Property Market 2015

johnp001

Deflation is back
CSO: Prices fall by 0.2% in the year to July

gaius c

handlemaster wrote: »

We all dream... Perhaps that was the real asking price

We know you were joshing but it did backfire on you a bit.

connacht_man

gaius c wrote: »

That one certainly provides fuel to the theory that 2012 prices in Ireland were actually "right prices" relatively to the long term average and that there was no over-correction as the bulls like to make out.

there was a completely over the top correction in property prices in Ireland , far above normal corrections in other property markets down the decades , no war was declared on Ireland and we never reached an economic situation as happened - is happening in Greece

to think that 2012 was the norm when the country was suffering its worse recession since the foundation of the state , was in a bailout programme , the euro was still in doubt in 2012 and oil was about 150 dollars per barrel , leaving out what didn't happen as outline in my first paragraph , it was a near perfect storm economically

property is rising again right now , the dip in Dublin ( and galway to a degree ) was an ever so small pull back

jay0109

connacht_man wrote: »

there was a completely over the top correction in property prices in Ireland , far above normal corrections in other property markets down the decades ,

Any stats etc to back that up or is it just your opinion?

Villa05

connacht_man wrote:

there was a completely over the top correction in property prices in Ireland , far above normal corrections in other property markets down the decades , no war was declared on Ireland and we never reached an economic situation as happened - is happening in Greece

There was completely over the top appreciation in property prices between 1996 and 2007.

handlemaster

http://www.irishtimes.com/business/financial-services/number-of-mortgage-drawdowns-jump-30-per-cent-to-6250-1.2315940

the times are running with 30% increase in mortgage writedowns in the second quarter... I push maybe before the new lending rules come in.

Bob24

connacht_man wrote: »

there was a completely over the top correction in property prices in Ireland , far above normal corrections in other property markets down the decades , no war was declared on Ireland and we never reach

You might also want to look at the 10 years before the crash ... overall prices have almost tripled in Ireland in the past 20 years (including the "over the top correction"), while they have remained stable in Germany.

johnp001

Villa05 wrote: »

There was completely over the top appreciation in property prices between 1996 and 2007.

Ronan Lyons recently published some interesting figures on this.
When does a housing bubble start?(published July 2015)

Between 1995 and 2007, house prices in Dublin increased by 300% in real terms (i.e. stripping out inflation), or 12.2% a year....Thus, by any statisticians metric, it was a bubble

He also quantifies the amount that various factors contributed to this price inflation.
This graph shows that "fundamentals" like income and demographics were a major factor in the 1995-2001 growth albeit with a significant contribution from loose credit conditions.
However increases in the period 2001-2007 were nearly solely due to loose credit.


It would be expected that any portion of the increases attributable to loose credit would be reversed after the bubble in the ensuing credit crunch. The extent of decreases at even the lowest point has not come close to the increases stemming only from credit conditions (ignoring interest rates which are factored separately)
NAMA, CGT exemptions, Conveyancing Act + Dunne judgement, repossession moratorium etc etc have all been instrumental in preventing the market find its equilibrium.
The figures in that article indicate that this point of equilibrium is at a lower price level than has been seen yet and that the market has, as yet, under-corrected as opposed to having over-corrected.

gaius c

johnp001 wrote: »

Ronan Lyons recently published some interesting figures on this.
When does a housing bubble start?(published July 2015)


He also quantifies the amount that various factors contributed to this price inflation.
This graph shows that "fundamentals" like income and demographics were a major factor in the 1995-2001 growth albeit with a significant contribution from loose credit conditions.
However increases in the period 2001-2007 were nearly solely due to loose credit.


It would be expected that any portion of the increases attributable to loose credit would be reversed after the bubble in the ensuing credit crunch. The extent of decreases at even the lowest point has not come close to the increases stemming only from credit conditions (ignoring interest rates which are factored separately)
NAMA, CGT exemptions, Conveyancing Act + Dunne judgement, repossession moratorium etc etc have all been instrumental in preventing the market find its equilibrium.
The figures in that article indicate that this point of equilibrium is at a lower price level than has been seen yet and that the market has, as yet, under-corrected as opposed to having over-corrected.

Our bubble was actually two bubbles, one on top of the other. The first one could have unwound in 2001 without any real damage to the economy. Property prices were actually starting to drop of their own accord before petrol got poured on the fire.

connacht_man

jay0109 wrote: »

Any stats etc to back that up or is it just your opinion?

we dropped 60% from the peak in Dublin , the average bear market internationally is about 50% lower than that figure

connacht_man

Villa05 wrote: »

There was completely over the top appreciation in property prices between 1996 and 2007.

there was but it took longer and the country is richer today than it was prior to the crash

the other poster claims 2012 was the normal price setting , im arguing the economic situation was pretty awful in 2012 so to say the property market was normal at a time when the economy was awful is lacking in credibility

connacht_man

comparing to Germany is purely arbitrary and selective , uk property prices have risen just as much in the past twenty years and London has risen much more since 1995 than Dublin ( if you can chose Germany as a comparison , sure I can chose London )

germans have the lowest level of home ownership in Europe where as irish people will always buy property if they can

Greyian

connacht_man wrote: »

we dropped 60% from the peak in Dublin , the average bear market internationally is about 50% lower than that figure

But that tells us nothing about how big the bubble was. The bigger the bubble, the bigger the fall afterwards, and we had a colossal bubble.

connacht_man

Greyian wrote: »

But that tells us nothing about how big the bubble was. The bigger the bubble, the bigger the fall afterwards, and we had a colossal bubble.

there were bubbles all across the western world in housing from the late nineties until 2007 , it was what caused the crash in the first place as banks took advantage of historically low rates of interest and the opening up of credit markets in a single currency in Europe

however , the bear market in Ireland from 2007 to early 2012 happened much quicker than the bull market from the late nineties to 2007 , it also happened in the middle of the worst financial crisis globally since the great depression

there is not the same availability of credit today as there was in 2006 yet houses have shot up since the lows , the reality is , Ireland is a country where plenty of people have plenty of money and the economy right now is booming and due to the weak euro is likely to keep booming

I don't own property for rent in Dublin or anywhere else , unfortunately I listened to the cranks over at the property pin and somehow believed houses would fall to an average of 150 k in Dublin , didn't happen and it aint going to

ive my money all in stock BTW but im going to buy property soon as there is no income worth talking about from equities and stocks are expensive right now relative to property

johnp001

Greyian wrote: »

But that tells us nothing about how big the bubble was. The bigger the bubble, the bigger the fall afterwards, and we had a colossal bubble.

Property market could need decades to recover from bust, says Central Bank(published Oct 2012)

The only comparable case in which property prices fell so dramatically was in Finland, where the collapse of the Soviet Union led to a major economic crash in the early 1990s – and where property prices fell by almost half in four years. In Ireland a similar collapse occurred within five years.
In Finland’s case, however, it took 21 years for prices to match their 1990 peak – with little to indicate that Ireland’s recovery could be any quicker.
The only other case in which prices had fallen by comparable amounts is the ongoing property slump in Japan – where prices peaked in 1991 at the top of an immense property bubble and have continued to fall steadily since.

This analysis from before the recovery/dead cat bounce (delete according to preference) is fairly conclusive that prices would continue to slump in the long term.

The scale of the impact on Ireland, the paper says, may be fuelled by the fact that Ireland’s crash has coincided with a global downturn.
“The scale of the global recession and the synchronised contraction in output across a number of advanced economies may be a key differentiating factor between the resolution of the Irish episode and the Nordic example,” the authors state.

We are again seeing a global downturn and synchronised contraction in output on a global scale which is identified as a key input to continued decreases in Irish property prices by the paper quoted in the article.
NAMA and repossession forbearance notwithstanding the headwinds are against the increases of the last 18 months being sustained.
Macro-prudential rules and increased supply can only accelerate this.

gaius c

connacht_man wrote: »

we dropped 60% from the peak in Dublin , the average bear market internationally is about 50% lower than that figure

You're trying to have your cake and eat it too by benchmarking the drop against other countries but not benchmarking the increase.

2012 prices were ballpark "right" based on prices versus incomes.

connacht_man

gaius c wrote: »

You're trying to have your cake and eat it too by benchmarking the drop against other countries but not benchmarking the increase.

2012 prices were ballpark "right" based on prices versus incomes.

I already said the increase in the uk property market from 1995 - 2015 has been just as strong and much stronger in London

interesting how so many here are dragging up papers from 2012 where various so called experts saw another 20% drop and more

they were wrong , deal with it , there is no going back to the lows of early 2012 , that was a generational low akin to what happened with equities in the spring of 2009

Piriz

connacht_man wrote: »

there was but it took longer and the country is richer today than it was prior to the crash

the other poster claims 2012 was the normal price setting , im arguing the economic situation was pretty awful in 2012 so to say the property market was normal at a time when the economy was awful is lacking in credibility

The poster said that property 'prices' were normal in 2012, he did not say the property market was normal, there is a difference and you took him up wrong.

gaius c

connacht_man wrote: »

I already said the increase in the uk property market from 1995 - 2015 has been just as strong and much stronger in London

interesting how so many here are dragging up papers from 2012 where various so called experts saw another 20% drop and more

they were wrong , deal with it , there is no going back to the lows of early 2012 , that was a generational low akin to what happened with equities in the spring of 2009

Comparing the least densely populated country in western Europe to the largest most densely populated conurbation in western Europe is to use your own words "purely arbitrary and selective".

connacht_man

gaius c wrote: »

Comparing the least densely populated country in western Europe to the largest most densely populated conurbation in western Europe is to use your own words "purely arbitrary and selective".

how is comparisons with Germany and more credible , a country where people traditionally rent rather than buy , irish people will always own if they can , cultural factors count

property in Dublin is not especially expensive compared to other European capitals and I exclude London , Dublin is a wealthier than average European capital

property in rural Ireland where I live is still far below the cost of construction and btw , I don't expect property in rural Ireland or provincial towns to recover to where they were in 2006 , outside Dublin got far more out of hand during the bubble , any kind of a four bed bungalow was making more than 250 k , people will continue to move to the capital however and the same diverging trends will happen as happened across the water between London and the rest of the uk

Barely Hedged

johnp001 wrote: »

Property market could need decades to recover from bust, says Central Bank(published Oct 2012)



This analysis from before the recovery/dead cat bounce (delete according to preference) is fairly conclusive that prices would continue to slump in the long term.

We are again seeing a global downturn and synchronised contraction in output on a global scale which is identified as a key input to continued decreases in Irish property prices by the paper quoted in the article.
NAMA and repossession forbearance notwithstanding the headwinds are against the increases of the last 18 months being sustained.
Macro-prudential rules and increased supply can only accelerate this.

That's some hell of a straw you're clutching there.

A paper from 2012 and some unsubstantiated economic statements

Barely Hedged

connacht_man wrote: »

I don't own property for rent in Dublin or anywhere else , unfortunately I listened to the cranks over at the property pin and somehow believed houses would fall to an average of 150 k in Dublin , didn't happen and it aint going to

I took the view and opinions on that website in 2011 and 2012 as a useful tool to outline how stupid some people are and hopped into the market in those years

connacht_man

Barely Hedged wrote: »

I took the view and opinions on that website in 2011 and 2012 as a useful tool to outline how stupid some people are and hopped into the market in those years

Im in stocks heavy since early 2012 , was going to cash my equity portfolio in during the summer of 2012 and buy a few places in Dublin , my capital appreciation with stocks has matched and possibly exceeded the growth in Dublin house prices but my income would have been far higher from renting out a few places in Dublin

Ive two thirds of my stock portfolio sold and plan to buy something soon , hoping to get a good commercial property , missed out on severals as the commercial property market is powering ahead right now , no pullback whatsoever this year

Barely Hedged

connacht_man wrote: »

Im in stocks heavy since early 2012 , was going to cash my equity portfolio in during the summer of 2012 and buy a few places in Dublin , my capital appreciation with stocks has matched and possibly exceeded the growth in Dublin house prices but my income would have been far higher from renting out a few places in Dublin

Ive two thirds of my stock portfolio sold and plan to buy something soon , hoping to get a good commercial property , missed out on severals as the commercial property market is powering ahead right now , no pullback whatsoever this year

No shame in having your money in equities over that time.

Agreed on commercial property. There is some deals still there but on questionable long term businesses ie bookies. If the location and price is good, it's a very good purchase

connacht_man

Barely Hedged wrote: »

No shame in having your money in equities over that time.

Agreed on commercial property. There is some deals still there but on questionable long term businesses ie bookies. If the location and price is good, it's a very good purchase

harder to get money from banks for commercial property , in recessionary times , everyone still needs a place to live but commercial units close , id only need to borrow 30% of the purchase price anyway

finding a lot of messing with agents , keeping properties for there preferred buyer

gaius c

connacht_man wrote: »

how is comparisons with Germany and more credible , a country where people traditionally rent rather than buy , irish people will always own if they can , cultural factors count

property in Dublin is not especially expensive compared to other European capitals and I exclude London , Dublin is a wealthier than average European capital

property in rural Ireland where I live is still far below the cost of construction and btw , I don't expect property in rural Ireland or provincial towns to recover to where they were in 2006 , outside Dublin got far more out of hand during the bubble , any kind of a four bed bungalow was making more than 250 k , people will continue to move to the capital however and the same diverging trends will happen as happened across the water between London and the rest of the uk

2006 called. They would like their clichés back.

Suburban houses in Dublin compare unfavourably with similar in New York. Obvious insanity.

The_Conductor

johnp001 wrote: »

Deflation is back
CSO: Prices fall by 0.2% in the year to July

Strip fuel costs out of the mix- and we're firmly in positive territory 0.9%
We really need to reassess how we calculate our inflation rate- when we have a commodity which has both fallen and risen by over 50% and 120% respectively- in very short time periods- in the preceding 12 month period........

Our defacto inflation rate- when you sit down and crunch the numbers- and use the modern basket of goods- but suppose imports match our actual import trends- have risen by up to 3%- as the Euro has fallen against sterling (with a lesser impact against the dollar). The UK is still our dominant trading partner- not to the same extent that it once was- but its far and away our single most important trading partner. Currency volatility hurts small open economies such as ours- far more than it hurts other economies that aren't as open as ours.

Take the headline inflation figures with a grain of salt- drill down into the detail- it gives you a far better idea of how things really are.

johnp001

The_Conductor wrote: »

Strip fuel costs out of the mix- and we're firmly in positive territory 0.9%
We really need to reassess how we calculate our inflation rate- when we have a commodity which has both fallen and risen by over 50% and 120% respectively- in very short time periods- in the preceding 12 month period........

Our defacto inflation rate- when you sit down and crunch the numbers- and use the modern basket of goods- but suppose imports match our actual import trends- have risen by up to 3%- as the Euro has fallen against sterling (with a lesser impact against the dollar). The UK is still our dominant trading partner- not to the same extent that it once was- but its far and away our single most important trading partner. Currency volatility hurts small open economies such as ours- far more than it hurts other economies that aren't as open as ours.

Take the headline inflation figures with a grain of salt- drill down into the detail- it gives you a far better idea of how things really are.

Regarding the figures above for "CPI - fuel costs" index. Does this include the fall in diesel as a transport fuel or does it also include the (sharper) fall in diesel derivatives as a heating fuel?
If there is a valid argument that fuel costs should be excluded then the input of fuel costs into a very wide range of other goods and services would have to be evaluated.
There are many elements in the index that have fluctuated by similar amounts to fuel costs in the last 12 months.
There are always anomalies in the CPI, the biggest one at the moment is in the "Housing, Water, Electricity, Gas and Other Fuels" index which is positive MoM and YoY currently solely due to the introduction of water charges.

The_Conductor

Yes- it includes both road fuel- and the cost of home heating oil (and gas)- which are at lower levels (not to mention- far lower usage levels at this time of the year- so using a massaged monthly average usage figure- and applying it to July- gives it a disproportional influence on the basket.

alastair

gaius c wrote: »

2006 called. They would like their clichés back.

Suburban houses in Dublin compare unfavourably with similar in New York. Obvious insanity.

2015 median sales price, Queens NYC - $499,990
Q2 2015 median sales price, Dublin - €281,958 ($313,355)

Not exactly obvious where that 'insanity' is.