THEYD meant to send me a card they said, but thought they might give me a call instead, as they hadn’t chatted with me for ages. Chat, chat, chat, weather, Christmas, family, snow . . . chat, chat, chat . . . Well . . . what do you think? Any chance of things getting any better this year? . . .
How’s work going for you? Just thought I’d give you a buzz in case you had anything . . . it’s been a bit quiet since before Christmas . . . chat, chat, chat . . . Not sure what to do . . . ha, ha, . . . Sure this year, it really can’t get any worse now, can it? Ha, ha . . . (slightly hysterical edge to laugh). Well, at least we can laugh about it . . . And we have our health . . . although, did you hear about . . . ? He’s not at all well . . . had a bit of a turn . . . Of course, he’s been under a lot of pressure of late . . . God help him . . . indeed, God help us all.”
The crisis has switched from the Irish banks to the Irish people. Morale is at rock bottom and more and more victims of the economic crash are quietly slipping over the edge into the abyss.
There’s no fuss, no news flashes and no publicity associated with these tragic personal stories and nobody jumps in to save them by lodging billions to their bank accounts. One by one, they just quietly disappear off the radar.
Economist David McWilliams is correct when he said that we must “negotiate for the Irish people, not for the banks” in a recent article “If I was Taoiseach . . . what would I do to save Ireland?” which outlines 10 clear-cut suggestions to save us from destitution.
Among a number of other things, McWilliams believes that “we need to prevent mass chaotic mortgage default and offer hope to the 400,000 people in negative equity”. He advocates that we change our bankruptcy laws (which are a punitive 12 years, compared with one year in the UK) and recommends that our mortgages should be made non-recourse so that those unable to service their loans could hand back the keys and walk away.
In a nutshell, McWilliams claims that there is another way of saving our nation and he spelt it out in no uncertain terms. And, as nobody else have come up with any other solutions at all, let alone any good ones, I’m promoting the idea that we all bypass the existing political system and vote in David McWilliams as our next leader. We could do a lot worse. Statistics vary somewhat, but apparently, only 40 per cent of homeowners have a mortgage. This figure may or may not be accurate, but one way or the other, the entire country appears to be feeling the effects of the dramatic drop in property values. Even first-time buyers admit that they want property prices to go up again, but understandably, only after they have purchased their homes!
It is only natural that homeowners’ hope that the largest single financial investment of their lives will, at the very least, hold its value and ideally, gradually increase in value over time.
According to the recent Daft property research report, 2010 marks the fourth consecutive year of price drops, and it emphasises the fact that we can no longer consider the Irish property market as a single entity because “the underlying conditions in the property market vary so dramatically around the country”. It recommends that we should look at different regions as very distinct markets. It also emphasises that yield (the relationship between rents and prices) is an important factor. When it becomes cheaper to pay a mortgage than to pay rent, buyers return to the property market.
Dublin city centre prices are now 50 per cent below peak levels and the stock for sale sitting on the market has fallen by 20 per cent from its peak. Even allowing for property for sale which is not listed on its website, Daft estimates that only about 2 per cent of the properties in the capital are for sale. This fact was confirmed last autumn when a number of Dublin estate agents advertised looking for homeowners wishing to sell. Numbers willing and able to buy are low but stock levels are even lower, therefore there is very little choice for potential purchasers.
However, with the 50 per cent drop in values in the capital, many simply can’t afford to sell as they are in negative equity and those without mortgages are, quite understandably, choosing not to sell. Daft reports that “a range of factors continue to weigh on prospective buyers, including tight credit and expectations of higher taxes and interest rates in coming years”.
What was not mentioned in the Daft report or indeed in any of the numerous end-of-year reports was that so many of our citizens are simply terrified to budge in any direction. Time indeed, to do as McWilliams suggests and save our citizens. He has my number one vote.
- Isabel Morton is a property consultant
