Considering Buying?? Consider these charts from Japan 1990-

Japanese house prices 1990 until today (or close)

The trend in total prices from 1990 until today. (Urban Land Prices are the metric for

The average annual change since their bubble burst

https://www.matissecapitalmanagement.com/.a/6a00d83452bb8769e20120a506122c970b-250wi

The “typical” house price bubble takes 6 years to unravel based on statistical analysis of 800 years of financial history accross the globe by Rogoff (Harvard University + ex-Chief Economist of the IMF) and Reinhart and falls by 35% in real terms. Given that our boom ended in 2007, that would mean an improvement around 2013.

futurecasts.com/book%20review%2011-10.htm

Our bubble was a lot closer to Japan’s in intensity. Their house prices tripled in the 8 years prior to the peak. Dublin house prices almost quadrupled and national house prices tripled in the 10 years before the bust.

https://www.statusireland.com/data/charts/Irish-House-Prices-Since-1996.jpg

Don’t be mug :slight_smile:

Can somebody explain why urban land prices are always quoted as the metric for house prices? Is there no property price index?

Because in the rest of the world they dont shove bunglows on any bit of roadside.

I have felt that the Irish situation is very comparable to the Japanese one for a long time and have previously posted some charts on this. Prices in Japan are still falling in all categories (rural, urban, residential, commercial and industrial).

Japan is a huge country with the majority of people living in the narrow coastal strips of land. You can buy land in the mountains VERY cheaply (at auctions/distressed sales you can buy houses built in the last 15 years or so for as little as 25-30k euros). However the land in the cities is much more expensive. The population in the country side is shrinking fast and in the cities it is actually growing (due to migration to citys by younger people).

Houses in Japan have effectively a ZERO residual value since you have to pay higher tax if there is any form of buildings on the land and 2nd hand houses in Japan (especially anything built more than 15 years ago) are not popular since they are made of wood and with high humidity need to be replaced/update quite frequently.

We are actually worse than the Japanese case since we are not even attempting to learn from them. The original Japanese version of “NAMA” was a spectacular disaster and the version they are currently using is just continuing the shift of money from the public section to the banks.

I agree with all you said Sammy. I read recently that the old folk left alone in the countryside are now migrating to the built up areas too, reduced rural health services are the main the driver.

I believe that Ireland and Japan had hyper bubbles, in that more as well as speculation there was a cultural imperative involved. We know ownership was the cultural primer in Ireland, I don’t know enough about Japan to guess what it is there, but I feel it may have something to do with their reluctance to become less Japanese.

I feel that the studies that show bubbles take on average six years from peak to bottom may not apply to Ireland, there’s just far too much excess supply, NAMA and non NAMA.

Can someone please elaborate on that, 35% in real terms? Is that in the sense that it will dip 35% below the actual historical value? For example, the average house price in Ireland taken from 1990 to 2006 works out at about 120K using CPI/inflation, does this mean that prices fall typically 35% below that level in a crash meaning average house price will end up at 78K?

CPI increased by 59% between 1990 and 2006 so deflate house price growth by that amount. Real New house prices at end 2006 were about 197k up from 65k. Second hand houses up from 62 to 235. So prices would fall to 128 and 153 at 1990 prices if the real fall of 35%. In 2009 prices these translate to 211 and 252… they are currently at 233 and 254 according to DoEHLG stats…
However i suspect our incredible supply overhang is probably unprecedented and that 35% falls are the wet dreams of most EAs…

Thanks YRG.

Looking at the first chart the index dropped from a peak of approx 105 to finish around 25. Thats a drop of more than 75%. Any reason Irish prices won’t do likewise?

This is a great chart, but is there an update for it? It’s entries are up to Feb 09, so really needs updating.

EDIT:
It is up to date, there is a little glitch on statisireland.com site which shows last entry as feb, but it’s actually Jan 10, so bang up to date. Nice!

StatusIreland is an awesome site. Congrats to whoever is behind it.

On the above chart, I would like to see it going a bit further back in time so we get a better idea of trend. Just looking at it with the naked eye, it looks to corroborate the view that we still have 30% - 40% to go.

Down, down, down it goes. Where it stops nobody knows.

Seems to me that most people, including some pinsters, have not yet grasped the gravity of the situation in Ireland in that they seem to think that things are a lot better than they actually are. That somehow or other things will return to 'normal" soon. This is a delusions which will disappear sooner rather than later. It will take many years, perhaps generations, for Ireland to recover what it has lost and even then property will not return to the stellar heights it reached at the top of the super bubble. Property, as an asset class has lost its attracion to those who are rational and practical. Investors must now accept that houses are for people to live in.

I am constanly amaze that so many people have not yet woken up to the gravity of the current situation who imagine a resurgence of the property market is imminent.

The foolishness of our politicians, the greed and incompetence of the banks/property developers and the greed of property investors has destroyed the irish economy. Oh and I must not forget the greed and high expectations of the Irish people.

Ireland has given the world a lesson in incompetence, with regards to running an economy, from which a less foolish people will benefit.

Me too.

When I worked it out before, 1996 was the absolute best year to buy a house in Ireland.
That’s based on subsequent mortgage rates, inflation rates and house price inflation rates.
It was last year I worked it out, but at that point you could have bought a house in 1996, rolled the mortgage interest into the mortgage every single year, never paying down a penny and your house would still have been worth more than the mortgage.

Yes a foggy hazy reality has been created with the final act, the great NAMA spoof.

The Fog may be about to clear in the next few month/s. Very quickly.

I think by Christmas Ireland will be a very very different place, people will generally be stunned or shocked + in ruin.

You say that every year…

Or at least, each of the last three years… :stuck_out_tongue:

There are levels to these things. Strata’s of disruption. Anyway I’ve been right each time :smiley:

Sure, sure.

Here’s the ratio of Owner-Occupiers as share of households in 2002 for the OECD below - in the middle of our boom and after the Japanese one. We have one of the highest rates. They have one of the lowest.

I’m not sure what this means. The now PIGS lead the race (e.g. Greece, us, Italy, Spain). A lot of the lower countries had big property crashes in the 1980s and 1990s (e.g. Holland, Finland, Switzerland, Japan).

People talk about our “property culture” justifying higher valuations - but maybe high ownership is just a symptoym of never having had a big property crash (e.g. Greece, Spain, Italy & us are former super-poor countries that experienced big growth in the 1980s and 1990s after joining the EU) - and not thinking negative equity every happen. If that’s the case, maybe the surge in renting in Ireland is a permanent thing…

Australia 70
Japan 60
Austria 56
Luxembourg 70
Belgium 71
Netherlands 53
Canada 66
New Zealand 65
Denmark 51
Norway 77
Finland 58
Portugal 64
France 55
Spain 85
Germany 42
Sweden 61
Greece 83
Switzerland (2001)*31
Ireland77
United Kingdom69
Italy80
United States 68

Source: OECD Economic Outlook 2004; *Switzerland: national statistical office.