Bank of Ireland Says Irish Housing Won't Stabilize Until 09

[verbatim]

13:26 *BANK OF IRELAND SEES MORTGAGE GROWTH EASING TO 8% BY YR END
13:26 *BANK OF IRELAND SEES COMMERCIAL PROPERTY RETURNS DOWN 16%
13:26 *BANK OF IRELAND PUBLISHED QUARTERLY PROPERTY REVIEW TODAY
13:26 *BANK OF IRELAND SEES HOUSE PRICES FALLING 8% THIS YR :BKIR ID

Bank of Ireland Says Irish Housing Won’t Stabilize Until 2009

By Fergal O’Brien
Sept. 11 (Bloomberg) – Bank of Ireland Plc, the country’s
second-biggest lender by market value, said Irish house prices
will probably fall 8 percent this year, extending a decline from
2007, and said the market won’t stabilize until 2009.
The housing market is still in the throes of correction and it may well be 2009 before signs of stability emerge, particularly in the wake of the European Central Bank's rate rise in July,'' Dan McLaughlin, chief economist at the Dublin-based lender, said in a report today. Sentiment and expectations can change, but
the current economic backdrop is clearly negative.‘’
House completions will probably fall to 50,000 ``at best’’
this year and there will be fewer than 40,000 in 2009, according
to the report. Irish builders completed 78,000 houses in 2007.

BoI down about 10% today.

[A_Random_Walk]

What is the justification given for 2009? I can’t see any hope of stability in the short term.

[Dreaded_Estate]

@A Random Walk

What is the justification given for 2009? I can’t see any hope of stability in the short term.

Blind optimism and a huge amount of wishful thinking

[Pill]

8% in '08 on top of say 10% in '07. It needs to and will fall a lot further than 18%. Next.

[johnboy]

So he missed calling the top but he is apparently well qualified to call the bottom.

Whenever I read anything that Dan has written I get the distinct feeling that somewhere in Ireland a village is missing its idiot.

[daltonr]

Whenever I read anything that Dan has written I get the distinct feeling that somewhere in Ireland a village is missing its idiot.

Oh! I don’t think they’re missing him.
Do you?

-Rd

[Dreaded_Estate]

@johnboy

So he missed calling the top but he is apparently well qualified to call the bottom.

Whenever I read anything that Dan has written I get the distinct feeling that somewhere in Ireland a village is missing its idiot.

I think Dan has been promoted from village idiot to “The National Idiot”

[CaveCanem]

1/4/2009, Dan?

[ewd3]

everything will be fine next year !!!

[Longtermrenter]

@johnboy

Whenever I read anything that Dan has written I get the distinct feeling that somewhere in Ireland a village is missing its idiot.

Best line in the Pin in ages

[BrendanG]

Rate of house price decline slowing, say BoI

11/09/2008 - 13:55:38
The rates of house price decline and mortgage slowdown has slowed, according to a report released today.

House prices are still falling however, and are back to what they were in November 2005, according to Bank of Ireland’s quarterly analysis of the Irish property market.

Yet the monthly fall was only 0.2% and the annual pace of decline also slowed, this time to 9.4% from 9.7%. As a result, Bank of Ireland projects an 8% fall for the full year.

Mortgage lending continues to slow, reflecting a combination of weaker demand and constrained supply, with banks tightening credit standards in response to the credit crunch.

Gross new mortgage lending has fallen by 13.4% in the year to the second quarter of 2008. However, the number of new mortgages drawn in the same period has picked up to 35,000 from less than 29,000.

The pace of growth in the outstanding mortgage stock also continues to slow to 9.6%. As a result, Bank of Ireland has maintained its forecast that mortgage lending growth will end the year at around 8% and that gross lending will amount to €29bn from €33.8bn in 2007.

Commenting on the review, Bank of Ireland’s chief economist Dr Dan McLaughlin said: “The housing market is still in the throes of correction and it may well be 2009 before signs of stability emerge, particularly in the wake of the ECB rate rise in July.

“However, affordability has improved in the last 18 months and the ratio of house prices to income is expected to fall further to 5.8% in 2009, which would take it back to the levels existing just prior to Ireland entering the European Monetary Union.”

The supply response to falling prices has been substantial, with completions down to less than 28,000 in the first half of the year and still look set to reach 50,000 at best compared to 78,000 in 2007. This would be the lowest percentage addition to the housing stock since 1996.

Moreover, leading indicators of housing starts imply that the first half of 2009 may be weaker still, and Bank of Ireland has forecast less than 40,000 completions next year.

Regarding commercial property, where the market is re-pricing capital values in response to increased economic uncertainty and the credit crunch, Bank of Ireland now expect a 16% decline in total returns in 2008, taking yields above 5%.

“Sentiment and expectations can change, but the current economic backdrop is clearly negative, given weak consumer confidence, a rise in unemployment and persistently high inflation, which is eroding real incomes,” said McLaughlin.

“On a more positive note, inflation may have peaked, given the recent fall in oil prices and the market is now pricing a rate cut by the ECB in the first half of 2009, which would be positive for the market.”

[Dreaded_Estate]

“However, affordability has improved in the last 18 months and the ratio of house prices to income is expected to fall further to 5.8% in 2009, which would take it back to the levels existing just prior to Ireland entering the European Monetary Union.”

What exactly does that mean?

[AAM]

I’m suspecting the 5.8% should read 5.8.
i.e. a multiple of 5.8.

Coul be wrong though.

[Dreaded_Estate]

@AAM

I’m suspecting the 5.8% should read 5.8.
i.e. a multiple of 5.8.

Coul be wrong though.

I thought that first. But a 5.8 multiple would put average house prices at around €180k, whereas it is closer to €280k

[johnboy]

@Dreaded_Estate

@AAM

I’m suspecting the 5.8% should read 5.8.
i.e. a multiple of 5.8.

Coul be wrong though.

I thought that first. But a 5.8 multiple would put average house prices at around €180k, whereas it is closer to €280k

Was Dan using his own salary as a benchmark?

[Tigdubh]

Dan took the July permanentTSB/ESRI Index at face value (as we know Dan is an optimist) but according to Finfacts pTSB said that the data was based on a small sample, which “was a factor in the very low decline in average prices during July” while Goodbody Chief Economist Dermot O’Leary says that the permanent tsb / ESRI House Price Index understates the national price trend.

Bank of Ireland economist says Irish house prices are falling at a reduced pace; However July price data may not be good indicator of trend

[PROFESSORI]

Long term affordability as calculated by mortgage payments as percentage of net monthly average earnings was around 30%,this ratio was rock solid until the latest shenanegans started,the key to holding up these crazy prices is lower interest rates as the multiples then look after themselves and the 200,000 - 300,000 mortgage payments seem “normal”.Of course now most households have two incomes and this has added to the “affordability” or in other words,banks realised two wages=bigger mortgage.Rates will have to come down soon.

Anybody know what the current percentage of net earnings is payable on the current “average” mortgage?

[The_Unwelcome_Guest]

@PROFESSORI

Of course now most households have two incomes and this has added to the “affordability” or in other words,banks realised two wages=bigger mortgage.Rates will have to come down soon.

That’s a big factor in relation to Dublin and commuterville, something that will change the relationship with regard to WLQG, as some term them into the future…

Affordability is also based on what mortgage term now exactly?!?

[PROFESSORI]

@The Unwelcome Guest

@PROFESSORI

Of course now most households have two incomes and this has added to the “affordability” or in other words,banks realised two wages=bigger mortgage.Rates will have to come down soon.

That’s a big factor in relation to Dublin and commuterville, something that will change the relationship with regard to WLQG, as some term them into the future…

Affordability is also based on what mortgage term now exactly?!? /quote

Call me old fashioned,but 25 years seemed long enough for me for the old chains to be attached!
Perhaps I’m totally out of touch with mortgage financing now,what is the “normal” term now for young buyers?

[2Pack]

Prices will begin to stabilise in 2011 and may match inflation in 2012 . Dan is simply talking shite as usual !

How can prices stabilise 10% down when BoI have reduced mortgages from 90% down to 70% LTV and thats being conservative. Does money now grow on trees in Dans back yard ??

The bloody Tooth Fairy is a more valuable and accurate forecasting tool than Dan McLaughlin , not that I am calling the Tooth Fairy a tool mind !!!