Is there any way to really know how much the banking crisis in Ireland has had an impact on asking prices or time on the market? Would these figures still be the same if our banks were in working order (or would prices have gotten so inflated if banks had been in order in the first place!).
Bernard N Williams
,
No doubt the banking crisis has made a significant contribution to the decline in prices, particularly in the last 12 months, as credit has not been widely available. AIB/BOI are the only real providers and no doubt they are risk adverse, limiting mortgage approvals . Coupled with the economic sitauation, there are lot of forces playing down on any stabalisation. Nevertheless, in my opinion, June may have been a significant month. I think more first time buyers pounced than expected in Dublin in June, showing that sentiment can change very quickly. Sentiment is something I think is critical. Those FTBs who have sat on the fence watching prices decline simply cannot wait forever to buy a home and considering how much we have fallen, can we really fall much further ? OK, developers can keep dropping the excess of empties but the second hand market can only go so far. Surely you get to a point where owners simply cannot afford to sell at a lower price? I don’t undertsand those who say prices could fall 80%? Nonsense! Who could sell then ? Supply and demand drive any market and sentiment dictates activity! Once you get through Jan/Feb 2010, those who feel confident that there jobs are relatively secure may feel the time is right to go in and hopefully prices will stablise at current levels. We have had a huge correction, much bigger than the reduction in public/private sector pay & tax increases. If we drop 20% for the next 4 years, houses will be worth nothing – come on, we have had a massive correction – in fact, I suspect we are now seeing the over correction – distressed sales. If prices keep dropping, fewer houses will become available and demand sentiment will come into play!
Gav Curran
,
I can’t agree that we are near the bottom yet.
For house prices to begin to rise investors need to see an upside to their committment. Putting aside the FTB some of whom will inevitably decide to buy soon given the lower interest rates, dramatically lower prices(YoY etc) and the myriad of other proposed reasons why we are at the floor, some basic facts (against buying now) are currently evident and important.
Consider what is currently priced in the market re rates of return? If we are to believe that smart or clued in ‘investors’ move markets then they will move when the time is right…or just before the time is right. Currently inflation is running -ve in Ireland (much more so than elsewhere, -5%). Currently nominal rates are higher here than anywhere else in the EU (govt debt). Yet we(our beloved banks, our government etc..) are tied to the same (lower) deposit rates as other countries in the EU. Inflation linked bonds in France are pricing almost no inflation for the next 3 years, and we can assume we will lag this. Assuming the market is correct (or even mildly correct) then we won’t negative real rates (r = n – Inf <0)here for a long long time (and as discussed in another article here this alone is not good for house prices). So why invest?
And then there is unemployment headed to the moon and the NAMA saga… the risk is definitely to the downside.
Either way if we hit a floor it will take a long time for us to get back up again. No panic i say, sit back and watch it all go horribly wrong. Maybe go buy a lot of gold chains and walk around saying “I pity the fool”. That would be mean though.
Ste - statusireland. ,
Is there any way to really know how much the banking crisis in Ireland has had an impact on asking prices or time on the market? Would these figures still be the same if our banks were in working order (or would prices have gotten so inflated if banks had been in order in the first place!).
Bernard N Williams ,
No doubt the banking crisis has made a significant contribution to the decline in prices, particularly in the last 12 months, as credit has not been widely available. AIB/BOI are the only real providers and no doubt they are risk adverse, limiting mortgage approvals . Coupled with the economic sitauation, there are lot of forces playing down on any stabalisation. Nevertheless, in my opinion, June may have been a significant month. I think more first time buyers pounced than expected in Dublin in June, showing that sentiment can change very quickly. Sentiment is something I think is critical. Those FTBs who have sat on the fence watching prices decline simply cannot wait forever to buy a home and considering how much we have fallen, can we really fall much further ? OK, developers can keep dropping the excess of empties but the second hand market can only go so far. Surely you get to a point where owners simply cannot afford to sell at a lower price? I don’t undertsand those who say prices could fall 80%? Nonsense! Who could sell then ? Supply and demand drive any market and sentiment dictates activity! Once you get through Jan/Feb 2010, those who feel confident that there jobs are relatively secure may feel the time is right to go in and hopefully prices will stablise at current levels. We have had a huge correction, much bigger than the reduction in public/private sector pay & tax increases. If we drop 20% for the next 4 years, houses will be worth nothing – come on, we have had a massive correction – in fact, I suspect we are now seeing the over correction – distressed sales. If prices keep dropping, fewer houses will become available and demand sentiment will come into play!
Gav Curran ,
I can’t agree that we are near the bottom yet.
For house prices to begin to rise investors need to see an upside to their committment. Putting aside the FTB some of whom will inevitably decide to buy soon given the lower interest rates, dramatically lower prices(YoY etc) and the myriad of other proposed reasons why we are at the floor, some basic facts (against buying now) are currently evident and important.
Consider what is currently priced in the market re rates of return? If we are to believe that smart or clued in ‘investors’ move markets then they will move when the time is right…or just before the time is right. Currently inflation is running -ve in Ireland (much more so than elsewhere, -5%). Currently nominal rates are higher here than anywhere else in the EU (govt debt). Yet we(our beloved banks, our government etc..) are tied to the same (lower) deposit rates as other countries in the EU. Inflation linked bonds in France are pricing almost no inflation for the next 3 years, and we can assume we will lag this. Assuming the market is correct (or even mildly correct) then we won’t negative real rates (r = n – Inf <0)here for a long long time (and as discussed in another article here this alone is not good for house prices). So why invest?
And then there is unemployment headed to the moon and the NAMA saga… the risk is definitely to the downside.
Either way if we hit a floor it will take a long time for us to get back up again. No panic i say, sit back and watch it all go horribly wrong. Maybe go buy a lot of gold chains and walk around saying “I pity the fool”. That would be mean though.
Number of houses sold, level of transactions in the property market | Ronan Lyons ,
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