Bank of Ireland, 26 April: Property price rises a false dawn

The usually optimistic Dan McLaughlin has turned bearish on the Irish residential property
market. See his comments here…

corporatebanking.bankofireland.com/fs/doc/publications/weekly-commentary/weekly-commentary-26-april-2013.pdf

Ireland: Property prices fall in Q1
National house prices fell again in March, bringing the fall in Q1 to 3%. On a monthly
basis national prices fell by 0.5% in March, the fourth successive monthly fall, taking the
index to a fresh new low. Dublin prices also fell, by 0.8% on the month and by 0.7% in
Q1, although they are still marginally higher on an annual basis, at 1.4% against a 3%
national fall.
It’s clear now that the pickup in prices in the second half of last year was
somewhat of a false dawn as the closure of mortgage interest relief scheme at the end of
2012 brought forward a substantial amount of demand. Recent activity and mortgage
approvals data also support this view as they have sunk in the opening months of the
year. The poor weather in Q1 hasn’t helped the housing market either keeping
prospective homeowners indoors and not viewing properties.
There may also be some fatigue amongst potential buyers as the mortgage relief scheme meant there was a
sizable incentive to purchase a house before the end of last year which upped activity but
now that the scheme is closed then the time pressure to purchase a property is now
gone.
The perception - or rather the fact - the prices are continuing to drop will not help
to convince those potential buyers that they should purchase as soon as possible. On
the flip side, the latest CPI data shows that rents continue to increase so there certainly
appears to be a demand for housing out there.
Whether this demand translates in anupswing in the housing market in the traditionally busier spring/summer period we’ll have to wait and see.

Contrary buy signal ahoy.

How does Desperate still pull a wage

Buy Buy Buy. :laughing:

Yes, because if there’s one thing that stops people making the most important financial decision in their lives … it’s the weather.

Bad weather keeps away those who are ‘looking’, not those who are ‘buying’ !

On a side note, I often wonder what goes through Desperate Dan’s mind when he’s writing a piece on the property market, something along the lines of ‘OK, now ***this ***time I’m going to get it right !’ ?

Am not saying he is right or wrong about it being a false dawn…

But surely there is a time lag between the date when the price is agreed and the date when the price is recorded…

In my book, that gap is two or three months…

So I would see a decline in PPR prices for March reflecting price weakness in December…which blows his mortgage interest relief theory out of the water…

Am I missing something here?

I think that, in order to avail of the MIR, the transaction had to be completed in December. So anything driven by the end of MIR would have been recorded by December, not March. MIR probably stopped being a factor in anything that went sale agreed after mid-November because after that point there was no hope of getting to signed contracts by December 31st.

Really? Really?

Rubbish. I know of people closing on Dec. 31st! Anything closed in Dec. would not have hit the books until late Jan/Feb.

But it would have been recorded with a December date in the PPR surely?

Not sure if they would figure in the CSO stats for December though?

The mortgage needed to be drawn down by the 31-12-12 to avail of MIR however the completion could happen in 2013.

I think that some posters are confusing PPR which is slow to complete monthly price numbers, and also does not have an official price index, with the CSO property price index which comes from mortgage lenders. When the mortgage lenders approve a purchase and release the funds they record the sales price and give it to the CSO for their property price index. The PPR is different and has a long lag.

Which part is rubbish? Which ‘books’ would not have been hit until late Jan/Feb?

Thank you both for clarifying. If I understand correctly this does not change the original point. Any transaction which would have come in under the barrier required to avail of MIR would have been recorded in the CSO December 2012 numbers, not in March 2013.

Wha? The bank will let you draw down the mortgage before you buy the house?

To your solicitor’s account yes.

They are mental.

+/- a couple of days. It would not drag it out to February. Solicitor would give bank and undertaking…oh wait…that may be a problem…

Michael Lynn used it to great effect.