Irish property still among the most expensive in the world

SimpleSam06

In the midst of a generally scathing review of government performance over the last few years, I found an interesting snippet about Irish property over on finfacts.

HOUSING AND PROPERTY - - STILL LEADING THE WORLD

During the boom, as Ireland slipped down international rankings for competitiveness and information technology readiness, we rose in key property league tables and remain there, despite the bubble bust.

An annual global survey of 236 prime shopping streets in 48 countries, which was published in November 2008, shows that Dublin's Grafton Street, is among the top 5 most expensive in the world -- ahead of London's New Bond Street and Tokyo's Ginza.

Prime office rents in Dublin are 14th highest in the world and double the level in Europe - the capital of the European Union.

Residential housing is still among the most expensive in the world.

A 2007 survey of management standard 2,200 square foot single-family dwellings with four bedrooms, two and one-half baths, a family room (or equivalent) and a two-car garage in 394 markets across the United States, Puerto Rico, Canada and a sampling of countries/territories outside of North America, showed that the cumulative average sales price of the homes surveyed in the 317 US markets (including one in Puerto Rico) covered was $422,343. For example in the Rocky Mountain state of Colorado, the most expensive house was in Boulder, at $615,000. the cheapest was in Colorado Springs at €197,500.

The most expensive studied international markets included (prices converted to US dollars as of Sept. 7, 2007): Dublin, Ireland ($2.13 million); Milan, Italy ($1.91 million); Rome, Italy ($1.79 million) and Paris, France ($1.67 million). The most affordable international market tracked is Bogotá, Colombia, at $140,100.

The Dublin price ranked with Beverly Hills, California, as the most expensive in the world.

As was suggested above, land rezoning remains the untouchable huge tax for the benefit of a small number, coupled with a ramshackle planning system and widespread nimbysim (Not-in-My-Backyard Syndrome) and its related shakedowns, is a huge drag on competitiveness and will remain so.

No alone were ridiculous prices paid for property during the boom, the Government allowed its developer supporters to build apartments of poor quality with joke levels of storage space. Occupants of apartments at the former gas works site in South Dublin, near the Google offices, have to store bicycles on their apartment balconies.

An article in the Irish Times on Dec 27, 2008 provided reason for the bullshit antennae to hit high alert. Even as 150,000 people may lose their jobs in 2009, the two bank economist cheerleaders of the boom, Dan McLaughlin and Austin Hughes, may well emerge from the rubble to proclaim new golden ages.

Property Editor Orna Mulcahy and a colleague Frances O'Rourke wrote:Maybe, just maybe, people will look back on 2008 as the year in which they should have bought property. A few years from now, when the economic gloom has lifted, today's prices - down as much as 40 per cent from the peak of 2006 - might seem like so many missed opportunities for first-time buyers and trader-uppers.

Using Construction Industry Federation (CIF) statistics to bolster their case and quotes from the Oracle of Omaha Warren Buffett, who is the antithesis of a property speculator, there is no hint that Irish house prices are among the most expensive in the world.

Billionaire Buffett has lived in the same house in Omaha since 1958 and a casino economy, based on trading property, is not his cup of tea!

Mulcahy/O'Rourke say that property website myhome.ie currently has a record number of homes posted on its site, and the average posting - the time a property takes to sell, or be withdrawn - has jumped from 100 days in 2006 to 220 days. They do not comment on the level of asking prices but as our illustrations show, the levels remain ridiculous.

They say that as many as 35,000 new homes lie empty across the country. However, including holiday homes, the total is estimated to be ten times the CIF level.

What is an empty new house?

A unit bought in 2005 as an investment to sell in a few years - pay 20% capital gains and make 50 grand from the transaction but the intervention of economics has stymied this game.

According to the Census 2006, the number of empty houses had jumped by 126,000 in the four years since 2002.

Any implications for the property market in having about 17% of the stock empty? Any risk of distress sales?

Mulcahy/O'Rourke conclude: No one knows if we are at or near the bottom of the market. The bottom will only be obvious in hindsight. Or, as Warren Buffet puts it, "The market will move higher. . . well before either sentiment or the economy turns up. So, if you wait for the robins, spring will be over."

It's worth repeating, that Buffett wasn't referring to houses and the last thing the Irish economy needs is a reprise of the recent fools' game.

However, it's easy to see that it may well happen.

Remember the campaigns about stamp duty while the Government's collection of 28% of the cost of each new housing unit in taxes and charges, was ignored? Besides, who would even think that the country was so short of land, that it was the most expensive in the world?

Green Party leader and Minister for the Environment John Gormley joined Planet Bertie to save the planet and his department gathers limited data on the housing market.

There is no data collected on development land sales as such information might provide too much sunlight for the vested interests involved. Neither is pricing data collected, despite the importance of the construction sector and its tendency to doom the economy.

The Scottish philosopher-economist Adam Smith wrote in his Wealth of Nations, which was published in 1776: "A dwellinghouse, as such, contributes nothing to the revenue of its inhabitant; and though it is, no doubt, extremely useful to him, it is as his clothes and household furniture are useful to him, which, however, makes a part of his expense, and not of his revenue. If it is to be let to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue which he derives either from labour, or stock, or land. Though a house, therefore, may yield a revenue to its proprietor, and thereby serve in the function of a capital to him, it cannot yield any to the public, nor serve in the function of a capital to it, and the revenue of the whole body of the people can never be in the smallest degree increased by it."

It may take even a bigger bust than the current one, for the penny to truly drop for the Irish people.

A boost to housing of course can have a short-run economic impact and it's akin to what the renowned British economist John Maynard Keynes had in mind in its seminal 1936 book, The General Theory of Employment, Interest and Money, when he wrote, in tongue-in-cheek mode:

"If the Treasury were to fill old bottles with bank notes, bury them at suitable depths in disused coal mines which are then filled up with town rubbish, and leave them to private enterprise on the well-tried principles of laissez faire to dig them up again - there need be no more unemployment and, with the help of the repercussions, the real income of the community and its capital wealth also would probably become a great deal greater than it actually is!"

Fighting Irish

Damn right, and i'm glad for anyone who bought a house in the past few years who didn't need to

brianthebard

What does this sentence mean?

Prime office rents in Dublin are 14th highest in the world and double the level in Europe - the capital of the European Union.

SimpleSam06

brianthebard wrote: »

What does this sentence mean?

I'm assuming he meant Brussels. The general tone of the article is fairly agitated, with numerous expletives, but its hard to fault the facts presented.

blast05

Everything you have highlighted in bold font isn't given a context of when the date refers to. The only stats or surveys presented refer to 2006 or the most recent being Sept 2007. An enormous amount has changed since then.
Not disagreeing with the tone but lines such as:

An annual global survey of 236 prime shopping streets in 48 countries, which was published in November 2008, shows that Dublin's Grafton Street, is among the top 5 most expensive in the world -- ahead of London's New Bond Street and Tokyo's Ginza.

Tommy Hilfiger recently opened on Grafton street. I doubt very much the rent would compare with if he opened there say 2 years ago

Prime office rents in Dublin are 14th highest in the world and double the level in Europe - the capital of the European Union.

And this would be about right considering it is the 16th dearest city in the world and the 2nd richest in terms of personal earnings .... and even at that, i would certainly guess you would get greatly reduced rates for office space in Dublin at the moment.
http://www.citymayors.com/economics/richest_cities.html

The Dublin price ranked with Beverly Hills, California, as the most expensive in the world.

Yes, in Sept 2007


One other line that struck me:

They say that as many as 35,000 new homes lie empty across the country. However, including holiday homes, the total is estimated to be ten times the CIF level.

I am interpreting this to mean there are ~350,000 homes throughout the country ot which ~300K are holiday homes !!? On the holiday home things, the mass sale of these is something that i have not seen materialise. Where i am from, there are ball park 70-90 holiday homes - not 1 of them has appeared on Daft in the last 12 months.