It may disturb some of you to realise that the slowdown in building has been greater than forecast .
Despite the plateau of units in the Daftwatch headline figure at about 54k it transpires that the slowdown in construction has been so profound in the past 4 months that the Razor point has already been reached at this lower level of 54k units.
I originally predicted the Razor point at 60k by end November .
2Packs Razor is the point at which Daft would have one full years supply FOR SALE at the THEN current rate of building .
It has come in at
6k units less than that
and
4 weeks sooner
There are 54k units on daft ( the headline Daftwatch figure) and the commencement/homebond/completion data now indicates we are building at an Annual Rate of under 54k.
The missing data was kindly supplied by Jim Beggs of AIB . That data is on page 2 of his November housing bulletin which is available here .
I also feel I must thank Jim for the key research that proves we have reached 2Packs razor by now.
I feel I must also make another prediction now we have put the razor to bed early.
There is ABSOLUTELY NO CHANCE that the number of house completions in Ireland, in 2008, will exceed 40k now despite my thinking, and saying , it would be in the 40-45k range for quite a while.
Yep, that’s the way it’s gonna be and with 1 billion euros in lost revenue for every 10000 houses not built, that’s a 5 billion plus euro direct hit for the exchequer compared to '06 figures
There are a multitude of problems relying on homebond as an indicator of activity. 2001 figures are an example of this.
The question I have for all the people who believe house building has suffered a collapse in activty is, where are the hordes of unemployed tradesmen? Figures from the live register would suggest that the diminution in number of those employed in construction has only been slight and recent.
So unless one believes property developers (in a bout of unaccustomed altruism) are paying lads to stay in their scratchers till the market improves, I’d be inclined to believe actual completion figures are rosier than official figures allow.
For the average developer, what’s the timeline between start and completion? I still see a lot of cranes in the Dublin skyline although I don’t notice that many new projects.
Lots of them were “self employed” or getting cash etc. so they may not be able to just sign on.
Lots of them could be finishing jobs already started.
Lots of them could be working short time for low wages rather than overtime and high wages
Lots of them could be gone back to Poland etc.
It will take time for the fall off in employment to sink in, reality is only starting to bite for most of those in denial in the last couple of months.
I’m beginning to wonder if the spike in propertiescoming on the rental market is the first visible evidence of the downturn in construction employment. If this is the case then we should see a huge spike in February/March 2008
I thought that the last Greater Fool’s spike in HPI occured in Q1 '06 and it was triggered by the mad rush to get on the ladder before Trichet took the punch bowl away ?
One bank economist has stated that completions are way ahead of what the ESB connections are indicating. He said that in the past ESB connections were useful because most places were connected up, but currently units are being completed without being connected.
I tend to agree with maz, I don’t think completions have fallen off massively yet. There are so many unfinished projects that need to be raced through, but the slowdown is in the post.
hey found that in the Dept of Environment PDF Green Bear posted.
When I get time I think it would be interesting to work out the % of property room size per time group ! Are we really building smaller houses now or not (well not accurate per Sq ft but inferences could be drawn) disregarding stuff from the earlier eras of course - like the 1920s
6k units less than that 
