Another fall in residential property prices…

Residential property prices fell in October, bringing an end to a three month upswing in house values.

Some upswing. 0.2 per cent in July, 0.5 per cent in August, 0.9 per cent in September. But now it has gone down by 0.6 per cent in October.

The figures suggest a two-tiered market is operating in the State, with property values outside Dublin down by 0.9 per cent in the month and 8.9 per cent on October 2011.

The market in Dublin continues to be more stable, with house prices falling by 0.2 per cent in the month. House prices in Dublin are 7.8 per cent lower than at the same point last year, with apartment prices 7.1 per cent lower.

By the way, as regards cash transactions, would they be higher or lower than the asking price of estate agents? Anyone know?

Alan McQuaid of Merrion Stockbrokers argues that:

The figures highlighted the fact that consumer confidence regarding the housing market remains fragile.

But disappointingly he then goes on…

He said the Government “cannot afford to be complacent and needs to tread very carefully” when unveiling any new tax measures in Budget 2013.

“Media reports at the weekend suggest that there are fears in official circles that a property tax combined with the withdrawal of mortgage interest reliefs, will put people off buying a house and kill the tentative recovery in the market that we’ve seen in recent months,” he said.
“Indeed, the uncertainty over how a property tax would be imposed may have been a factor in the fall in house prices in October.”

I wonder is that credible? People would not buy a house because of a potential property tax? Seems somewhat unlikely to me.

It also seems unlikely that there has been a ‘tentative recovery’. Not when the Irish Times notes that:

The Residential Property Price Index, published by the Central Statistics Office, shows that residential property prices were 15.1 per cent lower at the end of last month than at the same point in 2011.

And:

The data shows that house prices in Dublin are 55 per cent below the high point recorded in February 2007, with the value of apartments in the city now 63 per cent lower than they were five and a half years ago.

It seems doubtful that there will be anything like a ‘recovery’ – and really, what is a recovery in these circumstances – until the broader economic picture begins to improve, that is a significant drop in unemployment, growth in the economy and genuine stability. To talk of recovery now, when we still have at least three and potentially many more austerity budgets ahead of us is so precipitate as to be almost laughable. Moreover one Alan McQuaid knows this, for this April he noted the following:

“Although the March data are a step in the right direction we don’t see any significant improvement in the housing market until the employment situation gets better and bank lending returns to some sort of ‘normality’, which is still some way off in our opinion.”

And continued:

The bottom line is that Ireland remains a long way from where it wants/needs to be as regards credit demand/availability to get the domestic economy moving again. The reality is that until the banking sector crisis is fully resolved and things improve on the labour market front then the supply/demand for credit will stay subdued in our view, severely hampering the overall recovery prospects for the economy as a whole in the process.”

Unemployment? 13 per cent in 2015 according to the government’s own projections. So what fundamentally has changed sufficiently to make McQuaid more optimistic? Nothing is the answer. Nothing has changed.

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BTW, the good news never stops, does it? Though, and this could be my fault, I can’t find an overall figure for overall mortgage arrears.