Tag Archives: Ireland

Ireland’s Most Expensive House In The Bubble Can’t Sell At 75%-Off

“The detached Edwardian residence sits on 1.8 acres and looks out on to Dublin’s most expensive residential road. However, last year it was listed with a reserve price of €15 million, 75 per cent below its selling price, and invited interested parties to submit tenders for the property by October 27th last. … It has now been withdrawn from the market.”
– from ‘Ireland’s most costly house withdrawn’, Irish Times, 20 Apr 2012
[Thanks to ‘C’ for the story.]

“The purchase price was €127,000 ($177,000 CAD). The same home changed hands for €400,000 ($560,000 CAD) during the peak of the Irish housing bubble a few years ago.”

“A friend just moved to Burnaby from her family home outside Dublin to be with her boyfriend. She was telling me how her sister had just purchased a house in their Irish neighbourhood. The family was excited because she had purchased the house that backs onto their parents’ lot. The purchase price was €127,000 ($177,000 CAD). She didn’t mention how big the house was, probably modest by Canadian standards. But she did mention that the same home changed hands for €400,000 ($560,000 CAD) during the peak of the Irish housing bubble a few years ago. I can only imagine what this will mean for Coquitlam, Port Moody and North Burnaby when all those $550k houses drop below $200k, it’s going to be devastating.”
– Lex Limo, via e-mail, 11 Nov 2011 [Thanks Lex. -ed.]

High End Hit

Walford, Shrewsbury Road, Dublin
4,000sqft Tudor style house
Sold 2005 €58 million
For Sale 2011 €15 million

[hat-tip Don, by e-mail]

That’s about 75% off.
When a speculative mania ends, the high end of the market is as vulnerable as any other.
Owners like to argue that, for some particular reason, their enclave will be relatively resistant to any possible market drops; they are uniformly wrong, across all property types.
– vreaa

More from the Guardian article [22 Sep 2011] –
“Dunne was one of the most colourful characters in the Celtic Tiger – he paid record prices for the Jurys and Berkeley Court hotels just down the road from Walford in the heart of leafy Ballsbridge – with a view to knocking them down and creating a mini-Manhattan…”

What is it with speculative bubbles and Manhattan-wannabes?
– ed.

Vancouver RE’s “Reality Distortion Field” – “She conceded that I might have a point, but last time I spoke to her she was back to predicting only a modest drop in local prices.”

“I work with someone from Ireland. She argued with me about how real estate isn’t inflated in Burnaby. Her particular story has something to do with the houses in her neighbourhood not being priced for first time home buyers because she moved up into it. So others will have to sell to move up into it. She misses the fact that she’s describing a pyramid scheme. But after a trip to Ireland recently she was less sure of herself. She conceded that I might have a point after all. She saw homes skyrocket into the the 700-800 Euro range only to drop right back down to the 200-300 Euro range. Last time I spoke to her she was back to predicting a modest, 10-20% drop in local prices and then years of flat. I guess it doesn’t take long for the reality distortion field to kick back in once you get within the media bubble of BC.”
lexlimo at VREAA 20 Sep 2011 8:08am

It is difficult to not be swept along by group-think. – vreaa

“My family is from Ireland and what happened there is no different from what is happening here in Vancouver, in that the psychology of real estate has permeated everything.”

“My family is from Ireland and what happened there is no different from what is happening here in Vancouver, in that the psychology of real estate has permeated everything. In both cases, greed has taken over, with people bidding up insane prices for houses that have no intrinsic worth. Platitudes such as “the land is what you’re buying” and “real estate is a great investment” overwhelm any rational discussion of what someone needs for shelter actually are. It’s all about ‘investment.’”
Sean at VREAA 5 Sept 2011 2:04pm

Anecdotes From Our Future? – “They gave us 500K even though we only had a combined income of 55K”; “I would gladly hand back the keys of both houses”

Here follow personal stories from the Irish RE crash and debt debacle [from The Irish Times, 5 Sept 2011] that, unfortunately, might as well be from Vancouver’s future.
Unfair comparison? Similarities? Differences?

SIOBHÁN “Sometimes we just think these are supposed to be our best years and the stress is killing us”
“We have a mortgage with the EBS and when the rates started to go up on an almost monthly basis I was eight months pregnant, so we had additional costs related to the birth.
Things were starting to get tight so we contacted the EBS and asked about the mortgage break/ holiday. We were told that is not a service that it offers.
Then we asked about interest-only so they sent us out the forms but the guy on the phone warned that they don’t usually do it. Sure enough, they refused us, even though we only have about €70 left after paying bills each month.
The interest rates have continued to go up. Our mortgage has gone up by €450 a month since January 1st. We are a family of five who had two incomes and now only one. We spend €90 a week on grocery shopping while 50 per cent of my husband’s salary goes on the mortgage.
I know there are people out there worse off but sometimes we just think these are supposed to be our best years and the stress is killing us.”

CLAIRE “I’ve almost been made to feel guilty by the bank for getting pregnant”
“We bought a house in the southeast in 2004 for €175,000 and took out a mortgage with Permanent TSB. Then we got married and took out a second mortgage to build a house. We tried to sell our first house but couldn’t. We work full-time and our little girl is in a creche four days a week.
We are expecting our second baby in January and I will not be working during my maternity leave so we will have no money.
I’ve almost been made to feel guilty by the bank for getting pregnant. All we are looking for is a break while we get ourselves sorted. We have never missed a payment or never not paid a bill in our lives. We have the house rented now but it still doesn’t cover the mortgage.
Why are we being shot down at every turn?”

ANNETTE “They gave us €500,000 even though we only had a combined income of €55,000”
“We’ve tried selling my husband’s first home on three occasions over the past five years with no luck.
We’ve had various people rent the house and have been left holding large bills when some tenants left unannounced. It’s been difficult to rent and has felt like a noose around our necks.
Any time we get our heads above water something will come up with that house and we end up back in the red.
About six months ago, the bank took us off interest-only and we have now gone into arrears as we can’t afford the full payment. We had diligently kept up the mortgage repayments before this change. The bank, Permanent TSB, were completely inflexible and the pressure of all the mounting bills has made my husband leave the country to work abroad.
He is now away for two out of every three months and is out of contact most of the time over those two months. It is very hard, especially as we have a new baby and don’t live close to any of our family.
My husband is missing out on so much of our son growing up and when he comes home our son doesn’t know who his daddy is. This is not the vision we had for our married life.
We feel that the bank is completely ignoring its responsibility in all this. At the time of issuing the mortgages they gave us approx €500,000 even though we only had a combined income of €55,000 and also they only stress-tested our ability to repay the loan on my husband’s home on an interest-only basis. Now they’ve moved the goalposts on that.”

MARY “I said surely there is something you can do to allow me sell the house and we can come to an arrangement where I will repay the difference? The guy said no”
“I have a property which was my home until I got married. We then bought a family home and so I have tried to rent out my original house. I managed, but as time has gone on, the rent I have been able to get has fallen and for the past year we have been putting €500 a month from our reduced salaries to supplement the mortgage.
When the tenant moved out I was left with an empty house so I decided to try and sell. The asking price was €175,000 and the mortgage outstanding was €182,000. We received an offer of €165,000. I rang EBS to say I was finding paying the mortgage difficult. I told them I was managing but would not be able to continue forever.
I explained that I had an offer on the house of €165,000 and asked could I take the offer and then seek a personal loan from EBS for the difference which I could then pay off?
It seemed to me to be a reasonable proposition as it would instantly pay off a significant amount of the mortgage, leaving a more manageable amount for me to pay.
The EBS’s answer was that they do not give personal loans. They said I should borrow the difference from family or friends. When I said I was having trouble getting someone to rent the house they said ‘the house is rented? Then you are on the wrong interest rate. You should be on a higher rate’.
When I said ‘surely there is something you can do to allow me sell the house and we can come to an arrangement where I will repay the difference?’ the guy said ‘no, there is nothing I can do, I’m not trying to be cold or harsh, we just don’t do it’.”

NUALA “We had an auctioneer take a look at our house and he reckons we would be lucky to get €250,000. We got a mortgage for €415,000”
“My husband is self-employed and has been stung for tens of thousands of euro for jobs he completed and never got paid for. We used our savings to bail out the business. We have three children, the eldest is four.
I had to give up work after I had my first child as we simply could not afford childcare. My husband is now still self-employed and struggling to make between €100 and €200 a week. I am trying to get back to work and at the moment am receiving Job Seeker’s Allowance of €170 a week. On average we have €270 coming into our house and that’s a good week.
As it stands we are €35,000 in arrears with our mortgage. Our ESB bill is €1,400 and we have just received a letter to say they are going to disconnect us if it is not paid in full.
We have no oil in our tank and we are in debt with credit cards and personal loans. We are dealing with MABS and I have to say they have been excellent. They have given us a lifeline.
After months and months of talking about what the hell we are going to do, we have decided to move to Australia. My husband has gotten a job out there and he will go in the next six weeks or so and I will stay behind until next year.
My main problem now is what to do with the house. I need to be able to stay in it up until we are ready to go as we have nowhere else to stay. But we are not making any repayments at the moment and don’t know how long more this will continue for.
We had an auctioneer take a look at our house and he reckons we would be lucky to get €250,000 for it. We got a mortgage for €415,000.”

SUZANNE “We no longer have any disposable income”
“I can’t say that we are struggling to pay the mortgage currently but I reckon by the end of January we definitely will be, as we no longer have any disposable income following the recent increases by EBS to the standard variable rates of interest.
We are in a lucky position as we got an affordable house for €235,000 in 2007. Unfortunately for us though, we could only get a mortgage for €205,000 from the EBS and had to get the balance from our credit union to be repaid over 10 years. This works out at around €450 per month.
Luckily, the credit union has allowed us to reduce our payments to €200 per month as we had paid more off initially and we are still on target to clear the loan within 10 years, so that’s not the problem.
The problem for us is that we did not get off the variable rate and fix earlier this year because when we looked into it, we could not meet the fixed repayments. We cannot fix now as EBS have removed that option. Mortgage payments, tax payable, water charges and the rest are all going to eat into our money.”

GEMMA “I would gladly hand back the keys of both houses”
“I bought a house in 2000 and when I went to sell it and move, I was advised to release equity and keep it as an investment property. I would never have done such a thing if the financial advisor had not suggested what a good idea it was.
So we bought our second house and now have a combined mortgage of €420,000 for two properties. I have a job and my husband works as well and we have no children. I am going to have to move from the midlands to Galway for work. So I own two houses in Mullingar with monthly repayments of €1,800 plus all the added costs and have to find somewhere to rent in Galway.
My husband might struggle to find work so we will have to live on my wages of €2,500 per month. I would gladly hand back the keys of both houses.
I have never missed a payment on a mortgage or important bill in my life and recently cashed in a savings bond 3 years early to pay off my credit card which has supplemented our income for the last year.”

NIAMH “The mortgage is €330,000. The asking price for an apartment in the complex is €185,000 so we are €145,000 in negative equity”
“I purchased a nice two-bed apartment in south Dublin with great views in a small, well-kept, complex in 2005 and took out a mortgage with KBC Homeloans. I lived in it for three years.
At the time I was working in Dublin, had a good salary and was able to service the loan. It was a joint mortgage with my now husband but I always serviced the loan myself.
In September 2008, I moved city and we got married. I can’t afford the entire mortgage repayment (which is €1,900 per month) so for approximately two years now, KBC has agreed to let me make interest-only repayments which are €1,300 per month.
They have just agreed to extend this interest-free period for 12 months. The apartment is rented at €1,000 per month.
We don’t have any personal loans. We have made all the household savings that we think possible, such as discontinuing a phone line, recycling, not using the tumble dryer etc. We don’t go out to restaurants, we go to the library instead of buying books, we borrowed all the baby gear from friends and our cars are ancient.
I have to find €500 per month for the apartment at the moment between the mortgage, service charge on the apartment, the annual NPPR charge etc. and it seems that I am paying an awful lot per month just for the privilege of servicing a loan that I can’t afford to reduce at the moment.
Even if I knew I was able to scratch away at the principal it wouldn’t be so bad.
The mortgage is stuck at €330,000. The average asking price for an apartment in the complex at the moment is €185,000, so we are €145,000 in negative equity.
We have our heads above water, but only just. I know that at least we don’t have to eat cardboard but I feel like I’m running to stand still whereas at least if I felt I was moving forward, however minutely, it wouldn’t be so depressing.”

SEÁN “We thought Bank of Ireland might do a deal with us. Under no circumstances would they do any kind of deal”
“We have our house for sale in Cork for the past four years with a couple of sales falling through for different reasons.
Just six weeks ago a young couple put in a final offer of €180,000. We needed €187,000 to clear off our mortgage, and pay the auctioneer’s fees and solicitor’s fees but we felt it was the best price we were going to get for our house.
Since we’re on a tracker rate and have never missed a payment, we thought Bank of Ireland might do a deal with us. I’m only working two and a half days per week and my wife works week on/week off. Under no circumstances would they do any kind of deal. We tried other ways to raise the difference (family, credit union) but the buyers got fed up waiting and called off the purchase. We were devastated but in no way could I blame the couple.
While my wife’s job is fairly secure, mine is not and it is a real worry with three young kids. I am so p**sed off with the banks right now. I roughly estimate that over our mortgage lifetime, with us on a tracker rate, they will lose between €15,000 and €20,000 but they don’t care because we’ll bail them out regardless”.

BRIAN “I did go hungry to meet my mortgage several times, but I have come to the conclusion that this is pointless”
“I am a public servant, and in the past four months I have had to make the choice between eating or paying my mortgage. I chose to eat. I am struggling to survive on a wage that is only slightly above social welfare rates.
I joined the public service from the private sector, incurring a large cut in my wages. I own a three bed, semi-detached house and used my savings to pay my mortgage while I was training, on a wage of €150 per week.
I got a job far from where I owned my house. I couldn’t sell, so I rented it out. The rent covers far less than half my mortgage and I pay rent in the town where I now live. As time went on, my debts rose as I borrowed to pay my mortgage each month.
I have now hit a wall. I cannot borrow any more money. I did go hungry to meet my mortgage several times, but I have come to the conclusion that this is pointless. Losing my house is now inevitable. People constantly allude to the fact that I am lucky to be a public servant. I am not lucky. I am at the end of my tether.
At least my shame is my own. I don’t have a wife or child, and there isn’t a day that goes by that I don’t thank God for that.”

“There was obviously an insularity to the Irish mentality during their bubble. I feel something of that insularity here in Vancouver.”

Froogle Scott at VREAA 10 Feb 2011 1:44am“I’m halfway through the Vanity Fair article (“When Irish Eyes Are Crying,” by Michael Lewis [hat-tip to Nick for alerting us all to it -ed.]). Every couple of paragraphs I’ve been struck by the parallels to our situation here in Vancouver. Ireland is interesting, because in some respects it might be a better parallel for Vancouver than the United States. The US is such a vast economy, that even down on one knee, it’s still a heavyweight. Ireland is the provincial society that suddenly blew up grand — with a bad result. Something about that dynamic feels closer to home than what’s occurred across the entire US real estate market. Although BC is part of a much larger country, our geographic isolation, our relatively small population, our history of being outside the centers of power, does have an “Irish” aspect to it. And perhaps that isolation can lead to becoming ungrounded, or disconnected in certain ways. There was obviously an insularity to the Irish mentality during their bubble. I feel something of that insularity here in Vancouver.”

Thanks for the thoughts, Froogle, very interesting associations. We don’t have the overbuilding that the Irish had, but the fact that we are ‘insulated’, as you describe, may make us vulnerable to some of the same engines that popped their bubble. It is possible that, with a simple turn of sentiment & loss of imagination, we rapidly find ourselves less a cosmopolitan capital and more a medium sized provincial city with almost no discernible means of economic support. Another way in which we are ‘insulated’ is one which is, of course, common to all bubbles: statements like “All real estate is local” and “It’s different here” are used unconsciously by bubble-players to ‘insulate’ themselves from glaring external realities. When the history of our boom and bust is written (by you, perhaps?), we are sure that one of the most remarkable features will be how long prices chugged on up to more and more preposterous levels despite the glaring examples of bubble implosion all around. US, Spain, Ireland, etc, etc. All a testimony to the ability of the human mind, in particular the ‘group mind’, to ignore that which is inconvenient to face. -vreaa

While we’re partly on the subject of Ireland, ‘Charlie Mackay’ is a blogger who has archived quotes from their bubble. Take a look; Spot the similarities.
Here’s a nice one, from Sean Dunne, Property Developer, in 2006, just before their bubble imploded: “Every economist associated with every stockbroker in Ireland mistakenly forecast the end of the housing and property boom in Ireland”. They had been “vociferous and repetitive”, in the process encouraging outside commentators, including the Economist, the IMF and the OECD, to issue warnings about Irish house prices being overvalued. Well, “The hyenas have stopped laughing . . . each and every one of them was wrong. Instead, the price and supply of housing units has continued to break records.”
[For examples of quotes from Vancouver Sean-Dunne-equivalents (and a few ‘hyena’ naysayers), recorded here, in real time, while our bubble is actually still a bubble, see the ‘What Bubble?’ sidebar.]