Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

Falls in asking prices start to ease but NAMA questions remain

The lastest Daft Report, for house prices in Q1 2010, is out today, featuring a commentary by Professor Brian Lucey from Trinity’s School of Business. Among the things we now know:

  • The average asking price is a third below its 2007 peak. Large regional variations remain, with Dublin city centre prices 44% below peak levels, while Limerick city prices are only 25% below their highest. In general, Dublin and its surrounding counties have seen the largest falls (e.g. Louth, 41%) while rural counties in Munster, Connacht and Ulster have seen the smallest falls (e.g. Tipperary, 25%).
  • The total stock of properties for sale in Dublin has fallen by 25% – a key statistic as signficant reductions in the volume available for sale are a prerequisite for any levelling off in property prices. Nationally, the average fall is smaller – about 10% – with some parts of the country very close to peak levels.
  • Of the 3,000 or so properties posted for sale in January, by the start of April, almost one in three was either sold or marked sale agreed. One in five properties had sold, while a further 10% were sale agreed. In Dublin, the proportion of properties sale agreed was 20%. This level of transactions signifies that properties can find a buyer… at the right price.

Brian Lucey’s commentary uses the latest information to make a few points about NAMA, but not before sticking his neck on the line about how long he thinks the price falls will last:

So the crash is slowing. However, it is not over. The index peaked in May 2007. To expect the trough to be reached less than three years later is to fly in the face of historical evidence. Referring back to Morgan Kelly’s prescient, eye-opening ESR article which for many of us represented the key moment when our critical faculties on property were rebooted, a fall of 50% is likely. Based on a straight line projection of average declines in value since the peak this would see another 18 months of declining prices. That would be 50 months of house price falls, or just over 4 years, towards the lower end of historical experience. It is probable that as we decline towards the trough, the speed at which house prices fall slows down. And this is what we are starting to see – in the last six months, the average decline has been lower than the previous six months, itself lower then the period before.

Ultimately, while the cost of NAMA and its decision to use November 2009 prices, rather than current ones, is large, it’s even larger when combined with the costs of unemployment and negative equity:

House prices have continued to fall since November 2009, the date chosen (why, on whose advice?) by Minister Lenihan as the valuation date for NAMA. Based on figures, house prices have fallen by a further 4.1%. Applied to a €50bn portfolio, that’s a €1.5bn excess that will be paid over what would have been the case had the minister waited. Put it another way – the entire public sector pension levy has been squandered on a needless overpayment. A further implication for the economy is that the emerging problem of negative equity will deepen – negative equity acts as a bar to labour mobility, to discretionary expenditure, and ultimately to economic growth.

I’ve updated my Manyeyes visualization of property price falls from the peak at a county level. You can get all the goodies over on Manyeyes, including the raw data, but a summary of price falls by county from 2007 is in the graph below. The scale is not included but runs from light blue (0%) to darkest blue (a fall of about 45%). Each row shows a year, 2007 at the top and 2010 (first quarter) at the bottom.

Falls in property prices by county from the peak (%)
Falls in property prices by county from the peak (%)

For those interested in such things, the total value of the stock of residential property in Ireland around for the 2006 Census, which was just over €500bn at the peak in early 2007, is now about €338bn.

If you’re interested in discussing the latest Daft Report, you can do it here in the comments, on the Daft Report’s homepage (below the commentary) or on the wider web, in particular the three usual suspects,,, and over on Irish Economy section of

  • Lenihan says house prices now at bottom: Sindo - Page 15 ,

    […] House prices falling slower but still falling! One in three properties posted in January has sold or gone sale agreed by now, so it seems people has their price. For those who like playing with data, the Daft Economist on pointed to this: Many Eyes: Fall in asking prices from peak, Ireland by county Map of price falls from the peak by county. Discussion of Daft report and Brian Lucey commentary at: Slowing house price falls still raise questions for NAMA and Falls in asking prices start to ease but NAMA questions remain | Ronan Lyons […]

    • Jagdip Singh ,

      A 4.1% decrease in residential property asking prices since 30 November 2009? And this may mean we overpay by €1.5bn for NAMA assets?

      Rents on Grafton Street have fallen 13/14% since last 30 November (44% annualised) according to Lisney’s in the Independent today. What will that do to current valuations? That said, NAMA had to pick a valuation date for banks to value to and since the banks were required to submit their valuations by Christmas then Nov 30 was probably as good a time as any.

      You would wonder though who advised Minister Lenihan who went on to say that last September 2009 was the bottom of the market. You would also want to ask if NAMA can change the valuation date in light of the fact that we were plainly not at the bottom in November 2009. Some things are done and dusted but NAMA still has €75bn of the €81bn loans to value and buy.

      Is anyone taking bets on what the ESRI residential quarterly index will say in 2 weeks time? My tuppence worth is a 7-12% drop in actual prices in Q1. And despite the feel that DAFT’s asking prices might give, ultimately it is what properties are actually trading at that is significant.

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