HOW COME builders can afford to lop €100,000 off an apartment costing, say, €350,000?

It’s a question asked with suspicion as the adverts power the recovery with discounts at a level unimaginable two years ago. The suspicion is that developers made obscene profits during the boom. While gigantic profits were made, much of it was invested back into expensive land banks for further development – as we now know only too well from pleadings before the commercial courts, where even the most prudent of builders are facing receivership.

As for the current massive discounts, most represent a loss of around 20 per cent to the builder.

But, as explained to us from the horse’s mouth, a seller facing difficulties will discount to keep cash flowing on their books, to show their lenders that they have the all-important capacity to meet repayments. As those are likely to have been “re-negotiated” in recent months at a punishing increase in interest rates, effectively the builder is paying upwards of 20 per cent on his loans, originally taken out at around 9 per cent to 11 per cent. So selling at a 20 per cent discount still allows him to keep his head above water. Just. Those are the factual mathematics for anyone wondering if they are getting a bargain in the current climate. Yes, they are.