Free fall over but Budget will not help recovery - IT

irishtimes.com/newspaper/pro … tml?via=mr

Meh. Read it this morning. Nothing new to see here

Apart from the lack of the usual “talking up” of market.

Not everyone else might have.

Volume info:

She also mentioned about 46% of all sales to date this year were Cash Sales.
Yes, 46% back in Sep when the database’s initial figures came out.

It is being constantly updated since then. But I guess she was too lazy to go check the current figures.

Annette Hughes, director of DKM Economic Consultants
According to Hughes: “The good news is that those who can afford it can now buy the property of their dreams and get better value, subject to having the ability to repay.”

And in other breaking news…the sky is blue, the grass is green etc etc etc

This is a common misunderstanding of our predicament
We are in a deflationary environment. Things get cheaper because there is less money in circulation. However, as things get cheaper, the available money to spend goes down even faster. So in a deflationary environment things do not generally get cheaper, the opposite - they get relatively more expensive.

Regarding property, since it is usually leveraged, this effect is amplified: If you look at the average deposit size, it has increased, since the ability to find leveraging finance is reduced. So looking at the deposit (cash) required to buy a house, the price you pay has increased. On the other hand, average incomes are falling among the overall population, since less are working.

The bottom line is that housing affordability is decreasing, not increasing - which is the cause of continued price falls.

As some of those who have cash are being very silly and buying houses with it, this is reducing the available capital base in the economy and relegating it to non productive assets.

In the end this will cause house prices to continue to decrease, since housing, being in oversupply in the country as a whole, is now a commodity, and there is not much being bought, but what is, is soaking up a lot of available cash.

In the short term, the government can prop up the market through various measures, but since the cumulative deficit is increasing each day, it’s finances will collapse and there will be no remaining supports for the housing market. If you still have cash, this will be the time to buy, when prices are a fraction of what they are now.

In fairness to Annette, she’s also quoted as; " : “People’s ability to pay has been seriously impacted. I would expect that this will drive prices downwards as people won’t be in a position to borrow the same amount – it’s a further drag on disposable income which will fuel lenders’ decisions. There will be less money chasing the same properties.”

im very aware of this. why are all the cash buyers piling in now? are they afraid of being taxed on savings? but they are then liable for property tax ? i don’t know whether
a)im extrapolating the line too far, and this is a good time to buy in desirable area
b)im going to be in negative equity if i purchase now

i don’t understand how people in a bankrupt country are using all their cash for houses - is it to avoid inflation?

please excuse my relative ignorance

what is coming is very clear: more people sucking off the same tit, and less productive use being made of what is spent
the government never reduced spending you know, so that means more and more of its takings are going in debt repayments
Our economy does not run on expensive oil, since we’re the 2nd most oil dependent country in europe. Our economy runs on cheap oil, of which there’s none left. Therefore our economy if fucked. Increasing food prices wont affect us too badly, but declining oil availability will fuck-us-up. Availability is declining as they are making more productive use of it in the east.
Therefore our cumulative deficit will continue to increase, and our economy will continue to decline. It is mathematically impossible that this will not happen

I have a theory on these cash buyers…
In a specific area I’ve been interested in, I have noticed with the arrival of the PPR that of the 20ish properties, about 50% sold for considerable lower than the other 50%.
I had viewed all of them… was fed the same line from EAs pretty much for all… but it turns out 50% of them seem to have ended up being sold about half the price of the others.
For these 50% … when I asked/bid on them I was told, no way would they sell for that. But it turned out they did sell for that and below in some instances.

In addition, of these houses… the majority seem to remain unoccuppied… while the ones selling at the higher prices are seeing renovators in etc.
No why would only the guys who got a bargain decide there is no rush with renovating? Or renting?

My theory is that a large part of the market is going on behind closed doors… banks selling on the QT or offering properties to deposit holders.
I’m also inclined to think that somehow these properties are being stockpiled but of course I have no way of know if this is true.

Anyone care to offer other suggestions as to how these two markets can appear to exist in very close proximity to each other.

The area in questions is Drumcondra… north of the Tolka…

FWIW I’m inclined to rule out that some were done up and others not… because in most cases… they were all very similar to each other.

whats your time frame on that though - ten years?

they should privatize ESB and to make capital available for investment in alternative energy sources. could ireland run on wind / solar /wood alone ?

thats probably a really stupid question.

Not sure if that’s directed at me… but I’m only looking at PPR data so over the last 2 years.

sorry on oil getting more expensive.

Has anyone seen this take place?

I dont expect oil to get too much more expensive, it’s already at the point of not being worth it for a lot of people, whether it’s burning it to keep themselves warm, or to move around.
Remember also we are in a deflationary economy. I honestly expected it to crash this year but I was wrong, for now.
What is happening is that the price has been at a high level for a number of years now. As incomes decline, it gets relatively more expensive at the same price. This is the killer. Prices do not have to increase in absolute terms for it to do a lot of damage

There is no real replacement, rather avoidance due to economic contraction

I filled up today and it had gone under the 1.50 per l marker. .

More to do with the Euro - Dollar exchange rate than oil prices, Oil production is steady and substitution with coal & gas is preventing the “panic buying & price surges” that happened in the middle of 2008 from repeating, plus declining supplies of the cheaper to produce oil is stopping prices from falling much below their current levels.

Which of course all means that consumers who use large amounts of fuel, either for heating or long distance commuting, will have less money to spend elsewhere because the increases in non income taxes reduce their disposable income more.

If this is happening then it would show up clearly in the property price database?