THE head of Ireland's auctioneers and the former Finance Minister Ray MacSharry have clashed over the future of the so-called 'ghost estates' left over from the property boom.

President of the IAVI (Irish Auctioneers and Valuers Institute) Aine Myler has suggested that some new estates may have to be demolished altogether as part of an ongoing effort to restore stability to the property market.

Speaking to the Sunday Independent at the IAVI's annual conference in Dublin on Friday, Ms Myler said that as a result of poor planning and a lack of infrastructure, some of the country's newer housing stock may never be required.

Asked what could be done with these developments, Ms Myler said: "It's really difficult to know. It shows up a number of issues that emerged during the boom, where there was poor planning, the building of large estates where there was no infrastructure, no transport links and other links which have probably diminished in the meantime as a result of the retraction of services."

And while she readily conceded that there was a "huge national demand" for social housing, she went on to say that it would be unfair to place anyone in an estate if they did not want to live there.

She said: "We have a huge national demand of people who need housing from a social perspective, and yet that housing might be in locations where it's not required. Is it fair to ship people out to that location just because there happens to be an empty house there?

"I haven't heard any viable proposals about what to do other than to potentially knock down some of these developments."

Ms Myler's belief that demolition might be the only alternative for certain developments was met with total disagreement from Mr MacSharry.

"It shouldn't be the case under any circumstances that any construction should have to be knocked down," said the former finance minister credited with pulling Ireland out of the last recession.

"The country will survive. Why knock down structures that you know you are going to need in two, five or seven years? It's a ridiculous suggestion as far as I'd be concerned."

Offering his own view on the matter of the oversupply of housing across the country -- estimated last week to be as high as 300,000 units -- he said: "My own view has always been that the overhang should be purchased by local authorities to get rid of housing lists and the waiting lists. That would do a number of things. It would get rid of the housing list and it would generate activity in the housing sector."

But while the IAVI president drew the ire of Mr MacSharry for her views, she did receive some support from a more unlikely quarter.

Commenting on the matter, director of Social Justice Ireland (SJI), Fr Sean Healy, said: "People build estates in the wrong places where people don't live and consequently it's not possible for those estates to be viable. It makes no sense to ship people into communities that would be non-viable where some of these housing estates actually exist."

Citing examples in the counties of Roscommon and Leitrim as just two cases in point, he added: "One new estate in Roscommon that was built during the boom years, as far as I know there's nobody occupying any of the houses. It is a very small place. There is no way you can put 50 new households in there and have it viable.

"In another estate in Co Leitrim there were hundreds of houses built. Many of them are now not occupied. There is no viable support system for people on social housing in that context, so it makes no sense to move people into housing estates that have been built with no potential to be economically viable. They are (only) economically viable for people who have been living there all their lives."

The SJI director concluded by saying: "People who took the risks and put them there, maybe they see a possible future if they hold on to them long enough that they could be used as holiday homes in the summer, or for people who want a second home or something, I don't know.

"My reaction to it, in part at least, is that these were built on the basis of economic incentives and forecasts that were simply nonsensical and as a result people who built them are now left holding them and they have to find solutions."

Commenting on the overall prospects for Irish residential property, meanwhile, the IAVI president said she believed a three-tier market was now emerging.

"It will be a three-tier market, and we've seen already how that's started to divide up around the country where you have some activity at affordable levels in Dublin, a level of activity in other places, and then places where there is no activity," she said.


Report by RONALD QUINLAN - Sunday Independent

Most do not believe worst is over for economy...

A majority of voters do not believe Brian Lenihan’s claim that the worst is over for the economy but they strongly back his decision to remain in office as he battles with cancer, according to the latest Irish Times /Ipsos, MRBI poll.

Asked if they accept the Minister for Finance’s view that the worst is over or if they believe that the worst is yet to come, 61 per cent of voters said the worst is yet to come while 31 per cent believe it is over and 8 per cent have no opinion.

In party terms, only Fianna Fáil voters believe the worst is over with the supporters of all other parties saying it is yet to come. Younger voters are more inclined to the view that the worst is over while the over-65s are the most pessimistic.

Asked if Mr Lenihan is right to remain in office as he battles with cancer, 70 per cent of voters say he is, while 23 per cent say he is not and just 7 per cent have no opinion.

The strongest support for Mr Lenihan remaining in office comes from Fianna Fáil voters with 82 per cent supporting his decision to stay on. There is also strong support for his decision among supporters of other parties with 71 per cent of Fine Gael voters and 66 per cent of Labour voters supporting him while the figure drops to 55 per cent among Sinn Féin voters.

Middle-class voters are more strongly supportive of the Minister’s decision than working-class voters and older people more inclined to back his continuation in office than younger people but support for his decision is strong in all categories.

The poll was taken on Monday and Tuesday of this week among a representative sample of 1,000 voters aged 18 and over in face-to-face interviews at 100 sampling points in all 43 constituencies. The margin of error is plus or minus 3 per cent.

Regarding the budget, a clear majority of voters do not believe that the €4 billion package of spending cuts announced in it was fair.

Asked if they thought the package was broadly fair or unfair 65 per cent said it was unfair and 32 per cent said it was fair.

Fianna Fáil voters are equally divided on the issue but supporters of all of the other parties are inclined to the view that it was unfair. Sinn Féin voters are the most hostile with Fine Gael voters least hostile although a clear majority of them believe it was unfair. In age terms the over-65s are most inclined to believe the budget was fair, probably reflecting the fact that pensions were exempt from the cutbacks. In regional terms voters in Dublin are the most hostile.

When asked if the Government should put more emphasis on spending cuts or increasing taxes to further reduce the deficit in next year’s budget, there was a substantial majority for spending cuts.

A total of 55 per cent say the emphasis should be on spending cuts with 28 per cent opting for tax increases and 17 per cent having no opinion.

There are some striking differences between the supporters of different parties on the issue. Fianna Fáil and Fine Gael voters share almost identical views on the issue with 62 per cent of Fianna Fáil supporters and 60 per cent of Fine Gael voters backing further spending cuts.

Among Labour supporters the number supporting spending cuts drops to 52 per cent, among Sinn Féin voters the figure is 53 per cent and among Green Party voters it drops to 36 per cent.

The only party whose supporters back tax increases rather than spending cuts is the Greens.

On the issue of the banking inquiry, an overwhelming 91 per cent of voters said they wanted to see an inquiry into the crisis. Most of the polling was done before the Government announced the form of the inquiry but the strength of the public mood on the issue is clear from the result. There is massive support for an inquiry into the banking crisis across supporters of all political parties, across all regions, all age groups and social classes.


Report by STEPHEN COLLINS - Irish Times

House prices are now at 2003 levels as almost €100,000 has been wiped off the value of an average home.

The price of property has plummeted by a massive 31.5pc since the peak in early 2007.

Data published by the Permanent TSB/ESRI house price index outlined that the pace of property price declines escalated in 2009, with prices tumbling 18.5pc over the year compared to a fall of 9.1pc in 2008.

The standard house price in the country is now €213,000 and the figures deteriorated as the year progressed, with an 8.5pc fall in average prices in the last three months of the past year.

Niall O'Grady, general manager of business strategy at Permanent TSB, described 2009 as a "horrendous year" for the Irish housing market.

"The pessimist will say there's worse to come. The optimist will argue that affordability has improved so much that things will stabilise soon. But the realist will admit we'll have to wait and see," he said.

Separate research from Goodbody has indicated that there are between 103,000 and 144,000 vacant homes in the country.

Analyst Dermot O'Leary from Goodbody said the vacant houses "may not be in the right place".

"Ireland is still dealing with the legacy of the housing boom, but a two-speed market will emerge in the coming years with urban areas having less oversupply, like Dublin in particular, recovering first," he said.


Report - Evening Herald

Shocking new probe shows 302,000 homes are left empty...


More than 300,000 houses are lying empty around the country -- three times the official estimate, says a team of academics.

The scale of vacant housing -- equivalent to half of all homes in Dublin -- could be enough to meet demand for years to come.

The figure was worked out by the National Institute of Regional and Spatial Analysis (Nirsa), based at NUI Maynooth, which advises the Government.

It is up to three times the estimate from Housing Minister Michael Finneran, who last week told the Cabinet there were between 100,000 and 140,000 houses lying empty.

The construction industry suggested it was 40,000.

NIRSA director Prof Rob Kitchin said he decided to calculate accurately the extent of empty housing because official figures do not exist -- only estimates.

Along with colleagues, he used the GeoDirectory (Ireland's national address database), the 2006 Census and Department of Environment figures based on ESB connection points.

They concluded that 302,625 houses are empty, including properties for rent or for sale, homes not on the market for various reasons as well as abandoned houses.

The figure does not include the estimated 49,000 holiday homes in the State.

Oversupply

Prof Kitchin said the scale of available housing should turn the construction industry away from housing and towards infrastructure -- particularly the supply of broadband, energy supply, roads and public transport.

"I would say there is a few years' worth of housing supply there," he said. "Particularly in the rural counties, where there is a huge oversupply of housing."

But he added there were questions about whether the surplus housing was in areas where it was needed when the economy begins growing again.

"The higher rates of vacancy tend to be in the counties that don't have large towns," he said.

"So there is 30pc vacancy in Leitrim while Dublin which has the lowest at just under 10pc."

It is believed there are around 200 so-called 'ghost estates' -- developments built over the past few years that remain unsold -- among the overall empty housing stock.



Report by Brian Hutton - Evening Herald

Home repossessions will soar as 6,400 are in arrears...



AN avalanche of repossessions is now expected after new figures show close to 6,400 people stopped paying their mortgages more than a year ago.

The number who have failed to pay their mortgages for a period of 12 months or more is three times the level it was at a year ago. These homeowners are now almost certain to have their homes repossessed.

Pressure

And struggling homeowners face renewed pressure from next month, which will be the first time Bank of Ireland and AIB will be able to begin new legal proceedings against homeowners who have failed to pay their mortgage for a year.

A moratorium agreed with the Government forced the banks to wait a year before starting legal action to repossess homes from those who failed to pay their mortgages.

Many of the 6,400 people at dire risk of losing their homes should not have been given their mortgages as they had no hope of repaying them, mortgage experts said.

These bad lending decisions by banks and building societies will have to form a core part of any inquiry into the banking system, the detail of which is due to be announced by the Government today.

The new figures came as the High Court granted 12 possession orders against property owners -- including one investor who lost seven properties as a result of outstanding debts of €2.3m.

Ireland's largest banks, including Bank of Ireland, AIB and Ulster Bank, were among the lenders seeking repossession orders against property owners and investors who have fallen into arrears.

The numbers in mortgage difficulty are likely to escalate over the coming months as funds-starved lenders prepare to hike mortgage rates.

The new figures emerged in a report on the Irish mortgage market by the credit rating agency Moody's, which said that in November some 0.8pc of residential mortgages had not been paid for 360 days or more. This works out at just short of 6,400 mortgages.

There are some 791,000 residential mortgages outstanding in Ireland, according to the Financial Regulator.

More than 26,000 of these homeowners are in arrears of three months or more, the Regulator said just before Christmas. It said 17,767 have not paid their mortgage for six months or more. But the figures did not say how many homeowners had gone a year without making a payment.

Almost one home a day was repossessed last year.

The revelations come at a time when Permanent TSB is poised to hike its standard variable mortgage rate by 0.5pc. Other lenders are expected to quickly follow.

Banking analysts said yesterday that this was likely to be followed by another 0.25pc rise.

Hikes

Karl Deeter of Irish Mortgage Brokers said the hikes in standard variable rate mortgages were likely to prove to be a tipping point for many mortgage holders.

Senior researcher with the Free Legal Aid Centres Paul Joyce said that the new figures on those a year in arrears were disturbing.

Some 331 houses were repossessed last year, but end-of-year figures show that almost 1,000 new repossession orders were initiated in the High Court -- a 27pc increase on 2008.


Report by Charlie Weston - Irish Independent

The fall in house prices left many homeowners in negative equity, but this need not necessarily prevent you from trading up...


IT'S the topic no one wants to talk about, but this elephant has no plans to leave the room. Negative equity happens when the value of your property on the open market amounts to less than the sum of your mortgage.

If you bought a house within the past five years, you are likely to be in negative equity to some degree.

The average household is sitting on negative equity estimated at €43,000, according to Irish Independent calculations based on a recent report by Goodbody Stockbrokers.

It was estimated that 116,000 households were in negative equity at the end of 2009, rising to nearly 200,000 by the end of this year, according to the Economic and Social Research Institute.

However, this is a conservative estimate based on prices falling by 24pc from their peak in 2007. If house prices end up falling by 50pc, this figure would rise to 350,000.

It is generally expected that when the National Asset Management Agency is established and house prices start to recover, they will do so only very slowly and steadily. But this means that thousands of us may be stuck in negative equity for quite a number of years. This may not be an issue for you if you plan on staying where you are for the foreseeable future.

You may also have just enough of your mortgage paid off that it will not prevent you from trading up in the short to medium term. However, if your LTV (loan to value ratio) is still above 70pc or so, the financial challenge of trading up takes on a new dimension.

Kevin McNerney, director of the Mortgage Finance Company, says most first-time buyers borrowed between 90pc and 100pc of the purchase price.

"This leaves people in a position whereby, even if they wanted to sell the property and rent something for a few years, they would need to come up with a large lump sum to hand over to the mortgage provider, just to clear their mortgage debt." He estimates that if someone wanted to trade up, they would also have to come up with an additional lump sum ranging from 8pc to 20pc of the purchase price of the new property.

"If they buy a second-hand house they will need to have money for their stamp-duty also."

But what if you definitely need to move at some stage within the next five years? Is there anything you can do to prevent negative equity from scuppering your plans?

Depending on your circumstances, the ultimate answer may be no, but at the same time there seems to be little point in just waiting and hoping.

"If someone feels that they will need to trade up their property within the next three to five years, then the only option available really is to start putting additional money aside each month to enable them to have a lump sum set aside for when the time comes," says Mr McNerney.

For those who may need to move in three years' time, Patricia Foskin, of Waterford-based mortgage brokers Foskin Mortgage & Finance, suggests fixing mortgage rates now for the next three years. Depending on the lender, three-year fixed rates start from 3.19pc.

"This way they can avail of the current low rates for the next three years and save as much as possible by opening a regular savings account, where there are rates available of up to 4pc at the moment," she says.

Karl Deeter, operations manager at Irish Mortgage Brokers, says: "I think that it really comes down to what you can afford. If you can repay a little extra on your mortgage, now is a great time because with rates so low you will eat into capital in a more rapid fashion." For those on a cheap tracker mortgage, Mr Deeter suggests putting surplus funds into a high-interest savings account, so that you have the flexibility to decide what to do with it, whether as a down payment against another property or to pay off a lump sum on your existing mortgage.

However, he warns that whatever you do, it is vital that your credit score stays good as missing even a single mortgage payment could create more difficulties, particularly as banks become much more conservative about their lending.

"People need to find a way to avoid damage from the downturn as much as they need to find ways to get themselves lined up for any future move," he said. He also recommends overpaying your mortgage, but warns that those on fixed rates will not be allowed by their lenders to overpay, or will have to pay a penalty for doing so that will negate the overpayments in the first place.

You should also assume that property prices will not increase when determining how much you need to put by in order to clear the negative equity portion of your loan and also raise a deposit for a new property.

"This will help you to work out how much you need to be putting aside every month," says Mr McNerney.


Report by John Cradden - Irish Independent