CSO: Another Drop, House Prices Now down 42.5% from Peak

[fungus]

Irish Times: CSO: Property prices fall 12.5 per cent

irishtimes.com/newspaper/bre … um=twitter

Prices throughout Ireland fell by 12.5 per cent in the year to July 2011, down slightly from a decline of 12.9 per cent recorded in June. The monthly decline moderated to 0.8 per cent in July, from a fall of 2.1 per cent in June.

“This means the peak-to-trough decline in property prices is now 42.5 per cent,” said Davy chief economist Conall Mac Coille. “Prices have fallen 9.2 per cent in the first seven months of the year.”

[Subway1]

peak-to-trough lexicon.ft.com/Term?term=peak_to_trough

This is the change in a data measure - e.g., an asset price or economic statistic - from its highest point to its lowest point.

i dont see any troughs to date, just a nice long downward slope, i wonder if conal mc coille knows what a graph containg a trough looks like?
or just another contination of the soft language policy to try indicate that its over now, we are at the bottom.

probably too pendantic for some but a chief economist should not use such poor english (imo)

[Tag]

@Subway_

probably too pendantic for some but a chief economist should not use such poor english (imo)

https://operatorchan.org/n/arch/src/n64715_pot-kettle-black.jpg

Based on your words “pendantic” and “contination”!

[Subway1]

@Tag

@Subway_

probably too pendantic for some but a chief economist should not use such poor english (imo)

https://operatorchan.org/n/arch/src/n64715_pot-kettle-black.jpg

Based on your words “pendantic” and “contination”!

ouch! but I’m not a chief economist so am free to judge

[fungus]

NWL article on this:
namawinelake.wordpress.com/2011/ … nt-prices/

[Larry]

@fungus

NWL article on this:
namawinelake.wordpress.com/2011/ … nt-prices/

Looking at NWL’s updated predictions list at the bottom of the article, I see that Standard and Poor’s in June 2010 predicted a 41% fall peak-to-trough, and in May 2011 revised that to, erm, 33%. Good times.

It’s also interesting that 60% falls peak-to-trough are pretty much a consensual position amongst the latest predictions. The days of that figure being conspiracy theory territory are long, long gone.

[sharper1971]

@Larry

It’s also interesting that 60% falls peak-to-trough are pretty much a consensual position amongst the latest predictions. The days of that figure being conspiracy theory territory are long, long gone.

I ran a quick average of the peak-to-trough predictions from the list that were made in 2011. The mean prediction is 53.6%. Taking the CSO figure of 42.5% down from the peak, that’s another 10% from peak to go. For prices to fall a further 10% from peak, they need to fall almost 20% from today’s levels.

That seems about right to me. So I looked at the average prediction for the bottom-out date (again just using the forecasts since Jan 2011). Suggests 2012.

Could we see a further 20% fall by the end of 2012? I’d say close to it. Maybe another 12-15%.

Incidentally, averaging the predictions of different ‘experts’ is quite a good way of obtaining an accurate forecast.

[mambo]

Once again the media sees falling prices as BAD, rising prices as GOOD. As a potential buyer, it’s the opposite for me.

Prices could fall by a further 15% if rate of decline continues into next year

DAN O’BRIEN, Economics Editor

ANALYSIS: Oversupply, the lack of mortgage financing and the cost of borrowing are all playing a part as property prices continue to decline

THE GOOD news on the property market: July’s monthly fall in homes prices was the second smallest this year. The bad news: a single month is not enough to suggest that the deteriorating trend over the course of 2011 has been arrested.

The average monthly fall in prices over the first seven months of this year was 1.4 per cent. The average of the 12 months of 2010 was 0.9 per cent.

The accelerating underlying rate of price declines up to the middle of this year is cause for concern. And delving deeper into yesterday’s figures gives no reason to believe any segment of the market has been immune.

The chart shows declines in prices from January to July ranged from 6-11 per cent. That has added to the already massive declines registered among every market segment since 2007, with apartments now less than half peak prices and most other properties, regardless of location, down at least 39 per cent.

Many factors are likely account for the renewed weakness.

On the supply side, a large stock of unsold homes exists, and there is little sign that inroads are being made into that. According to property website daft.ie, the number of unsold properties up to the second quarter of the year remained stubbornly high, with hardly any reduction over the past three years.

On the demand side, almost every factor is working against price stabilisation. The numbers at work continue to decline and real incomes are stagnating, at best. Yesterday’s figures showing a growing number of people who are unable to service their mortgages are further evidence of these depressing trends.

The lack of new mortgage financing is another factor weighing on the market, with the latest figures to June showing that bank lending for property purchases continues to fall.

The cost of mortgage financing has been yet another factor in putting people off borrowing to buy property, even for those who are in a position to persuade a bank to lend to them.

The European Central Bank’s perplexing decision to increase interest rates twice this year looks like more of a mistake with each passing day. The hikes were justified by an increase in the headline rate of inflation caused by higher commodity prices. But with those increases partially reversed and a real risk of renewed recession, even the inflation hawks of Frankfurt are likely to be dissuaded from further tightening. It is even possible that this year’s increases could be reversed.

If almost all of the drivers of demand are weak, the psychology of buyers in a market in which prices are falling is almost certainly influencing price developments. Any form of deflation tends to feed off itself, with potential buyers postponing their purchases in anticipation of even lower prices.

When will the Irish property market reach bottom, and how low will the low-point be? Given all the dynamics, it is very difficult to see the market stabilising until next year at the earliest. If the current (2011) rate of decline continues for another 12 months, prices would fall by close to 15 per cent from their current level.

Under the central scenario underpinning the EU-IMF bank rescue, a further 21 per cent decline is anticipated before the market hits bottom. Under the worst-case scenario drawn up by legions of foreign consultants, a further 29 per cent decline could take place, bring the cumulative fall from the peak to 59 per cent (it now stands at 43 per cent).

By this metric, there is still some way to go before the bank bailout costs would be pushed up yet again.

irishtimes.com/newspaper/ire … 89624.html

[sharper1971]

@mambo

Once again the media sees falling prices as BAD, rising prices as GOOD. As a potential buyer, it’s the opposite for me.

+1

I love seeing an article like this one. The more often EAs and vendors get punched in the head with the facts, the more the facts will dawn on them. I think we’re finally beginning to see evidence of that, in some (but by no means all) of the asking prices coming to market as the new season draws closer. For a long time, every time I’ve met one of the EAs in my area, I chat with them about the latest item of news or depressing economic statistic. It has been hard work getting through but I have finally broken the spirits of a few of them. Now they are much more willing to downplay the expectations of vendors and to recommend offers that are low relative to asking price.

Out time is coming…

[wibbler]

@Tag

@Subway_

probably too pendantic for some but a chief economist should not use such poor english (imo)

https://operatorchan.org/n/arch/src/n64715_pot-kettle-black.jpg

Based on your words “pendantic” and “contination”!

You forgot “english”

[mambo]

Economist says house prices will drop even further
Market to fall 60pc from 2007 peak before bottom is reached

IRISH house prices still haven’t reached the bottom and are not “cheap” at current levels, according to Dermot O’Leary, an economist at Goodbody Stockbrokers.

Earlier this week, the Central Statistics office (CSO) said house prices in Dublin had fallen by 12.5pc in the year to July from the peak prices seen in February 2007.

In a note yesterday, Mr O’Leary, said that while house prices had continued to fall for the past four years, the CSO data confirmed the downward trend, recording a 42pc drop nationally and a 49pc fall in Dublin.

He believes that they will have to drop to 60pc from the boomtime prices before they become “realistic”. This forecast is based on an assessment of the prices that people can now afford to pay for property.

At the peak, property was being bought, on average, for as much as eight times the buyer’s annual income. And while this has reduced to five times at current prices, it still looks expensive when compared with international trends.

Mr O’Leary said: "While there has been a significant correction, the international evidence would not suggest this.

“Given high unemployment and lack of consumer confidence, this scale of a drop in house prices would make property more affordable and begin to attract buyers once again.”

There is a time lag between when Irish house price data are published and when the changes are recorded. When this is taken into account, the actual house price decline has been more severe, Mr O’Leary says. Some properties have already been sold at a 60pc discount from the boomtime peak.

This was the size of the discount on properties offered in the recent Allsop’s auction. It suggests that prices have further to fall, particularly outside of the Dublin area, he said.

Location

Much will depend on the type of property being sold and its location but Mr O’Leary believes prices still need to decline significantly before they become affordable and good value.

However, another economist, Alan McQuaid of Bloxham Stockbrokers, said on Monday that he was optimistic about house prices rising in the medium term.

“We think house prices should increase on a five-year view as the labour market improves” he said in a note.

“That said, the level of any rise over the next few years is only likely to be in low single digits as banks adopt a more cautious stance to lending than in the Celtic Tiger era” he said.

• Siobhan Creaton

independent.ie/business/iris … 61968.html

[irishaberdeen]

@sharper1971

@Larry

It’s also interesting that 60% falls peak-to-trough are pretty much a consensual position amongst the latest predictions. The days of that figure being conspiracy theory territory are long, long gone.

I ran a quick average of the peak-to-trough predictions from the list that were made in 2011. The mean prediction is 53.6%. Taking the CSO figure of 42.5% down from the peak, that’s another 10% from peak to go. For prices to fall a further 10% from peak, they need to fall almost 20% from today’s levels.

That seems about right to me. So I looked at the average prediction for the bottom-out date (again just using the forecasts since Jan 2011). Suggests 2012.

Could we see a further 20% fall by the end of 2012? I’d say close to it. Maybe another 12-15%.

Incidentally, averaging the predictions of different ‘experts’ is quite a good way of obtaining an accurate forecast.

i think its all a bit of a paper exercise, as there is not a huge volume of houses being sold, banks not lending money and have none to loan