We’re different, roysh? The decoupling of the Dublin property market

Today sees the launch of the fiftieth Daft Report, with a commentary by yours truly. To mark the occasion, and to mark five years of Ireland’s property market crash, Daft.ie and the All-Island Research Observatory at NUI Maynooth, have launched a property value heatmap tool. In a companion post to this one, I outline the tool, how it works and what it tells us about Ireland’s property market crash.

In this post, though, I’d like to highlight what’s in the report itself. The principal finding from Q2 was that conditions in the Dublin market do indeed look to have improved considerably since the start of the year. This has happened at a time when conditions elsewhere in the country are pretty much unchanged. It seems the decoupling of the Dublin property market from the rest of the country has already begun.

One reason for thinking this is price trends. While the average asking price in the capital did fall in Q2 (by 1.2%), taking the first half of the year as a whole, list prices in Dublin fell by less than 1%, compared with a fall of 10% in the second half of 2011. This is also in contrast to what is happening in rural Munster, Connacht & Ulster, where prices fell by roughly the same January-June as they did in July-December (7% vs. 8%). The graph below shows the six-month change in asking prices since 2006 for Dublin and for the “Ex-cities” category.

Six-month change in list prices, by region, 2006-2012

As I will tell anyone who’ll listen, though, recovery in the property market is less about prices and more about activity. We should not worry about house prices being low in Ireland – that’s good for competitiveness and mobility. We should worry about the number of transactions being too low. With barely 6,000 first-time buyer mortgages given out last year, in a country that is probably forming 30,000 new households a year, I think it’s safe to say transaction volumes in the Irish property market are unhealthily low.

There are two measures of activity included in the Daft Report, the stock sitting on the market over time, and – since January – the percentage of properties selling within a certain period of time. At less than 5,000, the total number of properties for sale in Dublin has fallen 35% from its peak. There are now fewer properties for sale in Dublin than at any time since the first half of 2007. By contrast, in Munster, there are 19,000 properties for sale, down only 12% from the peak stock on the market (21,000) and more than twice the early 2007 level.

The second figure below shows the proportion of households actively for sale at the moment – this doesn’t include vacant properties not listed for sale. Nationwide, the percentage has roughly fallen from 4% to 3% – but the spatial variation is revealing. About 1% of Dublin homes are for sale at the moment, compared to more than 5% in Munster, Connacht & Ulster.

Percentage of properties actively for sale (approximate, based on daft.ie listings), by region

But of course, the number of homes on the market is what might be termed endogenous. If prices stabilise or, wait for it, even rise in Dublin, there may be plenty of households holding back that will be tempted on to the market. So stock for sale is not without its limitations.

For me, the newest statistic in the Daft Report, the proportion of properties selling within a given number of months, is very interesting. It takes a bit of concentration to get the chart, when first presented with it – but the short version is, for property market recovery, one would want to see the lines rising over time. (Rising lines indicate that a greater proportion of properties are selling sooner.)

The graph below shows the proportion of properties selling within six months for Dublin and for Ireland’s four other cities as a group, at three points in time: last December, last March, and June. The proportion of properties selling within two months in the capital has risen from 25% last December to 34% now. Half of all properties listed in Dublin are sold within four months now, compared to six months late last year.

Percentage of properties selling (or sale agreed) within a given number of months

I haven’t really discussed Ireland’s other cities in this post, so let me do that now – their level of transactions are shown in the bottom half of the graph above. Interestingly, conditions are – on average – noticeably tougher, with more than half of all properties still unsold after not just six months, but a year. Still, with 40% of properties selling in four months, there is reasonable movement in those markets. In Munster, Connacht and Ulster (ex-cities), just 25% of properties sell with four months currently, the same proportion as late last year.

All these signs from Dublin may of course be a dead cat bounce, a false rally that brings out some of the latent supply on to the market, which – coupled with declining after-tax income and net emigration – pushes prices in the capital further down. However, Dublin prices are now down close to 60% from the peak, which when compared with incomes or more importantly rents, does seem close to “long-term economic value”. All thoughts, as ever, welcome.

63 thoughts on “We’re different, roysh? The decoupling of the Dublin property market”

  1. Hi Ronan,

    Great work on the heatmaps and for chronicling asking price trends.

    Can I ask you about the Q2, 2012 results.

    Nationally we are down 2.7% in the quarter, 13.9% in the past year and 54.2% from peak based on your indices of 46.3 (June 2012), 47.6 (March 2012), 53.8 (June 2011) and 101 (peak)

    Do you have similar figures for Dublin? I can see quarterly changes in different parts of Dublin but overall you say the fall has been less than 1% in H1, 2012 and given there was a rise of 0.3% in Q1, 2012, that means there has been a fall in Q2? Do you have the annual and peak declines also?

  2. There is something bizarre about analysis of so-called Irish “Property Prices.” There are no price data under investigation. What we are seeing is analysis of “listing amounts.” These “listing amounts” — there is no reason to call them “Listing Prices” — are culled from the web sites of paid selling agents. If you follow recent announcements by these agents, there is an apparent orchestrated effort to declare the property crash over in Dublin. It is not much of a stretch to surmise that this latest analysis is a component of this effort.

  3. RTE reports

    “The Daft.ie survey for the months of March to June found that prices in the capital fell by 1.2%, with largely stable prices also recorded in the Cork and Waterford city areas.”

    Is RTE getting the 1.2% from something published by DAFT and if so, can anyone point to the reference?

    “largely stable prices also”=1.2% fall in Q2 or 4.8% annualised?

  4. A cheery bunch this morning!

    @Jagdip
    Hopefully this will quench your thirst for stats!
    Region Average price Q-on-q change Yr-on-yr change Change from peak
    National €172,142 -2.6% -14.5% -53.0%
    Dublin €214,831 -1.2% -13.8% -55.5%
    Commuter Counties €172,713 -5.0% -15.7% -55.6%
    West Leinster €127,598 -4.6% -15.8% -56.1%
    SE Leinster €149,802 2.0% -12.5% -53.6%
    Munster €163,587 -1.1% -14.1% -48.0%
    Connacht €133,235 -7.2% -17.2% -51.4%
    Ulster (ROI) €135,836 -7.5% -13.3% -51.5%

    I see where you’re angling with the Dublin fall. For me, the trend in both CSO and Daft.ie for the first six months is interesting. Analysing subcomponents of that six months may be useful too – but I would have thought you of all people would caution against excessively analysing one data point out of context.

    @Geronimo
    Your argument is a bit of a well-worn canard at this point. Asking prices indices measure sellers expectations, which typically lead closing prices (by 3-6 months – see for example the stabilisation in Dublin asking prices in Q1 which was followed by stabilisation in the CSO Dublin index in Q2). Of course there are always going to be certain sellers with list prices out of line with market realities but the methodology is two-step, omitting outliers after the first step (in line with methodologies elsewhere).

    It seems you didn’t read most of the post, as your argument also fails to explain why stock on the market and the proportion of properties selling within, say, 2 months, have changed markedly since the start of the year. Your interpretation of the analysis is seemingly shaped by strong prior beliefs – your best bet, if you refuse to believe market conditions are changing – is to argue in dead cat bounce terms. (Note also what the analysis above is not saying, principally about any improvement in market conditions outside Dublin.)

    @Steve
    Thanks.

  5. ” In the long run the value of an asset must be linked to the income that can be generated from it(rent in the case of property,dividends in the case of shares) It is quite possible for individual assets to shoot up in price since residential areas can become more fashionable and companies can have very successful products. But in aggregate,share and property prices are constrained by the growth rate of the economy,which in turn depends on the stock of productive capital(new factories and so on.)” “Paper Promises” by Philip Coggan page 140

    Below is the link to the elementary property valuation error that bankrupted Ireland;
    http://www.independent.ie/opinion/letters/bubble-values-3034584.html

  6. http://www.independent.ie/opinion/letters/bubble-values-3034584.html
    Professor Neil Crosby’s online response to this Irish Independent letter
    “Bubble values” 29th February 2012

    “The analysis may be simplistic but unfortunately it is not flawed.
    Banks ask valuers to tell them what the market value/exchange price is
    at a point in time and then lend vast amounts over time based on that
    simple number. The surveyor gives them that simple number and do not
    think it is their job to tell the banks that the question they have been
    asked is stupid on its own and what they should have asked for is the
    underlying value. It was obvious in 2005 and 2006 that prices in the
    property market were higher than could be sustained by any rational cash
    flow analysis. But in a culture that rewards individuals for short term
    performance rather than longer term perspective, it was in neither the
    bankers’ nor the valuers’ interests to stop it. I cannot see anything in
    what the UK regulatory authorities have proposed that makes me think
    they understand the role of property valuation in driving asset bubbles
    and will prevent it all happening again sometime in the 2020s.”

    Neil Crosby
    Professor of Real Estate and Planning
    University of Reading

    John Corcoran – Neil Crosby is quite right to point out the critical and corrupting role of valuers and banks in the property bubble. RICS and other property related professionals should hang their heads in shame for not raising the alarm bells and not challenging landowners, banks and homeowners about the outrageous rise in property valuations which had no relationship with reality or ‘underlying value’. Their role is similar to that of ratings agencies which were paid to sign off triple A ratings by their clients for junk.financial instruments most of which related to property assets..Sadly it does not require a university professor to point this out.

    Anyone with a modicum of experience in property and development knew we were headed for trouble and I am sure I was not the only person to flag it up. If these so called professionals had been held to account by their so called professional bodies ( as the General Medical Council regulates doctors) half of them would have been struck off. Their primary responsibilty should have been to the reputation of the valuation profession and not their commission. In many countries property is taxed and valuers are independent or are part of the state.

    Radical reform is required or we will surely revisit this crisis again in the near future.

  7. @Ronan, no probs. Im just a northsider and I dont like been thrown in with your lot 🙂

    On a serious, I can see myself buying in a year or two in Dublin. I always said to myself that when I see CSO data Q on Q showing a flatlining in Dublin or a slight rise then that is the time to do it. Which seems to be happening now (in combination with the Daft report).

    But then i think your point about transactions is the most important one missing from all this debate. None of my friends are getting mortgages because the banks are too strict. We seem to have supply, there appears to be Demand but the capital isnt there for purchasing. And the banks are just hoarding cash because of new capital reqs.

    So the million dollar question, should i buy in the next year or two in dublin or is there more of a drop coming? or will house prices just track inflation for the next decade?

  8. Confusing transaction prices with asking prices is poor analysis. I think Allsops has influenced the setting of asking prices. And, even if you WERE dealing with transaction prices, it seems to me that there are thorny issues to overcome.

    I went to Kerry for two weeks looking for a holiday homes. The EA books were full of very poor quality homes at nominally ‘bargain’ prices’. It must be impossible to model price indices that properly account for quality issues.

  9. The professionals who organised these nonsense property valuations, which destroyed the Irish economy, are having their AGM in the Four Seasons Hotel today and will be addressed by none less than Frank Daly of Nama. Both Mr Quinlan and Mr Daly, now world property experts, are former Irish revenue officials. To achieve success in the world property business you must first join the Irish revenue.

  10. Ronan

    Canard

    Now that’s an interesting word. I pointed out that the data you are using are not “Prices” but crude “Listing” or “Asking” amounts on the web sites of paid selling agents.

    Canard definition from Mirriam-Webster
    a : a false or unfounded report or story; especially : a fabricated report
    b : a groundless rumor or belief

    I’m not sure what word you are grasping for, but canard this ain’t.

  11. @Steve
    I’m a northsider myself! Up the D7 massive!
    Clearly, that’s a big question you’re asking. My own sense is that someone buying in Dublin now with the right time horizon (15+ years) and using the right multiples to value their property (no more than 15 times annual rent) has very little to lose. More generally, housing is consumption, not investment (it’s a very poor way to deliver capital gain) so if you are looking at a property worth in today’s terms €250,000, would you be happy if in twenty years time it was still worth €250,000 (in today’s terms), particularly bearing in mind all the money you will spend maintaining the property?

    In relation to the banks, it is my understanding that they are stress-testing – rather reasonably – borrowers against 6% interest rates and this is why some are being told they can borrow far less than they’d like to.

    @Geronimo
    Sadly for you, canard is used entirely correctly in this instance. By this point, your argument reflects a demonstrably “groundless belief” (or ‘canard’) that asking prices are somehow not reflective of transaction prices. There is no evidence for this – even a cursory comparison of Daft.ie and CSO indices over time should have given you cause for pause.

  12. An important and significant metric is the number of completed sales, whatever the time scale (per annum?) NOT the percentage.

    Given the known rate of new builds, seconds coming to market (owner deceased, folk moving, etc.), the likely rate of new household formation, the likely number of ‘moveruppers’ AND cert par a ‘normal’ economic and financial environment, then you should be able to compute what the probable number of completed sales should be. Historical data must be available to plot a chart. Now compare this to what it is – with due allowance for demographics. Allow a generous error of 15%. Using ‘prices’ and ‘values’ in a market which is rigged is a tad dopey.

    Median salaries and wages are declining. Financial institutions are ‘broke’ so credit formation is somewhat slow. Employments are declining. These translate into lower prices paid. If not, then it is proof positive of either irrational behaviour on part of buyers or mis-selling on part of ‘agents’ (probably both). Mortgage interest rates will rise (probably unexpectedly) and that will, to paraphrase Colm McC, “make for a lot of insolvent folk” – again!

    Local charges and property taxes will have to be levied. That’s also a negative on prices.

    ” … In the long run the value of an asset must be linked to the income that can be generated from it …”

    Sure, but out of whose income is that income to be paid? If the economic Model-in-Use being deployed by pseudo-economists and other dopey critters mandates continuous increases (of whatever nature) – then a lot of folk are in for a very unpleasant suprise – in respect of property values and prices paid.

  13. The surveyors/auctioneers were responsible for three important and interlinking practices which created the bubble and crash.

    First the valuation error i.e valuing all 5 euro notes as 20 euro
    Second the ruinous commercial property lease law organised by a criminal cartel.
    And third 95% of all property sold in the state is sold by surveyors/auctioneers.
    They controlled where the vast property advertising money was spent. Almost all of it was spent with the broadsheet media and the Irish Times got the lion’s share. Therefore these auctioneers controlled the Irish Times property propaganda and all the other broadsheet media property propaganda. They had enormous influence in these papers editorial policies.

    This third item was the fatal one–the media faciltating this propaganda. There were other useful idiots like the soft landing economists etc etc.

  14. @Ronan, many thanks indeed.

    And forgive me, I should have opened with a heartfelt thanks to you and DAFT who have since 2006 been providing some of the most detailed and information rich statistics and commentary, which in my view goes well beyond the marketing tack-on that these reports can become for sales. Well done!

    I know we have had this exchange before, but it has never been conclusive as far as I recall but why does the indices – 46.3 (June 2012), 47.6 (March 2012), 53.8 (June 2011) and 101 (peak) – imply different results than you state. Yes it’s 2.7% versus 2.6% in the quarter, though it’s 53% versus 54.2% for peak.

    The reason I suggested a different press release was that I couldn’t see how RTE could get a 1.2% fall in Q2,2012 in Dublin from the printed material but maybe I overlooked it in a pre-caffeine state this morning.

  15. The worlD’s financial system has been wrecked by the residential sub-prime morgage scandal in the USA. The Irish economy has been destroyed by the greatest property crash in the history of mankind. In his book ” Breakfast with Anglo” Simon Kelly states “Banks believe valuers, which always amazes me because valuers don’t buy buildings. Some time ago, a system evolved whereby a valuer’s word was absolute, and a valuation was almost as good as money”

    Why is there no regulation of valuers?. Why have none resigned,been fired etc etc. Why reward failure.

  16. @Jagdip
    A choice has to be made between end-of-quarter or average-over-quarter and we’ve chosen the latter. Hence falls from the peak are Q2 (in its entirety rather than just June) relative to Q2 2007. And similar for other comparisons – hope that makes sense.
    R

  17. Unbelievable data from these monetary dumping grounds.

    Posh Rochestown Cork seems to have its prices hang above the rest for some reason at -47.2%
    But 271,249 asking price !!
    Come on.
    You would think they were putting a tram in there or something…….

    Never could figure out why that area was so expensive – the closer you are to the lower harbour the higher the chemical exposure.
    Some people have strange tastes I guess.

  18. “Ronan

    Sadly for you, canard is used entirely correctly in this instance. By this point, your argument reflects a demonstrably “groundless belief” (or ‘canard’) that asking prices are somehow not reflective of transaction prices. There is no evidence for this – even a cursory comparison of Daft.ie and CSO indices over time should have given you cause for pause.”

    So how then do you explain the content of the web site.

    http://www.collapso.net/531.html

    Believe me, I am really interested in this. I’ve lived abroad for 40 years and would like to buy property in Ireland, but your analysis of “asking amounts” flies in the face of documented, frequent, steep, and regular drops in these “asking amounts.”

  19. @Geronimo
    I’m not sure what your point is. You’ve linked to a list of revisions in seller expectations, all of which are included in the Daft.ie analysis.

    Probably worth mentioning here that while the myhome analysis includes all properties, no matter how long they’ve been listed (and thus, in my opinion, could be skewed by say 2007 properties still on the market), the Daft analysis looks only at newly listed or revised price expectations. As a measure of seller expectations, known to be a leading indicator of – and highly correlated with – transaction prices, I’m afraid I don’t see the shortcoming.

  20. @Geronimo

    If it is of any anecdotal assistance to you….As someone looking to buy in the Dublin south property market for about the last 4 months (and i’ve been to a lot of views and have put in some bids) I can tell you that virtually every property I have seen has been selling for circa 10-15% above its asking price. I do think its a mini bubble that will probably be tempered by the December budget. I have no doubt the positive spin of both the IT and Independent recently (e.g. one need only look at their reporting on the most recent EU summit to get a flavour) has been adding some fuel to fire of this mini bubble….you can be certain of one thing and that is that people will never learn and bubbles will remain a fact of life…..but of course, maybe this time its different!

  21. @Ronan

    “The graph below shows the proportion of properties selling within six months for Dublin and for Ireland’s four other cities as a group, at three points in time: last December, last March, and June. The proportion of properties selling within two months in the capital has risen from 25% last December to 34% now. Half of all properties listed in Dublin are sold within four months now, compared to six months late last year.”

    Have you done these figures for previous years (particularly pre the big declines) because if not, this looks like it could just be seasonality along the lines that spring was always the traditional selling season so q1 – q2 compared with q3-q4 and q4-q1 would likely have less ‘stale’ properties on the market?

  22. In Ireland the interface between private property and the public sector is where much political corruption occurs. Two examples are the planning process and state commercial leases. The findings of the Mahon Tribunal were–“Corruption in Irish political life was both systemic and endemic”. In the Moriarty Tribunal the findings were ” What was attempted on the part of Mr Dunne and Mr Lowry was profoundly corrupt to a degree that was nothing short of breathtaking”

    Former Taoiseach Mr Charles Haughey was acknowledged as being a corrupt politician. Many of Mr Haughey’s bagmen were state landlords–that was the pay back. Many Irish politicians familys ,friends and donors are state landlords. This is institutionalised political corruption. The Irish commercial property market is an organised criminal cartel who have imposed the most anti-tenant lease law in the world on all Irish commercial tenants i.e. ratchet upward-only rent reviews tied to long leases. The rent arbitration process is systemically corrupt , with the use of secret agreements,side agreements and other chicanary widespread. We are alone in the eurozone with this feudal commercial lease law. Once the tenant is securely locked into his cage, with the rope around his neck, evidence will then be produced to ensure his rent is raised as much as possible.

  23. @David O’Donnell
    Thanks!

    @grumpy
    I think you have a point (although in the report the graphs extend to 12 months so if a later line is above an earlier one entirely, the conclusion should be valid). This is something I was tracking periodically but it’s only really since the start of the year that it’s been systematic (for the Report).

    I’ll have a look later and see if there are comparable stats for a year ago.

  24. @V Barrett
    Its probally people who are cash heavy and need to re balance their assets.
    Its logical.

    Certainly if I had a stable job that could possibly pay the future tax and was endowed in the cash department I would be buying something with concrete in it.

    One never knows when the global banks will change tack.
    Remember the world financial system has got nothing really to do with rational production / consumption.

    Its a Giant Prisoner’s dilemma that may come to a end soon but maybe not just yet.
    There may indeed be more oil to waste so that someone else does not get a chance to burn it.

  25. “The newspapers were part of the vicious circle. They were making huge profits from fat property supplements and they were part of the collusion that went on between the big five estate agents, the newspapers themselves, the bankers and the estate agents”. Pat Rabbitte TD speaking in the Seanad on the Property Services(Regulation)Bill 2009 Second Stage. 9th November 2010.

    I highly recommend Derek Brawn’s book “Ireland’s House Party” “What the estate agents don’t want you to know”

  26. @Brian Woods Snr

    “That may require some explanation. Economic activity can be measured in three ways: income,output and expenditure. So when we say gross domestic product (GDP) has risen 5% in a year ,that means the nation has earned 5% more,produced 5% more stuff and spent 5% more. Companies can only pay dividends out of profits,and these profits come from revenues(i.e. the nation’s spending). Even if companies improve their margins(their profits rise faster than their revenues),the excess must come from the share of someone else(the workers). The profit share cannot rise forever.

    Similarly,rents cannot rise faster than incomes for long before no one can afford to rent. On the same basis, if house prices outstrip GDP,more and more of a homebuyer’s income must go to service the mortgage. This cannot last. Of course , in the short term, changes in interest rates, lending practices and the rest can cause house prices to overshoot.”

    “Paper Promises” Philip Coggan page 140

  27. @ Geronimo: VB above gives sensible advice. Keep out of the Irish res property market for a long time (except you have a preference for renting). South Dublin values are completely unsuitable as a valid metric. I live there and I see the situation at first hand.

    I queried an aquaintence who purchased recently, “Why”. He responded that he had been ‘assured’ that the res property market had ‘bottomed’. And the dopey critter believed what he was told! I thought it best to leave him with his delusion. Its not ‘nice’ to talk down a person’s home. They can become fearfully upset.

    I had some success with another aquaintence. Managed to get her to defer purchase in favour of renting. The ‘house’ she wanted to purchase failed to sell and is on offer at 50 grand less! Some ‘bottom’!

  28. @ John Corcoran. Thanks for that. It seems that some folk missed out on sixth form math. 2+ 2 = 4 and 2 + 2 – 1 = 3 not 5!

    They really must be putting Delusion into the drinking water supply. 😎

  29. @ Ronan Lyons,

    Well done, I take it this is part of your pHD pro gramme .

    You mentioned above about investment property,

    “More generally, housing is consumption, not investment (it’s a very poor way to deliver capital gain)”

    I cannot see any profit for landlords with the lie of the land at the moment.

    However all cities require good quality rental property, as people come and go etc.

    Where do you see the future of the rental market?

    In my opinion I see it heading for extinction.

  30. During the bubble, Irish land became the most expensive in Europe partly because of the very low supply.

    Farmers on CAP welfare were able to supplement their income by working in construction etc. while via the IFA, the farmers were also able to arrange a shakedown of the State in respect of land for roadbuilding, grabbing almost 25% of the national roadbuilding budget.

    In the current market, mortgages approvals were at about a 1968 year low in the first quarter of 2012 while the evidence from auctions shows that cash buyers can get discounts of 25% or more from what are regarded as current official price levels.

    What was typical of our ‘slightly constitutional’ governance system was a tribunal sitting all through the bubble period, investigating planning corruption, while local poltroons continued to create an artificial scarcity of land for development, in a country that was 4% urbanised.

    Has anything really changed? — a corrupt system eventually becomes endemic and every development spawned Sunday morning craw-thumpers, whited sepulchres and many more, seeking to squeeze what they could from the system.

    This is from the Indo in May 2000:

    The strategic planning guidelines constitute a mandate for continuing urban sprawl which will create an ever expanding metropolis around Dublin at lower density than any comparable urban area in Europe, DKM Economic Consultants warns in its report.

    According to Colm McCarthy, of Davy Kelleher McCarthy, the predicted number of new dwellings will require that development occurs over an area more than twice the size contained within the M25 around London, which has a population of eight million.

    He maintains that suburban development at six units to the acre would accommodate the required 165,000 dwellings in an area of 118 sq kilometers, or seven miles square.

    “The process of urban sprawl around Dublin has already spread throughout north and mid Leinster, beyond even the large area envisaged by the Strategic Planning Guidelines”, he warns. Due to speak at the Irish Homes Builders’ Association convention in Edinburgh this morning, Mr. McCarthy suggests an alternative policy by aggressively zoning and servicing all undeveloped land within ten miles of the city centre for housing and mixed-use development.

  31. @Ronan L

    Nice work and kudos on the collaboration on the heat map.

    One thing – “Dublin prices are now down close to 60% from the peak” – this is a bit misleading no?

    Looking at Status Ireland’s graph of the RPPI:
    http://www.statusireland.com/statistics/property/45/Residential-Property-Price-Index.html
    it would appear the Rest-of-Ireland is tracking the house price movement and that the Dublin market is tracking the apartment price movement – which would indicate that whilst prices may be off 60% in Dublin this may well be 75% apartment drops and 40% house drops with the blending of volume numbers bringing you to 60%.

    Given the propensity during the bubble for “developers” to go for high density apartment complexes in Dublin as opposed to one-off housing this would mean most of the empties in Dublin will be in the apartment market – and thus the fall will be more pronounced here.

    And on the other side of the deal, surely the lack of any lenders means volume will continue to be low, and as all of the main funders are zombifiied surely apartment prices have further to fall?

    Another Priory Hall could see them go intro cash-only territory.

    And with it Dublin prices.

    All of which means in 12 months you could be reduced to talking about micro-markets in Dublin “stabilising” to explain how prices continue to fall while people are outbid on houses in certain Dublin areas.

  32. @michael h

    Almost every TD sitting knows that their own constituencies could generate food for planning tribunals for a generation or more.

    Ten years ago I objected to a development in a particular town on the grounds that the architecture, layout and density were inappropriate, unsustainable and being dictated by other interests. I referred to the local development plan as the ‘local developers’ plan’ since so many of the plots were fortuitously owned and under the influence of local developers and their cronies. There were over 80 people at the meeting. As far as I can recall, no one spoke in support of my position. In the end not one but two such developments were approved and built. Current outlet occupancy is less than 50% and the same can be said for the apartments stuck over them.

    Time and again expensive tribunals have drawn attention to the real and tangible economic damage arising from conflicts of interests in political life, but politicians across the board have convinced themselves that conflicts of interests are ‘the other fella’s problem’.

    As an aside: the newly introduced property tax in Italy (Imu) raised 9 billion officially today (roughly 50% of the total targeted) – the remaining tranche (50%) is due to be paid in December date not specified as Monti is finished on November 14th.

  33. @ Roan L,

    I don’t think I made myself clear in my post above, I was referring to private residential landlords, domestic rental market and not commercial rental market.

    @ John Corcoran,

    Sorry about ticking you off old boy!!

  34. @ MH: “In the current market, mortgages approvals were at about a 1968 year low …”

    Ooops!

    ” … in the first quarter of 2012 while the evidence from auctions shows that cash buyers can get discounts of 25% or more from what are regarded as current official price levels.”

    Ooops x2!

    @ What Goes Up: “All of which means in 12 months you could be reduced to talking about micro-markets in Dublin “stabilising” to explain how prices continue to fall while people are outbid on houses in certain Dublin areas.”

    Nice one!

  35. @MH
    “the farmers were also able to arrange a shakedown of the State in respect of land for roadbuilding, grabbing almost 25% of the national roadbuilding budget”

    Shakedown? a quarter of road building costs required to purchase the land on which the roads were built – hardly that shocking especially under compulsory purchase orders. How much of a shakedown was there from consturction companies that built the roads – or the suppliers? Did people who sold 3 bedroom semi-d’s for 500k and more shakedown the buyers. did the legal profession and auctioneers get involved in the shakedowns….did local councillors get involved in shaking down developers and developers in shaking down everyone else.

  36. @ V Barrett

    In 2001, the Irish State agency, the National Roads Authority (NRA), said in relation to a campaign for an increase in compensation for land acquired by Compulsory Purchase Order, that was led by Tom Parlon, then president of the Irish Farmers Association (IFA) that pronouncements by senior IFA officials, including Parlon, had claimed that:

    1) the State, through the actions of local authorities, has no right to appropriate farmland;
    2) the compulsory acquisition of farmland for the national roads building programme is unjust, inequitable and seriously damages the livelihood and viability of 8,000 farm families;
    3) CPO legislation is outdated and compensation paid to farmers is inadequate;
    4) compensation should be paid at development land prices given the intended use of land for road schemes and not at market value for agriculture land

    The demands of the farmers were met – – nothing strange in that.

    The amount the State was forced to pay out for land compensation was described as “disturbing” by the head of the National Roads Authority in 2006.

    It accounted for 23% of the cost of roads projects in Ireland, but just 12% in England, 10% in Denmark, 9.4% in Greece and 1% in Iceland. A further 2% of the €18.5bn provided in the Government’s Transport 21 for road building over the next decade will go to archaeologists.

    RTÉ’s Prime Time programme in November 2007 disclosed statistics about the involvement of elected representatives in the land development and property business.

    A total of 22% of councillors dealt in or developed land through their day jobs as estate agents, landowners and builders. In Mayo, that figure rose as high as 45%, in Offaly it was 44% and in eight other counties it was 33% or more.

    Prime Time found that in Clare, declarations of interest showed that 97% of elected members have no beneficial interest even in their family home. In ten counties, two-thirds or more of the councillors have not declared an interest in the family home.

    Economist Jerome Casey, who was editor of the ‘Building Industry Bulletin’ in a report in 2003, said that site costs accounted for 42.5% of the cost of a house nationwide. Casey said that typically in the mid 1990s, Durkan Brothers sold apartments off O’Connell Street for £35,000 to £40,000 (€44,440 to €50,790) for which the site cost was £5,000. A decade later, both the Irish Council for Social Housing and private house builders were reporting city house site costs at up to 50% of the house price. Outside the cities, site costs amounted to up to 40% of the house price. For the country as a whole, site costs in 2003 were about 42.5% of the house price, an increase of almost 30 percentage points on the pre-boom position. In Dublin that increased to 50%.

    In the US land accounted for 20% of the total cost of a house. In Denmark the figure is similar while in Portugal the land factor drops to 15%.

    The Irish Times reported in March 2012 that the State spent €30m on goodwill payments to landowners for not obstructing agricultural land sales for road projects between 2007 and 2011.

    Payments for not obstructing – – shakedown is surely an apt term.

    A so-called goodwill payment of €5,000 for every acre of agricultural land sold for road projects was made as part of a deal to ensure farmers co-operated with compulsory land purchases under the second National Development Plan (NDP).

    An estimated €30m was added to the €1.4bn cost to the State for land purchase under the second NDP because of the goodwill payment. The fee applied to the purchase of approximately 6,000 acres of land.

  37. Will Baxter

    1 We recommend a temporary halt to the slaughtering of massively overrented tenants until the government pass “our”legislation. Once “our” legislation is passed slaughtering will recommence with vigour–no mercy will be shown to any of these serfs

    2 The Society of Chartered Surveyors will continue to produce “unbiased statistics” to show 99.99% of all landlords are granting tenants rent reductions.
    3. Congratulations to CBRE on their excellent research on retail premises in Wexford Town –an excellent unbiased piece of scholarly work. Hats off to a wonderful company. They will now proceed with their next in- depth study of retail premises on Achill Island to be following by the third of the trilogy , the Aran Islands. I understand tenants organisations will be very surprised with their findings.
    4 We highly recommend all members to circulate the excellent objective article in today’s Irish Times by the distinguished Irish economist Pat McArdle titled ” Changing rent reviews will have serious consequences”. There will be many more full page “objective” opinion pieces over the next number of months.

    5 In 2008 our members established the fifth highest rents in the world on Grafton St. When this current blip is over we intend to reintensify our efforts to establish the highest rents in the world in Ireland. This would be a great boost to national morale–world champions.

    6 The Society of Chartered Surveyors are organising weekend retreats and free trips on the Orient Express for our politicans/legislators to convince them of the urgent need to reinstate UORRs again in all future leases and no more tampering with our superb arbitration system

    7 We will continue to distribute the serfs private and confidential information among the cartel members. We will also leak to our media contacts selective information to smear some awkward serfs.

    T O’Neill
    The Cartel

  38. When there is a conflict between the public interest and the vested interests — Irish politicians always side with the vested interests. The Irish politicians never act in response to the public interest but only in response to their own self-interest. Irish politicians favour the special interests that finance their election campaigns. The interests of the typical voter will be overwhelmed by the power of the lobby groups,who can devote time and money to advance their cause.

    Another term for the problem is “clientelism”. When political parties get into office,they need to reward their supporters with jobs,tax breaks, subsidies, state leases etc etc. The Irish property disaster started with one house –Leinster House. Politics is like war. There are three things you need to win. The first is money and the second is money and the third is money. In matters of Church or State the man with the money carries the weight. Follow the money it always leads to Leinster House.

  39. @MH
    Salient facts but doesn’t the chicken and egg issue arise here. Given the property/land guzzling frenzy of the day wouldn’t the farmers have been irrational to take any other position. Extracting “Fair value” driven by a country awash with cheap and easily accessible credit can hardly be described as a shakedown for an asset that was only ever going to increase in value according to all the bankers of the day. Agriculatural land that could be used for no other purpose during this period also soared – a lot of farmers who sought to expand during the boom were caught in manner not dissimilar to people sitting on negative equity homes now. I just think the term “shakedown” is a bit of a TV3ish/George Leeish description of farmers role in madness that ensued.

    On a related issue i am surprised no thread has been started on the Financial Regulators passing of so many of the responsible elite (Richie et al) as “fit and proper” captains of industry….

  40. @Michael H

    The CPO prices for agricultural land bore no relation to economic reality in terms of ROI – but what did during the bubble? Easily achieved were prices of 25k and 30k and more for strips of land that never yielded more than €150/acre.

    The hardheaded approach would have been to look into the business record of each farm and make a calculation based on what the books revealed, but other factors to take into account relate to the percentage of the landholding coming under CPO. Consequently, one flat rate might be argued to be unjust. Losing 10% to CPO vs. losing 80% to CPO have very different implications for different types of farm.

    At the moment there is a bit of bonanza in wind farm installations for farmers surrendering land.

  41. @ V Barrett

    Yes indeed, they were all victims of forces beyond their control!

    It’s funny how the buck stops nowhere until there is a foreign target.

    The farmers have political influence and when Bertie Ahern agreed the bonanza with the IFA in 2001, there was little concern for taxi drivers after deregulation. A few years later, beet farmers plus Greencore got big payoffs on the ending of production.

    Harney was effusive that judges could see ‘restraint of trade’ in the taxi business but not under their noses. The former school teacher was also a little myopic in that regard.

    So more than a decade later and the Troika called time on the legal racket — at least we hope.

    Forces beyond our control?

    Emer Ó Siochrú wrote in a 2004 paper, “Land Value Tax : Unfinished business”: “It is astonishing to see just how much of the early State’s revenue – 5.4% in the early 1930s – was used to placate land hunger in rural areas to the relative neglect of pressing urban problems. This rural focus extended to providing subsidised housing for farm migrants from the West to the more fertile midlands and the rural labourer.

    Rural areas got more than ten times the social housing investment of urban areas. Local authority housing tenants moreover, were given the right to buy their house from the outset – a right only offered to urban flat tenants this year of 2004.”

  42. In a perfect Irish world all the cute hoors would be confined to Kildare street. No credible central database of housing actual transaction pricing. How many countries in the OECD are similarly deficient?

    There will be many dead cat bounces before the property market gains traction. Japan circa 1990 and subsequently would be well worth a look.

    When I look at the recent Brussels agreement I am encouraged but I also see the conditionality of a need for a Eurowide Regulator which curbs my optimism.

    I was suggesting to a few Kerry exiles from Mayo that 70 to 80% of people seem unaffected by the collapsing tiger. They took umbrage at that and told me the figure in Mayo of people adversely affected is more than 50%. They claim that people who continued in employment are now making less. They point out that immigrants in Mayo attracted to factory work during the boom are now unemployed and on social assistance. They catered to my prejudices by pointing out that FF = FG with both out of touch with reality.

    It is in Germany’s best interest to reverse the downward spiral and I am convinced they will at least make reasonable efforts to stop the decline. We should be grateful that Spain recognised that their first priority was to keep the sovereign solvent and that Italy was a staunch supporter.

  43. John “Korky” Corcoran,

    You rail against sundry others for failing to anticapate and warn against the bubble. However, it seem to me that you were a little careless yourself in taking on a large lease at the peak of the boom. Were you not a teensy bit at fault yourself.

    Did people force you to sign such a lease at gunpoint?

  44. I could give Ronan a tour of a myriad of properties new and old around the D7 area that were left to become run down. Many, because planning was either incomplete, on getting their 7 to 14 storey buildings which involved steamrolling over local opposition which tended to be quite gritty. For instance Phibsboro was to be bench marked from its most Stalinist building which everyone who knows it will know what I am talking about. The city was to have any charm ripped out in exchange for “planning contributions” to support equally unsustainable salaries.

    Dublin City Council were “practically” personally I believe “were” entering into joint developments with ‘high rise’ developers to steer coaches and four through development plans. Most planning permissions involved requests under FOI for minutes of secret meetings and so called planning consultations. Ultimately, all permissions were invariably decided by An Board Pleanala which became the de facto decision maker on planning in Dublin and elsewhere. Documents were produced with lofty titles such as Maximising The City’s Potential, sub titled “A Strategy for Intensification and Height”. Height or more particularly “High Rise” apartments was the DCC mantra and “Height along with traffic calming and congestion charging between the canals was to become the back bone of their financial mode. That, along with Commercial Rates charges which were completely distorted by the Celtic Tiger and which have never been bench marked back down to today’s reality were to be their main source of funds outside of government subsidies.

    When Sean Dunne’s arcitect representing Henning Larsen, asked Dublin City Architect Mr. Jim Barrett which model would he prefer? After being shown models representing a central tower of 32,37 or 42 stories smack in the middle of the Pembroke Estate, he memorably, at least memorable to me, replied, “I think the thirty seven storey tower would be most appropriate. If it had been started there would have been a gigantic hole right in the centre of Ballsbridge as the ground works were to take 3 years, there would be shuttering around it to this day and they would be pumping water from it.

    I remember having a personal meeting with the present city manager Michael Tierney and his secretary over the very subject of “High Rise” where I told him that Dublin City Council was well on the way to bankruptcy over their approach to planning issues. They are now trying to shed services left, right and centre and 20% of their staff by 2014 in an effort to survive.

    Now, Ronan has kindly produced the interactive charts to show how the follies have played out and boy have some birds come home to roost! As far as I can seen nothing has changed and DCC are still completely divorced from reality when it comes to their remit around planning and development not to mention the nurturing of business and jobs which seem to remain completely foreign concepts to them.

  45. @MH
    Rent seeking is normal in a capitalist environment. In the story u outline the buck stops with Bertie plain and simple. If collective responsibility and egalitarianism were realistic aspirations then Communism would have worked…unless ur Swedish. No?

  46. @V barrett

    Rent “seeking is normal in a capitalist environment”. True! accept in Ireland they don’t “seek” because they already have specialist insider knowledge with connections that go all the way to the top. The lowest tender will not necessary be accepted etc, etc. These people are nor seeking, that is for the plebs, they are simply “taking” that which they believe they are entitled to and whether the state has to borrow the money or not makes absolutely no difference to them. More like oligarchs and that kind of thing.

  47. @ Ronan

    Urban economics theory suggests that a city such as Dublin will ‘benefit’ (relatively) in the decline and this is indeed what is happening and will continue to be reinforced with more economic activity being attracted to Dublin as the rest of the country declines at a greater rate. Who would have thought economic theory could predict anything?

    In the most optimistic scenario though, at least an additional €8.6bn is to be taken out of the economy in the next 3 budgets (it may well be much more than this depending on other events). This will come from increased taxes and charges, and reduced government expenditure. So, have declining disposable incomes coupled with the likely remaining tight credit conditions over the next few years been factored in to your analysis?

    I’m merely asking out of curiosity. I have no intention of either selling or buying in the coming years and, with a relatively small mortgage, I’m one of the lucky ones not particularly bothered by negative equity. It is just that I cannot see any scenario other than continued property price falls in the coming years (with the proviso that Dublin will decline at a lower rate than the rest of the country).

  48. @Robert Browne

    I would add to your observations that there are plenty of planning laws and SIs which state quite clearly what the law is. It is amazing that some of the best paid public sector planners in Europe often have either not read the legislation, have not understood what it says, or have taken the view that what it says doesn’t matter.

  49. Thanks to you, Ronan, and daft.ie for doing sterling work on the Irish housing market. I agree with your opinion that number of units sold, and total value of same, is far more important than actual prices. The turnover was way too high during the bubble and way too low now. Return to a sustainable level may be the best definition of the end of the “boom/bust” process. It seems very difficult to access any historical/chart data on turnover. Do you or anyone else know of any source?

  50. A late remark on this subject, for anyone who might be interested.

    In SW Dublin, prices for a three-bed house have fallen from 190k to 170k since feb/march.
    But what has seemingly been happening is a rise in asking prices for properties that earlier this year were being offered for less – and enquiries tell potential buyers of apparent offers above the original asking price, that I’m pretty sure are fabrications used to create an artificial ‘seal’ on the bottoming of the price. This of course would require the co-operation of the seller, who might easily be persuaded by the combined media & CSO marketeering, with the professional advice of the estate agent.

  51. ”Another Priory Hall could see them go intro cash-only territory.”

    – Something there that needs to be looked at; you don’t need to be a conspiracist to wonder about the fact that the appointing of unqualifies persons to assess the fire-prevention minimums & other matters was in operation for years,when Priory Hall problems surfaced it was stated that it was just the tip of the iceberg, and now it’s all gone silent.
    There is an apartment complex that had to be evacuated a few years back due to the lack of a fire-escape, there are a huge number of properties liable for flood due to deliberate removal of location safeguards at the planning level, and properties are being sold that were empty for years & almost certainly are compromised by the elements.

  52. re- Bunbury

    Indeed, there was an investment advice firm (lost their name) here a few weeks back, who were warning clients about the continuing poor prospects for financial institutions here as a result of a possible further twenty percent drop in property prices.

  53. @RL Nice work. Everyone likes a good map. It would be nice to see the central bank do something similar with arrears. Or the dept of social welfare with unemployment.

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