bit as challenging as those in the EuroZone and Ireland. Sure, they have their own currency and they’ve printed GBP 300bn of it in an economy with a GDP of 1.5tn, to help inflate their problems away. And yet they appear poised for a triple dip recession.  In December 2012, the UK’s independent Office for Budget Responsibility published its latest fiscal outlook which forecasts GDP for 2012 at -0.1%, 1.2%, 2.0%, 2.3%, 2.7% and 2.8% (but as with all economic forecasts in the long term, all forecasters forecast a peachy outlook). Deficit:GDP is forecast as -5.7%,-4.6%,-3.7%,-2.8%,-1.4% and -0.4% between 2012-2017. Debt:GDP is forecast at 90.3%, 93.5%, 96.3%, 97.4%, 96.6% and 94.4%. Inflation is forecast at 2.8%,2.5%,2.2% for 2012-2014. It expects residential prices to increase 0.7%/ 3%/ 3.8%/ 4%/ 4% in 2013-2016 and commercial property to change -2.1%, 1.0%, 3.1%.3.6%, 3.9% and 3.5%  in 2012-2017.

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