House Price Fall More Than Data Suggest - Hurley

House price fall more than data suggest - Hurley

House prices may have fallen more sharply last year than the latest data suggest although demand for housing remains strong, Central Bank of Ireland Governor John Hurley said today.

Mr Hurley, who is also a member of the European Central Bank’s Governing Council, said Ireland’s banking sector is stable and well placed to withstand the current global market turbulence.

Latest published data showed house prices fell about 6 per cent in year-on-year terms in November, Mr Hurley told an Oireachtas Committee.

“This would, of course, mask variations that may exist and other industry sources suggest that the figure may be currently somewhat greater,” he said. “These developments in the market can be seen as part of a necessary adjustment phase following many years of high house price inflation.”

An end to Ireland’s decade-long property boom, when house prices quadrupled, is expected to lead to a sharp cooling in house building this year, which in turn is set to dampen the broader economy.

Mr Hurley said there were signs that underlying housing demand remained strong, however. “Private rents are continuing to rise, at about 11 per cent year-on-year, and employment and earnings are still growing,” he said.

But employment growth in Ireland was set to slow this year due to the weakening construction sector, Mr Hurley said. “While this is likely to lead to some increase in unemployment, the unemployment rate is expected to remain low by international standards,” he added.

Liquidity injections both in Ireland and through the euro zone system had helped Irish banks to deal with the current global turmoil.

“Our stress-testing of the banking system and our extensive financial stability analysis … indicate that Irish banks are solidly profitable and well-capitalised and with no major exposures,” he said.

“Our own banks remain robust in the face of the international credit problems and they retain a strong shock absorption capacity to deal with risks that have emerged.” … king72.htm

Not an awful lot in there, but given that it’s the Irish Times, it’s a bit surprising that the headline wasn’t “rents continuing to rise”.

I’ve been a lurker on the pin for a while - great site! Hope to be able to make some decent contributions over the next while.

Does the Governor of our Central Bank believe the statistics or not? This isn’t a trivial question. How does he feel walking into an ECB meeting and having to say “these are the figures but they might be wrong” for a key part of our economy?

Rents are up 11% he says - how do we know that’s right?

I think what he’s saying is that he has new data that suggests that the data he has is wrong, but the new data he has cant be published because it doesn’t exist. The rental inflation data is collated by a phone survey I believe with a sample of 100-150 (read it somewhere). Its wrong as well by the way, but you probably guessed that. |O

And welcome butcheroo.

In most other countries a rent rise of this kind would be seen as BAD news. Not in Canny McSavvy land where everything depends upon the property market, because there is nothing else.

The stupid SOAB didn’t call me. If he did I’d set him straight. :imp:

Hi butcheroo. :smiley:

Hi all! I guess if your banking system is as exposed as ours is, a strong rental market would be a safety net of sorts when banks’ clients can’t sell their stock. Mr. Hurley’s obviously got a bad news story here and he needs to counterbalance it with some good news. When the “good news” is as outdated and debatable as this, I suppose it tells its own story.

the whole “Rents continue to rise” is so silly. How can you honestly expect anybody to beleive this. They will fall off a cliff eventually. Imagine 4 empty places in an estate that are for sale. And a couple of rented houses as well. At some point the owners of the homes for sale will take the approach - anything is better than nothing and it will be a free for all to get in renters (considering all the foreigners that are going to leave as well)

I would not be surprised at all if in six months time, rents have dropped 25%

I got a place in the IFSC (one bed) about 2 weeks ago for 1150 PM. I’ve been watching the 1 bed market for a while and although the stuff at 1200 and below is hotly contested, stuff that costs any more takes ages to shift, if at all. I’ve got a lot of friends renting within 2 miles of the city centre and the highest rent being paid is 1300, and the person paying it is looking for somewhere else (and taking a bit of slagging). The people looking for 1500 in spencer dock need a serious reality check. Incidentally, of four friends whose LLs are jacking up the rents (on foot of these “reports”, no doubt!)m three are moving out. There really is plenty of choice.

What really brought it home to me was when Batt OKeef (Minister with responsibility for housing) Said “Rents are going up, so that’s a good thing”… minister for homeowners more like.

The Central Bank has had its head in the sand for SOOO Long when it comes to any form of real capital adequacy in our banking system that it no longer realises that it has moved beyond the head in the sand stage . 8)

Hurley is only first among equals in that place :frowning: .

****Rents are not rising nationally by 11%

They may indeed have risen at an ANNUALISED rate close to 11% for 1 or 2 quarters early last year but not for ALL of last year .

The Daft report was thereabouts in the year June 2006-June 2007 . … e-2007.pdf

page 2 11.9%

And if he were quoting the only officially relevant survey out there ( top of page 7) he would have said 12.3% wherever the fuck that number is coming from :frowning:

Actually its coming from A sample of ONLY 114 people that the CSO went out and RANG , thats where its coming from apparently . This is an insignificant sample size compared to Daft.

I therefore think this mirage of rapidly rising rents is a collection of asking prices or something that Maybe Ken fed the Central Bank …but HARK!!! whats this ???

Daft NOW ( in November 2007) say that annualised rises are in the order of 6.6% , not 11% and they should know should they not . … -2007.daft

Now a fall from an 11.9% to a 6.6% annualised and in only 5 MONTHS is not a RISING TREND HURLEY .

****It says that based on recent statistics rentals are actually FALLING at an 11% annual rate or so …do they not ???

And thats ASKING prices people, the higher price ones are , of couse, still not let on Daft !!

Nor does our government have to bail our banks out like before because some shower in Frankfurt have opened their taps to Hurleys abberations and Hurley knows that very well …but neglected to tell anyone of course 8) .

2Pack wrote

You obviously believe in the Fairy Godmother. Maybe we could also plead with Mr Trichet for money to take up our oil/gas reserves, since billions of taxation foregone is tied up in empty property in Leitrim, Longford, Roscommon, Dublin etc. It is so expensive to drill a hole in the very rough seas off Ireland; we could never risk taxpayer’s money.

“Please Mr Trichet, send the cheque to Mr Cowen and please Sir don’t print what it is for! We will make sure it goes the same way as the rest of the BMW funds :wink: for which the Western electorate will be eternally grateful! We appreciate your help with the Banks and we are sure that we will be in a position to make it up to you some day.” :unamused:

Mr Trichet lets our banks use his repo facility , Mr Hurley tells Mr Trichet that they have been stress tested and are completely solvent and very well run !

Dissected with a scalpel. :slight_smile: