So some predictions were quite off the mark…
This is a non-event !
Of course the completions are holding up.
It would be financial suicide not to finish what you have already started.
Developers cant afford to cease activity on these projects.
Doesnt mean to say they wouldnt, if they could.
Which ones?
More completions coming onstream will only hasten the inevitable crash.
Irish property prices are still firmly in cloud cuckoo land.
- There have been no interest rate rises for the average Canny McSavvy above ECB yet.
- Higher unemployment due to the significant falls in new construction have not really kicked in yet
- Real interest rates are STILL negative. Inflation is much higher than deposit rates, so it still makes more sense to borrow than to save.
- Higher unemployment from the unfavourable euro/dollar exchange rate is yet to materialise
- ECB rates would/should be 0.5 - 0.75% higher except for the problems in the US.
The seeds of destruction have been sown, but the emporer is still fully and magnificently clothed in the eyes of the vast majority.
In the last 6-9 months the only casualty of the new reality thusfar is the ISEQ, along with a small and growing awareness that the emporer might in fact be stark naked, grossly overweight and very, very unappealing to behold.
The ones about the irish building industry reacting to the slowdown in sales by curtailing supply, for a start. This was one of the receipes for a soft landing after all.
Since early this year, the only question was how what flavour of crash we were going to get - An early shutdown on the construction industry in 2007 or serious stock overhang in the hands of developers with the shutdown in 2008. I expected that many more projects would have been mothballed before too much was spent on them - but it seems the construction industry kept the pedal to the metal.
These figures indicate a 'Wile E Coyote" approach industry (and country) wide - still borrowing almost as fast as ever, still building as many useless houses as ever, heading over that cliff as fast as ever.
Took the words out of my mouth…Thanks RB.
Are not many of these completions at the behest of ‘off the plan’ sales and subsequent contracts at ridiculous 2005/06 price levels that the contractor is obliged to complete. Therefore, the developer could not give a fig, he’s got his money or at least a contract to get it on completion which he can enforce. It’s the person who is awaiting delivery of these contracted completed units at 2005/06 prices, who has also seen one development knock 100k of apartments in the last week, who is the one with his head in his hands!
Once completed and money trousered the developer is off on a sojourn to Barbados or the South of France or wherever to ride out the storm back home and await the next upturn.
Ah yes. I never really bought that prediction.
Also goes a long way to explaining why unemployment has not increased significantly. After all 7,698 were completed in November 2007 - annualised = 92,376!!
Agreed, I was thinking that was the case. Since the number of completions is still v high, no need for mass lay offs…yet(which is reflected in the stats from unemployment office). I expect shocking figures to be released early next year when building companies let go these guys completing houses and not starting new houses as per the CIF themselves!
Mine
I said 70k max a long time back and assumed in H1 that it would be 65k-70k , tops 70k. So I was wrong.
This is really really bad for banking stability in my opinion!
How many empties this time next year - anyone want to hazard a guess!
Morgan Kellys recent paper on how borrowing/lending by the banks and developers post slowdown springs to mind!!
350k incl holiday homes coz its december like !
From the anecdotal “do we have to complete” stories on AAM, many of them complaining about shocking finishes, my guess would be that the builders are rushing to complete anything they have a significant amount invested in, so they can shut up shop completely at some point next year, meanwhile getting any poor feckers that have bought off plan to cough up for the flat or for the difference between the agreed price and the eventual sale price.
Sorry, should have said apartment - in the UK a flat is a house that has been split into units, where an apartment (way posh) is something purpose built.
I’d say that a lot of the developers are actively trying to court the local authority housing departments too in the hope that they’ll buy complete developments off them.
The housing departments would need finished houses though unlike the specuvestors and FTBs with line of credit who would snap up the off-the-plans vapourware that was previously being offered.
That has been going on for years. The whole scheme was designed from a builder-centric perspective.
If you’re a developer and you’re only now thinking of “courting the local authority”, then you’ve missed the boat by about 3 days, you obviously aren’t “chums” with any local councillors and you obviously haven’t been in the right tents at biggest “in” event of the “Irish social calendar”, namely the Galway races.
I’d say there’s a few cold-calls going through regardless.