Unleash the McQuaid redux! All this talk about an improvement in the housing market…

Perhaps I’m far too cynical, but when I read Dan O’Brien in the IT telling us about Central Bank research that says:

Irish house prices were undervalued by between 12 and 26 per cent as of the end of last year.

And:

If correct, property prices could rise suddenly and significantly if the causes of the undershooting in prices were removed.

And then continuing:

The main reasons cited for the continued fall in prices are a lack of investor confidence, negative future house price expectations and an uncertain macroeconomic outlook. Additionally, “the requirement for substantial deleveraging within the Irish financial system and the associated issue of mortgage credit availability are also considered as significant reasons for the decline” according to the report.

I turn once more to Alan McQuaid of Bloxham, who although speaking from the belly of the beast has, at the least, a degree of consistency to his pronouncements. As noted before the weekend:

However, he said, there was unlikely to be a significant improvement to the market until the employment situation improved.

“Irish consumers will want to see the housing market stabilising before they feel confident about the economy overall. Even allowing for the Budget 2012 initiatives to boost the property market, as well as lower interest rates from the European Central Bank, the short-term risks to house prices remain to the downside in our view,” he said.

“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 has some wise words too as regards lending…

But analysts warned against too much optimism over the figures.

”Although these latest banking figures are encouraging to some degree, particularly in relation to the deposits side, the underlying message from the data is still one of overall weakness and difficulties in the sector,” said Bloxham’s chief economist Alan McQuaid.

”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.”

And there’s something uniquely depressing about reading the following in the SBP this weekend. Discussing the fact that there have been fifty homes sold this year in the €1m plus range – and accepting that compared and contrasted with the height of the boom that may be a pale shadow of what took place then, we are treated to the following:

Savills director Ronan O’Hara said the majority of the houses changing hands for more than Ђ1 million were not being sold on the open market, but quietly and without any advertising or publicity. He said the reduction in stamp duty rates in the last budget had made larger homes more attractive.
“It has made a difference. Many of the sales have been to couples with good salaries who are trading up from modest homes to trophy homes,” he said.

Trophy homes? Haven’t we been down this road once before in recent years and has nothing been learnt?

Maybe it’s me, but it seems there’s a bit of a media campaign to talk up the housing market, quite in defiance of the actuality.

Though if at the highest levels there’s a ‘recovery’ it seems to fit with what Garibaldy noted on Sunday about wealth in the UK and what Michael Taft has written here about the impact of the financial crisis on various sections of the society…