Month: July 2010

House prices

Readers may recall that back in September 2009 I blogged about Finance Minister calling a floor in the property market, and how unlikely that situation was. Mr Lenihan was appearing before the Finance committee in relation to NAMA. Here is the video:

I also drew (very poorly) some graphs, arguing that the only way property prices were going was down. By a significant amount. Some of the lads over in politics.ie sniped that my poorly drawn graphs were laughable (they sort of were), but the logic behind them was, I believe, sound. Some disagreed.

So let us return to those graphs from 10 months ago. Here is the graph I drew in September, based on CSO data for second hand home prices:

Screen shot 2009-09-11 at 03.40.26

You can see that as of Q1 2009, average national house prices for second hand homes were around €290,000. Next up, my graph (which included more recent ESRI prices from July 2009 at €240,000).

Screen shot 2009-09-11 at 04.09.12

My argument was that prices would continue to fall, more or less symmetrically with how they would have risen. In other words the second property bubble was from 2002 to late 2006, about a four year period. In 2002 average prices were about €200,000. My graph indicates that prices would return to €200,000 by mid 2010, about a four year period. Well I would argue that they now have done so.

Here is the latest date from the CSO. Prices continued to fall, passing well below €250,000 in Q4 2009 (€40,000 below the floor Lenihan called).

Second hand home prices (national) Ireland

But we don’t have Q2 or Q3 2010 figures from the CSO yet obviously, so let’s have a look at the ESRI figures.

ESRI/PTSB house price index Ireland

According to the ESRI for Q1 2010, average national house prices are now €204,830, and we can easily imagine that since March, prices have continued to fall. Which means house prices are now back to 2002 levels, where our second property boom started.

The question now is, will we start now unwinding the first property bubble, 1997 to 2002? I believe we will. I would see prices returning to 1998 levels, factoring in inflation, which would lead to a national average house price of about €130,000 – €140,000 by late 2011, or early 2012. It could even be lower than this, as it tends to overshoot on the downside. I see no factor that would keep prices where they are now. Government policy and/or NAMA are the only variants that did not exist before – but I still do not see them being able to counteract the other major factors: rising unemployment, lower credit, a shrinking economy, bankrupt banks and oversupply of houses, among others.

Unfortunately for us NAMA officially called the bottom of the property market in November 2009. Since then its own assets have significantly decreased in value.

Of course if anyone disagrees with my analysis, have at it in the comments.

ST: 'Fas in new cronyism row over lease'

Very busy. Will add context later. Our piece from this week’s Sunday Times. Related documents here.

FAS, the state training agency, is renting a warehouse from the former tax partner of a consultancy firm which has been “consistently successful” in tendering for work from the agency.

Unit 9 at Tolka Valley business park in Finglas, north Dublin, has been rented since 2000 from Terry Oliver, formerly of OSK, an accounting and business consultancy. Internal audits have concluded that Greg Craig, the former head of corporate affairs at Fas, had a conflict of interest in awarding contracts to OSK because of his close personal relationship with Oliver.

Craig was suspended as the audit was compiled, and has since returned to the state training agency as head of health and safety.

According to documentation obtained under the Freedom of Information act, the Finglas warehouse was to be used to train apprentice plumbers and electricians. It appears no-one has ever been trained there and instead it has been used for storage or left empty due to concerns about it meeting planning standards. The rent is more than €40,000 per annum. Fas was given legal advice in November 2000 that it should ensure the building was fit-for-purpose and met the required standards before signing the lease. It is not clear if this happened.

Before the lease was signed, emails between Fas staff and solicitors noted that the then manager of finance and administration at the Finglas training centre, Patrick Kivlehan, wanted to see the lease signed off “as expeditiously as possible”. Kivlehan is now head of internal audit at Fas.
In 2003, local management attempted to cancel the lease as the building was surplus to requirement. Oliver disputed the cancellation. Local management was later overruled. In 2005 the lease was extended to run until November 2011.

In February 2007 Richard Keegan, a Fas Building Services specialist, was asked to assess the site’s suitability for training apprentices. He found it didn’t have a “fundamental requirement” to hold courses for trainee plumbers and apprentices working with electronics. Keegan also noted in an email to management that the unit was not fire-safety compliant and would require planning permission before it could be used. He said the local Fas centre had “closed down the building in the past” because it “didn’t meet basic health and safety standards”. Email records show that last October, local Fas management again attempted to get out of the lease. “We looked into negotiating an agreement with the landlord but there was not a successful outcome,” wrote Robert Nicholson, a local manager. Legal advice was that the lease was “watertight”.

Nicholson said that altering the building would not be cost effective, nor would sub-letting, as the market for that type of site was too weak and “significant work” would be required to bring it up to the required standard for a tenant. It is believed Fas has paid nearly €400,000 in rent to Oliver, since the lease began. Thousands more has been spent on maintenance costs. Oliver refused to answer questions about the building, claiming it was a matter for Fas. The training agency confirmed that the warehouse is being examined as part of an ongoing internal audit. Internal auditors in Fas have already concluded that there was a “conflict of interest” arising from the fact Oliver and Craig were friends. Oliver, who retired recently from OSK, provided the Fas executive with personal financial advice.

OSK was found to have done a considerable amount of consultancy work for Fas in the early part of the decade, the majority of which related to corporate affairs. “OSK has been consistently successful when applying for work from corporate affairs, whether directly, via advertising agencies, or via Fas procurement,” an internal report concluded.

NAMA status – help?

There have been few (no) takers of my offer to any law people out there to help in my reply to the Office of the Commissioner for Environmental Information in relation to the status of NAMA as a public authority. This is disappointing, as the decision is critical to greater transparency for what is one of the most signifiant bodies ever established in this country (and to which we currently have no right to information).

I have begun drafting my response to the Commissioner, and would again seek input from any source. I will be adding to this document over the coming weeks.

OCEI reply

Digest – July 4 2010

Usual Sunday round-up. Love it or leave it, love. Home is weak again,  I must be tuned out? Let me know.

HOME

Irish man in London has free burritos for a year. Decides to bring a random woman out for a free burrito each week then blog about it. Makes for a great blog.

Gerry Adams; ‘where you live and how it effects you‘.

Iain Nash on the Stag Hunting Bill and missed policy-and-politics-related points.

David Manning: The false reality of news journalism. Thought-provoker.

WORLD

Andrew Sullivan; ‘getting shit done‘. The uselessly short attention span of the media, and damage it causes. If I were to recommend one link to click in this post, it’d that’un…

ConservativeHome notes Tony Blair is to be given a medal for his support of ‘liberty’. Jesus.

Tech Interlude: Stephen Fry on the iPhone 4.

Sociological Images: the personification of nations;

Many personifications in Europe and areas once colonized by them connect the nation to noble ideas and values through the use of Latin-derived names and the use of robes, poses, and other elements of classic statues and paintings to adorn a female figure. For instance, the United Kingdom’s Britannia (an emblem that first emerged when Britain was still ruled by Rome) is a goddess-like figure wearing a Roman-style helmet who has, over time, come to represent the nation and the idea of liberty:

Glenn Greenwald on the manipulation of the word ‘terrorist’. One wo/man’s freedom fighter; Tzipi Lizni rails against palestinian terrorists in an interview with The New York Times, then says…

NYT: Your parents were among the country’s [Israel’s] founders.

Livni:  They were the first couple to marry in Israel, the very first. Both of them were in the Irgun. They were freedom fighters, and they met while boarding a British train. When the British Mandate was here, they robbed a train to get the money in order to buy weapons.

News report from the New York Times, December 30 1947…

IRGUN BOMB KILLS 11 ARABS, 2 BRITONS

A bomb thrown by the Jewish terrorist organization Irgun Zvai Leumi from a speeding taxi today killed eleven Arabs and two British policemen and wounded at least thirty-two Arabs by the Jerusalem Damascus Gate, the same place where a similar bombing took place sixteen days ago.

Again, Glenn Greenwald; on journalism the difference between serving and afflicting the powerful.

Greenslade; the amazing media story being the McChrystal interview.

Dilbert dude, Scott Adams; ‘self-programming‘.

Rob Crilly: whose agenda is it anyway? Media coverage of Pakistan. Links.

Remember the video that went viral of Oakland police shooting dead Oscar Grant on the BART line? The deliberations have begun after a three-week trial. Best coverage piece here.

Ezra Klein on the machinations of the Nevada senate race being dominated by ‘jobs job jobs’ (or lack thereof). Prehaps insightful to Irish boys and gurls.

OTHER

Lefties will love this one. Video; crisis of capital. Loving the animation.

Last minutes with Oden; beautiful, touching, short film about a man and his dying dog.

Last Minutes with ODEN from phos pictures on Vimeo.

Sunday Times piece on Fás

We’ve a story in today’s Sunday Times about an interesting building that Fás has been renting from a Mr Terry Oliver. It’s behind a paywall, so no link, unfortunately. It took several months to compile through a series of FOI requests which were funded from you lot, the people who do be readin’ this here blog.

The Sunday Times piece opens…

FAS, the state training agency, is renting a warehouse from the former tax partner of a consultancy firm which has been “consistently successful” in tendering for work from the agency.

Unit 9 at Tolka Valley business park in Finglas, north Dublin, has been rented since 2000 from Terry Oliver, formerly of OSK, an accounting and business consultancy.  Internal audits have concluded  that Greg Craig, the former head of corporate affairs at Fás, had a conflict of interest in awarding contracts to OSK because of his close personal relationship with Oliver.

I will post it in full on Monday.

For those of you who bought a copy of the paper and therefore have the context, here’s the documents…



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1) November 2000 – Solicitors refer to finance and admin manager asking that the lease be concluded “as expeditiously as possible”, before the lease was signed off.

2) Fire safety compliance questioned if building altered. Work was later done on the building.

3) Mr Oliver disputes cancellation of lease in reply to letter from training centre.

4) March 2003 – Manager of training centre writes to Mr Oliver to confirm they will seek to cancel the lease.

5) Email from Richard Keegan who assessed the site and found it was not fire safety compliant; did not have a fundamental requirement for running applicable courses; had been closed in the past as it didn’t meet basic health and safety regulations; does not have ventilation for gas welding… “not to mention all the other regulations it has been in breach of in the past”.

6) June 2007 – Concerns raised about the effectiveness of running a plumbing course in a building with no gas facilities.

7) Manager of training centre says that sub-letting or amending the site would not be cost-effective, notes site would require significant work to make it suitable for a prospective tenant.

8) October 2009 – Letter from local manager tells of how they had attempted to get out of the lease recently once more, notes the lease was “watertight”.

9) Example cheque for monthly rent.

10) Example invoice.

Copy of inquiry sent to Fás Press office last Tuesday. Please note that most of the questions listed could be answered from the 300+ pages of documents we obtained under FOI for this story, we were looking to get useful quotes.

—

This type of work is utterly uneconomical for two freelance journalists to undertake. Even without including costs for our time spent working on the story, we’d still make a loss simply on expenses incurred. All money received from the Sunday Times goes back into the FOI fund.

I’ll post some additional information later in the week.

Knackered, until next time.

Dick Roche claimed €50k in mileage in two years

The Minister of State with special responsibility for European Affairs at the Department of Foreign Affairs, Dick Roche, claimed over €50,000 in “mileage costs” from his Department over two years – the highest total mileage claim of anyone at the Department over that period.

According to a database released under the Freedom of Information Act, Mr Roche ranks first for mileage claims for the entire department for both 2008 and 2009. In 2008 he claimed €28,466.97 in mileage costs, while in 2009 Mr Roche claimed €21,563.56 under the same heading – a total of €50,030.53.

In 2009 a total of €157,466.02 was claimed by Department of Foreign Affairs staff under the mileage cost heading, with Mr Roche’s claims accounting for over 13% of the cost of all mileage claims in that year. In 2008 Mr Roche claimed 11% of the €268,403.34 of all mileage costs at the Department. Mr Roche was appointed Minister of State at the Department after the 2002 general election and was reappointed in 2007.

Mr Roche’s senior at the Department, Foreign Affairs Minister Micheal Martin did not make any claims for mileage costs. His total claims for 2009 were €2,662.63, mostly for “subsistence costs”. Mr Martin has the use of a Ministerial car. The next highest claimant of mileage expenses after Mr Roche in 2008 was Patrick J Kelly, who claimed €10,025.40.

Under all expense headings, other staff at the Department include Ambassador to Turkey Thomas Russell, who claimed €16,784.28 in 2009. Ambassador to Australia Mairtin O’Fainin claimed €16,584.45 in 2009, Ambassador to Egypt Richard O’Brien claimed €15,559.16, Francis Rickard claimed €15,406.94 and Second Secretary at the Irish embassy in Abu Dhabi Robert O’Driscoll claimed €14,478.93 in 2009.

The Department press office said as far as it was aware Mr Roche does not employ the services of a driver and does not have a ministerial car at his disposal. Mr Roche is based in Bray, Co Wicklow, 20km from Dublin city centre. However Mr Roche was heavily involved in campaigning for the Lisbon Treaty in both 2008 and 2009. In 2007 his mileage claims totalled under €13,000. Mr Roche’s involvement in the campaign could have had a significant effect on his claims. According to SIPO “The use of Ministerial cars, including drivers, by Ministers (not Ministers of State) during the election period, is not an election expense as the cars and drivers are provided as a security measure and Ministers are required to use them at all times.”

As a TD, Mr Roche was paid a salary of €98,164.32 in 2008, and did not claim any travel or subsistence expenses from the Oireachtas. Mr Roche’s expenses claims at the Department of Foreign Affairs have continued into 2010, with the most recent single claim for €1,050.59 made for mileage costs on February 19, 2010. A Junior Minister could expect to earn €147,284 a year in 2007, on top of their average TD salary of €122,000.

Expenses data for all staff at the Department of Foreign Affairs for 2005, 2006, 2007, 2008, 2009 and 2010 will be published here in the coming weeks.

Updated:

In 2007 it emerged that many junior ministers were claiming large amounts of mileage:

THE current system of paying junior ministers’ mileage has been described as a “farce” after it emerged a TD in Dublin claimed 100 times more in petrol expenses than a TD in Galway.

Figures seen by the Irish Independent show that Noel Ahern, who represents Dublin North West, ran up mileage expenses of €19,710 last year and €20,390 to date this year.

This is 100 times more than the €190 which was claimed last year by Noel Treacy, who represents the people of Galway East.

But last night, Mr Ahern claimed the figures supplied by the department about Mr Treacy were “ridiculous” and “wrong”. He said he is usually at the lower end of claims when a full list is compiled adding: “I don’t think that (€19,710) is necessarily that much.”

Figures show the Department of the Environment — which is headed up by the Green’s John Gormley — has covered the most road miles.

The biggest claim last year was lodged by Cork’s Minister of State for Environment, Batt O’Keeffe — who ran up a travel bill of €62,638 and has already run up expenses of €32,240 so far this year.

Junior ministers were allowed to claim expenses following a Government decision in 1983 barred ministers of State from using a state car. Junior ministers do receive a civilian driver — but in a bid to cut costs, the Government allowed them to claim travel costs on up to 60,000 miles.

As long as ministers can prove that they used their car for official State business they are covered — and can claim travel allowance like any public servant on official business.

Markets, austerity, CSO figures

Dan O’Brien has produced an inhuman amount of copy on the CSO figures released yesterday for today’s Times; frontpage, opinion page and business page analysis. To summarise “it looks aiight for now, if we don’t fuck up… but keep that 1866 Pino Grande Blanc in the cellar for two years yet, bruvh”… okay, Dan O’Brien would never say ‘bruvh’, but you know what I mean.

A former colleague of O’Brien’s asks on The Economist if our austerity is a ‘healing pain’.

Constantin Gurdgiev; ‘recovery or triple dip?’. He wants more cuts.

Also in the last 48 hours or so, Paul Krugman wonders if austerity reassures markets, P O’Neill expands on his arguments through the Spanish-Irish prism on A Fistful of Euros and Karl Whelan weaves it into an analysis of bond yield levels. Then to tie it all up, also on AFOE, Charlie Whitaker asks should we be looking to reassure markets?

Back soon.