Slowing house price falls still raise questions for NAMA

Brian Lucey, Professor of Finance, TCD School of Business

7th Apr 2010

Brian Lucey, Professor of Finance, TCD School of Business, commenting on the latest Daft research on the Irish property market.

The importance of the Daft.ie database cannot be overestimated. It is surely unconscionable that in a country suffering the after-effects of a house price bubble, there is no real-time or even monthly house price index from any government agency. The unfortunate demise of the ESRI/PTSB index highlights this. Daft.ie now stands alone as the only national monthly index. We are, as a nation, steering blind, not to mention dumb, on the seas of house price deflation.

Given that, what do we find? Is the crash over? Yes, if you live in NAMA-land, a country wherein the valuation of assets to be transferred has been set at their value as of end-November 2009. In the world wherein the rest of us live, the crash continues. House prices continue to fall, albeit at a slower pace than heretofore. Nationally, in the first three months of 2010, the average asking price of a house was a shade under €235,000, down one third from the peak of early 2007. The fall during the first quarter was 3.4%, the smallest quarterly decline in almost two years. Year on year, the fall in the first quarter of 2010 was 18%, a slight decline on the record year on year fall of 19% in the third quarter of 2009.

So the crash is slowing. However, it is not over. The Daft.ie index peaked in May 2007. To expect the trough to be reached less than three years later is to fly in the face of historical evidence. Referring back to Morgan Kelly's prescient, eye-opening ESR article which for many of us represented the key moment when our critical faculties on property were rebooted, a fall of 50% is likely. Based on a straight line projection of average declines in value since the peak this would see another 18 months of declining prices. That would be 50 months of house price falls, or just over 4 years, towards the lower end of historical experience. It is probable that as we decline towards the trough, the speed at which house prices fall slows down. And this is what we are starting to see - in the last six months, the average decline has been lower than the previous six months, itself lower then the period before.

Further evidence that this could be the case is that the time to sell is again rising. In Dublin, houses are spending longer, over five months, before selling, a rise from just below 4 months previously. These Dublin figures are reflected countrywide. Buyers clearly are factoring in further deflation (apart from one buyer, NAMA, for whom the crash is over...) and the stock of houses for sale remains very high. Dublin is a partial exception - in the capital, there is some evidence of clearance is emerging, with the total stock for sale having fallen by 20%. Much of this decline was from houses that were on the market for more than six months - evidence that a buyer can be found even in a falling market, if the price is right. Rural markets appear to be "marking time".

Nationally, nowhere shows less than a 25% fall from peak prices, with Dublin leading the way, showing falls of 35% and more. The implications of these figures, continuing as they do a trend towards a bottom that we have not yet reached, are pretty horrid for NAMA. What's horrid for NAMA is horrid for all of us, because - for good or more probably ill - our futures are all bound up with the failures of NAMA.

House prices have continued to fall since November 2009, the date chosen (why, on whose advice?) by Minister Lenihan as the valuation date for NAMA. Based on Daft.ie figures, house prices have fallen by a further 4.1%. Applied to a €50bn portfolio, that's a €1.5bn excess that will be paid over what would have been the case had the minister waited. Put it another way - the entire public sector pension levy has been squandered on a needless overpayment. A further implication for the economy is that the emerging problem of negative equity will deepen - negative equity acts as a bar to labour mobility, to discretionary expenditure, and ultimately to economic growth.

The government cannot, try though it will, stop prices from falling further. It can only try to stem the losses to banks (and many suspect, with little evidence but much conviction, to developers) with our money.


HIGHLIGHTS:

Rental Index
Asking Prices, Residential Sales

Stock and Flow of Properties
Stock and Flow of Properties


SNAPSHOT:

Average asking prices across Ireland in Q4 2009
Asking Prices in Q1, 2010

Discuss This Article

  • Re: The Daft House Price Report Q1 2010

    Posted By: NO1FAN Date: Wednesday April 7, 2010 @01:19AM

    Long awaited new report is confirming my thoughts on the current position regarding house prices. However, as the author states, 'try as the government may'- it really does seem like there are forces at work to stimulate a pseudo-panic buying boom again, in what I believe is a disrespect for the intelligence of the Irish population. It's unfortunate but it appears that the function of government of last decade is a bit like our weather 'forcast'. It's not only unable to actually predict what's gonna happen, but worse, for the hundreds of thousands we pay for ministers' salaries and pensions, like met Eireann, our government have no effect on the future, unless as we are witnessing, the economy will recover because the govt says it's recovering.

    It really is confusing, as someone who'd like to buy; sales in many parts of the country and Dublin are still stagnant and dropping, however in some parts of Dublin, sales are happening where quality homes in quality areas are selling, albeit after 'false starts' in many cases, where bidders succeed, only to find themselves unable to obtain the required capital from the bank. The same trait which drove the pseudo-boom is present amoung current bidders.
    Somethings don't change, in the race to the peak of 2006, the same mentality prevailed. People who wanted the best house no matter what, upped and upped their bids until the weaker-willed folded, (ie those who thought about the figures not adding up). Thankfully, the difference today, is that the banks are no longer encouraging the free for all.
    I think you'd wanna be brave to write the updated Daft Report.
    One question- there's a steady trickle of houses coming on the market of late. Where are all the properties, whose owners haven't been paying mortgages for over a year. When these properties inevitably begin to flood the market, then the true effect on house prices of the current slowdown will be apparent.
    But i'm sure someone will tell me i'm wrong???

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Terry Date: Saturday May 8, 2010 @11:41AM

    So when are you going to start talking positive and bring some interest back into the market. History shows that housing prices will always get back to the highest rates, its just a matter of time, ive seen it all before, with the doom and gloom merchants pushing the markets down only to see it all recover and go to new highs. Time my son time, thats all it takes !

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Adam Hervas Date: Saturday May 15, 2010 @04:49PM

    'yes my son, time that is all it takes' and time is money so you tell me.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: R Walsh Date: Wednesday November 24, 2010 @11:27PM

    Is this the same Professor Lucey who produced a figure of €330 Billion as the amount of the National Debt on Vincent Brown programme on TV3 23/11/2010. Colm McCarthy's figure is €120 Billion

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  • Re: The Daft House Price Report Q1 2010

    Posted By: NAMAwinelake Date: Wednesday April 7, 2010 @07:07AM

    Thanks as always to DAFT for spending the money and effort in bringing some sense of statistical analysis to what is happening with residential property prices - a key indicator in any country.

    Completely agree with Brian Lucey's feelings towards the State's failure to produce a public register or even index of actual sales, this was first called for in the Kenny report of 1973 and during the past year we had various undertakings that a public register would be put in place. In recent times, the IAVI, CIF and consumers have all been demanding a public database which would show not only ACTUAL transaction prices BUT ALSO number of transactions. Without it, for all the great work that DAFT does in diligently compiling statistics we are practically blind. Of course DAFT is comparing apples with apples, asking price with asking price but a buoyant market should see settled prices closer to asking than a depressed market. What makesall of this particularly egregious is the assumption that NAMA valuation companies which include some estate agents are probably able to access actual sale prices when determing valuations at NAMA.

    The last ESRI index was for December 2009 and showed a monthly decline of 3.6% in December 2009 on thin sales and of course the index is a lagging index. The ESRI should be publishing the new quarterly index in two weeks time. I'm betting that it will show a 7-12% decline in Q1.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Cormac Date: Wednesday April 7, 2010 @07:10AM

    'NAMA land'? A very vitriolic report that sounds like it was written by a reporter for The Sunday World or the likes. I'm surprised by the lack of professionalism.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Anonymous Poster Date: Wednesday April 21, 2010 @08:39PM

    well guess who is a little bitter about negative equity

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Brian Lucey Date: Saturday April 24, 2010 @09:53AM

    Anon
    Dunno....who is bitter about negative equity? Not me.....dont have any.Care to elaborate, with a real name ?

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Captainwillard Date: Wednesday April 7, 2010 @07:52AM

    What we are seeing here is an instructive example of elliot waves and fibonacci retracement. In absolute terms, the falls are slowing but the ratios between successive monthly falls are still very high.

    I think we have another few years of pain myseff and perhaps another decade of zero nominal increases. Oh and wait for interest rates to increase.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Paul O'Connor Date: Wednesday April 7, 2010 @09:50AM

    I agree there should be a State index, but the sheer ardency of Professor Lucey's plea for such information seems to have affected his thinking in two respects: "Daft.ie now stands alone as the only national monthly index," he writes, but isn't Daft a quarterly index? And when he rhetorically suggests "We are, as a nation, steering blind, not to mention dumb, on the seas of house price deflation," is he not overlooking the very job that the Daft.ie index does?

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Eamonn Date: Wednesday April 7, 2010 @02:02PM

    Daft releases a report every three months, but the index itself is broken down by month (see the first table above)

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Michael Date: Wednesday April 7, 2010 @10:03AM

    I think the 'snapshot' of asking prices in the Leinster provincial counties are inaccurate.

    a 1 bed would range between €85,000 - €105,000

    a 2 bed would range between €145,000 - €165,000

    a 3 bed would range between €175,000 - €205,000

    a 4 bed would range between €230,000 - €320,000

    a 5 bed would range between €380,000 - €480,000


    As a nation bar the capital, we do not have the infrastructure to sustain a healthy growth and the lack of Multi-nationals will restrict us moving forward.

    As Captain Willard points out, a few more years of pain and interest rates creeping up although the ECB hasn't yet made any increases.

    I don't mean to sound negative but i feel this is only the tip of the iceberg as far as this recession goes! Thanks Banks!

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Kevin Date: Wednesday April 7, 2010 @10:19AM

    For the last 10 years we had speculation across the board &our house prices were driven on this speculation from developer and the young people who thought they'd make a profit on their 3 bed semi-d 50 miles from anywhere...Now the young poeple who bought a house are stuck with their 35 year mortgage.
    The problem is that we will not have anyone to buy the 3-bed semis in suburbia for 3 reasons: emmigration, unemployment and interest rates until our living costs and commercial costs come down to reasonable levels so that we can compete with the rest of the world & get jobs in the country. Unfortuately the current government are inept & are bereft of ideas.........

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  • Re: The Daft House Price Report Q1 2010

    Posted By: P Koucheravy Date: Wednesday April 7, 2010 @11:22AM

    @Paul O'Connor

    The report comes out quarterly but they track things monthly. Look at the top chart.

    I'd much rather read interesting -- albeit angry -- commentary from Brian Lucey and Morgan Kelly than the typical wishy-washy stuff that shows up in the papers.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Paul Date: Wednesday April 7, 2010 @12:09PM

    @ P Koucheravy

    Are you one of the steemed ecomonists in that great conglomerate AKA CBRE????? If so I will have to disregard your response due to the appalling track record of your organisation when it comes to property trends and the over reiance on the Crystal Ball. Sorry about that Patrick!

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Paul O'Connor Date: Wednesday April 7, 2010 @04:38PM

    @P Koucheravy

    Just want to point out that the Paul who replied to your posting there is not me.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Property Expert Date: Wednesday April 7, 2010 @01:04PM

    A leading UCD property expert has just released a survey outlining that prices will drop by 99% from their peak in late 2006. This will mean that property prices will be worth 1% of the figure they were at theier peak.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: NAMALand Date: Wednesday April 7, 2010 @01:27PM

    It would be nice to see some balance and informed opinion in Mr Lucey's editorial - rather than just biased opinion. The Daft survey covers asking prices yet Mr Lucey claims (perhaps rightly) that the bottom of the market has another c.18mths to go based on 50% peak to trough decline. But that assumes asking prices are the same thing as the prices properties actually sell for - which they are not. Anecdotally transactions are in most cases being concluded below asking prices so perhaps then some parts of the market have already reached the bottom - not discussed by Mr Lucey. In relation to NAMA the assumption is made that Nov 30th will be used as the valuation date for all loans transferred - nothing to suggest this is correct as that was only confirmed as the valuation date for the first set of loans. Also 42% of the first set of loans transferred were backed by collateral outside the ROI (all data available on nama.ie) so the Daft data has no relevance to these - furthermore the NAMA loans consist of a mix of landbank, developments and commercial property i.e. not all land/landbank with houses in ROI. For example the UK Nationwide House price index showed a 1.6% quarterly rise in UK house prices in Q4 2009 and a further 1.6% rise in same in Q1 2010 - by Mr Lucey's logic NAMA then must have underpaid for any loans backed by residential UK property - but of course he does not discuss/mention anything which might contradict his opinion i.e. balance. As an associate professor the least one would expect of Mr Lucey is informed opinion and balance.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Andrew Date: Wednesday April 7, 2010 @05:55PM

    NAMAland
    Naive of you in the extreme to expect a balance in Mr Luceys report, he is after all a state employee, benchmarked to limit, surely with his qualifications and beliefs he would have foreseen the difficulties huge payrises, paid for by property taxes would bring, did he say stop then? Refuse the pay increases as a matter of principle? I dont think so, but then again I could be wrong, I will humbly apologise if proved wrong.
    Good to see good homes in good areas at reasonable prices are selling, quality plus location, location, location will always win out! Just as it has for the last 2000 years.
    By the way did anyone see that exports through Dublin Port ( 50% of all exports go through it) were up 10%? and that our balance of trade is still positive ? one of only two european countries with that boast, Luxembourg being the other. Not bad for a country thats supposed to be on its knees. You have to go deep to the inner pages of the newspapers for these nuggets of info, proving Lord Beaverbrookes old maxim on how to sell newspapers " GIVE THEM SOMETHING TO BE ANGRY ABOUT"

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Anonymous Poster Date: Tuesday April 13, 2010 @10:59AM

    It's true some figures related to the irish economy are encouraging, and that the situation is far less serious than in Greece for example, especially due to the fact Ireland exports a lot more than Greece.
    So any recovery in the worldwide economy will bring some improvments within Ireland.
    And this is what's happening around the world, but especially for emergent countries (such as BRIC countries).

    But be careful with these figures. There are figures behind the figures.
    People on the dole for example. Currently, the rate stabilized at 12/13% which is less than the 15% expected, or even more for the most pessimistic forecasts.

    But this stabilization is mainly due to the fact a lot of foreigners and now a lot of irish are leaving the country and do not apply for the dole, or leave it...
    Without this emigration, be sure the unemployement rate would have climbed up to 18/20%... maybe more.

    It's a real bleeding of qualified workers Ireland faces now, with huge consequences for trading, or property investors, landlords who want to sale or rent houses...

    Actually nobody can't give accurate forecast for the coming months or years.

    But I personnally think Ireland will still have to suffer for a while before really feel the effects of the recovery...

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Anonymous Poster Date: Wednesday April 7, 2010 @01:37PM

    What happened in Mullingar recently is quite interesting:

    http://www.independent.ie/lifestyle/living-in-a-dream-apartment-at-24-2123829.html

    Indeed, it's not Dublin, Cork, or Galway, indeed it's in the country side, but
    even so, hundreds of people queuing, "We've never experienced anything like this, not even at the height of the Celtic Tiger," can we read in this article...

    There are buyers in this country, much more than expected.

    But they now want to buy the right property at the right price. That's all.
    And they want to be sure to get a property of which they're sure the worth will remain stable, or even increase a bit during the coming years.

    Seeing that, It's incredibly naive from NAMA (to be polite) to say prices are bottoming up now...
    Daft report still shows overvalued properties.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Orla Drennan Date: Wednesday April 7, 2010 @01:46PM

    I do not see how the snapshot of house prices for Munster/Cork City could be accurate...

    A 3-bed = €239, and for an extra/4th bedroom = €359???

    Where is the sense there?

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Anonymous Poster Date: Wednesday April 7, 2010 @11:08PM

    I agree with Cormac on the arrogant tone. Hope he is not writing these tabloid pieces and Irish economy blogs during his hours of work..which we're paying for.

    What annoys me is the way Mr Lucey is trying to link himself to the presience of Morgan Kelly.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: RAYMOND Date: Thursday April 8, 2010 @01:11AM

    I think things will get alot worse before they get better. People in Ireland are still making to much money compared to the rest of Europe. Does anybody understand this. How are Ireland compete against everbody else if wages are so high. Why does the Goverment tell the Unions this is the way it is and cut wages by 20 to 30 percent and that is it. If you dont like it there is 400000 people that will take your place . Ireland has to get with reality . Sorry

    Raymond

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Brian Date: Thursday April 8, 2010 @05:25PM

    the situation could be worse, if the report used the actual closing sale prices rather than the figures advertised on DAFT. the fall would be actually grater

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Elaine H Date: Thursday April 8, 2010 @06:43PM

    The problem with your report is that you lack real data about selling prices. As you state in the report, the index is based on asking price as opposed to selling price. We really have no idea how much property prices have falled or how close we are to the trough. If asking prices have fallen by 35%, it is fair to assume that selling prices have fallen more perhaps by another 10% - 15% but that is just a guess as nobody really knows

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Aztec Date: Thursday April 8, 2010 @10:50PM

    Professor Lucey's figures seem reasonable. I can't disagree with him. Its interesting watching people bicker in the comments section. I can only assume that those of you who refute his claims are home owners or EAs (wasting your employers time).
    As an onlooker, Ireland's economic predicament seems even more ridiculous. Focusing on property prices alone - who in their right mind can honestly say Ireland has a banking system or high paying jobs to support prices at their current levels? Ireland doesn't have the high paying banking, medical or legal jobs London offers or the Antipodes natural resources.
    Come on Ireland - get real. The sooner you do, the sooner you can start building a proper economy with real industries like energy, pharmaceuticals and technology.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: barry Date: Friday April 9, 2010 @09:01AM

    i have been watching north wicklow house prices begin to drop lately as the reality of the situation we are in is becoming to be truly understood by the public at large. people are emigrating, unemployed and the future does not look to bright. hoses that were commanding high prices are starting to come down to the stage were maybe at last it is worth buying a house in this country. what will happen once the average mortgage payment goes below the average rent?

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Bobbie Date: Friday April 9, 2010 @10:37AM

    First-time buyers have been largely absent from the market for at least two years, with many purchasers now waiting for what they believe is the best time to buy.

    In doing so, buyers must recognise at least the possibility of price decreases, as forecast in this report and while some may believe that values will stablise, they should not hold this view merely because it is convenient or desirable to do so.

    Purchasers must consider how they would feel if prices continue to fall, especially as individuals will be forced to pay higher interest payments by the banks. With one in three mortgages in negative equity for the foreseeable future, many people who wish to trade up have effectivley being excluded from the market.

    Most sellers watch the market keenly, waiting for signs of price stabilisation. Given the number of sellers waiting in the wings and growing danger of repossession, there is a real likelihood that a significant number of sellers will decide to re-enter the market simultaneously.

    Although there are other operative factors, such as the availability of credit, it is this collective realisation that prices will continue to fall which will give rise to a new round of house price deflation.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Anonymous Poster Date: Friday April 9, 2010 @04:47PM

    Re: description of the author, Brian Lucey is an Associate Professor, not a full Professor.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Brian Lucey Date: Saturday April 24, 2010 @09:57AM

    :@anon
    "Re: description of the author, Brian Lucey is an Associate Professor, not a full Professor."
    BZZZZ.....not in TCD.....go on, check....:)

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  • Re: The Daft House Price Report Q1 2010

    Posted By: RAYMOND Date: Sunday April 11, 2010 @12:38AM

    Hi there,

    Forget about housing for a while, where is Ireland going. Are we going to lose a generation of people to poverty and immigration.
    Any ideas from people out there?
    I do not live in the country so my view is a little different. I see Ireland in poverty for years to come because of doing business there is so high . The cost of living is way over the top.

    Raymond

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Anonymous Poster Date: Wednesday April 14, 2010 @11:50AM

    Equity is only negative if your intention is to sell, and given that lenders have shut the door there is no negative equity.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Simon Date: Saturday April 17, 2010 @04:48AM

    We sold up and moved to Australia when the going was good i.e before the bubble burst (2004).

    We knew then (as you all did) that there was a bubble and that it would burst.

    Some important questions need to be answered.

    You need to ask the Irish Government why they made no provision for the future when times were so good.

    Where did all the money go?

    How could the Bank of Ireland run out of cash one Monday morning last year?

    Why do you continue to tolerate blatant rip offs such as the Insurance Industry, the Banks and NAMA, double taxations such as , VRT, VAT on Secondhand goods, DIRT, Capital Gains, Bin Taxes, ReZoning Scandals, B.I.K. , toll roads (East Link) 3rd world health services, under funded old age pensions etc. Not to mention the State sponsored Docklands Tax Shelter and money laundering facility.

    Why does another wave (150,000 or more) of young Irish people have to emigrate to find work?


    They must be putting something in the water to cause such apathy.....

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  • Re: The Daft House Price Report Q1 2010

    Posted By: A Date: Saturday April 24, 2010 @05:22AM

    I left Ireland in 2008 for Australia. House prices over in Australia are in the same situation that Ireland was in at the height of the boom, they are elevated and are led by an intensity to just get into the market. Shacks are being sold for ludicrous prices, however Australia has a huge amount of natural resources and a ready market in China. The boom will continue here. Ireland has due to years of mismanagement from the Government put itself in a position where it is too reliant on the US and the EU. It has not invested in itself or Irish enterprise.

    The Irish Government have a lot to answer for, ensuring a country that will not recover for many years. Emigration will cripple Ireland again.

    The Irish housing market will not recover for many years. Personally I think Lucey is wrong when he states it will be another 18 months of house price declines, I think it will up to a year longer with the market stagnant after that for another 2 years.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: RAYMOND Date: Monday April 19, 2010 @09:42PM

    Very well said . I could not have said it better

    Raymond

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  • Re: The Daft House Price Report Q1 2010

    Posted By: NO1FAN Date: Wednesday April 21, 2010 @06:10PM

    21-APRIL-2010

    WATCH THIS SPACE, AND REMEMBER THIS DATE;

    i think my personal prediction is just about to roll itself out, which is great news for cash buyers.
    the beginning of the mass entry onto the market of good houses in good areas has just begun.

    what was seen as a spike, where good houses in good areas is about to take an interesting turn. there's just been an increase in such houses coming on the market in the last couple of days, which leads me to believe that the vendors worried about missing out on this spike have begun to put up the for sale signs.

    this should lead to some great competitive bargains, but i don't know what this situation will be like in 3 or 4 months.

    something's gotta give

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Anonymous Poster Date: Monday April 26, 2010 @11:31AM

    Our housing market is being determined by a bunch of amateurs. Ordinary people are still given massive amounts of money by banks to speculate on a market they have no idea of.
    As a result, interest rates, unemployment, emigration and available housing stock have only a partial impact on the market.
    The shine off a new kitchen seems to appeal more to house buyers than facts and figures.
    It resembles a pyramid scheme, and the system we have only perpetuates it.
    Only the top few layers have been removed, and all we can do is sign up and hope we don’t get knocked off when the next crash happens.
    I think the next layer of the pyramid is due to come down by Q4 1010, unless the unemployed find high paying jobs, emigration turns to immigration, builders stop building and interest rates fall.
    Could happen.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Owen Date: Monday April 26, 2010 @10:15PM

    My GOD! Has anyone here actually looked at the economic predictions by the heads of government, banks, auctioneers and professors etc which litter the web with stories of continued boom as recently as 2007!

    NOBODY here has a clue what they are talking about!!!

    I think this and that and this and that!!! Coz what I just wrote there makes as much sense as anything anyone has written above! Predicting the future is a gamble and meaningless, no matter how right it looks.

    I have spent the past 10 years in the UK looking back at the Irish people neck deep in their own greed, selfishness and bull sh*t.

    Everyone desperately wanting to be better than the next man! A class system where one number higher on your car reg made you better than your neighbour!

    No one really cared about the future of Ireland, everyone was too busy competing against their friends and fellow countrymen, grabbing desperately for their slice of the 'success'!

    Like sheep the Paddy's followed each other over the cliff, no one ever had a chance. No one took a stand! No one refused to be robbed as you were!

    Has anyone here left a restaurant or a bar because they felt they were being robbed with the prices being charged prior to 2007?

    You accepted it!

    If I hear predictions about the future of Ireland I’ll puke!

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Tom999 Date: Friday April 30, 2010 @01:32PM

    Well said Owen, spot on. What went on in this country was an utter disgrace. I am ashamed to be Irish, was then, am now and I used to be a very proud one.

    To all those who believed their own hype, I'm glad the day of reckoning is upon us but there is still a large number of people with the same attitude. To them I say "may the recession stay at your door for many moons to come". I was one of the less exuberant spenders and was constantly held back by the massive prices in this country, not just for housing, but for all concumables, from necessities to some of the "luxury"/non-necessity items.

    Prices for goods are still very expensive and the cost of living in this country is still far too high. Let the recession continue until sense is drilled into the psyche here. Only then may we get to a functioning economy and society.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: paul Date: Tuesday May 4, 2010 @09:31AM

    Your spot on, a lot of us became greedy sick people, but these people are the ones who will feel the worst of the depression here, well the ones who stayed on the boom time ride that is, anyone with half a brain would have exited while the going was good, years ago...

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Sergio Becerra Date: Friday April 30, 2010 @06:36AM

    Undoubtedly economy is rising in last months, is good news for all. The people begin to buy, save their employment. I hope a crash don't occur again will be a disaster.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Daniel Date: Saturday May 1, 2010 @06:20AM

    Greedy greedy Ireland...we had so little for so long that as soon as we got a taste of the good life we went mental! I just hope that we all learn a lesson from this recession.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: NAMAwinelake Date: Saturday May 1, 2010 @10:21AM

    The latest ESRI/Permanent TSB Index indicates prices nationally fell by 4.8% in the three months to end March 2010, with Dublin falling 10.3% and Outside Dublin falling 3.5%. The Index doesn't say if prices are stabilising, starting to increase in March or if the crash is accelerating. Prices nationally are now 35% off the peak.

    The State's biggest residential auction yesterday saw 6 properties from 71 sold on the day (apparently another 10 sold either before or after). One propety sold at auction reached its AMV, the others were off by 10% on average.

    Whilst our inflation is still negative, Europe's is now positive and the betting is there will be a modest increase in ECB rates later in the year (maybe 0.25- 0.75%). Unemployment is still rising and is expected to peak at 13.6-14%. Water rates and property taxes are planned and given the government has to come up with at least €3bn in November 2010, the betting is that water taxes might be upto €1000 per household. Against this our exports are looking healthy and the general betting is that the economy will start growing later in the year. NAMA is now getting to grips with developer loans and there are indications that property will be sold sooner rather than later. Brian Lenihan implied we were at the bottom at the start of April saying prices were now realistic and people could buy with confidence.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Paul Date: Tuesday May 4, 2010 @09:25AM

    Just look whats happening to poor old Greece people, we are not far off, do yourself a favor and wait, there IS NOT GOING TO BE ANY BIG PRICE RISES IN PROPERTY, NO MAJOR UPSWING, save your cash and if things get really bad you can always emigrate out of the banana republic with you hard earned money!

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Owen Date: Saturday May 8, 2010 @01:52AM

    NAMAwinelake - I think how you just described the Irish economy is fantastic! You should be on the radio! Just on what you said re water charges being 1,000 euro a month, The property tax is the most worrying! It's 200 euro a year this year... and its been accepted, so next year when something else disasterous hits the economy... its going to be 400 a year and it will be accepted. And in 10 years it will be 1,700 euro a year.... 141 euro a month, on top of your (increased european rate!) mortgage, on top of your commons maintenance (if you have a flat). I have had the UK council after me for 10 years! I paid 250 sterling a month in Scotland on a place worth 170,000. If you miss a week the councills over here will persue you adding interest and penalty charges! The 200 euro a year is just an introductory to the above! Again... nobody is taking a stand! Are the Irish people really that amotivated?

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Lukas Date: Monday May 3, 2010 @07:48PM

    http://www.rte.ie/business/2010/0430/house.html

    The quarterly Permanent TSB/ESRI house price index says that Dublin house prices fell by 10.3% in the first three months of 2010.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Dar Date: Tuesday May 4, 2010 @02:50PM

    Hi Folks,

    I'm thinking of buying shortly. Not at all clued in to the market and wouldn't dare try to predict it but feel i'm ready now, can afford the property repayments comfortably with my current wage and the money i am now paying in rent coupled with the soon to rise interest rates will erase a good portion of the money i'd save by waiting. Is this flawed logic? Would appreciate the advice of anybody in the market.

    Dara

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  • Re: The Daft House Price Report Q1 2010

    Posted By: kev Date: Wednesday May 5, 2010 @08:50PM

    i have the same question as above.. yes prices might fall a bit more but will the rising interest rates not cancel that.. if i get a mortgage now and fix for 5 years.. advice please

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  • Re: The Daft House Price Report Q1 2010

    Posted By: RAYMOND Date: Thursday May 6, 2010 @03:45PM

    Get the mortgage fixed for 20 years not 5. Interest rates in Europe are only going one way and that is up. The only way to pay for the debt is to raise rates. You can not keep printing money. Rates in Europe will hit 5 to 6 % within the next 2 to 3 yrs. You do not want to be in a situtation where your 5 yrs are up and the rate at that time is 6%. Then you are in big trouble.

    Raymond

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Owen Date: Saturday May 8, 2010 @02:08AM

    On the other hand, if you wanna spend the rest of your life in the pub wth out feeling guilty about society looking down (Coz were all the same in Ireland)... then Ireland's your only man! It's why were famous!

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Michael Webb Date: Tuesday May 11, 2010 @11:23AM

    It is my beleif that until house prices reflect affordability the will be no going forward. Picture Richard, his father encouraged him to buy a house in 1995. (far thinking at the time). The house was in Dublin 6W, nearer Tallagh than Terenure. He shared the house with a few mates until Aoife arrived. Then 2 kids follow who attend the local National School. Now the problem arrives Richard wants Dick Junior to go to Gonzaga (his alma mater) and similarly Aoife wants her little Eimear to go to Mount Anville. Richard sell the 3-bed semi for €315,000 releasing €225,000 equity. They are now looking for a 4 bedroomed at the back of Miltown/Churchtown. He is a financal controller of a medium sized business making €80,000 p/a, (no bonus in this climate). Aoife is working part time earning €30,000 p/a. Assuming Richard or his dad has pull the most he has to spend is (80,000 x 3.5) + (30,000 x 1.5) + 225,000 - 12% for stamp duty and legals. This means that the max he has to spend is about €485,000. These houses were selling in 2007 for €1.3M. Bearing that my sample family is probably the best buyer available this indicates that the affordable price represents a fall of 62% of from the high of 2007 and suggest house prices in Dublin 4 of €400 psf yet most houses on offer are still quoting €8-900 psf. (Just in case you are worried Richard and Aoife are creations of my mind)

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  • Re: The Daft House Price Report Q1 2010

    Posted By: NO1FAN Date: Thursday May 13, 2010 @04:08PM

    it's still hard to tell what's going on out there. whijle there is an expected flooding of the market with second hand homes, it hasn't quite started yet. a steady trickle since the end of last year, of homes in the southside, in particular along the luas line in the area around the gallops etc, of dublin have been selling at a steady rate, and haven't quite had the same price drops as the rest of dublin, as a result there's some incredible value away from the luas line. the esri shows a 10% drop since start of the year, so even along the luas should be dropping a b it more, to compete with the better areas.

    the prices most certainly won't rise till next year at least, because, i would expect a bigger than normal drop when the offloading begins proper, as there is only a limited amount of buyers for the stock available, and many of these have parted with their cash already.

    many in negative equity will have to get out before they lose anymore, local councils won't be buying just yet, as we've seen, dunlaoghaire rathdown are to offload their properties, so one safety net has just disappeared.

    i wonder what's in store for us. looking at things logically, taking everything into account, one would have to expect a big bang. as one of the more darin g economists said at the very start of the downturn- there's never been a soft landing in economies like ours, he suggested the possibility that a house worth €800k at the peak could easily become worth €150k after a downturn.

    interesting times ahead!!!

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  • Re: The Daft House Price Report Q1 2010

    Posted By: Enoch Root Date: Saturday May 15, 2010 @10:25AM

    The housing market should be looked at from a different angle besides asking price. This is a meaningless metric. The basic laws of supply and demand apply to the housing market in Ireland as well as to anything else.
    There is a major oversupply in housing.
    Demand by a section of the population is there but falling because of emigration. Unfortunately, the money required by those remaining people to satisfy this demand is not available.
    As Morgan Kelly pointed out in his paper on the Irish Credit Bubble in 2009, the bubble price of housing was dependant on cheap, plentiful credit. This is no longer the situation nor will it be for a long time. The financial institutions will have to revert to their tried and tested methodology for calculating mortgages to provide to borrowers. These are (i) 4 times single salary earner, 3.5 times joint salary, (ii) 90% value of the property and (iii) 20 year mortgage. This may give some indication of where true house prices lie. Anything outside these parameters should be considered a sub-prime mortgage with an attendant increased risk of default.
    Ireland is different at the present time in that unemployment and job uncertainty is on the rise. Take home pay is certain to fall as taxes and charges are going to rise. A property tax is certain. These factors will have an effect on earnings. The value of property is difficult to ascertain as the market is sclerotic. (Using NAMA valuations to underpin house valuation is not valid as the 'haircut' applied was to the first tranche, development property / land, much of which was overseas. The quality of assets in the second and subsequent tranches is inferior and will suffer a bigger 'haircut' than the first tranch of NAMA aquisitions. In view of this, I disagree that 'NAMAland' is some safe haven.

    Sellers will hold onto property if there is no imperative to sell, until they need cash. Resumption of anything like normal banking practice will force many to sell which will reduce the asking price further. Additional, unavoidable charges such as a property tax will focus peoples minds on whether it is preferable to throw away good cash after bad or to sell at a loss.

    In conclusion, I believe that house prices have a way to fall yet and that there is a high probability that Morgan Kelly will be proved right and we will see a 70-80% fall in house prices from the peak. NAMA, banking failure (to provide credit and to collect on failed mortgages), government failure to cut public sector wages and EU intervention in an attempt to stave off sovereign debt default will all defer the market correction for years but ultimately, will not prevent house prices falling.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: John Date: Tuesday May 18, 2010 @07:31AM

    Even the gloaters will have to start to recognize, that the losses of their compatriots will ultimately be their loss also. Gloating and pessimism are as responsible for the extent of our problem, as the lunacy that preceded the burst. We need solutions and not "from the hip" comments and analysis.

    Basics: As rightly pointed out, "Supply and Demand" determine prices and market dynamics.

    Marketing: When supply vastly exceeds demand (as is the case), marketing experts segment Market and Product to new levels of detail, and take better aim. It has been proven, time and time again, that this gets markets moving. It is important to get people buying again and to fix their interest rates - otherwise, we will have a bigger problem.

    Segmentations would include characteristics such as; Owner Occupancy of estate, builder evaluation, Amenities, Aarea business forecasts, Houses for sale in the area.....and many more. If I was in this business, this would be my next step.
    Sleeves up boys and girls, we can turn it around....even he gloaters will be happy to see it

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  • Re: The Daft House Price Report Q1 2010

    Posted By: kev Date: Monday May 24, 2010 @07:24PM

    im looking at an apartment in a tourist town in the west of ireland as a home and it also has excellent rental pottential for short term letting. im a first time buyer with a decent long term job. im 22. the agreed price is 150k. its a 2 bed and my long term objective is to build at home. a 5 year fixed rate of 4.35 and monthly repayments of 520euro after mortgage interst relief. as a 5 year home/investment plan does this sound like a good idea.. can i make money on this apt over 5 years or am i being naive..

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  • Re: The Daft House Price Report Q1 2010

    Posted By: SilverSingle Date: Monday June 14, 2010 @12:49AM

    Newly separated and a good amount of cash in hand.. Am I daft to offer 550,000 for house whose asking price is 650,000. Would have sold in 07/08 for 800,000 -ish.

    Daft that it will be rejected or daft because the value will fall over the next few years??

    House in area i want to live but needs about 40,000 worth of work to bring up to good standard.

    All opinions welcome

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  • Re: The Daft House Price Report Q1 2010

    Posted By: ROBERT BROWNE Date: Tuesday June 29, 2010 @03:19AM

    The next leg down in this crisis is coming when you see greedy and reckless banks trying to trigger obscure clauses in BTL mortgages and the regulator Mr Elderfield agreeing to their use. You just know that all hell will break loose and this time the government will have run out of even the blanks they fired before.

    Anyone that is afraid, my advice sell now, you will have to wait on average 5 months and then hope that the cheque clears. If you wait it is only going to get worse, much worse.

    NAMA is Irelands cash for trash. NAAM plus Anglo plus EBS plus AIB and BoI are the reasons nobody will buy Irish government bonds and is also the reason we are entering a jobless non recovery. There will be no serious job numbers created in Ireland for many years it will be ebb and flow.

    The country is on the edge of an abyss and people are talking about buying property? Well you have plenty of choice only 350,000 units empty with NAMA already starting to dump more on the market. What is in the water in this country? Has nobody heard that 2,000,000 more government workers are about to be made redundant in the U.S before the end of the year and that the property double dip is already under way there? In the parallel universe that is Ireland where there is no moral hazard in business or government prices were ordered by NAMA to stop falling last November 2009. NAMA is recession social welfare for developers, auctioneers/valuers and the legal crowd they have organised a board game called NAMA and it is still being played at full tilt and will be until the country is officially declared bankrupt. That is the time to buy. Oh btw they are spending inordinate amounts of money on spin doctors to counter any "truths" that professor Lucey tries to proliferate. Thats right you money spent to spin lies and misinformation so that you never really find out what is going on inside the NAMA SPV that you don't own.

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  • Re: The Daft House Price Report Q1 2010

    Posted By: PC Date: Thursday July 1, 2010 @01:27PM

    The average house price should be three or four times the average industrial wage in a market that is not inflated. It’s very easy to look at house prices down 10-50% and think its great value. House prices here were hyper inflated with unsustainable price increases. If you’re happy paying half a million for a house more power to you I'm far more dubious.

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