Dublin's des res feels heat of recession

Dublin’s des res feels the heat of recession
By Eamon Quinn in Dublin
Published: September 13 2010 18:13 | Last updated: September 13 2010 18:13
Investors wanting to assess the health of the top end of Ireland’s property market have often turned to Ailesbury and Shrewsbury Roads in Dublin’s affluent southern Ballsbridge neighbourhood.

Prices on these streets, where the country’s business and professional elite have lived in an eclectic mix of homes dating back to 1850, have long been the most expensive in Ireland. Four years ago they were also among the most expensive in Europe after 12 years of almost uninterrupted nationwide rises, says Simon Ensor, director of Sherry FitzGerald, an estate agent.

In 2005, a 4,000 sq ft (372 sq m) house on Shrewsbury Road set an Irish record when buyers, who have since fought to keep their identity private, paid more than €55m for a home with extensive land to the rear that remains undeveloped.

Now, after several years of severe economic decline, the market on the tree-lined avenues dubbed the “embassy belt” – US, British and French missions are all nearby – is arguably the most depressed in any of the advanced economies.

Houses on the more exclusive Shrewsbury Road are currently valued at €8m-€12m while on Ailesbury Road, 4,500 sq ft properties that were valued at €10m-€13m at the height of the boom have fallen back, Mr Ensor estimates, to 2002 prices of between €4m-€5m.

The gloom may lift next month when, after two years of no transactions, a few properties on the streets are expected to come on to the market.

Average Irish house prices have not fared quite so badly. They have fallen by about 35 per cent since 2006, according to a quarterly survey by Permanent TSB and the Economic and Social Research Institute, a think-tank.

David Duffy of ESRI says they may finally settle some time next year at about 45 per cent to 50 per cent below the peaks reached four years ago. In Finland, which probably holds the record for the steepest house price declines, peak-to-trough prices dropped by just over half in the 1990s.

Economists say many Irish buyers who bought houses in the latter years of the boom will remain in negative equity for years. Too many of the same type of housing, such as blocks of flats, dot the country – 93,000 housing units were built at the height of the boom in 2006. Some experts say 250,000 households in the country’s population of 4.2m are now in negative equity and house prices may remain stagnant, in real terms, for years.

Mr Ensor predicts it will take at least a generation for prices on Ailesbury and Shrewsbury Roads to match their 2006 peak.

“There have been some cases in OECD countries where there have been longer declines. But prices will be back, after we see them trough next year at 2000 prices,” says Mr Duffy.

That suggests the average price paid for an Irish house will trough next year at €170,000, or 45 per cent lower than the peak of €311,000 paid in 2006. “We have to start looking at creative ways [of dealing with the housing crisis],” says Ronan Lyons, an economist at daft.ie, a property website, who believes the plentiful supply of cheap housing in some regions could be used to attract inward investors to create jobs.

Commercial property prices have also fallen. An Irish government agency, the National Asset Management Agency, has started paying discounts over several tranches that so far average about half for the €81bn worth of big commercial property loans on the books of five Dublin banks. Prime office rents in Dublin city centre have fallen 44 per cent in two years from peak, more than anywhere else in Europe, says Marie Hunt, director of research at CB Richard Ellis in Dublin. Ms Hunt says they are stabilising at €376/sq m.

The top retail rents on the capital’s Grafton Street had fallen to €5,250 a sq m by early summer. There are some signs of activity as demand for new offices in Dublin appears to have picked up, Ms Hunt says. “We are hoping that in the short term, [commercial] values will start to stabilise and grow again but we are never going back to the heady heights of 2006 and 2007.”

Houses on the more exclusive Shrewsbury Road are currently valued at €8m-€12m

Are they?

What was this published in? Is there a link?

It’s the FT:

ft.com/cms/s/0/4e830afc-bf54 … ftcamp=rss

For some weird reason, it is blocked by following the link, but if you Google the headline it returns the full article.

They say a picture tells a thousand words, so here’s my summation of that article in a thousand words:


It reads more like the usual work-experience journo from the Independant that the FT

wasn’t in the print edition;

Is this the same Eamo Quinn who usually writes for the Sunday Tribune?

Ahhhhh… David “In many cases negative equity will not be an issue” Duffy:

How’s that working out fer ya?