Since the population is lower then expected is the state government going to change its tactics? Don’t count on it.

The U.S Census data show a population of 6.4 million people in Arizona on April 1st 2010.  Nearly a year earlier the Census estimated 204,000 more people then the 6.4 million one year later and the Arizona Department of Commerce was off by nearly 300,000 (291,000) to be exact.

How can the numbers be of by 4%?  For a state economy which has been driven by population growth that’s a huge difference.  It’s no wonder the streets seem more empty and real estate supply is not dwindling as fast as it should.

I hope this is a drastic wake up call for the Arizona government and related commerce departments who have been lax about driving high paying jobs to Arizona.  The state has, for too, long relied on real estate growth and development to drive the economy, leaving it destitute and weak in the wake of the Great Recession with no prospects for near therm improvements, especially with no change in the guard. 

A recent comment over at the Rogue Columnist noted, "Phoenix is ridiculously stretched out like some ancient creosote bush. You can drive for miles without seeing anything that looks like love. And when you finally see something that love might have constructed, it’s just as likely to be a ruin."

It’s hard to argue with the statement when so many homes lie empty, when the central city is filled with lifeless empty lots which have already been there for years with no change in sight.

Sure, there are spots of brightness in the valley, but the economy of the valley cannot depend of a few enclaves of wealth that are surrounded by the shattered false dreams of ever lasting housing development.  It seems the only businesses opening are restaurants, but how many are closing: or the many low paying service jobs.

Our Arizona government has failed us: they failed to prepare for the long term growth of the state, relying on population growth which has turned to be lower then expected. So what now?

Nation might take 15 years to recover

Economy has shrunk by ‘catastrophic’ 22pc on peak, figures reveal.

Ireland’s economy has “fallen off a cliff” and could take more than 15 years to recover as new figures reveal it has shrunk by 22 per cent from its peak.

A loss of more than a fifth of the country’s domestic trade, particularly in the retail sector, in such a short period of time has been branded a catastrophe by the opposition and by the Irish Small and Medium Enterprises Association (ISME).

The domestic economy, the day-to-day business of trading, has been decimated and to a far greater extent than previously thought.

According to official CSO quarterly National Accounts figures, since the peak of Ireland’s economic wealth creation in the first quarter of 2007, Ireland’s economy has reduced by a frightening 22 per cent.

From that peak period in early 2007, GNP figures (the domestic economy) had plummeted by just under 25 per cent in mid-2010, but rallied slightly in the second half of last year.

Given the penal rates of interest being levied against Ireland on its €85bn loan from the IMF/EU, there is a growing consensus that the country won’t be able to meet the repayments that some commentators believe could be as high as €10bn a year in interest alone.

As a result of a collapse of all tax revenues since the peak of late 2006 and early 2007, the Irish Exchequer has also reached another worrying milestone — posting 35 consecutive monthly Exchequer deficits since January 2008.

Mr Lenihan’s 2009 Budget day comments that the worst is over were based on a reported minor return to growth, driven by multinational profits, but this was an error and in fact the pace of decline actually increased towards the end of 2009.

In recent days and weeks, Mr Lenihan has pointed to the growth of the export sector as a real positive sign for the Irish economy.

He also said that he stood over his comments that the worst was over because GDP (GNP plus multinational profits) is a far better indicator in terms of economic activity and jobs.

In total, the domestic economy fell by 11.3 per cent during 2009, the largest-single decrease in wealth ever recorded.

Labour’s finance spokeswoman Joan Burton said that Ireland had “fallen off a cliff” and that behind these stark figures was a world of pain for regular Irish families.

Fine Gael senator Paschal Donohoe said the enduring legacy of the Government was the destruction of small businesses around the country.

“Our export industries are vital but we need a thriving domestic economy to get our country back to work,” he said.

“The Government has done too little too late to realise that we need small and medium businesses to drive our economy back to recovery.”

ISME said the majority of the pain was being felt by small businesses, which have been abandoned by the State.

To illustrate the true devastation of the recession on the private sector, 127 companies a week have ceased trading since Brian Cowen became Taoiseach in May 2008.

Report by DANIEL McCONNELL Chief Reporter – Sunday Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Up to 300,000 homeowners in negative equity

Further 30,000 will struggle with mortgage payments after Budget tax increases kick in…

THE spectacular fall in property prices is even worse than was stated by a government economic think tank last week — up to 300,000 homeowners are now in negative equity.

Expected interest rate hikes will mean another 30,000 people — roughly the population of Dundalk — will struggle to meet their mortgage payments by the end of the year.

The recession, joblessness and rising interest rates already mean that 70,000 borrowers have missed payments or renegotiated their mortgages.

Now financial institutions are expected to increase their standard variable rates.

It is also widely expected that the European Central Bank will increase its interest rate before the end of the year. This would also hit those on tracker mortgages.

Michael Dowling, of the Independent Mortgage Advisors Federation (IMAF), said: “With rising unemployment, higher taxes and the threat of higher interest rates this year, at least 100,000 people could be under stress to meet their mortgage payments by the end of the year.”

The Economic and Social Research Institute (ESRI), in conjunction with Permanent TSB (PTSB), said last week that prices were now back down to 2002 levels.

But leading auctioneers Savills Ireland told the Sunday Independent that the fall had been even higher. They said that in some sectors of the market, prices were now back to the levels of 11 years ago.

Joan Henry, head of research at Savills Ireland, said: “While the PTSB/ESRI index shows that prices in the market are back to 2002 levels, Savills data for particular areas shows that houses are transacting in some cases at 2000 price levels.”

She suggested that given this level of price correction and the removal of stamp duty, there was “good value” for those seeking to buy but there was unlikely to be any large increase in property transactions in the first half of this year.

“Unfortunately, economic developments in the final two quarters of 2010 have had a negative impact on both activity and price levels in the property market. Entering into 2011, continued liquidity issues in the banks, coupled with reduced disposable incomes via tax increases, will impact on sentiment and the purchasing power for potential buyers,” she said.

Ms Henry suggested that the effective removal of residential stamp duty may have a positive effect on the second-hand market.

“The fact that first-time buyers are in the stamp-duty net, albeit at very low levels, could result in further price reductions for that category of buyer,” she said.

Frank Conway of the Irish Mortgage Corporation said those who bought at the height of the property boom would be in negative equity and trapped with their existing lenders for years to come.

“As many as 250,000 to 300,000 mortgage holders are thought to be in negative equity. In mid-2006, more than a third of all first-time buyers purchased their homes using 100pc financing.

“Today, all would be in negative equity as house prices have fallen by 40pc or more,” he said.

According to the Permanent TSB/ESRI house-price index, the fall has been 38 per cent since mid-2006.

But the index shows that house prices fell by 3.5 per cent in the final quarter of last year — a time when consumer confidence was low in advance of December’s austerity Budget.

The rate of decline in average house prices in Ireland accelerated in the fourth quarter of 2010.

However, overall, the rate of decline for the year was significantly less than in 2009. House prices fell by 10.8 per cent, compared to a drop of 18.5 per cent in 2009.

But last week, tens of thousands of workers who received their monthly salaries discovered the true extent of the tax and levy increases introduced by Mr Lenihan.

Couples on average pay have had their net income cut by €140 a month.

Workers on the top tax rate are now burdened with paying 52 per cent of their gross pay in taxes and through the new universal social levy.

Official figures given to Labour finance spokeswoman Joan Burton show that 91,000 PAYE workers will move from the 20 per cent standard rate to the top 41 per cent rate.

It means that many of those thinking about buying property will have to re-evaluate their figures to take account of drastically reduced take-home pay.

Report by JEROME REILLY and LOUISE McBRIDE – Sunday Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Up to 300,000 homeowners in negative equity

Further 30,000 will struggle with mortgage payments after Budget tax increases kick in…

THE spectacular fall in property prices is even worse than was stated by a government economic think tank last week — up to 300,000 homeowners are now in negative equity.

Expected interest rate hikes will mean another 30,000 people — roughly the population of Dundalk — will struggle to meet their mortgage payments by the end of the year.

The recession, joblessness and rising interest rates already mean that 70,000 borrowers have missed payments or renegotiated their mortgages.

Now financial institutions are expected to increase their standard variable rates.

It is also widely expected that the European Central Bank will increase its interest rate before the end of the year. This would also hit those on tracker mortgages.

Michael Dowling, of the Independent Mortgage Advisors Federation (IMAF), said: “With rising unemployment, higher taxes and the threat of higher interest rates this year, at least 100,000 people could be under stress to meet their mortgage payments by the end of the year.”

The Economic and Social Research Institute (ESRI), in conjunction with Permanent TSB (PTSB), said last week that prices were now back down to 2002 levels.

But leading auctioneers Savills Ireland told the Sunday Independent that the fall had been even higher. They said that in some sectors of the market, prices were now back to the levels of 11 years ago.

Joan Henry, head of research at Savills Ireland, said: “While the PTSB/ESRI index shows that prices in the market are back to 2002 levels, Savills data for particular areas shows that houses are transacting in some cases at 2000 price levels.”

She suggested that given this level of price correction and the removal of stamp duty, there was “good value” for those seeking to buy but there was unlikely to be any large increase in property transactions in the first half of this year.

“Unfortunately, economic developments in the final two quarters of 2010 have had a negative impact on both activity and price levels in the property market. Entering into 2011, continued liquidity issues in the banks, coupled with reduced disposable incomes via tax increases, will impact on sentiment and the purchasing power for potential buyers,” she said.

Ms Henry suggested that the effective removal of residential stamp duty may have a positive effect on the second-hand market.

“The fact that first-time buyers are in the stamp-duty net, albeit at very low levels, could result in further price reductions for that category of buyer,” she said.

Frank Conway of the Irish Mortgage Corporation said those who bought at the height of the property boom would be in negative equity and trapped with their existing lenders for years to come.

“As many as 250,000 to 300,000 mortgage holders are thought to be in negative equity. In mid-2006, more than a third of all first-time buyers purchased their homes using 100pc financing.

“Today, all would be in negative equity as house prices have fallen by 40pc or more,” he said.

According to the Permanent TSB/ESRI house-price index, the fall has been 38 per cent since mid-2006.

But the index shows that house prices fell by 3.5 per cent in the final quarter of last year — a time when consumer confidence was low in advance of December’s austerity Budget.

The rate of decline in average house prices in Ireland accelerated in the fourth quarter of 2010.

However, overall, the rate of decline for the year was significantly less than in 2009. House prices fell by 10.8 per cent, compared to a drop of 18.5 per cent in 2009.

But last week, tens of thousands of workers who received their monthly salaries discovered the true extent of the tax and levy increases introduced by Mr Lenihan.

Couples on average pay have had their net income cut by €140 a month.

Workers on the top tax rate are now burdened with paying 52 per cent of their gross pay in taxes and through the new universal social levy.

Official figures given to Labour finance spokeswoman Joan Burton show that 91,000 PAYE workers will move from the 20 per cent standard rate to the top 41 per cent rate.

It means that many of those thinking about buying property will have to re-evaluate their figures to take account of drastically reduced take-home pay.

Report by JEROME REILLY and LOUISE McBRIDE – Sunday Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

What’s a house worth now: does anyone know?

With no national house price register available to help homeowners, working out how much your property is really worth can be tricky – if not impossible

LIKE MANY neighbourhoods around the country, Charlesland in Greystones, Co Wicklow could be renamed Walter Mittyland, such is the huge disparity in the asking prices of houses in the area.

When Keith Slowey and his wife, Genevieve, put their three- bed end-of-terrace on 89 Charlesland Grove on the market in October at an initial asking price of €310,000 (now reduced to €295,000), a three-bed mid-terrace house nearby was asking €345,000 while another three-bed, also mid terrace, in the area was €485,000.

There are lots of properties in Charlesland on the market and according to Keith Slowey, “the price range is crazy”. Two-bed houses predominate in the estate and some are asking more than nearby three-beds.

The houses are being sold by investors bailing out of the market and owner-occupiers looking to migrate down the N11 towards south county Dublin where properties are now more affordable.

The Sloweys are looking at five-bed houses in Delgany that cost €1.2 million at the peak but are now just over €500,000.

Before deciding what to ask for his house, Keith studied similar houses in the area on myhome.ie which he says was helpful, but a little misleading.

“All you are seeing is the prices people are looking for, not what they are actually getting.” With no house price register and a lack of transparency surrounding selling prices due to data protection legislation, confusion and denial reigns.

Some vendors are clinging to the vain hope that someone will love their property enough to meet their asking price, even it’s substantially more than their neighbours are asking for a similar property.

Charlesland was built in several phases and the asking prices in some cases reflect the prices originally paid. While the Sloweys bought their house in 2005 in an early phase of the development for €385,000 and will make a substantial loss of around €90,000 if they sell at the current asking price, they have good savings which will make up the loss.

“Some people who bought in later phases paid €525,000 for the same house and probably can’t afford to drop below a certain asking price.”

Little did vendors and estate agents know when properties were flying out the door at the peak of the boom that life was about to get so complicated. Now, with far fewer transactions to facilitate comparisons and no national house price register available to help homeowners assess the value of their own property, working out how much a house is worth can be like nailing jelly to a wall.

While the Government has promised to establish a national property price data base, this is unlikely to be set up in the short term. It’s dependent on the fate of the Property Services (Regulation) Bill 2009, which came before the Dáil in November but looks increasingly unlikely to be passed before an election is called.

For now, house prices remain a private affair between the buyer and the seller and their agents, the exception being prices achieved at public auctions. However, with so few of those happening, auctions can no longer be relied on to provide an accurate picture of values in any given area.

One of the problems is that while we know prices have taken a nosedive since the peak, the exact amount by which they have fallen is up for debate. The latest Permanent TSB/ ESRI house price index says house prices fell nationally by a further 3.5 per cent in the last three months of 2010, putting the fall since the peak in 2006 at 38 per cent.

But different house price indices tend to come up with different figures and often don’t take into account the nuances of local markets.

Low transaction levels – the country largest estate agency chain, Sherry FitzGerald estimates says the number of homes it sold last year, was down 55-60 per cent from the peak year of 2006 – have meant that it’s difficult even for estate agents to get a handle on values in some areas and even when they can glean some prices from other agents, sellers expectations and personal circumstances also come into play.

Against this backdrop of low activity, agents also find themselves having to appeal to sellers to be realistic about price, says Gunne director Declan Cassidy, who operates from the agency’s Fairview branch.

“You can show them (the sellers) asking prices for similar properties in the area, and they might say they want to be realistic, but if another agent says they’ll get them a higher price, they often go with them. A few months later and it’s back down in price.

“It’s all about getting them to believe the facts. For instance, if they know their neighbour sold at €325,000, why do they think their house is going to get €375,000? If they price it right in the first place, the get viewings, and once viewings start there’s more chance of getting bids.”

Vendors tend to be more realistic when they need to sell quickly but not everyone is in a hurry to sell. Estate agent Owen Reilly who specialises in docklands property, says that some owners are happy to leave their property on the market, at an unrealistic price, for months, even years. “This is creating a false impression of the market, that nothing is moving.” he said.

Some vendors may well be just testing the market, while others are putting property up for sale as an exercise to appease their bank, but at a price at which they know is unlikely to attract bids.

In some cases where properties sell after a long period of being on the market, the neighbours can be shocked to discover the eventual price, which may be far below the asking price, and far below what they reckon their own home is worth. These slow-to-sell properties often undergo gradual under-the-radar price drops and eventually sell at a fraction of the start-off price.

Price is the first thing most buyers notice. Sellers can be reluctant to commit to an asking price they feel doesn’t reflect the special features or standard of their property, but the anecdotal evidence is that they won’t get viewings unless they are prepared to compromise. While the size, condition, orientation and parking all have a bearing on what is being asked, ultimately says Reilly, it’s a numbers game. “It’s all about encouraging viewing and activity.”

Agents are saying that while there’s a perception that nothing is selling, when a buyer feels there is value they act quickly.

Declan Cassidy subscribes to the theory that selling houses is about getting people to viewings. “If a number of people turn up to view a house, it’s a comfort to each one to know that they’re not the last buyers out there.”

It’s easier to value property at the lower end of the market, where activity is stronger. “People will see a ‘sale agreed’ sign around the corner, and will phone us and ask us to come out and do a valuation on their house.” says Declan Cassidy. It gets trickier in areas where there haven’t been many recent transactions or where there are one-off properties, often in upmarket areas. “If you are going into an area you are not familiar with, there’s a good chance you will get it wrong unless you do your homework,” he says.

James Barber, who is selling a three-bed apartment at 125 Longboat Quay on Grand Canal Dock, says while his apartment is bigger than average – and is spread over two levels with some lovely features including swish bathrooms with underfloor heating – he came to the conclusion that he couldn’t assume that buyers were paying attention to the finer details. He accepted the estate agent’s advice to set an asking price that would generate viewings. “I did my own research as well and looked at Daft and myhome.ie, comparing my apartment with others.” His apartment is unusually spacious, with all mod-cons, but doesn’t have parking or a view of the dock and is on the ground floor. While he is asking €390,000, another much smaller 81sq m (872sq ft) two-bed on Longboat Quay but with waterfront views and parking is asking €495,000.

Barber has had over 30 viewings, by a mix of Irish people, Zimbabweans, South Africans, Chinese and Polish people, “but only two or three silly offers”. Barber’s agent, Owen Reilly, says: “If you were just talking about price per square foot the asking price should be higher but you have to put yourself in the buyers shoes and take into account that there is no parking”.

So how do agents value property in areas where they’ve had few transactions? They are saying that while the lack of price transparency makes life difficult, there’s more co-operation now between estate agents, who are helping each other with price comparisons .

“They won’t give you the exact asking price but you probably get fairly good idea,” said one director of an estate agency chain with several branches in Dublin. Big estate agent firms can have an advantage because there are more transactions which can be used for the purposes of comparison.

But even for the bigger agencies it can be difficult to get a direct or similar comparison, particularly where a property is unusual or has a quirk, and in the past these would have gone down the auction route to find their value in the marketplace. Declan Cassidy says agents can build a picture of values by talking to people – even people on their list who haven’t bought from them but who will often disclose how much they paid for another property.

However, even the most savvy agent can find themselves have to re-evaluate rapidly. This has been happening in neighbourhoods where receivers have been called in to dispose of distressed properties. A recent case was the sell-off of a block of apartments on the southside, called Booterstown Wood, at prices that were less than have than those originally asked by the developer. “Overnight it established a new value for that kind of property and in line with that I had to adjust the price of a property I had for sale nearby.”While big receiver sales can force people to re-evaluate asking prices in an area, individual vendors who drop the price of their home to a new low level can come in for stick from their neighbours.

Keith Slowey says he was approached by another seller in Charlesland who said his strategy to undercut the market, was “dragging everyone else down. But the way I look at it, it’s all about who can afford to sell and get out quickest”.

Report by EDEL MORGAN – Irish Times.

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Since the population is lower then expected is the state government going to change its tactics? Don’t count on it.

The U.S Census data show a population of 6.4 million people in Arizona on April 1st 2010.  Nearly a year earlier the Census estimated 204,000 more people then the 6.4 million one year later and the Arizona Department of Commerce was off by nearly 300,000 (291,000) to be exact.

How can the numbers be of by 4%?  For a state economy which has been driven by population growth that’s a huge difference.  It’s no wonder the streets seem more empty and real estate supply is not dwindling as fast as it should.

I hope this is a drastic wake up call for the Arizona government and related commerce departments who have been lax about driving high paying jobs to Arizona.  The state has, for too, long relied on real estate growth and development to drive the economy, leaving it destitute and weak in the wake of the Great Recession with no prospects for near therm improvements, especially with no change in the guard. 

A recent comment over at the Rogue Columnist noted, "Phoenix is ridiculously stretched out like some ancient creosote bush. You can drive for miles without seeing anything that looks like love. And when you finally see something that love might have constructed, it’s just as likely to be a ruin."

It’s hard to argue with the statement when so many homes lie empty, when the central city is filled with lifeless empty lots which have already been there for years with no change in sight.

Sure, there are spots of brightness in the valley, but the economy of the valley cannot depend of a few enclaves of wealth that are surrounded by the shattered false dreams of ever lasting housing development.  It seems the only businesses opening are restaurants, but how many are closing: or the many low paying service jobs.

Our Arizona government has failed us: they failed to prepare for the long term growth of the state, relying on population growth which has turned to be lower then expected. So what now?

The year in review for residential real estate sales in Phoenix.

I’ll refrain from commenting on this data.  It is a nice overview of the last four years.

Don’t miss the bottom section on foreclosure notices, trustee sales et cetera.

See Also

• Phoenix Real Estate Housing Market Trends, Graphs, Statistics And Reports
  Current and Historic graphs, statistics, tables and commentary of the real estate market in Greater Phoenix

I recently ran across a home on the market that looked familiar. It was a home I purchased just over 10 years ago. Here is a short breakdown of how it transitioned from a good deal to a much lower price 10 years later.

See Also

• Phoenix Homes Search | MLS Properties For Sale | Greater Phoenix MLS Wizard | Real Estate By Map
  Search Phoenix Real Estate by Region, Map, Address, School, MLS No. or Zip Code | Lender Owned, REO homes
• Rent To Riches: From paying rent to collecting rent.
  A new weblog with articles for the current and aspiring real estate investor

Bailout will total more than the EU ever gave us…

Noonan says interest rate must be renegotiated by next government:

THE €85bn IMF-EU bailout will come to more than the total amount of payments received since we joined Europe in 1973, the Sunday Independent can reveal.

Fine Gael’s Michael Noonan said yesterday that this stark fact showed why the interest rate levied on Ireland must be renegotiated and that any new government’s hand will be strengthened by this revelation.

In cash terms, Ireland has received €63.7bn from Europe in various agricultural, social and cohesion funding — far less than the bailout forced on the Irish by Jean Claude Trichet’s European Central Bank in late November.

When those payments are adjusted for inflation, they total €99bn — that is fractionally more than the total cost of the bailout when the penal interest rates are factored in.

When Ireland’s payments to Europe are subtracted, our net receipts from the EU budget amount to €41bn, of which no more than about €20bn could be classified as in any sense discretionary.

In 1973, Ireland received funds totalling just €47.1m from the then EEC, but by 1984 that figure had shot up to more than €1bn a year.

Payments into Ireland peaked at €3.2bn in 1997 and 1998 and have been falling steadily ever since.

According to the latest figures available from the Department of Finance, in 2009 Ireland received €1.8bn from various European funds, with the bulk of the money coming from the European Agriculture Guarantee Fund.

The fact that all of the inward investment into Ireland since we joined the EEC will be negated by paying back the bailout fund highlights the horrific cost being borne by the taxpayer because of the mistakes of bankers and developers during the last decade.

Fine Gael’s finance spokesman Michael Noonan told the Sunday Independent that Ireland will end up paying back more than it has ever received from Europe.

He said: “These figures strengthen the hand of any incoming government to renegotiate the rate of interest being levied on Ireland, particularly on the sum coming from the EU stability fund.”

Mr Noonan was heavily critical of Brian Lenihan’s decision not to contest the interest rate on the first tranche of loans totalling €5bn, which was transferred on Wednesday.

As Spain and Portugal seek to contain borrowing costs and avoid bailouts, European governments are considering lower interest rates on rescue loans in exchange for new guarantees to limit sovereign debt.

Ireland became the first nation to tap the fund, created in May, after Greece had received a separate €110bn rescue package.

The ratio of Irish debt to gross domestic product will reach 114 per cent next year, the EU estimates. That’s up from 25 per cent in 2007.

“It would be reasonable to lower currently charged funding costs by some 200 basis points to 300 basis points, thereby providing additional indirect financial support,” Julian Callow, chief European economist at Barclays Capital in London, said in a January 10 research report.

European finance ministers may discuss lower rates on rescue loans when they meet in Brussels tomorrow.

Other possible changes include boosting the lending capacity of the EFSF, which is backed by €440bn in guarantees by eurozone governments, and expanding its role to allow for debt purchases.

French Finance Minister Christine Lagarde has said that increasing the size of the fund by several hundred million euro will not be sufficient.

The EU must forge a “global package, not a series of individual parcels,” she said.

Report by DANIEL McCONNELL – Sunday Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Bailout will total more than the EU ever gave us…

Noonan says interest rate must be renegotiated by next government:

THE €85bn IMF-EU bailout will come to more than the total amount of payments received since we joined Europe in 1973, the Sunday Independent can reveal.

Fine Gael’s Michael Noonan said yesterday that this stark fact showed why the interest rate levied on Ireland must be renegotiated and that any new government’s hand will be strengthened by this revelation.

In cash terms, Ireland has received €63.7bn from Europe in various agricultural, social and cohesion funding — far less than the bailout forced on the Irish by Jean Claude Trichet’s European Central Bank in late November.

When those payments are adjusted for inflation, they total €99bn — that is fractionally more than the total cost of the bailout when the penal interest rates are factored in.

When Ireland’s payments to Europe are subtracted, our net receipts from the EU budget amount to €41bn, of which no more than about €20bn could be classified as in any sense discretionary.

In 1973, Ireland received funds totalling just €47.1m from the then EEC, but by 1984 that figure had shot up to more than €1bn a year.

Payments into Ireland peaked at €3.2bn in 1997 and 1998 and have been falling steadily ever since.

According to the latest figures available from the Department of Finance, in 2009 Ireland received €1.8bn from various European funds, with the bulk of the money coming from the European Agriculture Guarantee Fund.

The fact that all of the inward investment into Ireland since we joined the EEC will be negated by paying back the bailout fund highlights the horrific cost being borne by the taxpayer because of the mistakes of bankers and developers during the last decade.

Fine Gael’s finance spokesman Michael Noonan told the Sunday Independent that Ireland will end up paying back more than it has ever received from Europe.

He said: “These figures strengthen the hand of any incoming government to renegotiate the rate of interest being levied on Ireland, particularly on the sum coming from the EU stability fund.”

Mr Noonan was heavily critical of Brian Lenihan’s decision not to contest the interest rate on the first tranche of loans totalling €5bn, which was transferred on Wednesday.

As Spain and Portugal seek to contain borrowing costs and avoid bailouts, European governments are considering lower interest rates on rescue loans in exchange for new guarantees to limit sovereign debt.

Ireland became the first nation to tap the fund, created in May, after Greece had received a separate €110bn rescue package.

The ratio of Irish debt to gross domestic product will reach 114 per cent next year, the EU estimates. That’s up from 25 per cent in 2007.

“It would be reasonable to lower currently charged funding costs by some 200 basis points to 300 basis points, thereby providing additional indirect financial support,” Julian Callow, chief European economist at Barclays Capital in London, said in a January 10 research report.

European finance ministers may discuss lower rates on rescue loans when they meet in Brussels tomorrow.

Other possible changes include boosting the lending capacity of the EFSF, which is backed by €440bn in guarantees by eurozone governments, and expanding its role to allow for debt purchases.

French Finance Minister Christine Lagarde has said that increasing the size of the fund by several hundred million euro will not be sufficient.

The EU must forge a “global package, not a series of individual parcels,” she said.

Report by DANIEL McCONNELL – Sunday Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com