IL&P - Investors Conference Call

[Blue_Horseshoe]

Excerpts from the Preliminary 2006 Irish Life and Permanent Plc Earnings Conference Call - Final. Full version @ insurancenewsnet.com/article.asp … afde34de70 if you fancy it.

David Went (outgoing CEO IL&P), in response to a question from Scott Rankin (Davys);

DW: Oh stamp duty versus interest rates, sorry – I’m sorry. Yes, obviously interest rates have had an impact, especially at the first time buyer level in terms of availability of cash, so that’s one aspect of it. But clearly there’s a very large market in second-hand houses and that market has certainly been slowed down quite substantially as a result of the stamp duty. If you talk to estate agents, they’re still seeing lots of people going in, having a look at houses, but they’re actually finding it difficult to translate that into people making offers and actually signing contracts.

To put it in context, if you’re looking at buying let’s say EUR1 million house, do you want to be the last guy to pay a EUR90,000 stamp duty bill? It’s like the last guy who bought a taxi plate for EUR80,000 and the next day they were available for EUR2,500.

So that has created, I think a really dramatic standoff in the market and certainly, we see that as, at this point in time, the most significant factor. There is still, like there is still very strong underlying demand. We know that there will be 90,000 people reaching the age of 25, in other words the house buying age this year, so like there is substantial demand out there, but this stamp duty thing, I think it has really created a distortion in the market at this particular point in time.

Peter Fitzpatrick (Group FD, IL&P) in response to a follow up question from Sebastian Orsi (Merrion) attempting to quantify the “Distortion”

SO: Just if I could follow up, you did mention distortion on the housing market. Is there any way you might be able to quantify what sort of distortion you’re seeing in terms of a lending pipeline, or approval rates for us?

**PF: ** As I say, I think lending for example in the last quarter was pretty much flat, isn’t that right, year on year. So, admittedly, against the very strong 2005, so, it’s at sort of a level, it’s not falling off a cliff, on the other hand, it’s not growing very sharply. But as I say, there is a real serious distortion in the marketplace. Sorry, Eamonn first. And then we – I think we’d need to –

Another participant Eamonn Hughes (Goodbodys) cuts across the change the topic

Blue Horseshoe

[bearishbull]

Did none of these well paid analysts point out that even if a person paid 90k stamp duty on buying now , if it is removed in a years time house prices will rise to reflect this and no one would be able to capitalise on it! Maybe Went does’nt beleive people stretch their budget as much as they can afford/borrow. This was clearly demonstrated when the bands for stamp duty were messed with in 2004. And anyway if people feel property is such a good bet in medium to long run then why worry about 6/9% stamp duty when prices of property rose 12% on average last year! Plus new builds don’t have stamp duty and they are’nt selling well either.

[plaudit]

90000 people aged 25*, lets say 2.5 per house, thats only 36000 houses lads!

*Assume everybody buys when they are 25 just as an average

[CelloPoint]

@plaudit

90000 people aged 25*, lets say 2.5 per house, thats only 36000 houses lads!

*Assume everybody buys when they are 25 just as an average

I’m 25! Make that 35,999 houses required!

[Blue_Horseshoe]

David Went is oft to suggest that all’s OK in the market due to the total numbers in the FTB demographic, conveniently ignoring

Not everyone buys alone
Not eveyone is staying here
Not everyone will qualify for a loan
Not everyone wants to own a property here
Not everyone is at liberty (some are kept at the States discression)

and I’m sure there are a few other good reasons (answers on the back of a 50 to …)

Blue Horseshoe

[BillG]

DW: There is still, like there is still very strong underlying demand. We know that there will be 90,000 people reaching the age of 25,

90,000 people reaching 25?
There were only **70,843 **Irish people born in 1982 - where is he getting the extra 19,000 from … immigrants?

coe.int/t/e/social_cohesion/ … RLTAB5.xls

Interestingly, the number of Irish people turning 25 drops to 48,000 per year over the next ten years.

[plaudit]

Of course a lot of people will inherit their grandmothers house or extend their parents house etc. so that will weaken demand further.

[corkrenter]

@Blue Horseshoe

David Went is oft to suggest that all’s OK in the market due to the total numbers in the FTB demographic, conveniently ignoring

Not everyone buys alone
Not eveyone is staying here
Not everyone will qualify for a loan
Not everyone wants to own a property here
Not everyone is at liberty (some are kept at the States discression)

and I’m sure there are a few other good reasons (answers on the back of a 50 to …)

Blue Horseshoe

From;
cso.ie/statistics/bthsdthsmarriages.htm

2005: 61,042 births 27,441 deaths

If the 90k figure is right and every 2 ppl buy a house (unrealistic I know) and 27k ppl err are no longer with us and again every two leave a house say 13k homes thats a demand level of 33k new houses per year.

Yes there is demand out there it’s one third the build rate!!!

[SeanD]

Yes there is demand out there it’s one third the build rate

This seems to tie back to the amount of property on the market being bought by first time buyers - yet surely demand must be in excess of this given that the population in the private rented sector would seem to be rising via inward migration?

[Blue_Horseshoe]

@SeanD

Yes there is demand out there it’s one third the build rate

This seems to tie back to the amount of property on the market being bought by first time buyers - yet surely demand must be in excess of this given that the population in the private rented sector would seem to be rising via inward migration?

Or the amount being taken up by speculators/invesors!

Blue Horseshoe

[Duplex]

Would it be unreasonable to ‘speculate’ that the supply of housing now comfortably exceeds demand by a considerable margin?