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Updated 9.23am
THE FINANCE MINISTER has denied suggestions that a property bubble is developing in Dublin.
Mortgage arrears were also discussed by the Finance Committee, with Ulster Bank revealing that a split-mortgage product could be offered to retired customers.
Speaking in the Dáil, Minister Michael Noonan outlined that property prices nationwide are also still 47 per cent lower than their peak in September 2007.
He added that although prices and rents have risen over the past two years, the increase pales in comparison to those from the boom years.
The level of mortgage lending, which he said increased dramatically leading into the last property bubble, is also 8 per cent of its peak of €2.4 billion in 2006.
The minister outlined four main reasons why their isn’t a property bubble:
Noonan also noted a number of measures introduced by government to alliterate a shortage in housing stock.
“These included, subject to state aid approval,” he explained, “the extension of the living city initiative to include Cork, Galway, Kilkenny and Dublin and the broadening of eligibility criteria to include all buildings built prior to 1915.”
He added that Nama is releasing property market “that takes account of the market’s capacity to absorb them”.
The minister had been questioned on the topic by People Before Profit TD Richard Boyd Barrett, who accused Noonan of showing “an unwillingness to acknowledge the seriousness of the issue”.
Split-mortgages
The Finance Committee also touched on the subject of property yesterday, with Ulster Bank’s Chief Risk Officer Stephen Bell revealing that approaches had been made to the Central Bank on offering retired customers a split-mortgage product.
David Hall of the Irish Mortgage Holders Organisation (IMHO) told this website as long as these are affordable, it would be a positive move.
However, the focus should be on mortgage-to-rent schemes.
He also accused the Ulster Bank of “moving their customer care centre down to the Four Courts”, as the bank detailed how over 4,000 mortgages are currently in ‘legal processes’.
“The mortgage-to-rate system needs to be urgently reviewed,” he said, noting that it’s a ‘very helpful product’ but is taking too long to process.
“When you have 4,000 repossessions going on you shouldn’t be focused on a split product”.
He added a benchmark against the state pension would be important for split-mortgages in retirement, and warned that some have complex conditions.
Originally published 8.36am
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What have prices in 2007 got to do with anything. Its all about affordability. Houses in Dublin city are not affordable. 2007 prices are not the benchmark affordability is. Why keep repeating this soundbite it doesn’t make it true.
Well said Adrian, totally agree with you. Government out of touch with reality.
Its FG here we are dealing with adrian, more importantly its Micheal noonan, the biggest fool belonging to the biggest gang of fools this country has ever seen.
Noonan wants the banks to be able to regard the mortgages on these properties as “assets”. A new property bubble is emerging as NAMA sell many of these loans… Very strange rationale…
“The frenzy has started again. Six years after a property boom practically destroyed our economy, we are at the same nonsense again. When are we ever going to learn that buying and selling over-priced houses to each other is not going to make us rich, but will make us poor?
“At the moment, there is no credit in the system and no leverage, but this won’t last. Credit will find its way back into the Irish property market in time and then we will, yet again, take our seats in the rollercoaster, with predictable results.
“….This process will drive an even bigger financial wedge between the first-time buyer and the old cash buyer, exacerbating the sense of a housing crisis, when there needn’t be a crisis at all.
“Ultimately, in an environment of zero eurozone rates, new credit will come in as it always does and we will be off again into bubble territory. Except this time we won’t even have the demographics to support it.
“We’ve been here before. We know how this story ends.”
David McWilliams – April 7, 2014.
How will people ever get out of negative equity if prices don’t rise? We need inflation of 2% and property prices are a big part of that. Otherwise private and public debt will just get bigger and bigger. Some people think the price of everything can stay the same for ever. The real world is not like that
Joe, there are many more ways to increase inflation than just property.
Joe, the reason people are in negative equity is because house prices were over priced and people still bought them. You want this to happen again?
Joe, usually inflation leads to interest rate rises. If that happens you won’t be able to pay your mortgage anyway. But we have confidence that the Eurozone interest rate will remain stable, so Noonan can pretend nobody is noticing him recapitalising the banks by restoring “value” to their mortgage books.
This leads to a closed property market for most.
Hell how are ordinary people supposed to get a mortgage in the first place? What with rock bottom wages and zero hour contracts, huge rents so as to subsidise landlords property taxes and upcoming water charges. What banker in their right mind is going to loan even the minimum amount required to buy property? Does Noonan really think we’re all earning salaries like he is? The very fact that house prices are rising only goes to show how many people actually made a lot of money during the tiger times. Ordinary people in ordinary jobs will never be in a position to buy property.
Affordability is not the issue, supply and demand is the issue.
Right now, supply and demand are both at historically low levels but prices are still creeping up.
Supply hasn’t a hope of catching up with the pent-up demand so we will see a strong rise in prices once people have greater access to finance.
Affordability is a whole other kettle of fish that the Government can do very little about, especially when it comes to nice semi-d’s in the suburbs.
I’ll think you will find that the biggest gang of fools in the country got us into this mess i.e. FF. Then again I can’t see FG doing any better. Doesn’t look like I’ll be home anytime soon the way things are going.
Are Michael Noonan and Alan Shatter the 2 largest landlords in the country? If they are,arent they acting like vested interests?
People complain about low wages and having no money. If deflation continues there will be no increases in wages for anyone. If no one has any money then who is buying all the houses?? It appears cashed up Irish are coming home from Australia etc with large deposits of cash enabling them to push the prices up. I live in oz and I’ve noticed this growing trend in recent years. However its only small numbers really compared to the amount buying in the 2000s. It’s not ideal for cash strapped people at home, but what can noonan do about it? House price affordability is not within control of the government. We need more houses in Dublin especially, that may help drive down prices. However if developers start building again, people will complain about greedy developers getting on the saddle again. People can complain all they like but if inflation does not rise in Ireland no one will have any money or be able to buy a house.
The important stat in the article is not the price of houses compared to 2007, but the amount of money in mortgages being given out compared to 2006. At 8% of 2006 levels, we are very safe in the knowledge that there will be no repeat of the property bubble anytime soon.
The interests of the landlord class which have always been placed above the common social good in Ireland. If the state was truly interested in the welfare of society at large, it would use the taxation and legal systems to encourage owner occupier home purchase and strongly discourage property speculation.
As long as housing is treated as a profit center for the rentier elite and assorted vested interests, we will suffer the consequences as a society as demonstrated in the property bubble and crash and the current housing shortage crisis.
The Anti Austerity Alliance are calling for the following measures to address the Housing crisis and are running 41 candidates in the local elections next May.
• Introduce rent controls to stop profiteering in the private rented sector.
• End the rent allowance cuts.
• All vacant and Nama housing to be immediately passed over to councils and their suitability assessed for social housing.
• Stop the waste of taxpayers’ money in subsidies to private landlords.(€400m annually).
• Invest in public housing. For example, the €400 million annually given to private landlords could build 3,200 family houses. These homes rented out can generate funds for local councils.(€400m could provide at least 3,200 3 bed houses, based on Dept and Threshold figures of €125,000 per build
• For a general write-down in mortgages to their real value and to keep people in their homes.
• Lift the income eligibility for social housing.
• Provide the resources to rapidly refurbish and re-allocate council housing. End the boarded up houses scandal.
• AAA candidates elected as councillors will demand public housing.
Completely agree, house prices in 2007 were at absurd levels, some in Dublin more expensive than their central London equivalents! Saying they’re 47pct lower is an entirely useless comparison
Will personally, I’ve definitely learned my lesson from the last few years.
Last time round I DIDN’T go mad, DIDN’T take the “free money” of loans, half a million euro mortgages etc because I figured it would be a disaster if something changed in my circumstances.
Wasn’t I the bigger idiot as I’ve ended up paying for it all anyway through higher taxation, rents, cost of living increases etc whereas those who did go mad are now crying poverty and getting massive write-offs from the same banks that are now charging us fees on top of the money we’ve already stumped up for them.
Next time (and it IS starting again – I personally know someone who got a call from his bank in the last month asking if there was anything they could do for him) I’ll be ready.. nexdt time I’ll take every cent they offer because when it all falls apart again I’ll be no worse off than I am now AND I’ll have my house!
Doing things right in this country only leaves you exposed to being screwed over even more!
NAMA is selling off its properties to foreign investors. These investors are wealthy cash buyers, coming from places like China, Russia, and America, snapping up properties at a bargain rate, and leasing them at a premium rate. This is fuelling a speculative rental bubble, which in turn is artificially increasing house prices, as there are many dwellings that do not have people living in them, held by NAMA.
The State should, as you know, we pay taxes – the funding of several building developments in PPP. House prices in the Celtic Tiger era were ridiculously overpriced for what you got, especially in comparison to other similar sized cities.
The government also needs to better regulate the rental market, by applying proper rental standards, applying rent controls and being meticulous in relation to what can be classed as a rental accommodation.
So reading between the lines… We are in trouble, here comes another bubble and prices will double!
Comparing current prices to 2007 is a farce. Prices in 2007 were in cloud cukoo land.
Yes, prices were in cuckoo land but so were wages. The cost of housing is rising but wages are not. I pay rent and each year I’m left with proportionately less money afterwards as my rent rises. And I see most around me in a similar position. Noonan analysis will reap rewards for the big players in society at the expense of the smaller guys unless housing policy changes.
Lorna. Your last sentence sums the whole charade up perfectly.
Bubble? What bubble?
Is that you in disguise Bertie?
Ah shur house prices are 47% less than 2007! Tis grand!
I happened to come across the tweets of a well known ‘high end’ estate agent in Dublin who was trying to argue with another tweeter that an increase in house prices would be good for those … wait for it… in negative equity… and builders because …it’s not really worth their while at present … FFS. Nothing about those who were prudent and rented while those around them went stone mad. It’s seems those who made mistake should be absolved from their sins…
There’s a quiet and concerted effort by those with vested interests to have the housing market ‘bubble up’ and rise again. To use the phrase of a well known former Garda, it’s ‘quite disgusting’.
Breaking news: Noonan sits with his fingers in his ears, rocking back and forth and chanting “la la la it’s not happening, it’s not happening”.
I presume Noonan adopts the same head-in-sand approach to the fact we still have about a €10B budget deficit year on year, increasing the national debt. Of course, when historically low interest rates end which they inevitably will, be it tomorrow or a few years down the line, we’re screwed totally.
Of course, Noonan, Kenny, Gimmemore & co. will have long since gone off into the sunset with their gold plated pensions so why should they care longer term than beyond the next election.
My landlord just let us know that in June she will increase the rent of our Dundrum house by 20%. This government lives in denial or consists of landlord. Who the hell can keep up with this pace.
We’ve got a housing crisis on our hands and all he wants to do is rattle off a few irrelevant statistics. … typical.
Cocaine cost 50% less than it did in 2008
Cocaine’s a hell of a drug
Comparing property prices today to those in 2007 is stupid. In 2007 we were on the way up a very steep hill that had a very severe drop on the other side. How about learning from past mistakes and not climbing the same stupid hill again?
Deny the facts and hope the issue goes away. Standard governmental approach. The problem is clear for all to see. Deal with tenancy laws and rising rents in order to stabilise the market
I’m forever blowing bubbles
Pretty bubbles in the air
They fly so high
They nearly reach the sky
Of course with noonans lovely salary he cannot see whats the problem at all!!
Noonan is a big landlord, It suits him to make housing affordable for ordinary people and for property values to rise.
Unafordable! sheesh!
Higher property prices means higher property tax, simples
Here we go again…….
Can they not learn from what went on before?
They should be looking to stabilise house prices at cost to rebuild + x%.
Then once the economy is back on track and we are in a more normal environment then let free market forces dictate the property price.
So, price controls?
For now
Fair enough.
I prefer to think someone selling a house should have the right to sell at the best price they can get.
What price would you force houses to be sold at?
@ Jeremy
Maybe it’s a case of properties older than 10 years can be sold for what ever the market dictates.
However as there is a shortage of housing in Dublin, new builds should have a stable pricing structure. This would allow those that need them to afford them and stop the speculation that drive the hyper-inflation during the Celtic Tiger.
Also, the Government should do more to even any growth around the country.
The should work to make Cork/Waterford and Galway/Ennis/Limerick real and suitable alternatives to Dublin for Businesses.
Jeremy you are right and I’m not sure how workable it would be but if there was max increase per year that a house could increase by before incurring a heavy tax on the excess it would at least rule out all of the speculators buying up properties which would hopefully lead to a more balanced market. I haven’t fully considered this idea but it’s got some potential if it was drawn up correctly.
This government are a bunch of fools living in there own ivory castle called the Dail.
From the fiasco of the property tax,Irish Water and now in total denial over the runaway prices of houses in Dublin and surrounding areas. Wake up.Its happing again.The bubble is inflating.By the time it bursts the Minster for finance will be sitting back on his fat pension laughing at us poor little people again
Michael, 2007 property price levels were a tad unreal, weren’t they? So it’s not too clever to be benchmarking current verses 2007 prices, to justify why current market dynamic is not another property bubble in the making.
Remember period to 2007, Michael; all that cheap money, the mad banking practices, the poor regulation, the absence of proper and effective management and long-term planning at government level. You appear to have suffered a memory lapse on this one, Michael, and you were doing so well, on turning the country around! Must be a bout of election fever!
All in Leinster House should be thinking and planning on formulating proper policies for of the long term economic future of Ireland and it’s citizens and not just on next Election Day.
The mad governance continues apace as the citizens sit and wait patiently for economic upturn.
Every Government policy should be directed to keep housing for homes a cheap as possible. A house is not an asset it’s shelter, a basic human need. We have a social floor for education, health and welfare why not shelter.
I feel nauseous every time I see this bondholders fat f***ing head.
Comparing to 2007 when we were absolutely out of control resulting in a massive financial collapse, billions upon billions of debt, mass unemployment, suicide and all round misery. Yes that sounds like a good benchmark to aim for.
What the actual f**k is wrong with the country?
Delusional comments, comparing property prices now to boom times always makes it look okay.
Why are we looking at nationwide figures only, there’s a multi tiered prop market in Ireland. Dublin prime areas, Dublin, town areas in the country and the rest of the country.
Lending is down as banks are only lending to cash rich property investors leading to rising rents in areas where people can get employment and want to live.
His closing comments of its okay lads , nama have it under control is extremely worrying.
He can’t even say the year right when he’s interviewed …2 14 ?
Seriously noonan has lost it. At the height of the boom prices were way too high for affordability . The prices now are just about right for affordability. If prices go up another 10 percent affordability is going to be an issue again.
Bubble head Michael…
Banks wont give mortgages. Why would they? Govt robbed/is robbing the people to shore up their zombie balance sheets and write off debts. They’re not writing them off because they know they need another bailout (maybe a further 30-40bn).
Even if that weren’t true, what solvent bank would loan money to a citizen in a country where govt can steal their earnings at the stroke of a pen, using fascist FEMPI legislation and taxation/levies, thus making repayment impossible?
No real bank would do that.
Bite the bullet, write off debts that cannot and will not be paid, offload “odious debt”, hit the reset button, learn from the mistakes, never again socialise private debt and move on……
A boom is great news, negative equity is slowly shrinking away and we’re all wealthy again. Yay! This time let’s just not lend money to building the empire state building in ballsbridge, buying derilict bottleworks for quarter of a billion or investing in incinerator consultants. No apartments in the middle of nowhere, no destroying quaint little villages with ugly tax break estates. Keep control of ourselves and some inflation and rising property prices will be helpful for everyone.
Would you cheer if petrol, milk or a pint of plain went up in price? Rising prices are in no ones interest. Negative equity is only realised if the house is sold. So this does not effect most ppl. It does effect the banks assets sheets though!
I’d be happy to see a bit more inflation across the board, some of which ends up in people’s pockets for the goods and services they sell, or the salaries they receive. No inflation and pressure to keep wages low isn’t good for anyone long term.
No way do I want to see another bubble boom, but turning Ireland into a low cost low wage economy just to appease foreign multinationals trying to operate on the cheap isn’t fair given how heavy the personal income tax burden is on such a low level of income.
Clearly the Irish model is not to highly tax corporates, but instead to fill the exchequer coffers from income tax and vat from the citizens. I think that is somewhat unique in the EU and not very fair.
Property price rises are simply another part of inflation and yet portrayed as a “good thing” by governments, banks, estate agents et al. I.e. All those who have a financial or political stake in selling the myth that this piece of inflation is actually a benefit to us. It’s not.
High house prices destroy our competitiveness.
High house prices will be helpful as interest rates inevitably rise.
If you need to sell your house, the higher its price the better.
High house prices are lethal for an an economy, especially for a country that is so dependent on external trade.
So says the FF rep
I’ve heard so many stories in the past month from friends who say their landlords want to up rent, or move them out so they can rent out the whole of the property they’re in. Once they got the scent of money flowing back into the market, they fell back to their old ways at the drop of a hat, and frankly, whatever comeuppance they get from this will be well and truly deserved.
We have the most dysfunctional property market in Europe, where we treat ownership of property as some God given right and celebrate the huge expense of such an essential resource. We hoodwink our middle classes into believing this idea of a “property ladder” so we can sell them overpriced shoeboxes in God-awful sink estates, and let banks gobble up practically all of their disposable income. We’ve also created a form of economic apartheid where tenants have less rights, protection and social status than property owners. At the same time, the government and media use property as a cash cow to extract those sweet taxes and advertising revenues from long-suffering homeowners.
Their / they’re / there. FFS.
Out of touch idiot, the prices from 2007 have nothing to do with the present market situation.
Noonan is laughing all the way to the bank , the more houses rise the more property tax for the coffers !
It’s all a scam anyway , I’d to borrow 200 grand at the peak to upgrade my house and the drop I still have to borrow 200 grand after all these years later
It’s a slippery slope…
There won’t be another bubble.
Domestic banks aren’t recklessly lending anything to anybody like they were and they won’t want to get stung again.
There’s nothing that can be done about foreign cash coming in and buying up property though. That certainly won’t help prices. City prices are inevitably higher than elsewhere. The same can be said globally.
Cash buyers are carpet bagging and their speculation is creating the bubble. First time buyers and those wishing to trade up can’t afford to do so which means new “landlords” are reaping rewards with higher rents.
We are in the early stages of a German style housing market, without German style protections for tenants.
Head sand and he will be long gone with a massive pension when it goes wrong.
i am speechless by the absurdity of Noonan’s comments. “No, we aren’t plummeting towards complete annihilation, like we did 7 years ago, therefore everything is peachy.”
This is a result of the lack of ‘local authority housing’………..Gov have opted to pay ‘rent allowance’ instead!
€500 per month allowance X 12 €6,000 X a tenancy of 30 years = €180,000. This in turn pays landlords who have (second) mortgages (not to be ignored by Gov in our current crisis) – reduces the liability of the local authority also (and thus reduces ‘their’ function), and creates and or maintains a functioning “independent’”society. So they get a lot of the money back ie. Water Charges, LPT, Private Enterprise (Builders) etc., etc.
Noonan, will say absolutely anything he wants (successor’s will beat the same drum), whether it makes any sense or not!
The story doing the rounds at the minute, is that there is a shortage of houses for sale.
There is no shortage of people wanting to sell their homes, enough for all the people who want to buy (or would normally buy in a healthy housing market). Those homes are just unable to be sold because of negative equity.
The problem with building more houses now is that after people have supposedly paid off the current negative equity, they find more people in the same situation, also selling their home, and those people who will have thought they had paid down negative equity, stuck with even more, and unable to sell for a few more years. A tortuous situation to be in. Something which can only have a detrimental effect on the economy.
Let’s ringfence the viable part of Irish banks’ business (ie non-mortgage), switch all mortgages to non-recourse (like the US, where you ‘only’ lose your home – fair enough, it avoids moral hazard), see the newly separated, mortgage only parts of banks fail (although they may not, but it it likely), save the ‘systemic’ part of the banking system (cash from the taxpayer is not required for this as the non-mortgage part of banks’ business is still functioning), and give the real economy a much-needed shot in the arm.
Do we continue to bleed to patient, or lance the boil?
Manipulation of the people !
Yeah great idea to compare current prices to those at the height of the bubble Ffs.
This is complete nonsense. There are loads of houses for sale at cheap prices within an hour of Dublin. People had no problem moving from Dublin a few years ago to buy a house. Only now if you do it you can buy it for next to nothing and still be in Dublin within 45 mins. But if you insist on buying a house in a certain area best of luck to you.
If you can afford it go for it but for most couples who say are on 40k each most of Dublin is out of bounds.
and this seems legit to you? A country that is bust and has been bailed out several times, has a massive deficit, but is one of the priciest places to live in all of Europe? You don’t see a problem here? Also: prices in the suburbs of Dublin are on the rise because people with high incomes (and several cars, cause “don’t ask for infrastructure”) are in fact buying around Dublin.
Noonan just wants Property Tax on your Family Homes to increase dramatically with rising house prices.
Political Parties Max Your Tax just like Banks Max your Debt. Vital that voters Bring Their Brains to the Polling Booths.
€7000 is the total cost of all concrete products used in a 3 bed semi … hasn’t changes in the past 15 years.
We need to slap these fools in the local elections and send a warning shot across the bow. Noonan’s lack of insight and lack of acceptance that we are running straight back in to trouble is both alarming and sickening.
If a boom is coming, then increase stamp duty, increase income tax and increase capital gains tax. This would be one way of curbing the ridiculous and irresponsible spending that occurred during the boom.
He’s not worried he has not told the banks to sell the homes they are sitting on. He sees prices going up as home owners paying more property tax. People been evicted every day food banks its famine time again in this country.
People cannot buy a home because of cash buyer investors to rent. They should be taxed to the hilt if your not going to be living in it then tax the hilt out of them. it will be them pushing the price up. By taking badly needed family homes off the market, or you have to bring in proper rent controls This government is always spouting on about how country’s do things different than us and we should do the same.Well rent control in Germany is great . You know where you stand. It brings stability to the renter. It also balances out the market for people who want to rent and who want to buy. The problem with renting here is the renter has no idea where they stand from one year to another and for some from one month to another. Maybe then we would become less attracted to buying with better rent controls in place. But if Mr Noonan and people like him refuse to see what is happening then we are going around again to the good old bad old days the days this government said they would not let happen again.
have your say