House price falls...

Why do house price falls interest me? Truth is they don’t much except as a symptom of the broader economic situation and – I guess – as an inversion of the super-heated rhetoric of the boom. Because if they were the metric of progress for some they serve as an indication of regression now. Except I’m not sure I entirely agree with that thesis either.

I don’t think that this is necessarily a regression, but a reset to a more normal position – though what is normal these days can be difficult to determine. Which is not to say I cheer with every dip in prices – for some/many this is bad news, and in some instances very bad news indeed.

The problem being how to deal with that aspect of it and see the levels approach something akin to normal (though what that may be is also difficult to determine). Except we don’t have a functioning housing market and arguably never have, and particularly not when so many citizens have languished on waiting lists through the Celtic Tiger and now after.

And it is the voices who argue otherwise, who month after month seek some evidence in a marginal increase here, or a marginal increase there, that the housing market will swing back into full bloom after a regrettable interruption who I believe do the greatest disservice. One would be hard pushed to realise from what those who want Tiger 2.0 say just how bad the housing crisis is, how appalling the underfunding of social housing – to the point where now the Government is quite open that it does not intend to purchase or build local authority housing.

An Irish Times editorial from last March made the good point that given how developers wangled out of the 20 per cent social purpose element of the Planning Act it was ironic and not coincidental that NAMA was now providing ‘roughly 20 per cent of Nama’s current residential portfolio’. It also mentioned that there are 100,000 and more on the waiting list for local authority housing.

But these are an afterthought, at best, in terms of public policy – a staggering fact given that we have the local social democratic franchise actually in government. And the IT acknowledges that ‘it is unlikely the number will fall significantly soon’ despite a ‘massive oversupply of private accommodation’.

Yet as a symptom of the state of the economy, of how we have yet to hit bottom, house price falls will do well enough, and fall the prices do (and interesting to contextualise the figures in relation to this post from earlier in the week). In the Irish Times it is reported that:

Residential property prices nationally fell by 13.6 per cent in the year to July but rose by 0.2 per cent in the month, new figures show.
This compares with an annual rate of decline of 14.4 per cent in June and a decline of 12. 5 per cent in the 12 months to July of last year.

Interestingly although that 0.2 figure is national in Dublin prices fell by 0.3 per cent. And overall ‘House prices in the capital are now 56 per cent lower than at their highest level in early 2007, while apartment prices are some 63 per cent lower.’.
Of course none of this recognises that the mortgages being serviced remain close enough at the 2007 levels. But another figure sheds some light on just how problematic that actually is:

The firm noted census data showed the number of households with a mortgage and in unemployment had increased from 14,757 in 2006 to 50,792 in 2011.

And overall?

“We retain our view that repossessions will have to rise, and coupled with weak mortgage lending and a slow recovery in the economy, house prices will fall further.”

But wait, what’s this? Also reported in the Irish Times:

Property website MyHome.ie, which is owned by The Irish Times, said it was “cautious and a little surprised” at the figures and that not too much should be read into them.
“The new poperty register which will record actual transaction prices is due to go live next month and that is a very welcome development,” said Myhome.ie managing director Angela Keegan.
“While we welcome the recent trend towards moderating price falls and greater price stability, the overall increase in prices and also the modest fall recorded in Dublin for July was unexpected,” she said.

Unexpected? Surprised? Really?

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