Is the housing crash over?

“Is the housing crash over?”

No.

Employment is not picking up, there’s continuing downward pressure on wages and there’s a huge glut of houses waiting to be freed up from NAMA and other sources.

What sane person buys houses in this climate?

Let’s put it this way: can anyone come up with a metric to show how much houses are worth?

Who cares ?
House prices only matter if you connect your money supply to bank credit.

Oh Shit…………..

If a physical surplus is somehow found again more resourses will be wasted on houses or some other vessel of asset price appreciation that gives the impression of growth but in reality its the North Sea or whatever’s wealth flowing into these batteries for a moment in time.

The economic system we live under is a pointless waste of pretty much everything.
One can only look aghast at the futility of it all.

The CSO index excludes cash purchases which according to Conall Mac Coille of Davy account for 25% of the market.

Keep in mind that the number of transactions is very low.

Mortgage approvals in the first quarter were at a more than 40-year low.

http://www.finfacts.ie/irishfinancenews/article_1024366.shtml

Were saved! Saved!

No. No and No.

“What sane person buys houses in this climate?”

It’s a good job that when it comes to property, Irish people have the sanguine attitude of the Bull McCabe.

P.

Far too early to make a call, one swallow does not make a …… etc etc.

As Mr Michael Noonan said, the job is only 1/2 done.

Lots more tax increases, and cuts to services to come etc.

Property Tax will have to be ramped up steeply, cuts in services increased, and the magical Growth has not shown itself last year, or this year, and perhaps not next year.

The 18 Bln deficit which is aimed to be closed by 9 bln tax increases and spending cuts and 9 billion in growth is looking increasingly optimistic.

Does anybody have a idea what the country would look like with 18 billion in cuts and taxes alone?

Considering there might be nobody left living in the country in 20 years time making a call on property now is very premature.

Figures are based on low transactions and exclude cash.

Also my guess is it’s unlikely that all the below are priced in.

High unemployment, particularly among Potential FTB.
The governments screw the young policy is working well ie high 20/30 something emigration aka potential FTB emigration.
Fear of borrowing among the young that have seen family and friends see their freedom and quality of life destroyed by mortgages.
Property/Water Tax.
Higher Income tax.
Low job security among potential FTB (Usually on contracts).
Oversupply.
Repossessions that have yet to happen.
Low investment in infrastructure and infrastructure maintenance.
Low yield on houses.
End of property related reliefs.
Potential for default and euro exit.
Ghettoisation of certain areas.

Anecdotal reports I have heard suggests that prices have/had stabilised. There are three factors – cash buyers thinking there is value, more couples with savings wanting to buy and vendors having decided to hold onto properties and rent them out rather than sell them at what people are willingto offer (i.e. prices would be lower if NAMA et al sold at the prices the market is actually willing to bear). There is no indication that banks are more willing to lend despite all the talk of new products. The only buyers they are lending to stumping up 30% of the purchasing price as far as I can tell.

However, the other anecdotes I am hearing is that the domestic economy is absolutely goosed and confidence is very low. Therefore, things could deteriorate again.

(I rate my anecdotes as highly as these questionable statistics).

What does Morgan Kelly say?

Anecdotals I have seen say a 400,000 (at peak) 2 bed terrace in Co. Dublin is struggling to make 150,000 today (which is a tad more than 50% according to my calculator). My guess is it will go below 6 figures eventually. Let’s see how the next year or two pans out before we take anyone seriously who might be calling a floor to the property market.

Did I miss a meeting?

Have the banks started to lend again?
Have the banks started to tackle their 90 day+ arrears?
Has NAMA finished releasing their apartment stock?
Is the property tax cancelled?
Has unemployment gone away?

Seriously, can anyone point to anything that supports this stabilization – other than a load of Public Servants getting their golden showers in March?

Interest rates as low or close to as low as they can get so the only way is up. Taxes, direct and indirect to increase. No sign of credit crisis abating. No prospect of unemployment decreasing any time soon. Euro crisis unresolved/unresolvable without fiscal union (read unresolvable!). Europe going back into recession.

Having said all that there is pent up demand for family homes in south dublin in particular where people who can and could afford to buy this last few years are finally biting the bullet and holding off no longer as little Lily and Jack need an upgrade. Go to any house showing in south dublin on a saturday for houses in the 500-800k price slot and there will be standing room only. There maybe some positive signs in this segment of the market but as noted above the number of transactions are low.

Another reason this segment is doing well ties in nicely with the income equaility/inequality report posted on this website a few months back i.e. the top 10% of earners in this country are better off now than during the boom. This has been a decent recession for some. So my view is that while the overall market has a lot furhter to go, there is a mini frenzy taking place for houses in the 500-800k tier of the market and this report is likely to add fuel to that.

@ Sporthog: “Does anybody have a idea what the country would look like with 18 billion in cuts and taxes alone?”

1970s looks promising.

Housing corrections come in phases: we have probably completed the first, the Washout from the bubble. Next we have a up-and-down consolidation phase. The loose stuff has gone and the more resiliant starts to feel the pressure. Like a log-jam on a river. It looks awfully solid until suddendly …!!! This is where we are now. This bumpy plateau could continue until late 2014. Then its Shitsville time.

There is no end of dopey folk who ‘belive’ that the worst is over. Strawgraspers.

@ VB

I think there’s something in that. They’re probably is a group who didn’t buy in the boom but are both earning bubble wages, in their 30s, maybe 1/2 semi-state/state/NMC earner and are starting a family. Who are probably looking now in south or east Dublin.

However the group in front of them are in negative equity and the group behind are being told to leave the country, or are been recruited on short term contracts for lower wages and no/worse pensions. Not ideal mortgage candidates.

As Brian Woods says, its like a logjam on a river.

Speaking of anecdotal evidence, I am pleased to report that the economic disaster has been knocked off the top of the dinner party anecdote charts by a book called “50 Shades of Gray” which looks set to beat the Da Vinci Code as a bestseller. There was an article on this in the FT Weekender main section. Men of Ireland, put some manners on your women! 🙂

@ Zhou: They are a tad behind the curve. “Dominique” by Eugene Fromentin (1862) with a dedication to Madame George Sand; (trans by Sir Edward Marsh).

As the man said. “Shamelessly re-cycle old ideas”. The “Story of O” is quite something. Trash sells.

Presumably some of the public sector redundancy cash will find its way into property – college age offspring, etc. That means a probable slight lift in prices in the main cities. Moreover, local authorities are still doling out rental agreement contracts and these are like aces if the property is purchased at the right price. If rent supplement in its various forms was dramatically reduced, residential property would fall further. But one swallow doesn’t make a summer.

On the property front, I thought rather perturbing to learn that NAMA was excusing developers from personal guarantees if there was a ‘commercial deal’. Have any politicians been banging the drum over this?

@ Brian Woods Snr,

I see the front of the Ft site says

“EU could rewrite eurozone budgets, The European Commission headquarters in Brussels ©Getty Countries breaching debt rules could lose control of finances”

What a terrible pity Ireland did not cede control of its finances to Europe 10 years ago.

Energy costs rising, unemployment figures not accurate, thousands of people emigrating, retail sales falling, pension funds going bust, crime rising, drug use out of control, Ireland getting whacked in both football and rugby, NAMA trying to extricate itself from a black hole of debt banks demanding audited accounts, tax clearance certificates and other collateral before they will consider loans to not Public Sector staff, Ireland is on the verge of going bust a second time and requiring an ESM bailout which will push other creditors down in terms of subordination but wait…… house prices are rising? Spare me! They might be for barristers and the insolvency accountants who want to buy the same house in the middle of Ballsbridge for a million down from 2 or 3 million just a short time ago, and soon to be on the market for 800,000 but they are not prepared to wait any longer because the wife is putting too much pressure on them.

@ Sporthog. You raise an interesting issue there: fiscal prudence by legislators. Revenue is matched by payments. No borrowing for current expenditures.

If these sort of conditions were in the Irish Constitution our government and legislators would actually be accountable to the voters. This is possible but our politicians would not entertain the idea that they have to be careful with other folk’s money. All they want to do is spend, spend, spend and damn the consequences. Until those consequences wash up on their own doorstep. Then the tune changes.

Some very difficult decisions ahead. Expect all manner of spinning, displacment behaviour and casting of blame on ‘outside agents’. Rabbitte and Howlin are already winding up.

Stephen,

I was sort of thinking a bit about this today, by coincidence. I don’t know if you are still actively participating or on the periphery of those Limerick city/area economic and enterprise strategy planning efforts – which I used to read about in the local free newspapers (Stephen Kinsella, expert on roads & economic potential etc) – but perhaps at some stage, you may suggest to the spatial planning experts at University of Limerick to look into an exercise.

Look at the correlation or otherwise, in an urban area such as Limerick city, between the existence of bus routes and population distribution.

It is very interesting in Limerick city, I have noticed, because bus routes are often the life and soul of an urban environment and join it together – that the only profitable bus routes appear to go through the poorest parts of the city. Today, I purchased an all-day bus ticket and I went to my educational establishment nested firmly in the heart of an old working class Limerick area. I took a stroll for a bit of lunch, and found myself in a shopping mall in the heart of a nobby-er part of the town. I assumed that from this large shopping mall, I should be able to use my all-day bus ticket to get from there back into town again.

I guessed incorrectly.

I realised that, in Limerick city at least, profitable bus routes can only take you to poorer areas, and larger retail centres have been situated in posh areas, where there are no good bus routes, because apparently posh folk don’t use buses.

Anyhow, this is a much longer debate than I have space to delegate to here. But I will say, that in parts of Dublin city, where you can find very high residential property values, you may also find busy bus corridors, and fairly okay retail/community facilities together – and I think this is a golden combination – and places such as Limerick really need to think this out more thoroughly, with a view to fixing problems, where house prices in certain areas, just seem to fall off a cliff (relative to other areas, in the same suburb/city).

A friend of mine recently took up a job, as an architect for the city of Limerick, and this is something you may like to take a look at some time, with his assistance maybe. Just thought I would throw in something a bit local into the mix, since a lot of this things have to be tackled at that level, instead of nationally. Housing values are ALL about local ecosystems and their development. BOH.

FYI

Karl Whelan feeling ‘ just gloomy, ill-informed and talking though [his] hat.’

http://karlwhelan.com/blog/?page_id=22

Didn’t know he wore a hat!

@Brian Snr
Oh God , another man who thinks we live in a perfect full money universe.
– tell me ,What happens to the money supply when bank credit stops ?

Every economy needs suffiecent medium of exchange , otherwise commerce dies when money is hoarded.
There is a grave mistake happening withen the Eurosystem – money is not wealth -Money is a mechanism to transact wealth.

Hoover was withen days / weeks of shutting down the entire American experiment because of this.
What exactly is fiscal prudence in this envoirment ,pray tell ?

@ All,

It is high time in this country, that the appropriately trained and experienced spatial planning and design professionals, that we have given loads of tax payers money to train, are given the driving seat again in the effort to implement some joined up strategic work, customised to all the unique local conditions & characteristics.

It is high time in this country, that those who wish to perpetuate this OLAE! OLAE! national sing song about the housing price obsession – are instructed in the kindest of all terms – to exit stage left. BOH.

@ Robert Browne,

You forgot to mention that the Dept of Justice are releasing convicts early so as to make room for those who don’t pay the TV license and various property taxes, NPPR and Household tax etc.

We can expect more old age pensioners to be murdered in rural Ireland and more Gardai to be run over by uncontrollable citizens with 90+ convictions in due course.

You could not make it up, such is the baboonery which is at work in Govt.

@Brian
Was that the crescent Shopping centre you were in ?
As the only Thomas the tank engine around here I always wondered why build such huge roads to that great church of consumption when you had a railway out the back.
The Ballycummin ED pop. has increased by 7.1% since 2006 at 17,490 now.
But if people are not prepared to use the bus why bother with a railcar investment ?
It goes along with my view that once the credit bubble stops private cars become a net extraction on the economy as they suck out so much real resourses when others can replace them for much less raw material and input costs.
We live withen a flawed monetary ether – our role was as Fois Gras ducks – we have been overfed for so long we don’t know how to move around the farmers field now.

@dod
Any chance Laura is trying to gain favour with the new head honcho at her paper, who lest we forget allegedly promoted a “good news” agenda at one of his radio stations….

…of course she has an indefatigable misguided self belief that is based primarily on her refusal to listen to anyone that blows her analysis out of the water….so perhaps I am giving her too much credit in assuming she could be that machevallian.

@ DOC,

The cresent has a relatively positive balance between public transportation, shopping and housing all together. What it lacks of course, is the community centre, as in well known Dublin examples such as Liffey Valley etc, where the retail monstrosity is move away from the centre of the population.

You can see a classic example of that on the north side of Limerick city, which strangely has got both the poorest neighbourhoods with lowest residential values, and the wealthiest with the highest residential values – side by side.

The odd thing though, is that the wealthy portion has almost zero public transport, despite having the main ‘Ennis road’ going through it. There is really no bus service to speak of on the Ennis road. The Ennis road also features the brand new, expensive and lavish Jetland centre. But there are no buses to the Jetland from the centre of town, or from the other poorer parts of north Limerick city.

On the other remaining direction then, to the east towards Tipperary, Limerick of course has Mr. Kinsella’s alma mater, and a mixture of older working class and newer middle class leafy suburb. What I notice there also, is the network of public transport through the older working class part and its absence from the nouveau riche part. Of course, what skews that though, is the presence of the Limerick University campus many miles outside of Limerick centre – and only for that, I don’t think there would be any bus demand from Castletroy – as there doesn’t seem to be from the Ennis road at the present.

Mr. Kinsella himself even, is quoted in local free newspapers in Limerick as saying he has never been to Limerick city centre, and has no desire to go there. Again, you see in this comment from a super intelligent fellow – the social norms of the environ – fully internalised and repeated via language, and squeezed as ink onto newsprint, for I to study.

The ‘accommodations’ for buses on Limerick campus too, are trully hilarious. It is almost as if, the existence of buses on such a wonderfully green and leafy place is an embarrasment – and so the UL buses use ‘stealth technology’ to pass in/out un-detected from the campus – for fear the busy brains in the economics department will be upset by their presence. BOH.

@ Colm McCarthy & co.

At UCD, they love buses. Even a bit too much. More communistic, me thinks. And resi-prices not all that poor around Fosters ave, Stillorgan dual, Clonskeagh, Booterstown etc. BOH.

@Brian
I have no recent bus passenger figures but if I remember the Transport 2010 publication correctly the Limerick bus numbers held up during the first few years of the bust while the Cork numbers collapsed.

However lately my gut observations tells me numbers are up….particularly on some routes such as the very working class 202 route which needs to become a trolley bus in my opinion while the routes to the south side of Cork also seem to be busier lately.

It just goes to show the working class Euro dole is keeping what remains of rational domestic demand while the rest of the lot that thinks they have “productive” jobs are sucking in a huge quanity of imports for a obviously net negative return.

The entire Irish economy is a monetary perversion in my opinion with completly incorrect input output price signals.
The Post 1979 Irish economic univerese is a sick joke.

For a allegedly pro nuclear university you would think they would understand some basic level of energy dynamics and stuff.

PS
Brian
All those cars……well they need a collective – its called a Navy.
http://www.youtube.com/watch?v=c4DunYQGaPE

Don’t be fooled by these rugged raw clarksoneske individualists who need to be behind the wheel of a chariot to feel somehow detached from the great unwashed.

@Dork: “What exactly is fiscal prudence in this envoirment ,pray tell ?”

Ah Dork, sure that means you attempt to perform an anatomically impossible act. Like talking out of both sides of you mouth at the same time – whilst eating a flaky croissant! I have this funny notion that it is somewhat difficult to purchase stuff on tick – absent one of those plastic thingies. Are they real money as well?

@BO’H: “And resi-prices not all that poor around Fosters ave, Stillorgan dual, Clonskeagh, Booterstown etc.”

No. But then that’s where the ‘good folk’ (inc. me!) actually reside. Its the spokes that do it. Try a trip at right-angles to the spokes? Just make sure you bring plenty of supplies, a map, a compass and a Garmin. And why do we have to have those electronic timetables in a foreign language – as well as the local patois? Is this some sort of inverse productivity drive?

http://namawinelake.wordpress.com/2012/06/25/nama-announces-first-demolition-of-apartment-block-in-ireland/#comments

ThresholdIre Any views on NAMA demolishing 12 flats in “state of disrepair” in Longford when 335 families on housing waiting list there? 2 hours ago

Today’s FT property article below;

Property deals plunge in eurozone periphery

By Ed Hammond, Property Correspondent

Property transactions in Europe’s hardest pressed economies have crashed 65 per cent in the past year, highlighting the extent of investor reluctance to hold fixed assets in those countries seen as most in danger of exiting the eurozone.

During the first three months of this year, the total value of commercial property transactions in Greece, Spain, Italy, Portugal and Ireland was €644m. The figure compares with €1.8bn in the first quarter of 2011, according to CBRE, the property services group, and almost €6.5bn for the same period five year period.

“Investors are simply not willing to take the risk on the property at the prices which are still being asked in many of these struggling economies,” said Peter Damesick, CBRE’s chief economist for Europe, Middle East and Africa. The ailing economies of Spain and Ireland, in particular, were pillars of the continent’s property boom in the middle of the last decade.

The past five years have marked a shift in investor appetite, however, with demand focused on prime property with long leases in areas of high demand.

At the start of the financial crisis, Greece, Spain, Italy, Portugal and Ireland accounted for 11 per cent of all property sales in Europe. That dropped to 2 per cent in the first three months of 2012.

Certain property sub-sectors, such as central London offices and German rented housing portfolios, have attracted a surge in demand. Germany, the UK and the Nordic countries now account for 78 per cent of the continent’s market by value.

The slowdown in transaction volumes has also coincided with a long-running drop in values. Commercial property prices in southern Europe have declined steadily since 2007 peaks, while values in Ireland are 65 per cent down from five years ago.

In spite of the slump in property prices, many investors still feel buildings are not being offered at discounts which adequately reflect the risk of buying fixed assets in those countries.

“The banks in those countries, which own much of the property, are being extraordinarily slow to write down the value further and crystallise losses on their balance sheets. The net result is that bargain hunters cannot find bargains, so nothing trades,” Mr Damesick added.

The view is echoed by private equity companies, many of which have become frustrated by what they see as a mismatch between their expectations and those of the banks.

“Are they sellers today? Yes, they are. Can they all afford to sell and create opportunities for the private equity world? No,” said one senioreuropean private equity investor.

Property deals plunge in eurozone periphery

By Ed Hammond, Property Correspondent

Property transactions in Europe’s hardest pressed economies have crashed 65 per cent in the past year, highlighting the extent of investor reluctance to hold fixed assets in those countries seen as most in danger of exiting the eurozone.

During the first three months of this year, the total value of commercial property transactions in Greece, Spain, Italy, Portugal and Ireland was €644m. The figure compares with €1.8bn in the first quarter of 2011, according to CBRE, the property services group, and almost €6.5bn for the same period five years ago.