The December 2012 MIR Effect

Boom__Boom

I was wondering if the end mortgage interest relief at the end of December 2012 had much of an effect on the property market. Anecdotally there seemed to be a significant rush in December to get sales through.

Had a look at the property price register for the months of December

December 2010 - 1,988
December 2011 - 2,259
December 2012 - 3,683

To examine whether it was a case of a MIR effect or an overall boom in the economy I had a look at the the figures for January

January 2010 - 1,115
January 2011 - 1,027
January 2012 - 1,221
January 2013 - 1,264

I included January 2010 even though there was no December 2009 figure to show what sort of levels where typical in January.

The fact that the jump in Dec 2012 was not continued into Jan 2013 would seem to back up the anecdotal evidence. Basically the end of MIR caused a serious spike in December 2012 and matters returned to normal in January.

As it happens I wonder how many of the January 2013 sales were attempts which failed at getting in under the MIR deadline?

Why does this matter?

Well the 3,683 properties sold in December 2012 represented almost 15% of the total sales for the entire year of 2012 [3,683 out of 24,804]

Obviously some of these Dec 2012 properties would have been sold without the MIR effect and chances are it pulled some of the sales for Q1 2013 forward in time to 2012.

However I think its fair to say that a statisically significant amount of the properties sold in 2012 were caused in part by the MIR effect in December.

L1011

Give it a few weeks yet for delayed Jan 13 purchase entries to surface. Still some Nov and Dec 12 ones appearing. Won't make a substantial change though I suspect

D3PO

MYOB wrote: »

Give it a few weeks yet for delayed Jan 13 purchase entries to surface. Still some Nov and Dec 12 ones appearing. Won't make a substantial change though I suspect

exactly what i was thinking too. Also needs to be pointed out that Jan 2013 is currently up on the previous three years aswell and probably might get 30 - 40 more when all figures are submitted.

as a percentage it is down but as a total number it is up. Neither is conclusive as some purchases might have meant to get MIR but missed the deadline.

Quarter to quarter figures are useless IMO year on year provide a better view of the market but given how skewed its likely to be YoY comparing Q2 12 & Q2 13 is a much better comparrison.

RATM

Isn't there a rule that in order to qualify for MIR you had to pay your first mortgage repayment before December 31st ? i.e. to be sure of getting it you really should have closed the sale by the 30th November and then for your first repayment to have fallen sometime inside December.

Is it possible that a sizeable % of those 3,683 December 2012 buyers might now apply for MIR but be told by Revenue that they have missed the cut ?

I don't know, maybe some buyers who closed the deal in December came to an agreement with their bank to bring the first repayment forward so they could take advantage of the MIR before the cut off point.

Anyway regardless of all the above I still remain to be convinced that those who rushed out to buy average homes before Dec 31st will have saved anything at all in the long term. In fact I seem to remember some economist ran the figures on it and his conclusion was that very few average couples would financially gain by claiming the MIR vis a vis the saving in a falling market. Of course that view is contingent on where you see the market going. But to my recollection the only people who were recommending a rush to buy before the end of MIR and also saying that the property market had hit a bottom were our old pals the media.

xper

RATM wrote: »

Isn't there a rule that in order to qualify for MIR you had to pay your first mortgage repayment before December 31st ? i.e. to be sure of getting it you really should have closed the sale by the 30th November and then for your first repayment to have fallen sometime inside December.

No, it appears this was not correct. It was widely repeated on forums like this through the last few months of 2012, including by me, but killers1, whose knowledge of the mortgage process appears encyclopedic, pointed out that it is the date of mortgage draw down that counted.


That said, I'd say there was a small number of buyers that missed out on MIR because they didn't get their mortgage drawn down in time, what with the Christmas break and all.