Category: Irish economy (14)

The Bank of England today kept interest rates at a record low of 0.5 per cent and made no increase to its unprecedented scheme of pumping money into an economy struggling to get back on its feet.

The decision was widely expected and analysts expect no change in monetary policy until much later this year as the central bank waits for a clearer recovery from the worst economic downturn since World War II.

If anything, BoE policymakers have left the door open to more monetary easing in the form of expanding their £200 billion scheme to buy assets with newly created money — quantitative easing in the jargon — if the economy worsens.

An end to the recession is now “in sight”, after the Economic and Social Research Institute (ESRI) said that “a clear picture” was beginning to emerge of the likely extent of the economy’s troubles.

For the first time in more than two years, the institute has not lowered its quarterly forecast for Ireland’s economic prospects for the year ahead.

It now expects the Irish economy to shrink by 8.9 per cent in terms of its gross national product (GNP) this year, which is a slightly more modest contraction than it expected at the time of its previous forecast in April.

ESRI economist Alan Barrett, one of the authors of the report, said the stability of its forecasts, after a succession of regular and often sharp downward revisions, was “in itself a noteworthy factor”.

Read more: Irish Times Business

The Irish Times has run a story about Findlay Property in this weeks property supplement.

Click here to read more.

John Walsh, Simon McDonnell & Jean-Paul Van Cauwelaert

John Walsh, Simon McDonnell & Jean-Paul Van Cauwelaert

Sourcing property for investors

PETER CLUSKEY

Thu, May 14, 2009

LONDON INVESTMENTS: EVEN IN a flat market, new transport links are guaranteed to generate interest, so the long-awaited extension of a train line to south Hackney in east central London is already attracting investment.

Prices across the city are down by an average of 10–15 per cent since 2007, and agents say sales have virtually ground to a halt – so it’s a buyer’s market, with particular value for euro zone buyers.

“People in London are extremely conscious of the availability of transport when they buy or rent.” says Simon McDonnell, director of Findlay Property, which specialises in sourcing investment properties for Irish clients. “So when the new East London Line opens here in July 2010, we anticipate an immediate increase in property values of around 10 per cent. We’ve already been buying property within walking distance of where the stops are going to be.”

South Hackney, says McDonnell, was one of the last areas of central London resisting gentrification, but that’s changed, particularly in neighbourhoods like Shoreditch and London Fields.

“It’s within walking distance of The City and there’s easy access to the West End, so the train will put in place the element that’s been missing,” says McDonnell.

Three of the four directors of Findlay Property are Irish: Simon McDonnell, John Walsh and John Paul Van Cauwelaert. The fourth is Scot Alan Findlay. They set up the business in a small East End flat in 2001 and now operate from the more salubrious environs of Broadway Market.

“We’re not an estate agency,” says McDonnell. “We’re a property management company which sources properties on behalf of its clients and then manages it for them afterwards.

“Almost 100 per cent of our clients are Irish. Roughly a third of our properties are ex-local authority, a third are luxury modern apartments and a third are Victorian townhouses. So, if someone says he has €250,000 to spend and is looking for a rental yield of 7 per cent, we’ll source the property for him.”

Typically, a three-bed ex-local authority property can be bought for around €235,000. Findlay charges a 2 per cent finder’s fee, which could come to €5,000; refurbishment costs another €5,000; stamp duty adds €2,500; legal fees another €1,000; and furniture and white goods €2,000. That’s €250,000 all in – the cheapest McDonnell would recommend.

As to the “Olympic factor”, the well-documented boost to property prices before the games come to town in 2012, McDonnell is not really convinced. “The Olympics are on our doorstep, but I’m cautious about claiming too much for them. For me, the chief benefit will be the long-term one of improved infrastructure.”

www.127.0.0.1/oldfind

© 2009 The Irish Times

The European Central Bank cut its benchmark interest rate by 25 basis points to a new record low of 1 per cent today, as expected.

European Central Bank President Jean-Claude Trichet said the euro-zone economy was showing tentative signs of stabilising at a very low level.

The European Commission has forecast that the end of the recession is in sight.

The Bank of England has kept interest rates on hold at 0.5% and announced that it will inject an extra £50bn into the UK economy.

ECB HQ Frankfurt

ECB HQ Frankfurt

Rents across Ireland have fallen 5 per cent in the first three months of this year, according to report published today.

In its latest survey on the rental market, property website Daft.ie found the national average rent is now €840 per month, a drop of €160 on the same period last year.

The major cities experienced the biggest drops, the report found. In Dublin and Limerick, cities rents were down by up to 6.5 per cent, while in Waterford city and Cork city, rents fell by 5.3 per cent and 5.1 per cent respectively.

Nationwide rents have posted falls for 14 consecutive months and are 17.5 per cent lower than the peak in early 2008.

“The rental market is feeling the brunt of too much supply and not enough demand,” said Ronan Lyons, economist with Daft. “The number of properties available for rent is now over 23,000 – an all time high. This additional supply is having a downward effect on price and is also pushing out the time it is taking to rent properties”.

The Daft Rental Report is based on an analysis of all rental properties advertised on Daft.ie since January 2009, including 250,000 since January 2008.

Sources: Irish Times & Daft

The pound’s slide against the euro has begun to trigger concerns on the continent that the UK is seeking to gain a competitive advantage over its European Union partners.

Sterling has fallen by more than 25 per cent on a trade-weighted basis since the autumn of 2007, raising the question as to whether Britain is letting its currency fall to help its exporters at a time when the eurozone is falling more deeply into recession.

Brian Lenihan, the Irish finance minister, in January directly accused the UK of running a policy of “competitive devaluation”, putting other countries under “immense pressure”.

As the pound has stabilised a little in recent months, the Bank of England now sees the benefits of a lower currency, not in rising exports but in a rapid fall in imports contributing positively to economic growth.

Source: www.ft.com

Brian Lenihan the finance minister delivered the toughest budget in the history of the state. The main points include:

– €3 billion in tax rises and spending cuts
– Doubling the income and health levies
– Cutting child benefit

Typically a person earning €100,000 per annum will pay an extra €333 per month into the governments coffers.

In other news Moody’s increased its expectation of losses on Irish bank loan portfolios due to continued deterioration in real estate prices, the likelihood of more corporate defaults and the erosion in residential loan performance.

Straightened times indeeed.

The New York Times has run a sensationalist piece on the sudden economic implosion in Ireland. This comes on the back of the Sean Dunne expose back in Janaury and ahead of todays emergency budget announcement.

Similarily BBC Radio 4’s venerable Today programme ran a feature this morning on the perceived pitiful economic situation in Ireland.

Added to this was the recent Sunday Times magazine feature on Ireland’s beleagured economy.

There seems to be a sense of schadenfreude to the current international coverage. Just how accurate is all this doom-filled commentary? Does the irish media have a riposte?

Sensationalist Schadenfreude?

Sensationalist Schadenfreude?

Links: www.nytimes.com, www.bbc.co.uk/radio4 & www.sundaytimes.co.uk

Work is well underway on this huge development being built by London-Irish developer Eamon Lyons. It is located on Old Street on the edge of London’s financial district – The City. It is due for completion in 2010. The development comprises of two 14 and 16-storey towers.

Eamon Lyons has over 20 years experience in the East End. Originally from the west of Ireland, Lyons cut his teeth with Sean Mulryan’s Ballymore Homes in the late 1980s and early 1990s but eventually established his own company, Tudorvale Homes, which has been building houses and apartments for over a decade.

Artists impression of the finished development

Artists impression of the finished development