2010 marks the end of a single national property market

Ronan Lyons, Economist

5th Jan 2011

Ronan Lyons, Daft's in-house economist, commenting on the latest Daft research on the Irish property market.

The headlines from a review of the residential property market in Ireland in 2010 make unsurprising reading. 2010 marks the fourth year in a row where asking prices fell. Asking prices were 15% lower on average in 2010 than in 2009 and are now 40% below peak levels. One could make the argument that compared with a fall of almost 20% in 2009 the market looks closer to stabilising now than a year ago. But economic headwinds remain strong, with unemployment high, confidence low and those with static take-home incomes viewed as the lucky ones.

So what do we know at the end of 2010 that we didn't know at its start, apart from the exact size of the falls in property prices during the year? I would argue that we know one very valuable thing: the underlying conditions in the property market vary so dramatically around the country that we should no longer be talking of a single national property market. Instead we should look at different regions as very distinct markets. This is important because it means that talk about "the property market" is essentially useless.

To understand differences across regions, it's worth recapping what we should be looking for in a healthy property market. Essentially, for a property market to find its new price level, there needs to be balance in the supply side of the market, i.e. no particular pressure on sellers to lower their price, and balance in the demand side of the market, i.e. no particular incentive for people to rent rather than buy.

The supply side will be in balance when there is no longer any overhang of properties for sale. Overhang refers to properties actively being sold, which we can trace using the total number of ads on daft.ie at any one time. Country-wide, there are almost 60,000 properties for sale on daft.ie, a figure that has not change significantly since mid-2008. It is important to remember that in addition to these, there are vacant properties currently not on the market that could be sold, in particular those in ghost estates.

What about demand? This brings up a whole host of factors, from changes in income tax to patterns of migration. But the simplest way of looking at whether the demand for buying properties is in long-term balance is the relationship between rents and house prices, known as the yield. For property, the yield should look like an attractive interest rate for savings, something like 6%. In Ireland, at the peak of the market, it had fallen as low as 3% and currently stands at just short of 4%.

Therefore, when we look at conditions around the country, we should be looking at three things: the fall in prices from the peak, the total stock sitting on the market, and the yield on property. Using these headings, it is clear that the idea of a national property market needs to be retired. Certainly for the next few years, Ireland will be a collection of different property markets in the same country. At one end, there is Dublin, at the other end are the non-city parts of Connacht, Ulster and Munster, and in between are the other main cities and Leinster.

In what way are these property markets different? Ultimately, it comes down to how far along the path of adjustment they are. Take Dublin city centre, for example. Firstly, asking prices there are already 50% below peak levels. Secondly, the stock for sale sitting on the market in Dublin has fallen by 20% from the peak. Even allowing for properties for sale not listed on daft.ie, only about 2% of properties in the capital are for sale. The ghost estate problem is also smallest in the cities: Department of the Environment figures suggest that a further 2% of Dublin properties, mostly apartments, are in ghost estates. Lastly, the yield on property in Dublin city centre has risen from a low of 3.5% in 2006 to over 5.5% in late 2010.

At the other end, counties such as Mayo or Limerick have seen asking prices fall by just 30% from the peak on average. Across the non-city areas of Munster, Connacht and Ulster, there are over 37,000 properties for sale, which is not significantly lower than mid-2009, when the market was at its most crowded. These figures mean that almost 7% of properties in these areas are for sale. To this must be added properties in ghost estates, which constitute in many places a further 5% of semi-detached, terraced and apartment homes. Lastly, on the demand side, the yield on properties in these areas is still below 4%.

Naturally, no-one knows in advance the exact yield, and therefore the exact fall in house prices, that will bring Ireland's property market back into balance. However, we do know that we are not there yet, as the market overhang persists and the relationship between rents and house prices remains out of balance. We can also say that whatever the ultimate yield and fall in prices needed, Dublin looks best placed to balance earliest, while those places away from the main cities and from Dublin's orbit have taken the smallest steps so far towards sustainable prices.

Suppose the yield that will bring the property market back into balance is indeed 6% and therefore that the fall in prices from the peak is between 55% and 60%. If that is the case, while parts of Dublin may be close to completing their adjustment, some parts of the country are perhaps no more than half way through their adjustment process. This important distinction will be hidden if we continue to talk about a national property market.

Can anything be done to speed up the adjustment needed and prevent much of the country's property market languishing for years yet? In theory, it's as simple as sellers in rural parts of the country mimicking the discounts from the peak offered by their urban counterparts, and thus speeding up the adjustment process. But this is difficult as currently only larger population centres have the volume of transactions needed for sellers to judge market conditions. Ultimately, it comes down to information. Real-time publicly available information on transactions and prices achieved would be a significant aid for sellers all over the country and would help speed up adjustment in the property market back to sustainable levels of transactions and prices.


HIGHLIGHTS:

Sale Index
Asking Prices, Residential Sales

Stock and flow of properties
Stock and Flow of Sale Properties


SNAPSHOT:

Snapshot of Asking Prices Nationwide
Snapshot of Asking Prices Nationwide

Discuss This Article

  • Re: The Daft House Price Report Q4 2010

    Posted By: Joe Date: Wednesday January 5, 2011 @01:39AM

    The positive to be taken from this weakening of property prices, is that the future generations (who don't emigrate) may be able to afford somewhere to live, and raise fasmilies.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Wednesday January 5, 2011 @04:15AM

    The latest figures continue to illustrate the extent to which the property market overheated during the Celtic Tiger years. While it seems very painful to people now, I do believe it is in the national interest to have realistic and sustainable property prices. For too long many families and single people were priced out of the market and that was not a healthy situation for the country. House prices and mortgage borrowings need to get back to the old standard of 3 x salary which was the norm for my parents generation. Looking at the figures and considering the current economic issues, I believe that the market will bottom out at 45-50% of 2007 peak value within the next 2 years. Once the market stabilises, people should buy with the mindset that a house is a home and not an investment vehicle to make a quick buck. That will be the key to achieving long term stability for the property market and will re-ignite growth.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: NAMAwinelake Date: Wednesday January 5, 2011 @07:59AM

    Well done to Ronan and DAFT.ie for producing what now appears to be the most extensive report on asking prices in the State. And with PTSB now having less than 5% of the mortgage market and its house price series excluding cash sales, and the DoEHLG not bothering to classify sales when calculating its average prices you'd have to wonder if the DAFT.ie series is the most accurate reflection of what is happening with residential property. Sadly the Minister for Justice and Law Reform didn't introduce an amendment last year as promised to the Property Services Bill to enable a House Price Database so maybe DAFT.ie is as good as it will get.

    With respect to yields (roughly rent divided by the price of a property) - both of the components can change, that is rent and asking prices. And I wonder is there enough evidence that rents have stabilised. The rent assistance available might act as a floor (though many properties will not accept rent assistance) but with an overhang of property and roughly static population (in fact Dublin's population fell slightly last year though surrounding counties were up) and pressure on wages/take home pay and the fact that there are few largescale landlords to control prices, will rents fall further?

    Also NAMA controls a colossal amount of property - at least 6,000 completed dwellings in Dublin alone and you would have to say the tendency will be for some of these to come onto the market, perhaps at teaser rates.

    For the little it's worth, I think prices will come down by 5% this year by reference to the ESRI/PTSB house price series.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: SFLondon Date: Wednesday January 5, 2011 @10:48AM

    This report, whilst interesting, is of limited use as it is based on asking prices which have no bearing whatsoever on actual sales. Until the Irish people get access to the equivalent of the UK's land registry data showing actual prices achieved on a particular street, the Irish property market will remain a rudderless ship, exposed to the unscrupulous behaviour of unregulated estate agents.

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  • Anyone for Talking Reindeers??

    Posted By: Alison Date: Wednesday January 5, 2011 @07:03PM

    As mentioned by a previous poster the report is based only on asking prices which are no reflection of reality. These asking prices remind me of my 7 year old asking Santa for talking reindeers this year. Sounds to me like sellers are asking for impossibilities and are partially living in a dream world. I, like many other posters on the daft site am waiting to buy as cheaply as possible. So I say fair play to Ronan and DAFT for putting the report together as at least it gives some indication of what figure to work from when bargaining downwards.
    Thanks again guys. We are getting there.. albeit on the slow path as usual in Ireland.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Potatoeman Date: Wednesday January 5, 2011 @12:07PM

    House prices have a long way to go before they reach two to four times the average industrial wage. The average house prices in Dublin from Q1 1996 were 83k they then jumped in Q1 2000 to 186k. Thats over a 100k in four years clearly not sustainable.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Tara Date: Wednesday January 5, 2011 @12:15PM

    Well done Ronan Lyons,

    There has always been two Celtic Tigers (one a large wild animal the other a popular domestic animal) Dublin and the ROI (Rest of Ireland) operate as two different economic areas and to bundle them together causes the ROI to be strangled by the dramatic headlines following our property boom and bust.

    Cash buyers are expecting 50% discounts on peak prices as per Dublin headlines even though the property in question had never reached the same dizzing asking price as it's Dublin counterpart.

    I have 5 buyers for my property but all have to sell to buy. My first time buyers all fall short of my already adjusted asking price. I believe we as a market are like the herds in the sereneti waitng for some instintive animal cry and we will all stampede again.

    The only true reflection of where we are at is whether it is cheaper in the long term to buy or rent or whether it is cheaper to buy what is already built or to build new.

    We the Irish have always needed to own 'our bit of green' long term renting as is popular with our largest european market ie: Germany is not and will never be part of the Irish psyche.

    P.s. Emigration is not always a bad thing.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Wednesday January 5, 2011 @02:04PM

    The notion of attaching a yield to a resi property has been a method for the doom and gloom merchants to illustrate how overpriced the market is. Maybe so but it bears little relevance in a home buyers market. judging from comments above and other articles i have read in recent years, the days of persons owning multiple properties for investment purposes are over (for this generation). Therefore, for me, yield is the least relevant benchmark. Unemployment and wider economic indices have shown a stabilisation following the 2009 horror and all economists point to the fact that house prices are linked to unemployment figures. therefore, my opinion is that prices will not fall much further in areas with most of the working population ie dublin. supply/ demand has a way to go elsewhere I'm afraid. However the key to the property market stabilising in line with unemployment is confidence. However, the use of the term "confidence" needs to be examined in the context of the property market. I ask you the following:

    Based on the notion that buyers will indeed buy for one reason ie a long term home with a 20 yr plus mortgage:

    1. Do you think prices will be at current levels (50% below 2007 peak) in 20 yrs time?

    2. Are mortgages more affordable than before the celtic tiger taking into account wage levels and interest rates?

    3. will Irelands population grow or contract over the next 20 yrs?

    4. where will the population growth if any occur?

    5. Will significant residential development occur over the next decade?

    My opinion:

    Question 1 - No. They will be higher than current levels given longer term economic growth.

    Question 2 - Yes. Economists have pointed to the fact that mortgages are more affordable at current prices than before the boom.

    Question 3 - Yes. weve had an ongoing baby boom. they wont all emigrate and as tough as it sounds the retirement age will be increased so more people will be living and working in the economy in future years.

    Question 4 - dublin and to a lesser extent other cities and their hinterlands.

    Question 5 - No. banks cannot lend in the short term and will refrain from lending into the construction sector in the medium term leading to a build up of demand in required locations.

    Therefore, my opinion is that anyone in a position to buy now should do so with confidence that they will not be in negative equity for a significant period. i am conscious that finance is difficult to obtain at present however there are significant cash deposits out there and a lot of buyers sitting on the fence. In that case we may be falling prey to what led us to buy too much property in the boom...greed...albeit this time for a bargain!

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Patso the fatso Date: Thursday January 6, 2011 @09:43AM

    Selling a house or considering selling a house? All of your arguments appear to bolster the opinion that you have a strong self interest in talking up the property market. I find it interesting that you first pose the questions then answer the same questions in a condescending manner as though you wish to educate the lesser well informed.
    Perhaps if you put forward a much more convincing argument with solid facts and not pure speculation, you wouldn't come across as a total spin-doctor to all the "positives". In essence you sound desperate to hold on to the fortune you made during the boom; and as talk is cheap your little monologue does not cost you anything. But I would hasten to warn potential buyers that if there is an upturn in the current economic environment in terms that effect the general populous and not just the pockets of the oligarchs; then the effect on house prices will not and I repeat, will not immediately send house prices spiraling out of control.
    House prices will first stabilize for an extended period or until there is a catalyst that drives the property market. In the current situation the likelihood of this happening is significantly hampered by the huge bailout agreement we have with the IMF etc.
    In short, house prices can only go one way at the moment and that is a down. One last point. We are relying on figures from property websites to give us an accurate picture of what is really happening in the market. By their own admission, house prices dropped by around 14%-15% last year. But these figures are based on "asking prices" and not on the actual closing price. Do you know anyone who sold their house recently and got what they were looking for it. Do you know anyone looking to buy who is willing to offer the asking price straight away. A good solicitor would give you advice on what you should be offering and I can personally tell you that I would never advise a prospective buyer to offer anywhere near the asking price. You can always offer more once you have established the ground price; but it is difficult to negotiate the price down.
    Anyway, that's my opinion. Let me know if you think I am full of crap or if you agree with my appraisal of the situation. I have never written anything on any of these websites before but since I have gone into conveyancing, I find I spend much more time trying to understand the general consensus on property issues before proffering my opinion. I am sick to death with all the damaging spin and misinformation being fed to the public. At least here I get the chance to let you know (albeit under a pseudonym) what I think.
    I doubt that this article will be posted.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Joe Blog Date: Thursday January 6, 2011 @04:19PM

    Hi Patso The Fatso,
    We thought your response above was very funny. It is a very nice put-down to the garbage that Anonymous Poster posted.

    I agree that the price drops we are hearing about are not based on the actual closing prices people are getting. My Gran died two years ago and my mother and Uncle agreed to sell the property in Tempelogue, a 3 bedroom house needing some modernisation. They were advised to put it on the market by an estate agent for €460,000 but after three months they didn't even recieve one seriously interested viewer. In the end they brought the price down to I think €420,000 before people started to even come and look at it. In the end they sold it for €388,500.

    I see that unemployment figures are up again. I am considering going to Austrailia once I finish my degree. I dont think there are many job options out there for me at the moment. Out of last years class of around 30 studnets about two thirds of them are still struggling to find jobs.

    Even if I do manage to get a job here in Ireland the chances of getting a mortgage are now slim as starting salaries are down dramatically. I dont want to be stuck living in a 1 bed-room appartment for the rest of my life.

    I have to get back to the study. If that was your first time posting you should consider giving it another go. We all enjoyed your rant.

    May house prices continue to fall so that we can all afford one when we graduate.

    Blogger

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Niall Date: Tuesday February 22, 2011 @04:52PM

    Hi bloger and all... I liked the numbers you gave us and was thinking if a number of people gave a similar summery we could develop a picture of the relationship between asking and closing...
    So I'll make a start with
    3 bed semi detached deans grange area
    2007 - 790K
    2010 begins sale process staring at 430K
    02/11sale agreed at 300K

    Most of us will know some one we can call and ask how there sale proceeded ... lets see if we cant get a big list

    Niall

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  • Re: The Daft House Price Report Q4 2010

    Posted By: aine Date: Wednesday February 23, 2011 @11:38PM

    well done niall need more of this real prices the truth,,,

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Niall Date: Tuesday February 22, 2011 @05:18PM

    Here's another ...
    3 bed semi ... Knocklyon
    started selling 08/10 379 at 379K
    reduced to 345K
    sold at 317K

    niall

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Mark L B Date: Thursday January 6, 2011 @04:23PM

    Very well said. House prices are going to continue to fall. The figures in the papers today about employment support what you are saying.

    Good post. Are you also involved in the property trade. If so, would be interested to know why you appear to be on the 'wait till prices come down' side of the devide. Could there be a rouge estate agent amoung us?

    Mark

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Shane Peters Date: Friday January 7, 2011 @12:11PM

    Dear Patso,

    I read your post and found it very interesting. I also read the article which sparked your reaction and found it too to be very interesting. I like the way this form allows all people to discuss the issue of property sales in Ireland in a way that informs the public about everyone’s opinion. In other words people get to say how they feel about the current situation. Some simply say what they want in a few lines, while those who want to articulate their point also get the opportunity to put down larger paragraphs.
    Unfortunately when the sentiments do not match our own beliefs there is often a conflict of understandings. Naturally people with an interest in selling are going "to talk up" the market. People who wish to buy will "talk down" the market. But the neutrals actually offer a balanced opinion based on what they believe is actually going on.
    You asked for feed-back so I have to say that I think you should not attack other posters. Readers are often much more intelligent than you think and are easily capable of discerning factual information from fiction for themselves. So you do not necessarily have to champion their cause.
    There are some posters on this forum who simply want to stir up a reaction by making random statements like "its time to buy now people, I just bought my first house at a steal", or "I just sold my house to some unsuspecting young couple for way over the odds and now I am in the Jacuzzi drinking Champaign".

    We're not stupid; it is easy to see what these people are at. If you are going to champion any cause try to stay impartial unless someone asks for your opinion. I am not a great author and I much prefer reading. I base my own opinions on factual figures where possible. My opinion about buying a house at the moment just happens to be the same as the one you expressed. I do think house prices will continue to fall. During the boom house prices rose by an average of 15% per year for nearly 10 years. Conditions were very much different then.
    I also believe that the property websites, government publications and estate agent reports try to put a very positive spin on current conditions as it serves their own self interests.

    Here is something I read this morning which I didn't write but feel highlights the reasons why prices will continue to fall better than I ever could.

    "MyHome‘s hope that there is an overhang of pent-up buyers waiting in the wings to come into the market once the house price trough is reached seems a little fanciful – this is the generation who are emigrating in droves, with substantial numbers on the Live Register, the need to build a large deposit, and difficulties in accessing mortgage credit. I would think demand is pretty soft all round, and even if people moved out of rental accommodation into their own homes this creates an addition problem of further oversupply in the rental/investment sector and the potential to push that property onto the market. The effects of the future property tax may also slow sales as people wait to find out what their commitment might be. Overall, 2011 seems set to be another year of decline, but perhaps not as drastic as 2010 and certainly not as bad as 2009."

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  • Re: The Daft House Price Report Q4 2010

    Posted By: a-buyer Date: Thursday January 6, 2011 @12:43PM

    wow if ever i herd a spin from an Celtic tiger estate agent then this has to be the best. how come the Celtic tiger died but the estate agents carry on regardless. and you talk about greed.. LOL

    please, as a buyer i will not be diving into the market any time soon. unemployment high, government taking from the country for the next 4 years. no investment in infrastructure, jobs, health or schools. just more greed from them. !!!!

    If the market does move then only expect a leveling to 1% in prices over many years. As a country we have now tied our private debt to public debt. the biggest mistake of all and very un-reversible in the short term.

    2011 will be a year of watching by many. sellers expecting that there will be a price increase therefore keeping their asking prices high.. just remember people even a dead cat bounces..

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Tuesday January 11, 2011 @04:47PM

    Question 4; I very much doubt there will be population growth in secondary cities for many years,you only need to look at the amount of economic migration of young Irish to stable economies such as Canada Australia & New New Zealand,for accurate statistics you need to search those nations official government websites for origins of immigrants which are very much up to date.Self deception which caused the mess in the first instance must be overcome.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Wednesday January 5, 2011 @03:08PM

    great to see that the crash is almost finished in Dublin so I can start selling some of the apartments I bought soon even though I am making plenty on rent from them I want to buy my dream villa in florida now

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Mad Max Date: Friday January 7, 2011 @07:14PM

    I admire your enthusiasm....but I think you are being slighly deluded.. I sense sarcasm though!

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Brian Date: Wednesday January 5, 2011 @03:33PM

    i have been looking for property in the leitrim/roscommon area for the last 2-3yrs and to be frank find asking prices of sellers at best delusional and at worst an insult to intelligence, this backed by greedy/deceitful agents who are only damaging their own reputations in the long run [god knows they are bad enough already] and disabling the current market by promoting unrealistic prices to both vendors and buyers.there needs to be a complete ovehaul off local markets and many agents/auctioneers brought to book.
    as for the above report when applied to my situation/needs i'd have to say "about as much use as a chocolate teapot"

    good luck to all in 2011

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Gerry Browne Date: Wednesday January 5, 2011 @04:16PM

    I live in New York and was from Westmeath 20+ years ago. I would love to buy an apartment or smaller house in Ireland for extended visits and for my kids who love to visit. The problem is I can buy a place in a nice location in Florida with sun year round not to mention other pleasant places to visit for a substantial discount on asking prices in Ireland. The asking prices are still way out of whack. Sales will pick up again but not before another 20% reduction from current levels. I have seen this before here in the states and must warn you that when prices go up in a bubble they overshoot by whatever percentage but when they bust they also over shoot on the downside. I believe that in the case of Dublin and only the better areas of quality properties will the rot stop soon and everything else will see major reductions before they start selling. 3 reasons for this. Salaries have been reduced along with high unemployment and bank lending standards tightening reduces the pool of buyers qualified for a price range. Secondly we have at this time no idea exactly how many borrowers owe more on there house than it's worth along with the long wait for a reposes ion of a house by the bank. Many people are set to loose their homes. Finally the property market must reach a point where every property owner and want to be is terrified of buying anything and have been stung really bad. This will be the bottom. As Warren buffet says "when there's blood on the street it's time to buy". We are not there yet or even close.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Damien Date: Wednesday January 5, 2011 @04:28PM

    Daft Reports are just never going to be accurate, this is the first issue, asking prices are not a good gauge to the property market, because mainly greedy IAVI members are naturally going to advertise a best price for the seller so that they can claw a good return on sale value for their commission (a sort of bonus culture method of sale unfortunately). The issue of sales is that asking prices are still too high to buyer because of a number of factors, chiefly threat of reduction of earnings for one, nobody wants to be lumbered with mortgage during a phase when everything is so uncertain with their own finances, and we the lack of pay rises in the market these people only face further cuts to their take home pay. If you took an example of last year 2010, the average industrial wage that was around 32000 euro gross and multiplied this by say 4.5 in terms of a mortgage draw down your looking at 144000 ot a maximum mortgage, but I can guarantee you that the gross figure is not what the potential buyer is looking at he is looking at the net figure because of the budgets in this case that is 26000 euro net pay with the same calculation of 4.5 works out at 117000 of a mortgage if the asking prices where closer to these figures for a standard 2 bed house I think you would see more sales but most properties geographically are still at 170000 euro plus.

    I read someone else's reply above and they suggested going back to 3 times the salary well take this using the example above and the gross is 96000 and the net is 78000. From memory this would suggest that asking prices would have to go back to around 1997 or further and not 2002 figures as outlined in Ronan's article.

    My own personal opinion is that we are in for a lemon drop over the next few years that all the commentators are too afraid to say because they don't want to admit that we are in for a 10 year downturn. Captialism is a 30 year cycle read your history books the first 10 years are doldrums the middle 10 are road to recovery and the following 10 are boom to bust..... our problem is that we have not applied capitalist rules to resolving our banking problem so we may acutally buck the trend on the first 10 years to potentially 15 maybe 20, and we are really only after finishing year one

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  • Re: The Daft House Price Report Q4 2010

    Posted By: noel harrington Date: Wednesday January 5, 2011 @07:23PM

    about time house prices came back down to earth,they should drop a further 20% to be normal.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Mad Max Date: Wednesday January 5, 2011 @07:43PM

    Myself and my partner thankfully never got on the property ladder during the 'boom' times. We both have good jobs and have just started looking at potential places to buy.

    A word of advice for those potential first time buyers. The asking prices that you see on places like Daft and estate agents windows are way off.... Start at 30/40% lower. You'll be suprised where that will take you!

    Was looking at a house in a good (south Dublin) area. Asking price was €410k (I was told that the house was worth almost €700k in the good times by the agent). They have provisionally accepted My offer of €300k and the vendor will pay my stamp duty.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Robbie Date: Wednesday January 5, 2011 @07:55PM

    Well done Ronan on your roport,sellers have to be realistic on the price they are looking for,a 1bed apartment in the greater dublin area should be no more 100k,

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Wednesday January 5, 2011 @08:51PM

    Time to buy lads. Just got my loan approved and got a decent 5 yr fixed rate too!

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  • Re: The Daft House Price Report Q4 2010

    Posted By: kieran Date: Thursday January 6, 2011 @07:48PM

    At least not all is lost if you move your feet, sold my 60 sqm bed apt in the docklands area last month for 250k( payed 500k for it tho in 06) and im just after buying a gorgeous 90sqm 2bed in the docklands too for 270k after a lot of bargaining.

    You might say its only an extra 30sqm but it does make a lot of difference when you look at it and at least i can get rent for life garanteed unlike may other areas

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Sunday January 9, 2011 @12:21PM

    500k for 60sqm apt?More money than sense...

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  • Re: The Daft House Price Report Q4 2010

    Posted By: LK Date: Friday January 7, 2011 @02:59PM

    Too much mathematical analysis folks. What really happens is based on emotion and confidence. An argument and counter argument for any outcome can easily be made. Its amazing how many people say that it was obvious that house prices were too high but did nothing about it.

    So if house prices go up it is because there is a baby boom; no more developments are in progress; there is pent up demand from renters; the affordability has improved.

    If they go down it is because the yeild is still too low; the banks wont lend; the multiple of salary is too high; there is too much stock.

    Ultimatley a herd mentality will impact behaviour (choosing whichever justification criteria suits) and that will determine the outcome. Can you hear it now? ''Oh yeah,we bought in 2011 - it was obvious that the market couldnt go any lower''. But if it does they will be quiet and the ''we held off as it was obviously going lower'' brigade will be heard.


    My guess is that it will go down for a short period and then start gradually rising but that is no more valid than guessing red on roulette because the last one was black.

    • Reply to this message
  • Re: The Daft House Price Report Q4 2010

    Posted By: Mark Fitz Date: Saturday January 8, 2011 @10:16PM

    Betting on red because the last one was black is a ridicules way to bet on roulette. Man, you are better off staying out of the property market if that's your approach.

    Base your bets on factual data. At least that way if things go wrong for you you can say you did everything by the book.

    At the moment with the massive package from the IMF, huge unemployment, totally untrustworthy politicians and policy makers and a general feeling of doom; the only way that house prices can go is into the red, sorry I should use a non-roulette tern; down.

    Read this post again in twelve months time and see if I am still on the correct track. I predicted prices would fall by another ten percent this time last year and the outcome was worse than I expected. Look back for yourself.

    I predict that in twelve months time the house prices will have fallen a further 12%.
    Any takers.

    Marcus Fitz.

    • Reply to this message
  • Re: The Daft House Price Report Q4 2010

    Posted By: LK Date: Monday January 10, 2011 @02:34PM

    Marcus

    You could well be right - if you see my post it says that I expect them to drop this year. My real point is that every view proposed by people seems to be based on a non-contravertable fact - whether that be prdictions of upward or downward movement. Both cant be right ! So the reality is that the prices are as likely move based on general sentiment as much as on economic data.


    PS - thats why I also believe that the gold bubble is soon to burst. Speculators are getting ready to take profit as soon as they think all the little guys are in based on sentiment (which is justified by facile views on limited supply of gold, the gold standard etc.)

    So if you get you or anyone gets their prediction right - it is based on luck rather than any real insight.


    And as for the point from another blogger about better value in manhattan - get real ! It is still $800K for a fairly basic 1/2 bed apt. I lived there in the late '90s - great place for a period but you need big bucks to survive with any quality of life. and I can gaurantee you that the weather is not better - freezing all winter and boiling all summer.

    • Reply to this message
  • Re: The Daft House Price Report Q4 2010

    Posted By: RAYMOND Date: Friday January 7, 2011 @05:21PM

    I don't understand why you would even think of buying anything in Ireland at the moment.
    Ireland has nothing to offer ie, Weather or quailty of life. If I was living in Ireland at the moment i would be moving to a country that has beter weather and a cheaper ecominy. Ireland is still way over priced. I live in Manhattan ie, new york city. What a life compared to Dublin , its like a different world.

    Raymond

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  • Re: The Daft House Price Report Q4 2010

    Posted By: goldencow Date: Saturday January 8, 2011 @12:05PM

    If land is gold then just buy some gold and forget about the land until we are finished with this 'monetary event'. Irish property is just a small part of the picture which includes the dollar becoming defunct as China and the Euro becoming more powerful. The money supply (credit) drove the Irish market and ultimately the contraction (credit crunch) is what's crashing it. Money itself is being re-calibrated and the only viable position is monetary metals, not super-inflated assets which have yet to bottom out.

    • Reply to this message
  • Re: The Daft House Price Report Q4 2010

    Posted By: Conor Date: Monday January 10, 2011 @11:16AM

    I would disagree strongly that this is a good report. While perhaps somewhat comforting to those who bought property during the boom (and also to estate agents!), it is vague and there doesn't really seem to be any solid opinion expressed by Ronan on how he, as an economist, believes things will play out. The reality for me is that a nice house which can currently be built for 150k on land which costs say 50k does not merit a selling price of 300-400k. And needless to say, the build standard and finish of Irish homes appears to be shocking compared to those in the States. I believe this bust cycle will wake up the Irish and at last they will realise that renting for life as is the norm in many places across the globe is not such 'dead money'. In today's society, children to not expect to inherit and live in their parents houses but are instead generally self-sufficient.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Yields or Bust Date: Monday January 10, 2011 @05:52PM

    Folks

    A few fundamental known knowns in Rumsfeld speak.

    Banks price property not consumers.

    Please repeat ad nauseam until it becomes engrained in our consumer brains. Banks price property not consumers, repeat it, understand it, and bring it to your consumer grave.

    Most commentary in relation to any property market, Ireland included, suggests that consumers are the market participants who determine property prices, well they don't, it’s the banks that do.

    Why so?

    In c99% of residential housing transactions a third party is providing north of 80% of the finance for that property (and historically in many cases (sadly) north of 100%).

    The action or inaction of the third party who ultimately determines the price at which the transaction takes place is generally a bank, not the end consumer.

    Until the banks can afford to lend again (which they can't) and are confident lending against the asset class (which they aren't) then prices will continue to go significantly lower.

    At what price will banks resume their lending? (Assuming they can afford to).

    Well for previously nauseating claptrap such as 'Location, Location, Location' in future please re - read as 'Rental yield, Rental yield, Rental yield'.

    In fact it’s always been rental yield, rental yield, rental yield but for some strange reason the property lending banks forgot this and for a decade were smoking and drinking a cocktail of never ending optimism in risked asset pricing.

    The reality is however in risky assets yields matter and in property they matter above all other valuation metrics bar none and normalized property yields will always comes home to roost – always. So talk of other valuation metrics somehow superseding this metric is utter nonsense.

    In case you’re not convinced ask the Japanese banks for a quick history on the dos and don’ts in pricing property. I’ll think you’ll find a similar tale. Location, location, location are in many respects very dirty words in a bankers vocabulary following housing bubbles.

    So please don't be under any illusion that banks - particularly Irish banks, are going to price property in the future on anything other than stable (in their opinion) nominal rental yields because their not. I should know this as it’s now my day job.

    The banks were incredibly stupid and badly stung in the past in looking only at the ‘ability to repay’ side of the equation on the part of the borrower, and they are not going down that road again.

    Why? Because it’s proven to be a very poor valuation metric and despite contrary opinion doesn't actually work over the medium to long term i.e. it leaves the risk of negative equity on all parties as too high a risk to bear and the problems which that entails.

    Pricing on rental yield is a much more stable and viable long term method – music to a bankers’ ear at the present time. Irish bankers would gorge out today on stability and viability - not sexy I know but how they wish they could turn the clock back.

    So talk of lending again at 2, 3 or 4 times salary etc is yestedays metric - in preparing any of these 'ability to repay metrics' what the banks are actually establishing is just that i.e. the ability of the borrower to repay the loan today based on current and expected earnings plus or minus a stress test for interest rate movements - but these metrics ultimately give zero information about the actual underlying value of the individual property. Repeat zero.

    And this is the heart of the mess that we're in today. Banks failed to ask the right questions (for nearly a decade!).

    I should know as I have bought 7 properties - all home dwellings - and sold 6 of them over the past 12 years and I was never once asked by the lending bank in that time to provide a comparable rental for a comparable house in the vicinity I was buying. Not once, and I doubt I’m unique.

    It’s a bit like a stockbroker not trying to at least have a stab at next years eps number for a stock. This is something they simply don't forget to do. Irish lending banks forgot to ask the obvious basic questions for nearly a decade. Incredible but true.

    It’s worth noting that in that period of lending which I refer I’ve mentioned nothing such as the well worn phrase ‘cheap credit’.

    Why? Because it’s as near as makes no difference to a complete red herring insofar as accurate property valuation is concerned. It’s trotted out again and again as one of the primary reasons used to explain the property bubble – which it may well have been, but by and large it’s simply another input into ‘an ability to repay’ model for borrowers and says zero about the underlying asset value. Zero.

    Property pricing is all about the income the underlying property can generate over time, nothing more nothing less. Forget ‘I don’t intend to sell it’ arguments – more irrelevance - the cost of financing the purchase has obviously an impact on the borrower but it says nothing about the income generating capacity of the asset. This is the core of the current impasse.

    One may argue that a lower discount rate (interest rate) applied to monthly rentals increases the property valuation- true - however over the longer term (and most mortgages average terms are between 20 to 25 years) a more appropriate long term average rate, should have been used in valuation models and this would negate any short term ‘cheap credit’ blip which would bring us back to a more sustainable valuation process and thereby negating once again ‘an ability to repay metric’ as a basis in pricing.

    In simple terms its rental yields or bust – and we’re bust because the banks forgot this.

    Please remember the property market drivers are the very same as the equity market drivers except they operate in the slow lane.

    The equity market drivers include the supply and demand of stock, the cash generation ability of the company concerned and the long run earnings multiple for the company and the sector it operates in. Not complicated. For property substitute the following words in the above sentence ‘houses’ for stock, ‘property’ for company and ‘yields’ for earnings multiples i.e. you get back to the same place.

    For the hundreds of thousands of people in Ireland over the past decade the fact that banks forgot to apply the fundamentals of property valuation is simply inexplicable – it’s the banks day job for which they were handsomely paid.

    And by the way they were supposedly regulated as money lenders to know better, but that’s a different story.

    In any other industry mis-selling normally carries with it the prospect of significant compensation to the aggrieved party. Why is it any different here?

    Many people signed documents over the years with regards to dodgy insurance polices and were successful in claiming damages against the guilty insurance company for abusing their legal duty in presenting and selling poorly designed insurance products to the public.

    I for one cannot see any difference with the mis-selling of insurance products and the mis-pricing of property assets and mis-selling mortgages.

    Arguments given such as ‘let the buyer beware’ are understandable when one is buying a new car for instance but largely irrelevant when it comes to a property purchase which is supposedly regulated, for which the Government generates a specific tax to complete, involves many professionals such as lawyers, auctioneers, architects, engineers, accountants etc.

    In the case of property transactions consumers generally take steps to mitigate the risks associated in the transaction.

    They employ a lawyer, they use the services of an auctioneer, they have at times to employ architects and engineers and they are required to have life assurance in place prior to any funds being advanced by a lending bank.

    In simple terms consumers when it comes to property transactions are generally careful – they transact in this market perhaps once or twice in their lifetime and in the main are property novices. In many respects by their actions consumers are living proof of ‘buyer beware’.

    How in these circumstances can a consumer be asked to compensate the countries banks for their crazy lending practices when ‘lender beware’ was absent from the banks lexicon for so long.

    Take for instance an average consumer (average mortgage and house size) who bought in 2004 who is now in serious negative equity and can no longer afford to meet the monthly repayment.

    The actions of the banks in the intervening period in flooding the market with excess product, thus ensuring the banks security was at best compromised and at worst almost a second thought, and by their action is now imparing the ability of the consumer in selling the property and virtually guaranteeing a negative equity scenario.

    How can any reasonable person come to the conclusion that the fault and 100% of the cost for this scenario rests with the consumer. Economically, socially, financially and logically this stance makes no sense. Burden sharing is the next step.

    The most recent pronouncement by the Financial Regulator that no mortgage debt forgiveness is likely, is complete nonsense and hypocritical.

    He recently indicated that he felt the recommendations as outlined in the report prepared by the Mortgage Arrears and Personal Debt Group as fair and balanced – just to note within the final report the Group stated that “We do not recommend a formal debt forgiveness scheme having regard to the broad range of policy considerations which are outlined in the main body of the report.” i.e. we are happy to condone the mis-selling of mortgages and mis-pricing of property by Regulated money lenders.

    If I were to replace ‘we do not recommend a formal debt forgiveness scheme..’ with something like ‘we do not recommend compensating consumers who suffer losses as result of the mis-selling of insurance products..’ what do think would have been said at the time?

    As you can understand I think this stance by the Regulator is avoiding the inevitable will ultimately be proven to be incorrect.

    The market will ultimately do its own work in this regards the public (in their hundreds of thousands) will see the sheer stupidity of the Regulator and the banks in this regard. Recently he indicated that the banks cannot afford a debt forgiveness program – and excuse me - the public can afford to pay for mis-sold mortgages – I think not.

    Property valuation is not a complicated job in fact it’s so simple it’s shameful that basic long division was absent in the Irish banking psyche for the best part of a decade. I reiterate - until property prices revert to their long term rental yield metrics – that being c7% net yields (Govt. numbers) then property prices will continue to fall.

    In terms of property valuation 7% is the magic number.

    Just to note I'm no doomsday specialist I 'm just pointing out a plain fact about risky asset markets - they revert to their mean price metrics adjusted for inflation over the longer term and that metric for Irish residential property is a 7% yield. Period.

    Anyone who believes Irish residential house prices somehow operate outside of these long run asset pricing fundamentals is living in cloud cuckoo land.

    The more established a particular asset market becomes the more confident one can become that a reversion to pricing means will occur over time.

    Irish property has been around a long time - it’s not a social networking web based activity where valuation fundamentals are more difficult to establish - the drivers here are well know and the pricing multiples are well established.

    Based on the current long run rental yields versus where they were at the top I'm absolutely confident that Irish property will see falls of 66% from top to bottom. That's the minimum.

    That minimum fall is based on the assumption that prices will fall to satisfy long run yield averages - this is by no means certain and, as in most other risky asset classes prices tend to over correct following a bubble period so yields as a result could do the same here i.e. a move out to 10% could very easily happen given the pressure on incomes.

    Take the following real life example:

    Actual house price at purchase (Longford 4 bed in 2004) €212k

    Initial Gross Monthly Rent €750 p.m

    Net monthly rent -(cost c5% of rent) €712.50

    Initial net yield 4%

    House price at peak (Summer 2005 – yes it was 2005) €240k

    Rents at peak €750 pm (no improvement)

    Net Yield at peak 3.5%

    Current Gross Rent €500 pm

    Net rent (@95% of Gross) €475 pm

    Current asking prices - per daft.ie (this is daft !) €209k

    Correct asking price to re-establish net yields at 7%

    i.e. (€475 * 12)/ 0.07 = €81,428

    Fall from Top is (€240k - €81.4k)/€240k = 66%

    Fall from current asking price is (€209k- €81.4k)/€209k = 61%

    A few things to note - in the real world current €209k asking prices per the Daft website are a fiction of some auctioneers imagination i.e. they are not happening. A more realistic on the ground current asking price is currently c€120k.

    Using the numbers above gives a net yield of 4.75% which is still way short of 7% i.e. a professional property investor would simply not buy at these levels – so why should a would be house purchaser.

    In summary - we're a long way off the bottom in regional house prices. 7% is the magic number. Deal with it and tell the bank to get lost – they screwed up - debt forgiveness is the single most critical ingredient in solving this countries economic woes. It will happen. Rental yields tell me so.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Mark Fitz Date: Tuesday January 11, 2011 @10:52AM

    Re: Yields or Bust

    I have read "The Bankers" by Senator Shane Ross. I have read "Addicted to Money" by David McWilliams. I have read "Who really runs Ireland" by Matt Cooper but I never really understood the banks mechanism for property pricing until now.

    I have to say that the person who wrote this very thorough article really should consider writing a book. I enjoyed reading it. Not because it agrees with my own opinion that property prices will continue to tumble; but because it was so well written and although it is comparatively short, I think it is more succinct, accurate and fluent than even Shane Ross's last book.

    You even give Matt Cooper a run for his money. Please keep up the good work. I for one simply dismiss opinions unless there are credible statistics and figures from credible sources to back up points.

    When such information is presented in an articulate manner with evidential points and figures; it makes for interesting reading. Some authors tend to flood the page with facts and figures, names and dates etc, which can in some cases, confuse the reader and detract from the point being made.

    For a second there I thought that the author of this article was going to assume that the readers would automatically understand the points being made about yields and the effective calculating metric used by bankers and property valuators. But then when he/she gave a concrete example at the end the point was clearly demonstrated.

    I have effectively calculated the price at which I will be able to afford to buy the house I am currently renting, by simply changing figures to mimic my own situation.

    Excellent article. Really enjoyed reading it. Brilliant and well formulated.

    Marcus Fitz

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Consumer101 Date: Tuesday January 11, 2011 @12:09PM

    Yields or bust, I'm a publisher and think there could be something to Marcus Fitz's comment regarding a book! Drop me a line at tuppencefee@gmail.com if it's worth a conversation. Thanks.

    • Reply to this message
  • Re: The Daft House Price Report Q4 2010

    Posted By: CB Date: Wednesday January 26, 2011 @01:07PM

    Yields or Bust


    I agree with you, yields are vital. In a market solely driven my investors, yields are all that should matter. Clearly, many property buyers are purchasing a home and not investing and thus will not be driven by the quest for adequate yields, but ultimately yields should be and will be the major driver of Irish property prices.

    With respect however, I disagree with the figure of 7%. I thing we are entering an era of much higher interest rates in the medium to long term and this high interest rate environment will force investors to seek higher levels of return, closer to 10% perhaps. Rising rates will be fuelled by inflation and I'll explain why I think this.....


    --Excessive inflation in the money supply will lead to rising Interest rates--

    To combat the financial crisis, central banks all over the world have been flooding the markets with newly created money. This new money (there is lots of it) is fuelling asset bubbles globally, including commodities. The increase in commodity prices is leading to worrying increases in inflation, particularly in emerging markets. Companies in countries like China and India are under pressure to raise wages and increase there prices due to increasing wage demands and rising costs. This will ultimately lead to price inflation in Europe. The ECB hinted this month that they see inflation coming down the road which will require them to raise rates, thought this is unlikely to happen until the end of the year.

    Rising interest rates will have a couple of consequences:


    A.
    As rates increase, it will cost more for banks to borrow on the markets. Coupled with higher capital ratio requirements and the higher levels of risk associated with lending, banks will have to increase their lending rates in order to make money. Investors can currently borrow for 20 years at around 5%, this rate will increase. Perhaps it will be 6% in 2011. If you are borrowing at 6%, a yield of 7% on property would not be worth the risk, especially when any significant capital appreciation of your property is unlikely. .

    B.
    The growing Soveriegn debt problem in developed nations is driving up the cost of soveriegn debt. With increasing inflation, Governments are going to have to pay larger interest rates to entice investors. If in 2 years time the Irish Government is paying say 10% on its it 10 year bonds (not an unlikely figure at all), and this is guaranteed by the EFSF (i.e there is a "low" risk of default), why would an investor look for just 7% yield on his property investment which is riskier theoretically. 10% and low risk, or 7% with higher associated risk? It's a no brainer, 10% please.


    Thus, in my opinion, we will not see a bottom in property prices until prices adjust to 12 times rental income (~8% yield) at the very least, In fact, I think a good value property will sell at around 10 times rental income (10%). To translate this into property prices, I am saying that a property generating rental income of €10,000 should be valued at a maximum of €120,000 (12x10). If such an evaluation is to become the norm, average property prices will have to drop a further 40% (40% of current price not peak price).


    I have only discussed the efftect of rising interest rates on property prices. Clearly there are many other downward presures on house prices including: rising unemployment, falling wages, over supply, higher taxes, emigration etc etc. Bearing all these factors in mind, it is very hard to agree with those that genuinely believe that the market will bottom out soon or that it has bottomed out. There is a lot

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Yields or Bust Date: Friday January 28, 2011 @03:53PM

    CB

    I've just returned to this blog and have seen your comments and thank you and others for the complementary language used.


    I've no doubt that under differing circumstances other yields may indeed be more appropriate however all I'm suggesting is that over the longer term (since 1976 to date) the residential property yield average in the ROI is 7%. Fact.


    Before you come back and give possibly very plausible arguments for not using simple averages all I can say is that yields in the years 1976 to 1982 averaged close to 12% negating somewhat the exceptionally low yields in recent years. So the average is, what it says on the tin, an average.


    Given that the average residential mortgage is a long term investment by the bank the more appropriate rate to use is the long term average rate as risky assets tend by their very nature to revert to their mean (average) return adjusted for inflation over the long term. Fact. 'Mean Reversion' is alive and well.


    The fact that banks were lending in Dublin at the height of the market (Q1 2006) at net yields between 1% to 1.5% indicates how manic the metrics had become.


    My big surprise in the fallout of the mess in the meantime is how surprised so called seasoned commentators are to the scale of the disaster. How can anyone be surprised when the lending books of the Irish banks doubled in the final three/four years of the bubble up to the end on 2007 lending into property assets yielding 1% to 3%?


    One doesn't have to spend too many years in McKinsey's and the like to realise that lending money against any risky asset which is yielding nearly 3% less than the 'risk free rate' at the time is a recipe for things to go tits up. And they did. And still are.


    My gripe still rests with the fact that us mere mortals can figure all this stuff out - without much brain power - and yet bank bondholders, ratings agencies, equity investors, Regulators, the Central Bank and above all others the lending officers and the executives in the banks couldn't.


    I'm still having serious bother about all this.


    And now the Regulator claims the consumer should shoulder 100% of the mis-pricing error. Sorry this is plain wrong.


    I'd say to all readers insist that the Regulator via your local TD (whoever that may well be) realises the basic injustice and pure stupidity in this claim.


    Vote with your feet and put it up to your bank, they need to share the burden of crazy mortgage debt. As 'experts' they should have known the market a multiple times better than the average consumer. ITS THEIR DAY JOB.


    No amount of bluster from the banks can exempt them from this fact.


    Price falls of +66% from the top will happen - in a market dominated by lending banks it's impossible to fathom such an event given their almost complete reliance on market stability and yet as conumers we're being asked to pay for their mess. Please.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: NO1FAN Date: Monday January 10, 2011 @07:52PM

    conflicting opinions above, which correspond to conflicting interests. why would anyone be advising to buy now unless they had property or properties to sell, either their own or on behalf of a client.

    look at the facts. the previous budget had little or no effect on most of the workforce, except for civil servants and emergency services. despite this, the prices continued to fall steadily throughout the year.

    as a result of the budget, we are now all equally affected (apart from the protected rich in this country). this means that all of our take home pay will now be reduced this year. and the worst thing is, that after the bills (ever increasing) are paid, disposable income will be almost non existent in many cases.

    not only that, but there'll be more to come on a yearly basis. the only silver lining i see, is that the prediced lowering in retail prices may actually now occur, having failed to materialise last year. you can't count a few 2.99 breakfast rolls or coffee and sandwich for 5euro as an overall drop in retail prices.

    based on the above, people's borrowing power is substantially reduced. i'm not a banker, but i can see why a bank would be slow to give a mortgage for €400k on a home that's heading to a value of less than 300k, when our salaries are ever decreasing.

    i did read this week, that we already have above average price drops already, but this is to be expected- we had above average price rises, which made no sense looking at european relative values.

    so be caredul not to tie up your future in an unaffordable mortgage.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: palace for pennys Date: Tuesday January 11, 2011 @03:12PM

    When to buy folks

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Mark Fitz Date: Tuesday January 11, 2011 @04:37PM

    Use Yield or Busts' metric. Its very easy.

    Marcus Fitz

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anti - Nags Date: Thursday January 13, 2011 @03:04PM

    I sense that most who comment here have vested interests - either they have

    (1)bought a house in the bubble
    (2)lost their jobs and so have no money to buy
    (3)resent the fact that they have to rent since they cant afford to buy anything decent
    (4)complainers/nags who just like to complain about everything


    What happened is not unique to Ireland. There have been booms and bust throughout history. You all need to get out more, enjoy the fresh air in your lungs and stop trying to blame someone for what happened. It is only when you step back from the problem you realise that it is just part of a cycle. Things change repidly and will always change rapidly. Germany is shining at the moment but 10 years from now who knows what will have happened.

    If you can afford to buy a house now, you shoudl buy it now. If you want to rent now, then rent. But dont waste more years of your life complaining and nagging about Ireland. Who wants to live in a country full of whiners. If you are not happy here, you should leave and find your dream life in New Yrok of whereever. You will find out in time that there really is no paradise and that Ireland is not so bad after all.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Michael B Date: Monday January 24, 2011 @08:23PM

    Well said anti-nag im sick of hearing these Ireland bashers every day of my life. It was a great country to live in when a taxi driver could have a new merc and a ''villa'' in Spain, ive lived oi Oz and have travelled alot these people have probably gone as far as santa ponsa for week and reckon they know how great the standard of living is in th US or Oz.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: CB Date: Wednesday January 26, 2011 @01:22PM

    Anti-Nags


    I like your positive attitude and you're probably right, most people do have an vested interest in the property whether they are buys or sellers, . We are a bit of a nation of whiners, no one can deny that, but to be fair, a lot of people are very anxious about the predicament they are in. People have lost jobs but are still expected to pay large mortgages and with negative equity (and no buyers anyway) they can't sell the house or they would be realising large losses.

    Whatever their reason for posting here is, hopefully the end result is that people learn from what they've read here and maybe will make wiser investment decisions in the future.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: NO1FAN Date: Friday January 14, 2011 @09:13AM

    WHO CRAPPED IN YOUR CORNFLAKES?????
    i wonder where all that anger came from, since it bears no relation with any of the comments above- no one is moaning, merely exercising their right to free speech, which in my opinion is based on the opinion of each of the above in relation to the property market.
    sounds like an angry estate agent who's no longer having it all his own way- give me back my football!!!

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Friday January 14, 2011 @01:41PM

    Hi No1Fan,

    No connection to any estate agents or anything like that - just try to be as far away as possible from people like you who still have alot of anger and want to inflict it/blame others ....living is is important , not whinging about house prices - who wants to spend the next decade complaining about something that has happened before and will happen again. Time to get over it and move on.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Friday January 14, 2011 @03:11PM

    hi lads - I think this year will be my time to buy - have held off ofr 4 years now and tired of renting and giving my rent to landlords who never fix anything - and i have spent almost 40000 euro on the rent the past 4 years - not worried about the prices falling further since i beliver the bottom is very near and I dont plan to be moving

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Patso the fatso Date: Friday January 14, 2011 @08:14PM

    Your rent is €10,000 euro a year? If you live in a house that is currently worth €300,000 that represents 3.33% of the overall price.

    If house prices fall by 12% this year then the house you live in will be worth €264,000. Therefore you have effectively saved (€36,000-€10,000 =€26,000) by not buying this year.

    Use mathematics and statistics to justify your case. If you buy in a falling market you are mad. You will be spending the childrens' college funds effectively.

    Give me five good reasons why people should buy and I will give you ten reasons why they shouldn't, each backed by figures and facts.

    Patso

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Patso the fatso Date: Saturday January 15, 2011 @09:17AM

    have tried to post three responses to the last post. The site administrators appear to want to hamper free speech as I wanted to say that if the last poster has paid €10,000 a year rent over the past four years amounting to a total of €40,000 then he/she actually saved around €160,000 by not investing.

    But as I said I think free speech is being impeded by the site administrators.

    If house prices drop by a further 12% this year then you will save around €26,000 (€36,000 - €10,000 =€26,000) on a house currently valued at €300,000. In other words you are saving more by not buying than you could save if you buy.

    more than €2,000 a month.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: ZZ Date: Monday January 17, 2011 @01:16AM

    The post by "Yields or Bust" is very informative; and I have performed your calculation since then and have to agree with you that in many cases most houses are still way over priced. My view though takes into account other factors, and previously owning a property outside of Ireland, I have taken into account such things as;

    The location – yes this still is a factor….don’t let anyone tell you otherwise. You want to be close to your place of employment with a reasonable driving time or bus ride to the city. If you have kids you want to be near the good schools, and then from a break in issue; you don’t want to be living in a high crime rate area.

    Interior – what work has been undertaken to make it comfortable; was the kitchen renovated, bathrooms etc, is it an old house and the original features still retained. Recently we looked at a house in need of work, and the real estate agents were looking for 450-500k. How can an agent expect to get that amount when you still need to spend another 100k to renovate it??!? I just don’t know. This place needed to be completely gutted and started a fresh, but they still stuck to the price.

    Exterior – are the gardens and house maintained, does it have double glazed windows and is it a nice looking building, does it have a reasonable sized rear garden…not a little plot that won’t fit a BBQ in that many builders these days seem to think is ample for any family. Many builders of new developments got greedy and sold houses with small little rear gardens with no ability to add on and grow with the house. Look at any of the older developments and you will see large rear gardens…how things have changed since then.

    And finally is it family friendly …I have kids and they need to be happy as well.

    So in this downturn of an economy my wife and I have decided to buy, because we can now afford a house. One thing I would say is that we are buying to live in the house and we don’t consider it as an investment that we can sell at a later date for huge profits, as it would seem many people often comment on. So cash in hand we now hope to find a nice house in a nice neighborhood that we can purchase at a reasonable price. Based on these factors and the “Yields or Bust” calculations, we are going to hopefully purchase a home that we will live in for the remainder of our lives, and don’t see it as a get rich quick scheme or investment.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: NO1FAN Date: Monday January 17, 2011 @04:10PM

    Glad to see most are using logic to but thru the waffle. Well most, anyway are using logic and reason to form their opinions on the future of prices in the housing market. Others, obviously are basing there opinions on complete lack of any relation to actual fact or going to the trouble of applying common sense- but hey- sense ain't all that common after all. However, in this democratic society, I enjoy reading each blog, whether or not I agree with someone's opinion or not, because in this democratic society, we all have the right to our opinion.
    The other advantage, is it makes correct assumptions, opinions and calculations stand out as blatantly clear when we see the occasional opinion based apparently on no logic or reason, but perhaps anger that everyone else doesn't shape their opinion.
    I'm choosing to believe that Morgan Kelly's prediction of a possible scenario couple of years back, that a house worth 1 million at the peak could perceiveably be worth in the region of 150k to 250k after the burst of a bubble, based on historical cases in which there has never been a soft landing.
    No real point then in buying a house now, when it could be worth half the amount in a year or two.
    So I guess eventually the prices here will eventually find their base, and then we won't feel the need, or otherwise, to blog about house prices.
    Happy New Year to all not having a cow (man).

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Patso the fatso Date: Tuesday January 18, 2011 @01:27PM

    I have been keeping an eye on the figures for properties on the market in Dublin for the past few months. In January 2011 the number of properties listed for sale in Dublin has remained more or less static at 5753 properties +/- 6 (I mean literally plus or minus six listings i.e. between 5759 and 5747 listing).
    To me this shows a lack or movement at the moment further frustrating the market with buyers digging their heals in and refusing to pay what they see as high prices whereas sellers are refusing to downgrade prices and accept lower offers.

    I would have thought that this figure would be growing in light of my own observations. I frequently drive along Terenure road west to go to work; and since late December I have noticed that there are a substantial number of new “For Sale” signs appearing in this area alone. I counted seven signs there yesterday and there were only three properties there last December.

    This is only one area and it is an affluent address, surely if houses in Terenure are going under the hammer in such growing numbers this must be representative of the broader situation and houses in other areas are now appearing on the market in greater numbers too.

    My colleague sold her house in Ranelagh (small mortgage after 12 years occupancy), a Georgian terrace house for €570,000 last February. She is now in a position to barter on prices; but is still not satisfied with the current cost of properties. With the drop in house prices over the past year, she is “on paper”, nearly €68,000 better off. That is after fees. She had no legal costs.
    If property prices drop by 12% this year (random figure) then she will see a €68,400 saving if she still doesn’t enter the market and that is without benefiting from interest on deposit account.

    So without saving she is saving if you see what I mean. This is the reverse of the property bubble in positive terms. She sold high (albeit, she could have sold higher) and now she is living rent free with her partner while all the property around her devalues annually (14% last year).
    When she buys back into the market she will effectively have gained, both in location and size of dwelling, and also in terms of value for money.

    Now I am not advocating this idea. I own my own home. I love my neighbours and my house. I particularly love my local area so I would not dream of selling up to take a risk on a falling property market. I have put too much work into my home to sell it now. To me it is worth much more than it is to anyone else.

    What I would say is that for first time buyers or people who have not found their ideal home yet, if you hold out for just a little bit longer you may find yourselves getting a whole lot more for your money.

    Patso the fatso.

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  • Re: The Daft House Price Report Q4 2010 - proof that it is roulette

    Posted By: LK Date: Tuesday January 25, 2011 @03:28PM

    I was the one who said that you may as well pick black or red on roulette & was told that I should base my predictions on factual data.

    As per message 1 month ago, too much maths to 'post event'' to explain the price movement and predict future movement. It is down to sentiment - any case can subsequently justified by maths.


    Still not convinced. Have you seen whats happening to gold. The commodity that could only go up. As predicted in my previous mail it is dropping, dropping , dropping. why ? because of some fundamental shift in its underlying value ? Of course not, its because the speculators are profit taking and the mugs who got in late are subsidising this. BTW - it has been those speculator talking up the gold market for 2 years. It is all rigged in favour of the house - black or red my friends!!

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Tuesday January 18, 2011 @02:08PM

    I think it depends where you live.A lot of areas outside Dublin did not experience the crazy house prices in the bubble and so have not dropped by the same percentage - I am renting and pay 950 a month which is almost 12000 a year and have been renting for 6 years now so I have almost spent 68000 euro. The houses in my area were selling for around 225000 at the peak and are now around 160,000 - 180,000 so I think it pretty much balances out if i were to buy. I either lose 12000 a year on rent or about the same if house prices do drop. The advantage being that would have my own place. I also think it depends on your age. It is fine for lads in their 20s to be sharing a rented place - i think you are more tolerant of the noise, mess etc but once you are in your 30s and ready to settle down buying is definitely more attractive if the price is right. So , to sum up , i will probably buy this year - probably wait till the autumn though.

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  • Fakt, ze konieczne jest

    Posted By: Gibiolibods Date: Tuesday February 1, 2011 @03:07AM

    Przeczytaj caly blog jest bardzo dobry

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Tuesday February 1, 2011 @03:14PM

    Nice pluckey report

    However , Property price will continue to decrease this year based on the following.

    (1) Banks are still restricking there lending criteria,
    (2) Wages are still decreasing
    (3) Employment ( unsecure to risk for a huge finacial commitment)
    (4) Mortgage Interst rate are on there way up which implies affordability reduces.
    (5) 100,000 people left Ireland adding to rental / property overhangs
    (6) Hard pressed investor off loading second and third properties
    (7) Nama to off loan properties
    (8) Banks to off load repossesed properties.

    Now heres the thing, only buy a home when your ready to settle down with wife and kids etc, Other wise enjoy your spendable income and live life to the max . You'll be a mortgage slave time enought.

    Ps Regardless what price a autioneers currently is asked for reduce it by 20-35%. Remember they only want to get the best price for there client and there commision. Regreatably when they look at your they only see euro notes. Play hard ball , ignore the sales pitches and the smarry smiles and do your own home work if your going to buy this year.

    As for Gold its over heated and melting , food commodities are the thing, famine is never that far away ,

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Anonymous Poster Date: Monday February 7, 2011 @02:07AM

    I have been reading the whole thread.

    Monitoring the market and see things coming right now. we need to get a 3 rooms apartment for our family of 3 so far.

    Interesting thoughts from both trends but I wonder if someone thought this:

    Mortgage monthly payment should never be higher than what a person gets in the dole.

    That is my believe, if a bank would have followed this path, the house market would be really stable and everybody would be able to have their rightful home nowadays.

    Would this work? Idealistic? Well...maybe

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Patso the fatso Date: Monday February 7, 2011 @08:42PM

    I listened to Today FM this evening. Ronan Lyons was talking to Matt Cooper about the stabilizing rental market. Then some other lady from Waterford (I think) also joined the conversation.

    The jist of the discussion is as follows:

    Rents nationwide fell by around 0.5% during 2010, according to Ronan Lyons. This compares with a decrease of 15% in 2009.

    The total number of properties available to rent has also fallen from a high of over 23,000 in the middle of 2009 to fewer than 16,000 at the start of February.

    However, some regional differences are apparent. In Dublin, rents in some areas are up to 2% higher than last year.

    Outside the main cities, rents continued to decline, dropping by an average of 3.5% in 2010.

    'For any property market, the key condition for a levelling off in prices is clearing the overhang on the market,' commented Ronan Lyons, Daft.ie's economist. He said that in Dublin's rental market, and to a lesser extent in those of the other cities around the country, that happened during 2010.

    'Across large parts of the country, however, there remains a significant oversupply on the market, which is pushing down rents,' he added.

    Basically Ronan Lyons re-recited what he had written for the RTE.IE website like a good choir boy.

    I didn't catch all of what the other estate agent had to say but it was roughly the same but for the Waterford region.

    Then she blatantly stated that good properties (well maintained) were easy to rent out at the moment but poorly maintained properties; the ones that immigrants had recently left were difficult to find tenants for.

    I know what she wanted to say. Good, well maintained property is easier rented out than squalor. Obvious, isn't it. But not only did she insult the thousands of foreign immigrants living in Ireland today, she also took a sledge to our intelligence.

    If the thousands of foreign workers who helped Ireland during the boom are now leaving a wake of poorly maintained properties behind them as they depart our failing country (28,703 Polish people left Ireland last year alone) why are we not seeing a deluge of cheap rental accommodation coming to the market. Alternatively, why are we not seeing these thousands of squalid properties flooding the sales market.
    I'll tell you why, because there is a great deal of kneading of figures going on in an attempt to "talk up the market".

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  • Re: The Daft House Price Report Q4 2010

    Posted By: happygolucky Date: Tuesday February 8, 2011 @04:50PM

    i currently have 2 properties on the market in kinsale co cork, i think that if somebody wants to come and knock my prices down and see if they can pick up a good priced property then i am all for "getting a bargain"
    what i cant understand is the massive difference in pricing opinions by estate agents.I honestly get the opinion that nobody knows !
    anyway i feel sorry for people who are worse off than myself but get out take a walk and enjoy this wonderfull country !

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Peter Heaslip Date: Sunday February 13, 2011 @12:09AM

    Dear Patso the fatso,

    I have read your contribution to this forum with some interest. After your pronouncements on Dragon Oil share price almost two and a half years ago during the attempted takeover by ENOC when you convinced many of the shareholders to "hold out for a better deal" I would have to say that I can only advise readers to follow your thread.
    I have not yet met with you personally as I did not attend the shareholders meetings but I never got the opportunity to thank you for your advice. It was only by accident that I happened upon this website after searching through the DGO forum for details of our discussion. I still hold my shares in Dragon oil and that is largely thanks to you.
    I live in London for the past five years and I would love to hear your views on property prices and market catalysts there. I have not bought yet but I would like to hear what you have to say about investing in property.
    I also have to say that it is funny to hear you advising against investing in Irish property. I always got the impression that you had some interest in that market;
    "I cannot advocate against selling DGO shares at the moment; the only obvious benefactor will be ENOC. In two years time they will be multiplying their measured gains by a factor of two minimum. I cannot think of a more favorable investment opportunity other than the over inflated Irish property market".

    LOL good to see you have found a new place to express your opinions. P.S. I wouldn't claim to be a novice at writing blogs. Your past will catch up to you sooner of later.

    PH

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  • Re: The Daft House Price Report Q4 2010

    Posted By: A Nil Date: Wednesday February 16, 2011 @10:06PM

    PATSO FATSO,

    You don't haev a clue what you are talking about. You are just guessing like teh rest of us. you clam to know more than ronan lions but you don't. he works in the business so he knows whats happening in the market. personally I am happy that property prices are rising again. It keeps people like you busy writing on these silly bloggs.

    Get a life.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Fraustrated! Date: Friday February 18, 2011 @07:55AM

    We have tried to buy two properties since March 2010.... 1st we got a mortgage for, the development was in recievership but mostly complete.... All was well until 2 weeks before we were due to move in - turned out that someone had a charge over the property and the reciever expected us to complete with the charge unsettled - bye bye!
    Property 2 - developer said no problem, good deal for both sides - 3 year option on the property, we pay 3 years rent up front builder is able to complete the house and we have 3 years to complete the purchase.
    He had told us that his bank was ok with it, but we asked for that in writing from the bank - surprise surprise - his bank would only agree to a 1 year option! They stated that it will be a very different market in 3 years - to which I responded well you haven't sold any in the last 3 years! NO Deal....
    The situation here is crazy but we would definately advise BUYER BEWARE.... Particularly when buying a new / section 23 property!!

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Aine Date: Wednesday February 23, 2011 @11:34PM

    we are thinking of buying this year but still feel some house prices are so overpriced,i read about a year ago from an ecomonist that the averavge house price should be around 135,000i think it was mcwilliams,,i thank ronan lyons for showing us some light but we really need to see more selling prices on here as thats maybe 20 to 30 percent less than asking,,thanks to previous blogs who quoted a few we need more well done guys.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Matthias Date: Saturday March 5, 2011 @10:18PM

    Hi,
    I would expect that the average price will go down to less than 50k per bedroom.

    Because this are the prices that are paid in other European countries like Italy, France or Germany.

    That means a one bedrooom apartment will sell for 50k.
    A two bedroom apartment for 100k.
    And three bedrooms for 150k.

    When you reached this level, then I would buy Irish property.

    Until then I live in shared accommodation.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Patso the fatso Date: Thursday February 24, 2011 @08:05PM

    Hi all you happy people out there,

    Hi A Nil, thanks for your kind comments above. I hope you didn't burn up your brain cell typing your message to the people. You don't have to worry about falling prices in this recession; caravan prices remain stable.

    Listened to the Matt Cooper show on Today FM this evening and heard again the statement made by Morgan Kelly.

    "House prices will fall by 80% of their peak market value".

    For those of you who do not know who Morgan Kelly is; he is one of the three Irish economists who shouted that our economy was on the verge of financial collapse, back as early as march 2006. He is a professor of economics in UCD Dublin and has the distinguishing title of being the only Irish economist to correctly predict the state of our economy today.

    His talent for correctly calculating the outcome of financial measures and policies by our government, and the macro and micro economic implications of such policies has earned him a certain degree of fame over the past few years. He has appeared on the Primetime discussion and debate show on RTE television. He has written columns in the Irish times on the crises in our economic structures and the related cronyism of our political system and business leaders.

    But why all the fuss over one mention in a radio show.

    Well, Morgan Kelly has never been wrong in his calculations. You can see for yourself if you like. Go to youtube and type in his name and listen to what he was saying would happen to our econimic soverenty and our property market if you like. Listen to what he says about the rate of deterioation of the property market and the growing social unrest. Listen to his reason for discounting property prices in relation to oversupply and lack of demand. Listen to what he has to say about the effect of a growing unemployment problem.

    Listen to what he said would be the effect of stringent budgets by our government.

    And remember he said all of these things back as far as 2006 onwards.

    So A-Nil, I do not make random statements. I base my arguments on facts and figures. In my line of work you check and double check before you make a firm statement.

    I have a life. It has been severely effected by the current economic situation, but I have a wife and two healthy children. A house I can still afford to pay the mortgage on and good friends.

    In a way I understand your anger, I am angry too, but you need to direct the anger in the correct direction. Start by voting tomorrow.

    Patso.

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Damien Date: Monday March 7, 2011 @04:39PM

    Interest Rates Ladies and Gentlemen..... Unless you can buy with Cash forget about it for a good few years... Banks or Lenders will not want to know ya.... it is all well and good discussing the price of property but the biggest factor is having the money....

    Morgan Kelly, David McWilliams et al are basically quoting the history of Capitalism.... 30 year cycle 10 bad 10 good 10 boom.

    Wait 3 or 4 years all the extra charges and taxes will make you sick of the thought of property ownership if you can even afford it....

    Live your lives and be as happy as you can be and let the chips fall where they may... it is a lottery after all

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  • Re: The Daft House Price Report Q4 2010

    Posted By: Patso the fatso Date: Monday March 28, 2011 @10:14PM

    As we enter the fourth month of the year, some of us may await the Q1 sales report for 2011 with some trepidation. The figures for the first three months will present a bitter dose of reality to those who espoused ideals of a soft landing as early as Q4 2010. The reality is that our banks will require a substantially more financially robust endorsement by the new government before the ship regains an even keel and stability returns to the lending or financing markets in Ireland.
    The Nett effect of this predicament will be a further tightening of financial purse strings during 2011 and into 2012. Reduced credit will have a further “knock-on” effect on the housing market. It will become increasingly more difficult to qualify for a mortgage. Indeed the financial requirements momentarily for mortgage seekers are in stark contrast to the conditions required up to 2008.
    So to what degree do we estimate the decline in this years property prices?
    Given the steadily growing numbers of property entering the sales market (contextually not unusual for this time of year) and the current sense of malaise in the market; the increase in properties for sale and the pressure on people to sell due to financial constraints (due in no small part to budgetary measures and redundancies etc); the natural and correct conclusion would be to estimate a continuation in the downward trend.
    The degree by which property prices will degenerate can best be correlated to the Nett effect of budgetary measures.
    It is estimated that the latest budget has had the Nett effect (up to now) of removing 4.3% of the average person’s income. This reduction includes direct as well as non-direct taxes and levies.
    Therefore it is reasonable to extrapolate; sticking to the theory of correlative exclusivity that the Nett drop in property prices will be in and around 4.3% for the first three months of the year, i.e. Q1.

    This theory of course has very little to do with economic models and is based solely on a theory of my own. I like to call this theory the “Fatso quantization” model. Who knows it might just be a winner.

    Let’s see what happens.


    Patso

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  • Re: The Daft House Price Report Q4 2010

    Posted By: best anabolic supplements Date: Tuesday October 8, 2013 @07:09PM

    Well, that is my first check out to http://www.daft.ie ! We are a group of volunteers and starting a brand new initiative in a regional community in the exact same niche. Your blog supplied us valuable information to work on. You have done a marvellous task!

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