Rejoice! Rejoice! The property market is ‘stabilising’… sort of. January 2, 2013
Posted by WorldbyStorm in Economy, Irish Politics.trackback
Though reading the fine print… perhaps not so much. As reported in the Irish Times today:
Further evidence of the stabilisation of the Dublin property market is contained in new data released today.
And what glad tidings – or not, given the centrality of inflated house prices in this state to aspects of the crash – suggest this happy outcome?
Property prices in south County Dublin rose by 3 per cent in the last quarter of 2012, when compared with the same period in 2011.
Well then… And…
This is the first such increase noted since 2007 and is one of a number of indicators of a stabilising market in Dublin contained in new figures from online websites MyHome.ieand Daft.ie.
Not that they’d have a horse in this particular race – eh? The odd thing though is the evidence that it’s not stabilising, evidence culled from its own data. For example MyHome.ie found that.
…the asking price for houses in Dublin fell by 1.6 per cent in the final quarter of last year, reversing the rise of identical magnitude identified in the previous quarter.
And:
However, the annual rate of decline for the capital for 2012 came out at 12 per cent, the lowest rate for Dublin in four years.
But it’s still a decline. And a fairly significant one at that. As is the following:
Nationally, asking prices for houses declined by 2.9 per cent in the final quarter of last year, bringing the annual rate of decline to 14.8 per cent, according to MyHome.ie. There was a marked difference between the time it took for properties to be sold in cities and in rural areas.
What to make of this?
The two websites use different methodologies and this accounts for their different outcomes. Nationally, the year-on-year decline for 2012 was 9 per cent, as compared with 18 per cent at the end of 2011, according to Daft.ie. This showed that nationally, the property market was “stabilising but not yet stabilised”, Mr Lyon said.
Perhaps, perhaps, or we could take the words of Alan McQuaid from some time back about the prospects for a genuine stabilisation of the ‘market’ where he noted it would require economic growth and falling unemployment to assure any ‘normalisation’ of the property market.
Given that the Government itself doesn’t expect unemployment to dip below 13 per cent any time soon I’d wonder just how (overly) optimistic those reports are.
There’s a larger question as well, and I reference it above. Given the artificiality of the housing market and house prices across the late 1990s and on into the 2000s it seems that there might be a fair way yet for prices to fall in any case. And let’s not forget the potential effects of the property tax in – ahem – suppressing house prices and values in the near future. By the way, has the IT divested itself of myhome.ie? For there is no mention of an interest in that entity in the article.
The Cedar Lounge Revolution 
Q4 of 2012 was also the last chance to avail of first-time buyers’ mortgage interest relief. As a result, one would expect a spike as people attempt to avail of that. When you factor in the property tax, I would expect to see a sharper drop in Q1 and Q2 of 2013.
The reports of a resurrection are very much exaggerated, I think.
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Because if you actually read the Daft.ie survey it tells you that, for example, the year on year fall in prices in Connacht/Ulster in the last quarter of 2012 was 19.6% compared to 13.6% during the same period last year. In Waterford they are down by 17% and in Cork, Galway and Limerick cities by around 10%. Rural Galway is down by 19%.
You really would have to be a lunatic or a scam artist to portray figures like this as heralding some form of recovery.
I wonder sometimes if this Magical Thinking about the property market results from (A) Journalists who are keen to have the value of their own house rise and (B) The idea, increasing in currency, that if everyone adopts a positive attitude the economy will improve by dint of sheer wishpower.
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Well, B seems to be a common belief among the UCD4 brigade.
Another factor is that most of the journalists we’re talking about DO live in South Dublin, and they happen to live in houses rather than appartments. So, for them, this is good news. Why would they care about the price of houses in imaginary places like Ballymote and Oughterard?
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I remember Mike Soden popping up a few months ago encouraging NAMA to kick start the property market by buying up homes that were on the market.
There are some people who seem to believe that all they need to do to fix the housing market is trick people into buying homes. There are some people who never learn.
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I for one don’t buy the idea that its in the public interest for house prices to be on the up. They were going up consistently higher than earnings and inflation for about 20 years before 2008. I didn’t see that at the time as good news for anyone except the vested interests, landowners, builders, estate agents and last but not least, house owners. This piece be implying that its bad news for house prices not to be going up as a matter of routine. I believe that far left politicions rather than sticking up for the people of no property by seeing house prices made more affordable seem to want to convey the idea that higher property values should be a priority for society. This kind of populist opportunism seems to be where the far left is committed these days. Its not working though.
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As it happens I’d completely agree with you and I’m sorry if that wasn’t clear in the post. The idea prices should rise is crazy, and no less so is the idea that would be ‘healthy’ for the economy etc. the decoupling of actual wages from house prices was massively pernicious, but then again so is the lack of effort to produce social and genuinely affordable housing. My intention in these posts btw isn’t to bemoan the lack of ‘recovery’ but to point out a) how on their own terms the orthodoxy continue to get it wrong in terms of predictive power and b) how after the centrality of housing to the crash they still can’t wean themselves off it. All that said I have great sympathy for those who Were caught in that dynamic.
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We have the funny position that say young people who get jobs at a lower scale than their colleagues of say 5 to 10 years older are actually better off as they can buy homes at a much reduced rate. I am told that inward investment is now driven in part by cheaper facilities, offices etc.
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