House price falls: The McQuaid abides… July 3, 2012Posted by WorldbyStorm in Economy, European Politics, Irish Politics.
Those who have followed the dizzying descent of Irish property prices will have been dismayed that the relative voice of sanity of Alan McQuaid of late Bloxham was nowhere to be heard in the various analyses presented with the latest figures released last week – at least not in the Irish Times. Figures that show a countrywide drop of 15.3 per cent in the year to the end of May, albeit those seeking some degree of solace could point to a .2 per cent increase in the month. This ‘rise’ was the first recorded in five years. All told?
The CSO said house prices in Dublin are now 55 per cent lower than at their highest point in early 2007. Apartment prices in the capital are 61 per cent lower than they were in February of that year.
Residential property prices in Dublin are some 57 per cent lower than at their highest level at that time. In the rest of Ireland, the fall in residential property prices is 47 per cent.
The national index is some 50 per cent lower than at its height in 2007, the CSO said.
Davy stockbrokers said the index understated the true peak-to-trough decline in house prices and that it was “already close to 60 per cent”.
But that 0.2 per cent increase? That’s cause for rejoicing, surely? Not so fast. The gloom that pervaded the analyses was indeed McQuaidlike, and appropriately so.
Davy noted the CSO index excluded cash purchase which made up “at least 25 per cent of the market” and which were likely to be sold at “particularly distressed levels”.
It said a lack of transaction data had also probably “pushed up” on the CSO index.
“The lack of transactions may be evident in the split the CSO provides for properties in Dublin and the rest of the country,” the stockbrokers said in a briefing note.
Glas Securities noted the May figures represented the slowest rate of decline since October last year. It said the figures would “provide encouragement that the time of steep falls in property prices may have given way to less dramatic price movements and even some price stabilisation in the market, particularly in the Dublin region”.
“However the longer-term outlook for property prices remains uncertain in the context of wider economic issues and depressed mortgage lending.”
At least an hint of realism there.
But wait, what’s this? Reading the Guardian story which has the headling ‘Irish house prices rise for first month in five years’ what is this that I see?
“On a practical level it is difficult to see people rushing out to buy a house when labour market conditions remain very fragile,” said Alan McQuaid, economist with Merrion Stockbrokers.
“That said, the May house price data are a step in the right direction and suggest the worst may be over.”
He’s certainly right about the first, though I wonder though is this step in the ‘right direction’ comment a tad premature. Because the way I read this is that with three/four/who knows how many yet further deflationary budgets ahead the idea that there will be a rebound in the property market is for the birds. The basic underpinnings of the economy are in such dire straits and short of something fantastical likely to worsen that any optimism is deeply misplaced. And Alan McQuaid, putting aside the second comment, now of Merrion Stockbrokers says as much too.