Daft Report Q1


In other news, the house price falls are positively affecting the well-being of those who want to buy a house for a reasonable amount, although current owners will need to feel more disgust before that happens.


Daft.ie are experts in ‘well-being’ now?
Have they got Tony Quinn writing reports for them or something?

A course in (the revolutionary new mind system) Disgust-Busting ™ is required!!!

That, and a course of bio-psycho-endo-naturo yogurt. ology.

Hi all,

Don’t worry, no-one at daft.ie is claiming to be an expert on psychology and well-being! The quotation used is from our latest commentator, Liam Delaney, economist at the Geary Institute on Behavioural Economics (gearybehaviourcenter.blogspot.com/). So it’s kinda his thing!

More analysis up at: ronanlyons.wordpress.com/2009/04 … ie-report/. All comments and suggestions welcome,


I think that’s fair enough Ronan - healthier-than-average dose of cynicism here on the 'Pin! :mrgreen:

Is there any other kind! :smiley:

Whilst this is based on asking prices, nevertheless the report states that prices are 18% lower than their peak. Myhome stated last week that prices were down 50% with Jim Power also last week stating they were down 40% (based on valuations, according to Jimbo).

From the same people who thought the market had bottomed out last month:


Of course you will see no reference to these “negative” reports in the national press while the desperate journalists wait for any sign of positivity in a market that is well on its way to becoming known as one of the worst house price collapses in in recent times.

Fair point - we can only go with what the stats tell us, though. What might square the circle for you is the following. At the peak, asking prices would have been perhaps 5% below closing prices, i.e. people got more than they asked for. If you believe that people are settling for 10% less than revised asking prices now, then you’ve 15% on top of the fall in asking prices. That would mean about 33% on average and in some parts of the country, according to daft.ie’s latest figures, the fall from peak asking prices is about 25%, which takes you up to your 40%.

The other thing I would say is that daft.ie is the only measure of house prices that is based on Census weights, rather than market weights. Each regional market enters the daft.ie model in proportion to its size in the 2006 Census, regardless of how many transactions or website listings or whatever. To the best of my knowledge - and I believe that a forthcoming paper by the ESRI’s David Duffy should confirm this - all other metrics are based on where transactions happen. If one set of areas - be it commuter belt, city centre or wherever - floods the market for whatever reason, that can affect some of the other metrics.

Incidentally, one of the reasons we use Census weights, apart from overcoming any arguments about daft.ie’s relative market share in particular regions, is that it allows estimation of the total value of residential property in Ireland. I’ve been working away at that over the weekend and will - in an entirely personal capacity, on my blog (ronanlyons.wordpress.com) - have a Budget day suggestion on the same topic tomorrow!

Ronan L wrote:

This is what I have seen in a ‘confidential’ report from one of the (mis)leading EAs.

On that Ronan,
One very informative stat that you used to include on the report is the length of time it takes to sell a house. In fact, its almost AS important as the price. Theoretically if no-one reduced their asking prices, then houses may not sell, and the stats would show a “stable housing market” when in fact the market would be completely dysfunctional. Hence showing BOTH prices changes and the length of time it takes houses to shift are complementary factors when understanding the market.

Hi IID, on time-to-sell, that’s another fair point! There are unfortunately lots of data issues with that particular series, which we’re working on at the moment. When we discuss the report, there’s unanimity with your point of view on its relevance at the moment. Trust me, as soon as we have a series on time-to-sell that works, we’ll be the first to promote it! In the meantime, check the outflow statistics on the stock-flow graphs, both national and regional. While not exactly the same, it’s at least telling you about quantity rather than price (and is also interesting because outflow has been greater than inflow since October).

On your theoretical example, hopefully I can clear this one up - the prices we report are not the average of all properties on the site, they are based on newly listed properties or those that change their price. The aim is to capture expectations at one point in time, rather than reward lazy sellers whose properties are up for months and months with repeated appearances in the stats!

So if we were in your theoretical example, say a situation with 50,000 properties for sale and no-one posting new properties or changing the price of those they had up there, we would essentially have no daft report… and of course no-one wants that! :wink:

Its interesting that Daft’s figure for the total fall in house prices since the peak in Feb 2007 is almost identical to ESRI’s. I make Daft’s figure to be a fall of 18.7pc between Feb 2007 and Feb 2009 and ESRI’s 17.7pc. Are the two surveys totally independent? Is the ESRI one based on selling prices or on asking prices like the Daft one? If the answers are both ‘yes’, then the fact that they are giving similar results is significant. These falls still seem a lot less than in UK or US. The graph in the Daft report also seems to show the stock of properties for sale down from about 63k last October to 60k now. Is that a normal seasonal thing?

The housing market is seasonal and this has started to show up in the Daft listings for the first time since about 2006 when the for sale listings first took off. It is pretty obvious that the uptrend has weakened, probably due to lower completions, though I do expect new peak later this year, simply due to typical seasonal pattern.

I have been expecting this summer/autumn to be the final peak before listings start trending downward again, which will ultimately lead to average nominal prices bottoming out in a few years, 2011 is the very earliest I could see this happening, though I wouldn’t be surprised if it is later.

Hi Ronan

The choice of quote you use on your blog is interesting,

The implication here is that all that is required for house prices to recover over the medium term is for Irish people to maintain their preference for owning their own homes.

I notice you are quite careful in saying settle at higher level.
Is this code for now is a good time to buy?

This looks to me to be a misleading assumption. I think it is wishful thinking at best and wilful disinformation at worst to contend that future irish property prices will be in any way linked to the owner occupier instinct .
The argument I would say is demonstrably false
It ignores many factors not least the other main psychological driver for the bubble and that was the Buy to Let investor

Buy to let investors require renters to pay off their mortgages. The current collapse in rent would only be exacerbated by every currently renting person who buys a home and stops renting, further hammering home revulsion to investors who get burned and continuing a glut of BTL owned properties for renters and buyers to choose from.

Each burned investor will be one less likely to pay over the odds for any property on the basis that property only goes up, a fundamental requirement for the bubble to be reinflated and property to recover.

The elephant in the room here is the vast oversupply of houses which will continue to drive the market down until the empties are filled or demolished.

This glut of empties doesn’t care whether people rent them or buy them

Given the apparent switch from net immigration to net emigration this may take some time.

So, I would think it’s more relevant to talk about exactly how many houses we have that we don’t need and what year we will have the poplulation to fill them.
Maybe you could figure out what a sustainable level of residential construction would be once we need to start building again.

(in fairness you do discuss this on an earlier post on the blog

by my back of an envelope calculations scotland with a larger population has had an equilibrium figure of 15000 since WW2 that’s how bad I think it is)

Maybe we could ask what a reasonable price to pay for these houses is for workers to be able to pay their rent or their mortgage and not need exorbitant uncompetitive wages.
Maybe we could compare prices with our competitors in the eurozone and wonder where do we want prices to be.

Irrespective what we value our houses at in our heads
if we can’t earn the wages to pay for them by exporting goods and services whether we want to own or rent is irrelevant.

As for a return to former values!!!
Not in our lifetimes

The whole point is that high house prices are bad for Ireland
very bad
very very very bad.

You would be doing a greater service were you to stop trying give false hope that things will be the way they were and that there is even a glimmer of hope that house prices will go up and start trying to spread the word that things should never be allowed to go that way again.

(of course I should point out that in the event of hyper inflation in the eurozone nominal values would recover but not real value and in any case hyper inflation is unlikely as long as we share a currency with Germany)

edited by ewd3
(got a bit heated)

Hi ewd3,

No, unfortunately, it’s not code for now is a good time to buy. It’s not really code for anything other than what it says! You’ve merely chosen 25% of what I nabbed from Liam’s commentary and put into my blog post and emphasised a bit that on its own might look like what you fear people like me are trying to push in the media.

I can’t obviously speak for anyone else who’s (un)lucky enough to be quoted in the media on the property market but what I was trying to do here is what I try and do every time - give some insight based on the facts as I see them. Well, if I’m honest, in this instance, I was just repeating an insight someone else had and adding in some thoughts of my own.

I know you go on to outline your reasoning that this is “demonstrably false” but I think Liam’s reasoning is sound here. If the average punter is, everything else being equal, more likely to pump his wealth blindly into property regardless of its return, property prices will be higher than if people are generationally scarred from investing in property.

That’s interesting, I haven’t looked at Scotland. Dan O’Brien however has compared Ireland’s long-run housing output with the US and the UK on an earlier commentary - shameless plug, daft.ie/report/dan-obrien.daft - although I would differ from him on whether our 1970s output and our 1990s/2000s output should have been the same.

I totally agree. Funny thing is, mortgage repayments as a proportion of wages in 2005 were not significantly out of line with historical averages. That was due to the financing model, though, which has now collapsed. Wherever the financing model re-settles will have a huge bearing in where prices level off.
Wages certainly have to come down. I’d love to see a discussion of, say, a blanket 20% reduction in wages achieved through social partnership. So drastic, but also a clarion call to the rest of the world that we realised how out of line we’d got and were willing to readjust to be competitive again. It also has the advantage of avoiding the current remedy of death by a thousand cuts, where no-one knows with any certainty whether this pay cut or this tax rise will the last, and hence big ticket expenditure - and I don’t mean just houses - is suffering.

I very much doubt that was what Liam was implying and I know for a fact that was not what I was implying in reporting Liam’s commentary.

Well, while the primary aim of my blog is probably not solely to send the message out that things will never be the way they were again, I would certainly like to thing that by trying to give clinical analysis and insight, my blog is certainly closer to that than to giving false hope about reaching 2006 prices again. But if it does come across like I’m just towing some party line - the blog is after all me writing personally and not in any professional capacity - bring it up there or here, like you did here, and I’ll try and explain myself.

Nothing wrong with passion! :slight_smile:



cheers for the reply.

just to further the discussion lets look at this piece

Preferring to be an owner occupier and the contention that people will

are not the same thing at all.

Liam is saying and you agree, that the Irish preference for owning over renting is likely to support prices. I am saying that this preference is irelevant because it ignores a key driver of the bubble which was buy to let investors.
This part of the market has been badly damaged, the more owner occupiers there are the worse it is for the btl investor.

I think it’s a leap of logic to imply that people preferring to own is equivalent to pumping their wealth blindly in to property.

There will be no blind pumpin of wealth by investors , without whom there would be no bubble. In terms of the Irish market in my view owning or renting is a 0 sum game.
As long as there are thousands of BTL landlords chasing a diminishing pool of renters the preference for owning it could be argued will sigificanly undermine the Investment market and by extension prices in general.

The reason I’m being so harsh and that I think it’s so important is that the "Irish people love to own so prices will recover " is to me is a myth, just like the “land they’re not, making any more of it” argument. It is the type of guff that can cause more people to over pay for houses and get burned.

For a rational discussion of Irish housing needs we should stop codding ourselves and avoid such pop psychology.


Ronan, you don’t honestly believe this do you?

Compare and contrast the lending conditions 10-20 years ago and over the last ten years. Not a chance.
My father’s first mortgage was 22% of his take home pay. Set by the bank.

During the boom so many figures were massaged and exaggerated, bonus/overtime included, rent a room etc. I would estimate alot of people who bought in the boom period are in the 35-40% range. Not to mention the length of terms.

By the way, thanks for coming to discuss this.