This post revisits the claim made, a year ago, that NAMA only requires a recovery in property values of 10% in 10 years. The 15% fall in home values since has already pushed that out and a further 10% fall in 2011, as is likely, means that NAMA will require a new boom – 4% a year, every year till 2020 – to break even. Read more
This post examines the transition from NAMA 1.0, the saviour of Ireland’s financial system, to NAMA 2.0, an entity hell-bent on not making a loss under any circumstances. While ostensibly a safer deal for taxpayers, the true cost to the real economy of such a NAMA is only beginning to be understood. Read more
This joint post with Brian Lucey examines one hundred different ways of spending the €25bn that the European Commission approved last week for the Irish government to spend on recapitalising Anglo-Irish Bank. They range from the very practical (fight malaria) to the very amibitious (space elevators) to the very ridiculous (detach Cork). All of them give a good idea of just what a huge number €25,000,000,000 is! Read more
This post reviews the (scant) latest information from NAMA’s second tranche. It discusses the problems caused by Anglo’s omission from the figures NAMA gives, before estimating the likely true haircut for the first two tranches. It then calculates the total fall in property values implied by the ever-rising haircuts, before discussing some good news, bad news and neutral news from all this for the taxpayer. Read more
This post examines Fintan O’Toole’s claim that the bank bailout has reduced Irish people to serfdom. In particular, it challenges the notion that the bank bailout is Ireland’s biggest economic problem, by comparing it to the budget deficit (and the national debt). It also challenges the idea that Ireland has no economic future and gives five grounds for optimism about those “lucky enough” to work in Ireland over the coming decade. Read more
This post reviews the latest Daft Report, released this morning, which finds that asking prices are one third below their peak on average. Of encouragement to all parties is the high levels of transactions, with one in three properties posted in January either sold or sale agreed already. It also discusses Brian Lucey’s commentary, which outlines implications for NAMA. Read more
This post looks at the figures behind the first tranche of NAMA’s loans and whether they suggest that NAMA is driving a hard bargain for the taxpayer. It finds that the EU’s guidelines on discounting mean long-term economic value is ultimately lower than current value not higher. It also outlines how the first tranche of loans may be entirely unrepresentative of future tranches. Read more
With NAMA set to swing into operation, this post outlines the elephant in the room for NAMA: yields on Irish property. It also discusses how NAMA could still work for taxpayers – if those working for NAMA ensure that they make themselves fully aware of the true yields on various types of Irish property and how those yields may correct themselves over coming years. Read more
The latest Daft Report shows that rents in all parts of the country have actually stabilised since November, a surprise given the apparent excess of properties in large parts of the country. This post discusses whether the January figure is more likely to prove seasonal or structural, before outlining the importance of stable rents for the broader property market and economy. Read more
This post reviews the latest Daft rental report, which finds that rents are at their lowest level in almost 10 years. Rents have fallen in Dublin by more than other parts of the country, while the total stock available to rent has fallen 10% in recent months. Some implications for NAMA are also explored, before underscoring the good news for tenants this news represents. Read more