Nice analysis but the conclusion is escaping me. Are you saying that if property was being sold at a normal rate (which I doubt if it is) and if no new property came onto the market – then it would take 12 months to sell all the property on
the market? That seems pretty bad to me, but I might have missed the point
Thanks for that – have edited the final paragraph slightly, to draw out the conclusion a little better. Hope it’s an improvement.
Con
,
Hi Ronan, interesting analysis. Out of curiosity, I compared it with the US data you linked, and I noticed a couple of points.
One is that the US analysis works with current sales patterns, presumably even if they are volatile. If, in an attempt to do something more directly comparable to the US analysis, we were to take average loan approvals over the first 3 quarters of 2008 as the sales indicator, we get monthly sales of about 1,460, which I guess means about 56 months supply. (If I understand your post right, you are saying that there is about 14 months supply if monthly demand is 6k, which is equivalent to 56 months at 1.5k.
The second is that it looks to me from the US data as if perhaps there is some sort of a natural ceiling to Months’ Supply in the US, of the order of 11 or 12 months. Perhaps this could be a reluctance to go to market when in negative equity, or when prices are perceived as being low. And this is in a country where repossessions actually take place, and where significant numbers of home owners walk away in tough times, both of which I guess would tend to boost the number of properties put on the market during a downturn. If this observation has anything in it, then even your 14 months estimate has a pretty negative look to it in the Irish context where very few homes are being forced onto the market by repossessions.
Very good comment – I had planned on calculating a second series based on current transaction levels, and I think that’s what you’ve done, giving an insight into how much more ‘out of whack’ the market is now compared to ‘healthy’.
I’ll post up a revised chart with current transaction levels, when I get a chance. Thanks for stopping by and taking the time to do the analysis and make the comment,
Excellent analysis and information I agree with your point you need both the picture over the past years AND the live picture.
Is there some paid body who can keep this up to date. As someone with a rental property that I would happily sell once market stops being so flat such information is really useful to me as it says once the graph moves below 6 months the market has some life again.
Con
,
Aaagh. Error in calculation. Sorry. Average for first three quarters of 2008 is 5,312, so your figure of 6,000 is actually fairly good. It does drop to 4,209 in the third quarter of 2008, ‘though.
[…] Ronan Lyons How many months supply is sitting on the property Posted by root 2 hours 50 minutes ago (http://www.ronanlyons.com) Apr 24 2009 there is some sort of a natural ceiling to months 39 supply in the us very good comment i had planned on calculating a second series based on website design by susan gallagher design powered by wordpress Discuss | Bury | News | Ronan Lyons How many months supply is sitting on the property […]
stephen
,
Hey could you email me on this and let me know why exactly property prices in Dublin are more expensive than elsewhere around the country for new and second hand houses
Hi Stephen,
Ultimately, it comes down to amenities. People pay more to live in Dublin because living in Dublin offers them more than living elsewhere. If you think about your own life, I’m sure you’ll think of things that large cities have that small villages don’t – a steady stream of jobs being an obvious example.
R
Caelen ,
Nice analysis but the conclusion is escaping me. Are you saying that if property was being sold at a normal rate (which I doubt if it is) and if no new property came onto the market – then it would take 12 months to sell all the property on
the market? That seems pretty bad to me, but I might have missed the point
ronanlyons ,
Hi Caelan,
Thanks for that – have edited the final paragraph slightly, to draw out the conclusion a little better. Hope it’s an improvement.
Con ,
Hi Ronan, interesting analysis. Out of curiosity, I compared it with the US data you linked, and I noticed a couple of points.
One is that the US analysis works with current sales patterns, presumably even if they are volatile. If, in an attempt to do something more directly comparable to the US analysis, we were to take average loan approvals over the first 3 quarters of 2008 as the sales indicator, we get monthly sales of about 1,460, which I guess means about 56 months supply. (If I understand your post right, you are saying that there is about 14 months supply if monthly demand is 6k, which is equivalent to 56 months at 1.5k.
The second is that it looks to me from the US data as if perhaps there is some sort of a natural ceiling to Months’ Supply in the US, of the order of 11 or 12 months. Perhaps this could be a reluctance to go to market when in negative equity, or when prices are perceived as being low. And this is in a country where repossessions actually take place, and where significant numbers of home owners walk away in tough times, both of which I guess would tend to boost the number of properties put on the market during a downturn. If this observation has anything in it, then even your 14 months estimate has a pretty negative look to it in the Irish context where very few homes are being forced onto the market by repossessions.
Am I missing something important here?
ronanlyons ,
Hi Con,
Very good comment – I had planned on calculating a second series based on current transaction levels, and I think that’s what you’ve done, giving an insight into how much more ‘out of whack’ the market is now compared to ‘healthy’.
I’ll post up a revised chart with current transaction levels, when I get a chance. Thanks for stopping by and taking the time to do the analysis and make the comment,
R
Kieran ,
Excellent analysis and information I agree with your point you need both the picture over the past years AND the live picture.
Is there some paid body who can keep this up to date. As someone with a rental property that I would happily sell once market stops being so flat such information is really useful to me as it says once the graph moves below 6 months the market has some life again.
Con ,
Aaagh. Error in calculation. Sorry. Average for first three quarters of 2008 is 5,312, so your figure of 6,000 is actually fairly good. It does drop to 4,209 in the third quarter of 2008, ‘though.
“Measure twice, cut once.”
ronanlyons ,
Phew, at least I’m not out by a factor of 10… My blog-free Friday night had been in danger of going by the wayside!
Ronan Lyons How many months supply is sitting on the property | Outdoor Ceiling Fans ,
[…] Ronan Lyons How many months supply is sitting on the property Posted by root 2 hours 50 minutes ago (http://www.ronanlyons.com) Apr 24 2009 there is some sort of a natural ceiling to months 39 supply in the us very good comment i had planned on calculating a second series based on website design by susan gallagher design powered by wordpress Discuss | Bury | News | Ronan Lyons How many months supply is sitting on the property […]
stephen ,
Hey could you email me on this and let me know why exactly property prices in Dublin are more expensive than elsewhere around the country for new and second hand houses
Ronan Lyons ,
Hi Stephen,
Ultimately, it comes down to amenities. People pay more to live in Dublin because living in Dublin offers them more than living elsewhere. If you think about your own life, I’m sure you’ll think of things that large cities have that small villages don’t – a steady stream of jobs being an obvious example.
R