Ratings agency predicts further 20% fall in Irish residential property prices

davet82

Ratings agency Fitch expects house prices in Ireland to decline by a further 20% from current levels.

In its latest residential mortgage briefing Fitch outlines what it refers to as "substantial concerns" for the peripheral eurozone markets of Spain, Portugal, Greece, Ireland and Italy.

"Fitch anticipates depressed mortgage lending, continued declines in house prices and pressure on incomes and consumer confidence," it said.

The agency, however, has given itself room for error in its forecasts, saying that its assumptions are conservative and that property prices in Ireland may stabilise sooner than its "base case assumption" suggests.

Fitch said that access to mortgage lending will continue to hamper property markets in a number of countries, including Ireland.

"Banks maintain strict underwriting guidelines and are strongly restricted in their willingness and ability to lend, especially in peripheral eurozone countries," it said.

interesting, this sounds like more sense to me than some of the recovery of prices that seems to be peddled as of late although i probably wouldn't predict as much as 20%

D3PO

The same agency that rated Ireland as Triple A during the boom and never once warned about a bubble.

Id take what they say with a big pinch of salt to be honest

lima

davet82 wrote: »

interesting, this sounds like more sense to me than some of the recovery of prices that seems to be peddled as of late although i probably wouldn't predict as much as 20%

yeah hopefully it'll happen sooner rather than later

johndaman66

davet82 wrote: »

i probably wouldn't predict as much as 20%

I would say it very much depends on the individual markets, be it the property type or the location. For certain properties I would suggest a 20% drop (from where we are at now) is a conservative estimate of how much further they will fall. Other properties unlikely to fall much more if at all in my opinion.

The_Conductor

A further 20% fall correlates with bringing us back to the affordability levels of the early 1990s- which coincidentally, is when Peter Bacon in his first report suggested prices were last stable (he used 1994 as a benchmark for when the bubble started inflating).

So- the figure has some merit- however in isolation of looking at supply and demand, net migration figures, demographic profiles, affordability, cost of ownership- and a plethora of other related issues- it really is pulling a figure out of thin air- even if others are in agreement.

gaius c

smccarrick wrote: »

A further 20% fall correlates with bringing us back to the affordability levels of the early 1990s- which coincidentally, is when Peter Bacon in his first report suggested prices were last stable (he used 1994 as a benchmark for when the bubble started inflating).

So- the figure has some merit- however in isolation of looking at supply and demand, net migration figures, demographic profiles, affordability, cost of ownership- and a plethora of other related issues- it really is pulling a figure out of thin air- even if others are in agreement.

Typical trend is for 70% of the gains during a house price bubble to be lost during a crash so by historical precedence, we shouldn't really be going all the way back to 1994 but then nobody has ever had a crash like ours either (even Japan).

gaius c

D3PO wrote: »

The same agency that rated Ireland as Triple A during the boom and never once warned about a bubble.

Id take what they say with a big pinch of salt to be honest

But you're happy to take the word of estate agents and politicians as gospel?

handlemaster

interesting alright. was was the over all drop in 2012 12% ??

D3PO

gaius c wrote: »

But you're happy to take the word of estate agents and politicians as gospel?

Did I say that ? :rolleyes:

Id rather listen to respected economists with a track record rather than some faceless agency that get it wrong time and time again.

Gurdgiev, McWilliams, Kelly, Stiglitz, Krugman.

Im not saying Fitch wont turn out to be right, but even a broken clock is right twice a day.

jmayo

D3PO wrote: »

The same agency that rated Ireland as Triple A during the boom and never once warned about a bubble.

Id take what they say with a big pinch of salt to be honest

Thye have gone the other way and now are on the pessimistic side.
But I think they aren't far wrong in this case.
I can't see any economic indicators to make me think that the market, for the most part, is still not on a downward slide.
Of course there might be mini areas such as the now olbligatory reference to Sth County Dublin where 3/4 bed house prices appear stable.
Note I said house prices and not property prices.
There is still a lot of apartments in that area and no one now wants them long term, apart from investors with cash.

smccarrick wrote: »

A further 20% fall correlates with bringing us back to the affordability levels of the early 1990s- which coincidentally, is when Peter Bacon in his first report suggested prices were last stable (he used 1994 as a benchmark for when the bubble started inflating).

I have always reckoned that we were heading for mid 90s prices, the point at which the upward curve really began.
Nice to know some others believe the same.
The historic trend in bubble crashes means we don't stop somewhere on the upward slope, but go right back to start or even past the start.
Why do people believe our bubble is always going to be different ?

BTW where are we at the minute, what year's prices are we now equivalent to ?

leonidas83

jmayo wrote: »

Thye have gone the other way and now are on the pessimistic side.
But I think they aren't far wrong in this case.
I can't see any economic indicators to make me think that the market, for the most part, is still not on a downward slide.
Of course there might be mini areas such as the now olbligatory reference to Sth County Dublin where 3/4 bed house prices appear stable.
Note I said house prices and not property prices.
There is still a lot of apartments in that area and no one now wants them long term, apart from investors with cash.



I have always reckoned that we were heading for mid 90s prices, the point at which the upward curve really began.
Nice to know some others believe the same.
The historic trend in bubble crashes means we don't stop somewhere on the upward slope, but go right back to start or even past the start.
Why do people believe our bubble is always going to be different ?

BTW where are we at the minute, what year's prices are we now equivalent to ?

2001/2002's prices

jmayo

leonidas83 wrote: »

2001/2002's prices

Hang on I thought in 2011 we were equivalent to those prices ?

Surely we are around 2000/2001 at this stage ?

leonidas83

jmayo wrote: »

Hang on I thought in 2011 we were equivalent to those prices ?

Surely we are around 2000/2001 at this stage ?

Depends on alot of different factors, commercial, residential, industrial property, their all performing on different levels but in the main were operating at 2001/2002 levels

lima

This will be fabulous news if it happens, I'm waiting with mortgage approval to buy but I don't believe we have reached the bottom yet ;-)

Luca Brasi

D3PO wrote: »

The same agency that rated Ireland as Triple A during the boom and never once warned about a bubble.

Id take what they say with a big pinch of salt to be honest

Absolutely correct. Throw in any ESRI and Dept opf Finance forecast with it

Villa05

Luca Brasi wrote: »

Absolutely correct. Throw in any ESRI and Dept opf Finance forecast with it

I would give fitch more credit, ESRI and DOF are accountable to,no one, while fitch is private and whats left of their reputation is at stake

foxy06

Anyone else notice how rte reported earlier that property prices EASED by.5% and then few hours later changed it to FELL. I know its effectively the same thing, just strange?

xper

foxy06 wrote: »

Anyone else notice how rte reported earlier that property prices EASED by.5% and then few hours later changed it to FELL. I know its effectively the same thing, just strange?

The prominent use of the word "ease" in the RTE headline was widely noted on various property discussion sites today and largely ridiculed. We are used to seeing spin and subjectivity in various media outlets about the property market (e.g., house prices "recovering" could mean either direction depending on your personal circumstances and views).
However, on this occasion, it is primarily a case of just poor English. Using "fell" makes it a much clearer and objective statement.