We woke up to the news today that Dublin property prices are predicted to return to pre-crisis prices by February 2020 – a mere 2½ years away.
The caveat of course is that this prediction has been made by “experts” Savills, who its fair to say have a bit of a vested interest in the property game.
Nevertheless you have to ask yourself, how did a country with the worst housing-market crash in the world return to such a place.
Fine Gael wisely advised us ‘to make sure that we don’t repeat the mistakes of the past’ and promised to “prevent that boom and bust cycle that bedevilled us for so many years”.
They told us they were different from Fianna Fail and that “there will be no return to the past where tax incentives for developers drove supply.”
The problem though is that rather than give tax breaks to developers to BUILD, they gave tax breaks to investors to BUY; 7 Year capital gains tax exemptions, introducing tax-free REITs, encouraging the use of tax free SPVs, QIAIFS and ICAVs.
OK but all that was done to ‘kick start’ the property market and the government have learned their lesson, right?
Successful lobbying by interest groups such as the Residential Landlords’ Association created the myth that landlords were leaving the market due to the the ‘stringent costs’ of running a rental property. Landlords it seems, are also allergic to paying taxes.
The government, believing the hype, immediately increased tax relief on mortgage interest meaning landlords could now deduct 80 per cent of the interest paid on borrowings on a rental property up from 75 per cent previously, with “full interest deductibility” to be restored for landlords by 2021.
So what can we expect in Budget 2018?
The Department of Finance recently held a consultation on the “tax and fiscal treatment of landlords” and our new Minister for Housing, Planning and Local Government, Eoghan Murphy has publicly stated that he thinks we need to “look at new measures to support and/or encourage landlords”.
Further to the Religious Sisters of Charity getting ‘sole ownership’ of the new National Maternity Hospital.
And the online petition, against the move, that has gained more than 75,000 names…
And the Sisters of Charity basing their decision not to pay redress to the Magdalene survivors based on the findings of the McAleese Report…
Readers may wish to recall the following reported by Conor Ryan and Clare O”Sullivan, in the Irish Examiner, back in February 2013…
The Sisters of Charity made €63m in sell-offs during the boom of which €45m came from the 2001 deal for land around its former laundry in Donnybrook, Dublin.
Last year, the Religious Sisters of Charity, who amassed a €233m property portfolio, said they could not afford to release €3m it promised to put into a trust fund for the victims of institutional child abuse.
The order blamed the decision to reduce its cash offer by 60% on the poor property market.
In 2009, when they supplied details of their assets to the Government, it had financial interests of €33m and sold €63m of property in 10 years. The order said it needed to set aside €38.6m to care for its 264 sisters.
Mere sink estates next to the filthy richness soon to be on offer in LA’s most exclusive precinct. To wit:
Nile Niami, a film producer and speculative residential developer, is pouring concrete in L.A.’s Bel Air neighborhood for a compound with a 74,000-square-foot (6,900-square-meter) main residence and three smaller homes, according to city records. The project, which will take at least 20 more months to complete, will exceed 100,000 square feet, including a 5,000-square-foot master bedroom, a 30-car garage and a “Monaco-style casino,” Niami said.
“The house will have almost every amenity available in the world,” he wrote in an e-mail. “The asking price will be $500 million.”
Card-carrying Journalist, acclaimed Bono biographer and DIT lecturer Harry Browne appeared at the banking inquiry to discuss the media’s role in the the boom and bust.
In his opening address, Mr Browne, formerly with the Irish Times, argued that by putting advertisers above readers newspaper editors had managed to lose the respect of both. [full text at link below]
Print and broadcast media in Ireland played an immeasurable but almost-certainly significant role in the inflation of the property bubble and the legitimation of risky behaviour by the financial-services sector in the lead-up to the crisis of 2007-08, and did so partly by ignoring or marginalising scepticism about these phenomena.
I won’t romanticise the journalism of an earlier age, which had plenty of its own problems, many of them involving the limits and shortcomings of professionalism itself. However, over the last 30 years or so these principles are widely understood to be increasingly at risk all over the world, with particular features of the media landscape endangering them.
As the leading American scholar of journalism Daniel Hallin has written: ‘For the most part I don’t think journalistic professionalism is breaking down from the inside, by journalists becoming less committed to it; instead I think professionalism is being squeezed into increasingly smaller niches within the media field’
It is my contention that in Irish newspapers we can quite literally see that ‘squeeze’ occur over the period between about 1990 and 2007, as the physical construction of newspapers changed. There was a inscription of an unquestioning pro-business ideology and practice on to increasingly large, advertising-heavy proportions of the newspaper – with ever-growing business/finance, property and lifestyle sections, dedicated to the advertising of, respectively, recruitment, real-estate and consumer goods and services.
Even the most scrupulous of newspaper editors came to see those sections as a realm of, at best, what you might call ‘Professionalism Lite’, where soft treatment of the rich and powerful was expected.
Even if you worked in the niches where full-blown professionalism still held sway (the journalists who filled news pages and provided political coverage, for example) it was hard to miss the message embedded in that big, colourful product about your employer’s relationship to financial institutions, property interests and other corporate bodies.
Those supplements were, after all, paying the bills. When Irish Times Ltd infamously paid €40 million for myhome.ie in 2006, it appeared to confirm its dedication to what increasingly looked like its core business: advertising property sales.
This has obviously consequences, of course, for the newspaper’s capacity to deal impartially with subjects such as the desirability of property ownership over other forms of tenure, or the related question of the ‘soft landing’.
A group of Irish financial journalists, speaking on condition of anonymity to a team of academic researchers who published their findings in 2010, discussed this issue.
One of them said: ‘Much of the mainstream media seems to me to be very conflicted because of their reliance on real-estate and recruitment advertising. That doesn’t mean reporters consciously avoid writing bad news stories, but it’s hard to run against the tide when everyone is getting rich.’ Another stated that journalists ‘were leaned on by their organisations not to talk down the banks [and the] property market because those organisations have a heavy reliance on property advertising’.
In 2006 I myself interviewed dozens of journalists about the direction of the Irish Times.
One of them, retired from the paper, said: ‘In the mid-1980s… we had a series investigating the truth behind buying and selling property. Can you imagine that now?’ Even in the 1980s, he recalled, ‘[t]he commercial side of the paper [i.e. those who sold advertising] were in complaining like nobody’s business’ about the series; but the then-editor, Douglas Gageby, ‘stood up to them’.
The idea that certain, then-small parts of Irish newspapers were professionally compromised territory, however, was already in the air as early as the 1980s.
A former business editor from Independent Newspapers recalled a lunch from that period where journalists and brokers gathered to mark the appointment of a new president of the Irish Stock Exchange:
The lunch went well and all the proprieties were observed, until, during the port, the topic of mutual dependence came up in the conversation. ‘What do you mean, mutual?’ a rubicund and slightly tipsy broker ventured. ‘The business pages are ours. We own them.’…
…By the time of the Celtic Tiger, this compromised turf of business and financial journalism had expanded many times over both in the volume of pages produced and in the number of journalists employed. In that important and revealing research cited earlier, the authors summarise the views of several of the Irish financial journalists they interviewed:
According to Journalist F, because of the need for regular contact with financial sources, ‘some journalists are reluctant to be critical of companies because they fear they will not get information or access in the future’. Journalist E… believed that some journalists had become ‘far too close to their sources’: They viewed them as friends and allies and essentially became advocates for them.
Their approach was justified editorially because many developers and bankers limited access to such an extent that it became seen to be better to write soft stories about them than to lose access.
Extremely soft stories would be run to gain access too…. Journalist B criticised daily financial journalism for being ‘almost entirely press release and stock exchange disclosure based’…. Journalist F noted, it was ‘well known that some PR companies try to bully journalists by cutting off access or excluding journalists from briefings’.
Many of the Irish journalists interviewed for that research said the business media here had become more adversarial since the crash. However, in research among British journalists in the aftermath of the financial crisis, a study found there was ‘no consensus among financial and business journalists about their “watchdog” role in relation to markets and corporate behaviour’.
This sort of ambivalence, to put it kindly, about telling good, tough stories while maintaining source relationships is not unique to financial and property journalism. However, as the role and prominence of those sorts of journalism increased exponentially in the 1990s and early 2000s, their particular compromises of ‘professionalism’ played a proportionately much bigger role in newspaper coverage of these important areas of the economy and society.
Their growth was not inevitable, nor was it unique to Ireland. It was part of an international development in the newspaper industry that sought to diversify papers’ content and appearance to make them more attractive to advertisers and (to a lesser extent) readers.
RTE Television Centre (top) and Julien Mercille (above)
It’s Mercille on Monday.
Julien Mercille writes:
A fortnight ago a scandal involved Europe’s largest bank, London-based HSBC and its Swiss banking arm, in a large tax evasion scheme.
The charges are that the bank helped its clients hide accounts while providing services to corrupt businessmen and criminals.
Some have called it the biggest banking leak in history. Newspapers immediately gave much attention to the story, but the UK’s Daily Telegraph gave it minimal coverage. Why?
It’s partly because the Telegraph feared that HSBC would stop funding the paper through advertising. Peter Oborne, the Daily Telegraph’s chief Political Commentator, actually resigned in protest because his paper’s editor let commercial advertisers influence the news content and reporting.
HSBC also used to sponsor RTÉ’s Drivetime radio show, which suggests obvious conclusions, but more on that below.
Advertising revenues are crucial to the news industry. They allow newspapers to be sold for a cheaper price, making them more competitive.
This affects news content because corporate advertisers tend not to subsidise television programmes or news stories that seriously question or attack their own business or the political economic system of which they are part, which would be contrary to their interests.
The same goes for corporate or state ownership of the media: owners don’t favour stories that directly challenge government or the corporate sector simply because that’s directly against their interests.
Former Telegraph executives and journalists have confirmed the allegations, saying they were ‘spot on’, and additional claims have been made that:
– HSBC pays about £3.5 million per year to the Telegraph in advertising fees.
– The paper’s commercial department is ‘stronger’ than the editorial one and this has been a ‘dirty little secret for some time’. The Telegraph ‘can’t afford to offend’ some ‘key advertisers’. This means ‘stories being softened, stories being downgraded in terms of placement, headlines softened or stories not run at all’.
– HSBC withdrew advertising from the Telegraph three years ago after negative reporting on the bank.
– Often, ‘If there was a story related to a big Telegraph advertiser and something that was deemed critical was going to appear, subsequently you’d get a call of irritation from someone very senior saying: “We’ve heard that you might be running a story about Tesco… Did you know that they spend X amount with us advertising each year?’
The Irish media faces the same situation. For example, RTÉ gets about €150 million in advertising revenue every year, and in 2008 before the economic crisis that reached €240 million. It’s almost half of its total annual revenues (the other half is made up by the TV licence fees it collects).
Some of its main sponsors are banks, insurance firms and car companies:
-Bank of Ireland
A quick look at RTÉ’s website shows how desperate it is for corporate advertising, telling potential advertisers that RTÉ is ready ‘to help you plan the process of getting your message across the largest audience in TV, Radio, Print and Online in the Irish market’ and that advertising on RTÉ ‘is the ideal platform to enhance your tactical plans or long term brand objectives’.
There are telling examples: Bank of Ireland sponsors RTÉ Radio’s The Business show by paying a fee of €160,000 for 12 months.
Ulster Bank sponsors RTÉ’s Drivetime radio programme by giving the show €260,000 for the year. Before that the sponsor was Danske Bank, and before that, HSBC bank. Who really thinks those shows will give us a critical and objective picture of financial issues?
A clear example of the significance of advertising to the Irish media is the large amount of funding from property advertising received during the housing boom years.
The Irish media went even further than benefiting from property advertising money: they became owners of property websites, acquiring a direct stake in the growing housing bubble.
For example, in 2006, Independent News & Media bought PropertyNews.com (along with the PropertyNews monthly newspaper), the largest internet property site in Ireland.
In 2006, the Irish Times bought the property website MyHome.ie for €50 million, along with the website newaddress.ie, which aims to make it easier for home owners to move residences.
Also, most newspapers published weekly supplements for commercial and residential property, ‘glamourising the whole sector’, while ‘glowing editorial pieces about a new housing estate were often miraculously accompanied by a large advertisement plugging the same estate’, in the words of Shane Ross, former Sunday Independent business editor:
‘Unfavorable coverage of developers and auctioneers in other parts of the newspapers was regularly met by implied threats from property interests that advertising could go elsewhere’. Moreover, a reporter working for an Irish news organisation stated that journalists ‘were leaned on by their organisations not to talk down the banks [and the] property market because those organisations have a heavy reliance on property advertising’.
Some people will deny that advertisers and owners influence news content. That’s contrary to all evidence, but think about it this way. We don’t have any problem understanding that a trade union newspaper reflects the trade union’s viewpoint.
Or that a student paper reflects the students’ viewpoint. Or that a television show that would be sponsored by Greenpeace or Amnesty International would promote environmental and human rights issues. Or that a radio station sponsored by the Irish Palestine Solidarity Campaign would highlight views favourable to Palestine.
So why is it so hard to understand that a show sponsored by Ulster Bank or Bank of Ireland will likely present favourable views of bankers? Or that a programme sponsored by private health insurance companies won’t tell you that a private, profit-driven health care system is inefficient, wastes money, and bad for people’s health? Or that a show sponsored by a car company won’t exactly be keen on promoting real alternatives to our car culture?