Falling prices and rising stocks point to adjustments in the housing market in 2007 and 2008

Frances Ruane, Director, ESRI

10th Jan 2008

Professor Frances Ruane is our guest blogger, commenting on the latest Daft research on the Irish property market.

As we enter 2008, to make sense of the Irish housing market during 2007, it is necessary to consider fundamentals. There are two markets to which all of us relate very strongly - the labour market and the housing market. The labour market determines how we fare - what incomes we earn, what conditions of employment we have, how easy it is to change jobs. The housing market impacts strongly on our standard of living as a major expense in our budget and, in the case of homeownership, it impacts on the value of one of our major assets. These markets are important to the economy as a whole - the labour market determining employment and influencing unemployment, while the health of the housing market is often seen as reflecting the overall health of the economy.

Good house price increases versus bad ones
When both the housing stock and house prices grow gradually over time, this is seen as a positive indicator of economic well-being. This usually occurs in an environment of income growth and population growth. When house prices rise rapidly and unsustainably, the situation changes, as has happened in the Irish house market over the past decade. For many potential home-owners, houses became unaffordable. So, for example, while many parents have enjoyed real increases in the value of their housing asset, their adult children have felt excluded from the market as prices rose to impossible levels. From the perspective of the economy, high and rising prices brought about further increases in housing supply. This was positive up to a certain point, after which the effect turned negative, as resources drawn into the sector grew to unsustainable levels.

It is not surprising then that the overall reaction to the slowdown in the housing market in 2007 was mostly one of relief, as some level of normality was seen as returning to house price increases. This period has seen a significant shift in expectations about house prices - reflected in both Daft's asking price index, which measures changes in the prices sellers were looking for when placing their houses on the market, and the ESRI/permanent-tsb house price index, which measures the changes in the agreed prices at which houses are sold. While the two indices measure different things, it is possible to compare them - Figure 1 shows the two indices together, with the average for 2007 set to 100.

Asking prices and closing prices compared
As the graph shows, back in early 2005 there was a significant gap in the relative price indices, compared with their late 2007 levels. The agreed price index was above the asking price index, showing that the price that sellers typically achieved was above what they initially sought. The increase in asking-prices began to slow down in 2006, and asking prices have been pretty static since late 2006. Meanwhile, the index for agreed prices continued to rise until early 2007 and since then has been in decline. In effect, prior to 2007, the market increase was beating what sellers were expecting to get, whereas in recent times this pattern has reversed. The different patterns suggest that sellers' expectations have moved more steadily to the present levels than have actual market prices. This is consistent with anecdotal evidence that people were expecting to get more than the asking price up to 2007 and now expect to get less.

Large increases in stocks around the country
A key addition to the Daft report this quarter is the information on stocks and flows of houses onto the market for each month in 2007. These data give us some insight into the 'time to sale' of houses on the market. They show that the stock of houses for sale rose in all areas over the period - so that by January 1 2008 there were on average around 62 percent more houses on the market than in January, with the lowest increase experienced in Connacht/Ulster (51%).

Interest rates and job prospects hold key to buyer confidence
What of the prospects for 2008 and beyond? To the extent that the recent changes in stamp duty are seen as reducing uncertainty, they should lead to increased confidence. Economic growth rates will be lower than in previous years but not low relative to the rest of the EU, and taken with the growth in the population seeking housing should have a positive effect on demand. The labour market is forecast to show slowly in 2008, with both incomes and employment rising but at a much slower rate than in recent years. On the other side, threats of increases in the ECB rate have not gone away, and this will lead buyers to be cautious. Furthermore, buyers may be affected by the credit tightening as banks seek to strengthen their loan portfolios. In terms of market prices and volumes, the behaviour of builders and developers in releasing stocks for sale will also be important in certain parts of the market. The ESRI's Winter Quarterly Economic Commentary anticipates that house prices will stabilise during 2008. While many factors influencing the housing market remain positive, it is the level of confidence felt by consumers feel over the course of the year that will be crucial in determining the final outcome.



HIGHLIGHTS:


           The Daft.ie Asking Price Index


           Stock and flow of properties on Daft.ie, 2007


ASKING PRICE SNAPSHOT:

Asking Prices Snapshot
Asking price snapshot across Ireland, 2007

Discuss This Article

  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Missing Data Date: Thursday January 10, 2008 @10:19AM

    The ASKING PRICE SNAPSHOT: does not contain the pricing for 'Commuter Towns', in the past the DAFT reports Always listed this as a separte entry with separate pricing.

    Daft can you revise your report to include this entry and figures.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Thomas Date: Tuesday January 15, 2008 @01:01AM

    In my opinion the current adjustment of Irish house prices is a normal process and long time overdue. Compared to the continent (France, Italy, Germany, Switzerland) Ireland is clearly overpriced. Have you ever had a look at other property sites? I mean other than Irish and those covering the Mediterranean coast?
    There is no fundamental reason why Irish houses are worth 50% more than houses elsewhere. The higher level of wages here is no explanation and not even an exception. It is also part of the Irish bubble…

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: sma Date: Saturday January 19, 2008 @05:04PM

    I am living in France. a modest 3 bed 95m2 house with a garage and a 800m2 garden can be purchased new for about 150,000€ in the sunny south west. Looking at the minimum wage in both countries and the general standard of living it would appear that the irish market is in need of a 35% correction. With 250,000 houses empty and with little prospects for selling the vast majority of them the near to medium term future is not bright.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Sean and therese featherstone Date: Thursday January 10, 2008 @04:09PM

    My feelings are that most people are not building in the impact of the credit crisis. Banks will not lend in the same manner as they have in previous years this will have a detrimental effect on the ability to sell properties in the next 12 months. There is a strong likelihood that buyers will sit and wait!!

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: ricky Date: Thursday January 10, 2008 @07:35PM

    Liquidity not demographics or demand or supply or interest rates as many economists would lead you to believe is the primary driver of house prices.A good example is the sustained drop in property prices in Japan since 1990 despite low interest rates,increasing population,etc.
    Liquidity is simply described as matching lender with borrower-a task that will become more difficult in the years ahead due to lack of confidence from potential borrowers and excess caution from the lenders.
    Hence Berties very astute comments to the media "dont talk ourselves into a downturn"

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Bob Date: Sunday January 13, 2008 @08:42AM

    Some buyers will clearly wait to see what happens and will pay increasing monthly rents to landlords in the interim, often for poor quality accommodation, since builders have responded to market changes by constructing fewer homes.

    However, as the pent-up demand for housing increases, buyers will realise, in considerable numbers, that they are only delaying the inevitable and will look to purchase their own homes, especially when the difference between mortgage payments and rents narrows, as is now occurring.

    At that stage (late 2008), prices will jump as a result of the time taken for builders to respond to the market and buyers, fearing that prices will escalate as before, will again make higher offers for the limited housing available, thus further driving the market upwards.

    As current market conditions are purely temporary, those awaiting further price reductions will be disappointed and whilst the situation would be different if housing supply had remained constant or if immigration had reduced, neither occurred, on which basis, the supply and demand equation still endorses the likelihood of higher prices.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Anonymous Poster Date: Monday January 14, 2008 @01:36PM

    I think you are clearly miss-taken here. Its property speculators who have been driving up prices not people who actually intend to live in the property themselves. Most of that money has moved to the Eastern block, Asia and the US now. And although there maybe a temporary rise in prices next year there will be a further drop off as the market realises that the underlying assets are over priced. Remember 1 in 7 properties are currently unoccupied in Ireland compared to 1 in 30-odd in the UK where the population is more than 10 times greater. A truly worrying statistic if every there was one. Further to your point on rents. As the supply of rental properties continues to rise i.e. builders holding on, small time investors etc, rental prices will eventually be forced down creating a greater margin between rental income and mortgage repayments forcing a lot of people to sell up. Throw in a US recession and I think Ireland is in for a very rocky period over the next 5 years.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: bob Date: Monday January 14, 2008 @06:44PM

    Investors would not have been in the market without the notable demand for accommodation which has existed for the past decade and which is forecast to continue growing as a result of natural population increase and inmigration. Such speculators dont plan to live in their own investment houses as these were bought in anticipation of healthy monthly rents from others and / or capital appreciation.

    Prices wont decrease in 2009 on the basis of the market realising 'that the underlying assets are over priced'. People have been saying this for years but are still spending Monte Carlo type money to live in small Irish towns. People must pay whatever the market dictates for either rental or purchase properties, or become homeless.

    Why is the unoccupation statistic worrying? I have a two vacant coastal properties which I will retire to, but wont sell in the meantime as I would have to pay capital gains tax and dont want the hassle of tenants. 'Vacant' is good.

    Why say 'As the supply of rental properties continues to rise' when all evidence suggests that supply has stopped? Also, why expect investors, who have made considerable gains, to sell up at a time of bumper rental returns? I bet most people are paying more rent now than 10 years ago.

    Your assumptions are fundamentally flawed and are based on what you wish to happen rather than what is likely to occur.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Badgeman Date: Tuesday January 15, 2008 @04:25PM

    How exactly can it be good for either local communities or society in general to have colonies of empty houses all across the country? It's immoral as well as being completely unsustainable from a planning and environmental perspective.

    It's a sad reflection on modern Ireland that people like you actually feel the need to boast about deliberately contriving to keep houses unoccupied, while the rest of us struggle to pay mortgages or rent in order to have a roof over our heads.

    Proof that a hefty property tax needs to be introduced, if ever I heard it.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Badgeman Date: Tuesday January 15, 2008 @04:25PM

    How exactly can it be good for either local communities or society in general to have colonies of empty houses all across the country? It's immoral as well as being completely unsustainable from a planning and environmental perspective.

    It's a sad reflection on modern Ireland that people like you actually feel the need to boast about deliberately contriving to keep houses unoccupied, while the rest of us struggle to pay mortgages or rent in order to have a roof over our heads.

    Proof that a hefty property tax needs to be introduced, if ever I heard it.

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  • Simple thoughts

    Posted By: Obelix Date: Wednesday January 16, 2008 @09:18AM

    One thing that somebody should be clear on, today for profit and property people would sell their mother, for this reason I do not see many vendors selling at a discounted prices. You have seen a "beautiful" example of a property owner who is so happy with his properties that he prefers to leave them unoccupied because he needs to retire there. And he needs 2 property: one for the odd days and one for the even days. If you notice there is some immorality in the society today I am saying: my God, which world are you living in and where have you been so far? I am saying that being an investor myself. Starting price today is 10%-20% higher that it was in 2006, so do your calculations and tell me where the price drop is. Some price cut was recorded on some shanty homes for which people were asking absurd money. It is like I am sellin gmy old bycicle for 1000 euros, I am offered 200 euro, so the price crashed. In Ireland a mortgage impact 30-40% of the total income (supposing 2 people work in a family). In other countries this percentage is much higher and no property crisis has been recorded. I do not have huge repayments and I took account of a possible downturn in the property market whe I made a move. I wish everybody could have his/her home without being strangled by a mortgage because I think a place where to leave should be the most natural expectancy of everybody.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: paul Date: Tuesday January 22, 2008 @10:55PM

    you are right ,people, delay your purchase of a property at your peril, dont forget , most of the doom and gloomers you hear and see in the media already have a home.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: idiottje Date: Thursday January 17, 2008 @12:15PM

    Over the period from the 15th of December to the 4th of January there were 324 price drops and the average drop was 6.7%.
    8,867 properties listed in Daft have now dropped the price at least once.
    The length of time properties remain on the market has increased significantly over the last 3 weeks.
    On average properties that remain unsold have been on the market for is now 143 days.
    Sligo remains at the top of the list where properties on now on the market for an average of 165 days.
    Almost 35% of properties listed on Daft have now been for sale for more than 6 months.

    http://www.irishpropertywatch.com/

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Anonymous Poster Date: Friday January 18, 2008 @01:00PM

    Oh! I wonder why that is? Simply because Irish property is over priced by about 30%. People have been fooled into thinking that prices they see now reflect the value of the asset. As good old Alan Greenspan put it, there is a froth on the global property market at the moment. Once that settles we'll see realistic affordable prices that matched the market. Prices will rise with inflation at that point. For those of you who think that immigration will solve the problem you are also mistaken. The average person on minimum wage will not be able to afford anywhere this side of South Hill in Limerick. For investors, rent doesn't meet mortgage repayments even remotely at the moment so we won't see a demand from the buy-to-let side either.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Paul Date: Friday January 18, 2008 @04:24PM

    As good old Warren Buffet put it...."Be fearfull when others are greedy and greedy when others are fearfull",i think i,m getting greedy again!For the previous poster who does not believe investors will be back in the market soon he is very misguided.Rents are up over 12% yoy and increased by 1.6% in Dec alone.Investments are coming close to washing their face again.Anybody who misses the boat this time only has themselves to blame when prices start to rise again in the latter half of this year!
    It is also interesting that money markets have started to price in ECB rate cuts by year end(2 cuts in fact),this will be a catalyst for the market to kick on again.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Hugo Date: Friday January 25, 2008 @12:01AM

    I think, that rents are being substantially driven up by immigrants from new EU countries, because they don't have any intention to stay in Ireland for life, they don't feel the need to buy their own house or appartment. This is a huge advantage of Irish investors investing in rental properties as far as rents are concerned. But what will happen, when Germany, Austria, France and Italy open their labour market to employees from new EU countries (and they are obliged to do so no later then 7 years after admission of new members, which is in 2010)? And with continually decreasing numbers of jobs for low skilled workers, they are going to move to those countries, because in many cases, they even don't need to rent in Germany and Austria, because their job would be just around the corner. I am from new EU country (Czech Republic), and 7 out of 10 of my friends Czechs and Polish) are planning to leave Ireland the same year, when Germany and other countries open their labour markets. There are around 100.000 Polish workers living in Ireland. If only half of them leave, we are talking about 50.000 people. If they live 5 of them in one apartment, thats 10.000 additional empty apartments within 1 year. So I believe, there are not good times ahead for Rental Investors.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Holger Date: Friday January 18, 2008 @03:39PM

    http://www.davidmcwilliams.ie/the-generation-game

    I think he is too pessimistic about the property market but still a very good book to read

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  • Europe

    Posted By: Obelix Date: Friday January 18, 2008 @04:43PM

    Are you really sure that property in the rest of Europe is so cheap?

    Ia a 2 bed-room apartment in Rome cheaper than a 2 bed-room in Dublin? Is a 3 bed -semi cheaper in Italy? I would no say so. I can believe a 5-10% fluctuaton on the current prices (plus or minus) but a property crash is not realistic. Who are the people forced to sell? Those who bought before 2004-2005 can meet the mortgage repayment by letting out the property. For those who bought later selling is not an option as they would face negative equity. This is only my opinion. I can only tell you that if in Ireland the property prices should crash, in Italy with the current economy should fall to zero! But that did not happen for some strange reason. Can you explain it to me?

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Stuart Date: Monday January 21, 2008 @06:22PM

    The reality is at the start of 2007 the prediction was house prices would rise 5%. They didn't but at the time most people believed house prices would rise forever. There has been a bit of a reality check and now people are more wary. 40,000 empty apartments and they are still being built. Doesn't suggest rents can keep going up. US heading for recession, Euro hitting record highs with a strong possibility of a rate increase, job loss announcements and the pendulum has swung from ridiculous optimism to overdone pessimism but that is the market. There has never been and never will be a soft landing in the market economy. There are probably bargains out there but it is a very brave person who puts their money where their mouth is. I say this as mainly an equity investor. After 4 months of unbelievable pain I haven't a clue what to do. It looks like the bottom but I thought that a few months ago! We are in for a world recession, batten down the hatches, Ireland cannot escape immune.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Anonymous Poster Date: Tuesday January 22, 2008 @01:07PM

    Well maybe if you were in a 2006 frame of mind of course you would be thinking prices would rise in 2007. I think a lot of people expected things to stagnate in 2007 with a small drop off. At least thats what the estate agents were telling us. I was blown away by a report posted today on finfacts see- http://www.finfacts.ie/news/dublinapartments.htm. I hadn't realised things had got quite that bad so quickly. I can't see things improving this year either. Even if the ECB cuts rates. I think the lunacy in finally coming to an end. Take a look around you. Things just don’t feel right in Ireland. Things are out of kilter. You can't have first world property prices with a third world infrastructure and government for that matter.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Stuart Date: Tuesday January 22, 2008 @03:01PM

    One of the problems we have in Ireland is real data is usually up to 6 months out of date by the time it is published. The up to date stuff is all anecdotal and usually produced by vested interests - I have no idea where they get their information from.
    On the empty apartments you only have to use your eyes. I drive along the Stillorgan dual carriageway regularly where apartments have shot up all over the place and still are being built. At night there are very few lights on and at the top of Booterstown Avenue there is a small complex of about 8 apartments and they are all empty.
    Builders have the ability to shut off activity like a tap. They move elsewhere. Lose construction jobs and you lose spending power, the government loses revenue and will have to tackle over staffing in the public sector (already started). They know what's coming they see the tax receipts well before they tell us. (Handy that nothing was wrong at the last election but the day after things were tight.) But let's not panic. Ireland has taken 20 steps forward and will take 2/3 steps back. It won't feel nice but it is a wake up call to everyone who says "This time it is different". It is not and never will be, it's called economic cycle.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: FAUGH45568 Date: Sunday January 27, 2008 @09:55PM

    Biggest Problem is Credit on a Global Scale. The Credit Markets are not functioning correctly, which means Credit will be harder to come by for Personal and Business.

    Up to now, the world has been built on Credit and once the Music was playing the Party continued.
    The Music has stopped, Credit has dried up, Banks dont trust each other.
    This started with Residential, then into CDO's & SIV's, commercial, Credit Default Swaps, hedge funds and money market funds.
    When these start to be devalued or marked to market thats when the fun will begin.
    Recession is 100% in the US, Europe is showing signs of slowing.

    Watch the Banks, already 1 Bank has closed this year in the US. Expect this to increase over the next few months..
    German Banks will be announcing massive writedowns in the next few months..
    Inflation Rising, Commodities at record prices, Negative Equity, Unemployment rising, and a Financial System that is in turmoil..
    House Prices have to come down because the Credit is simply not available on Tap like before..

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Deux Date: Monday January 28, 2008 @05:33AM

    Moved to Brisbane last month and bought a 4-bed detached with pool in a beautiful location 13km from Brisbane for 300k euro. Best move I ever made. Consumers are completely ripped off in Ireland. House prices need to come way down for confidence to return.

    I would suggest any young professional with no commitments and a few quid in the bank to come on down........it is all its cracked up to be.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Anonymous Poster Date: Monday January 28, 2008 @01:43PM

    Yeah I'm not as far away as you mate. Just in London where the markets are also rocky. Renting over here and keeping an eye on Ireland. Looking from the outside in gives you a different perspective. I travel back to Ireland all the time. I love it when I go back. It feels like there's one big party going on over there (less so lately). The Irish are great at that. People spending like money's going out of fashion. And maybe it is. Disposable income is a relatively new phenomenon in Ireland and I'm sorry to say this but I think we're not very measured in how we spend it. The same goes for property and our affinity for the land. This is effectively a perfect storm scenario unfolding before our very eyes. When credit starts to dry up a lot of people will get burnt. Defaults on mortgages, credit cards and negative equity (happening right now) will be abundant. 500 euro for 2 bed apartment in Dundrum when the roads in an out of the place are a joke! The same goes for Clarehall on the way to Malahide. Over inflated prices for cheaply built, poorly planned properties that will be crumbling in 20 years time. Regardless of a falling market these properties simply won’t hold their value. And not doubt we’ll see a dead cat bounce scenario. Possibly when the ECB cut rates later in the year but just like the fed cut the market will rise and fall. Consumer spending being a huge factor of course – going back to the credit argument once more. So good luck to the optimists. I’m simply not sold.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Cee Date: Wednesday January 30, 2008 @11:34PM

    Stuart - sell now. I own 3 properties myself but owe very little. Couldn't be bothered selling now but would if I had any substantial debt on them. They will recover in time but not before they see another fall of 25% on top of the 20% they have already suffered here in Castleknock and it will take 10 years. I have been predicting all of this off and on for the past 2 years on this forum. Read my posts - I haven't been wrong once even though I was ridiculed when I said that prices could fall by this amount. I never really looked at property prices in isolation. I knew what was going on in the banks. So did the bank directors and senior management but they didn't care. They stay in office for 3 to 5 years with 6 figure salaries and 7 figure bonuses. They then get an 8 figure reduncancy payment when the big insurance companies come together and boot them all out at the next AGM. Sub prime was only the tip of the iceberg. Check CDS (Credit Default Swaps) on Google tonight and you would sell every share in every bank no matter what you had to take. They have gambled USD 45 TRILLION (that's 45 THOUSAND Billion) in these spurious derivitves to escape their obligations on asset holding. For example, Bank A loans 1 Billion to a risky company mining in Angola but gets Bank B to issue a CDS to guarantee full repayment on default by recipient of the loan. Bank A is then exepmt from Central Bank requirement to asset back its loan by say,90%. Bank A then returns favour to Bank B when it has a high risk loan etc.etc.etc. This stuff is all in the public domain today - serious analysts know all about it and are predicting a major banking crash. While sub prime hit mainly US bank and EU sub prime debt purchaser banks, the collapse of the derivitives will take out more than 1/2 of the entire banking sector. Just to give you an idea - CDS issues at end of 2006 were USD 10 Trillion - at end of 2007 they were 21 Trillion and today they are USD 45 Trillion. The entire GDP of US and EU is about 28 Trillion so they have undermined the whole global financial markets as these CDS are now starting to be called in for staggering amounts Expect cost to banks of 3 to 4 trillion which will bust more than half of them. This is just crazy but about 300 people in Goldman Sach's alsone made commission of more than USD 10 million each on this last year so they just ploughed along until BANG. The Central Banks didn't even understand what the banks were at and the entire foundation of the banking system has been undermined as it was in 1932 when FED inspectors sent out from Washington were shown barrels of nails covered with a layer of gold coins.

    You should also Google Icelandinc Banks - they are all virtually bankrupt and cannot access funds to meet their obligations. They are trying to get into the EURO for protection even though Iceland is not in the EU. These are the stories not yet in the main news but they are coming fast - as I said before - the US bank crash came in 1932 which was THREE years after the share bubble burst. The property bubble burst end 2006 so we are heading into the abyss. All property and equity values will be decimated - like Japsn when their banks got into a similar situation almost 20 years ago. The Japs just used inflated shares in other companies to inflate their own asset values even more. It is all the same syndrome ban greed with no controls. Banks create money that does not exist and then this is pumped out to fuel rising asset values. They go to the most insane lenghts of creative banking to manufature paper money which is used to increase the value of Joe Public's home. For example, Citibank had reached it's upper lending limits to Enron. However, Enron needed another 100 million and Citi wanted to give the boys this money as it was being used to drive up the share price which they would all gain from. What did they do? Citi BOUGHT two disused Nigerian barges which Enron had in mothballs in Lagos for - yes, 100 Million. Enron guaranteed to buy them back after 6 months so they got the money which wasn't a loan and didn't break lending rules. Of course, it was a fraud and 4 guys from Citi went to jail when Enron couldn't repurchase the barges. The guys doing these deals are also crazy - they are not Harvard MBA's but dealers fuelled by adrenaline and coke with a good eye for the horses to boot. Of course, there was also a bit of "fat finger" syndrome. That's where he dealer's fingers were too big for his dealing terminal keyboard and an incorrect landing of the oversize digit led to new levels of papers gains and losses including one Jap with a fat index finger who cost his bank for USD 200 million with an over-zealous tap on his QWERTY. Check it out. Nick Leeson and Soc Gen are only in the ha'penny place. The mechanics have nothing to do with local market realities where the banks operate i.e. Ireland - the paper money has to be recycled several times a year with many of us caught in the frenzy. When the paper money disappears - we are left with real deflated values and of course, real inflated debt.

    Even commercial property is affected - yesterday Salomon predicted 30% fall in Irish commercial prices which were considered immune even at start of 2008. However,Europe is still the place to be. We control about 75% of global capital flows and have the wherewithal to come out fairly intact albeit with property and equities down more than 50% and unemployment at 12 to 15%. US will fare worse with 12% decine in GDP and a major collapse of banks. Australia will also come out very bad with a huge fall in commodoties - excluding gold, platiumum and diamonds which they don't do much of. Brisbane definitely not the place to be - maybe Munich though. Read the material on the net - all from stern, puritanical non dramatics bankers and financiers - especially Bill Gross. I agree that we went ahead 20 steps but we'll go back 10 or 12 - still ahead if you are positive about it but definitiely back to the early 90's.

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  • how much hypocrisy!!

    Posted By: Obelix Date: Friday February 1, 2008 @05:41PM

    "I have 3 properties but I owe very little" bit I do not want to sell. Instead, if you have one property with a debt on it you have to sell and lose your money. But once for all, where is this property prices drop you are talking about? Of course there is a 20% drop as people's asking price is 20% higher. If there is a downturn in the economy I am not really sure that people will be forced to sell at discounted prices. Maybe you are thiking of a collapse of the Irish economy like the Argentinian one. If the economy slows down the vendor will make the price anyway. I do not see many people aroung forced to sell. I am sure for some properties built in the middle of the GOBI desert, far from amenities, restaurants, locals, there are no potential buyers and that is understandable as people look and should laways look for quality. I think in the modern economy, with 90% of the property in the hands of a far lower persentage, the prices are dictated by the microeconomy and not the macroeconomy. You can say that shares are up 20% or down 20% tomorrow, not really sure that my life wil change a lot. Sometimes I have a feeling that people do no want to see prices going down (it is true for the Gobi desert properties, whose price drop has very little to do with the economic situation) they would like to see a collapse.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Holger Date: Thursday January 31, 2008 @09:47PM

    @Cee I hope you are not right because this is scary but where would you suggest to bring the few savings? buy some gold and keep it at home?

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: House prices and rents are going to crash Date: Saturday February 2, 2008 @04:17AM

    I am quite sure that the house prices in ireland are going to crash. Immigration in ireland has slowed down tremendesly in the last year especially white collored asians who had bought houses and rented houses in bulk. Part of the reason is that in Ireland unlike UK and USA there is a lot of uncertainity for having continous jobs for noneuropeans as it being a small country gets saturated very quickly and unlike UK and USA country of nationality rather than productivity is a crieteria in ireland.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Holger Date: Sunday February 3, 2008 @11:08AM

    the fed has cut interest rates by 1,25 % in two weeks that gives a very interesting situation because it means the fed expects recession

    I am really looking forward not only to the effects on the Irish property market but also how the stock exchanges will perform in the next two years e.g. at the beginning of January I was expecting the Dax to head for 5000 but I never saw the fed react that sharply next question here is how the European Central Bank will react to this as the time where the Europeans just followed the fed are over seems to be that many lenders are very lucky

    I still think the property here is overvalued but maybe the fed can really avoid a very deep recession with her agressive policy when unemployment does not go too high and the interest rates stay low for another while they maybe really get a soft landing here in the proprty market

    What I am also wondering about is the immigration I know more and more people who are leaving a French colleague to Munich an Austrian to Spain and they had the necessary financial potential to enter the property market here I really hope that Cee is wrong and I also still hope for many of the buyers here in the last 2 years that they don`t get ripped off completely

    it is a very interesting situation in total at the moment I really do hope the times ahead are not too turbulent

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Bob Date: Monday February 4, 2008 @11:15AM

    The FED rates reduction, combined with measures planned by the Bush Administration to stimulate the economy, will ensure that no recession occurs. The ECB is also widely tipped to reduce rates, probably by early summer and this will promote further European growth. Lets not talk about a recession, particularly when there is no real basis for such negativity.

    Instead of referring to occasional individuals who have emigrated, readers in their twenties and thirties should examine their peers and look at the length of time for which they have been looking for a home. There is clearly an ever-increasing demand for accommodation, with more househunters waiting for longer periods than before and this indicates a growing pent-up demand for accommodation.

    Where will such individuals purchase? Hardly any houses being built and those which come to the market are selling quickly, as those who have postponed the inevitable realise that paying rent is just wasted money. Those who are buying now are the smart ones as the clear reluctance of sellers to reduce asking prices (apart from those whose properties were overpriced in the first place) means that houses won't get any cheaper.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: JimmyTheFish Date: Monday February 4, 2008 @01:18PM

    Whatever about a supply shortage in Dublin and the possibility of fall in prices being "managed there", none such possibility exists in the NW. (NB Second hand prices fellmore in Dublin than elsewhere, also big talk about sky scrapers in Dublin.)

    I travelled from Sligo to Caslterea before Christmas and I must say that every other crossroads on the road from Boyle to Castlerea had a For Sale sign. Loads of houses have been built in Ballisadare, Cooloney, Carrick-on-Shannon, Boyle, Elphin etc.

    You can rent a pretty nice 3 bed house in the NW i.e. Sligo/Leitrim/Roscommon for 600-650 pm. the mortgage for the same house would be even at the current mad priced being offered be around €1700 (this doesn't cover insurance on the mortgage etc) In other words, your rental costs from Jan to March based on calendar month wouldn't cover the cost of the mortgage.

    What effect the problems in the NW will have in keeping down the Dublin market if any will determine how long the slump lasts.

    Re: interest rates, how much would a .5% fall in interest rates help a first time buyer. It would be about €15 per week, not something to gladden the heart and definitely not something to cause a stampede to the EAs offices.

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  • Bob's World

    Posted By: Badgeman Date: Tuesday February 5, 2008 @04:20PM

    Bob,

    What sort of bizarre parallel universe are you living in?

    "Hardly any houses being built and those which come to the market are selling quickly".

    That reads like desperate estate agent propaganda.

    Despite the construction slowdown, 50,000 units will still be built this year, while Dublin alone already has 40,000 empty units.

    Houses are taking significantly longer to sell and vendors everywhere are dropping prices - fact. The evidence is all around you, Bob.

    "The reluctance of sellers to reduce asking prices (apart from those whose properties were overpriced in the first place) means that houses won't get any cheaper".

    Well, seeing as EVERY single property in the country is already hugely overpriced, then by your own reasoning, they are all going to drop even further.

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  • Re: The Daft House Price Report, Year In Review 2007

    Posted By: Cee Date: Tuesday February 5, 2008 @09:35PM

    Badgeman is spot on. I accept that private vendors will not drop asking prices as they are in a state of virtual denial (DENIAL is a acronym for Don't Even Notice I Am Lying). Virtual is the other key word. Asking prices are down just 8% but ACTUAL selling prices for the few that are selling are down an average 20% on end 2006. Anyway, the private seller will not set the trend. This will be set by builders who will be forced by banks and sharholders alike to sell for what the market will pay. Rathborne beside Ashtown train station is an example - prices were cut from 368K to 268K. We will see a lot more of this. Yet, on this very website, PRIVATE sellers in Rathborne are still looking for 350K for the exact same property. Why wouldn't they when they have already paid 368K (and the rest) for what they are selling? By the way, the builder still can't sell at 268K and a price of 220K is probably more realistic.

    Holger - I am in business myself and I don't like any of this. However, I know what is going on. Bank shares hammered again today. ISEQ down more than 4%. AIB and BOI down almost 50% in 12 months. This has nothing to do with sub-prime which hardly featured in either bank's business activities. The problem is huge debt exposure - principally on risky corporate credit guarantees. Gold is the thing - or cash. Irish banks won't go bust. Even if there was a possibility of that happening, the shareholders would sell out long before it could ever come to that. The Irish banks are looking more attractive for takeover every day. What worries me is WHY there has not been any interest so far. I fear that the debt exposure is far worse than even I have estimated but I still am not worried about a banking collapse. The Eurozone has enormous capital reserves and to that extent we are fairly well insulated from what will be a meltdown in US and Asia. UK is fine also as their capital reserves are even higher per capita.

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  • JNtQRCUmftF

    Posted By: www.daft.ie Date: Tuesday May 31, 2011 @04:13PM

    Www daft.. I like it :)

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