jump to navigation

Another fall in residential property prices… November 30, 2012

Posted by WorldbyStorm in Economy, Irish Politics.

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.


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.


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.


1. CMK - November 30, 2012

Interesting analysis and the CLR performing a public service in actually analysing the wishful thing that the is all the orthodoxy has left at this stage. However, what I find chilling (and this was picked up by Michael Taft too) is that the state fully intends to let more than 400,000 rot on the dole between now and 2015. They’ve more or less given up the ghost and said ‘f**k it, sure it’ll be grand’. The human costs of that will be ferocious. By 2015 we’ll have had in excess of 400,000 unemployed for 6 years and, if truth be told, there’ll still be that number long after 2015 (‘Austerity Treaty, how are you?’). In that context hoping for a rise in house prices seems perverse to me. There’s no reason to suppose that nett emigration of 35,000+ per year from now to 2015 is unrealistic. In that context, unemployment levels of 400,000+ by 2015 mean the government knows that profound is on the cards?


LeftAtTheCross - November 30, 2012

CMK, the reserve army of labour will need homes to rent at the state’s expense, that’s the backstop here, the rentiers are getting their bargains at the bottom of the market and the future of housing is a return to private free-market squalor.


2. Mark P - November 30, 2012

This shit just gets worse and worse.


3. Rot Peter der Affe - December 2, 2012

Unusually, I find myself in danger of being underpessimistic in the case of Irish house prices. I predicted a 70% fall from the peak – it looks like it will definitely overshoot, for a number of reasons.

Firstly emmigration means the rate at which supply far outstrips demand continue to rise, secondly rapidly sinking take-home wages means fewer people can service debt, thirdly loans are hard to come by because of the zombified state of the banks, and lastly only the desperate would buy in a falling market.

And most importantly on a political level there will be no reigning in of the (voluntary) transfer of power to finance capital from states in Europe and at the European level; if the CDU/FDP here in Germany has anything to do with it – and they have a lot to do with it.

Deutsche Bank doesn’t just lobby here, they have their advisers actually seconded to the finance ministry, where they help to shape policy.

So Europe will remain in a holding pattern until the federal elections in Sept/October 2013, if Dr. Merkel has her way. The chances of her having her way are 50/50, I would estimate. ‘Events’ may well intervene especially if resistance from below continues to organise.

Kenny and company are deluding themselves if they think they will get any concrete aleviation in the debt slavery terms before then, despite the recent charm offensive against the peripherals. Unless they grow a pair and start to mutter about suspending interest payments.

If all the peripheral government in the states currently being waterboarded for the benefit of Bundesbank theologians got together and declared a couple of years moritorium on interest payments to the ECB / EFSF, then within a couple of days we would see a change in the German postion. And possibly the CDU/CSU’s chances in the coming election would be seriously compromised.

I could go on but end of rant…


WorldbyStorm - December 2, 2012

No, that’s really interesting. I think you’re right. The basic factors at play seem so fundamentally unstable – and your point about wages being able to service debt is crucial (add in the inevitable increase in interest rates from the current historically low levels and it’s fairly scary) and so far from resolution that the idea it’s bottoming out looks madly optimistic.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: