How far down for rents? Guess the index

Hi guys,

With January over and all the predictions for the full calendar year of 2009 out of the way, those who are prediction-starved might be interested in a Hubdub market I’ve set up for the next Daft Report. Essentially, I’m interested in seeing how spot on ‘the market’ is about rents, so on the prediction market set up, you can place some pretend money on the outcome you think will happen (not a million miles from betfair, intrade, etc).

I’d be interested in seeing how accurate we all are (I say we, but of course, I’m not allowing myself to do it, for reasons of conflict of interest!), as it might say something about people (landlords, tenants) and how they are actually operating at the moment.

I’ll be discussing any interesting findings on the blog, and the intention is to run a market for each daft report, assuming this one ends without tears. Hubdub should be free to use and optional to register, so hopefully that doesn’t annoy anyone.

Thanks,

Ronan.

PS. Latest heat-map (coldness-map?) of changes in asking prices by county is up on Manyeyes and also, with a brief discussion, on the blog. All comments and suggestions welcome.


daft.ie/report

Why not register the domain daftfair.com and be done with it , monetize that data eh!! :smiley:

This is a difficult topic and I have gone for a fairly low prediction. My reason:

Paradoxically, the falling purchase prices mean that parties will refrain from purchasing and will instead remain in the rental market. So demand for rental property is boosted by the crash. This will better enable VI’s to make their affordability assertions to encourage parties to buy.

In general however I woud theorise that rental fall will lag sales price falls by one or two years. So the question really depends on how long the house price will take. eg if the sales crash takes 3 yrs, I preddict the rent crash would take 5.

Of course there are huge variations in property type and location…

But this thread does raise important issues that affect decision making over the next few years.

You’re forgetting the other important factor - a factor that is deeply significant in the case of the Irish market. Immigration during the boom years was high. In the last year it has begun to fall massively thepropertypin.com/viewtopic.php?f=4&t=16463, thepropertypin.com/viewtopic.php?f=4&t=16262, thepropertypin.com/viewtopic.php?f=4&t=16078 (go back through the topics you’ll find lots more). Immigrants, naturally, would represent a big rental population, and with their departure the rental market is suffering badly.

Rentals will fall even faster this year, as there is no respite for falling employment levels in sight, and this will result in a larger exodus, not only of recent immigrants, but also, because Ireland’s economic position is far worse than most other countries (if only the general populous realised how bad!!), of many indigenous people.

Someone’s thrown the bubble into full reverse.

The falls are going to be just as savage as the gains. No question.

We are going right back to square one. 1996 property values (possibly adjusted for inflation)

I am supremely confident that rents will fall by more than 17% and I have voted as such on the site. I don’t see anything that can sustain the rents as they are and all we are likely to see are significant drops, some of the factors that I would see driving prices down are:

  • Immigrants returning home
  • Some emmigration, not necessarily significant but a factor all the same
  • Job losses, people moving back in with their parents, people moving into cheaper shared accomadation
  • More rental property coming to the market, new developments being rented out.

Caveat - I want to rent my own place, if I still have a job, so maybe that is driving my prediction :slight_smile:

You forgot the massive oversupply.

Over 20,000 properties to rent on Daft. Those 20,000 not_so_cannies are going to have to go into a rent death spiral with the exisiting cannies to see who gets to keep their BTL.

Or else they try to flog it along with the other 70,000 up for sale.

So it seems as time passes we will end up with Auctions in citywest but not for Bulgarian apartments but the muck thrown up all over the country and it’ll be like UK car dealors Buy one get one free. :open_mouth:

Rents are collapsing. The supply of places for rent is just too large now and growing by the day, with few marginal new renters entering the mkt. Landlords are now accepting drastic cuts as they all fight to compete with the now very small pool of people looking to take up new accomodation.
There is a sudden realisation that one has 2 choices now;

1] Accept a much lower rent and actually get some cashflow for 12mos (and hope next year in a recovery you can hike the rent again)
2] Arrogantly hang out for a higher number and get no cashflow for 12mos

You can really feel all the landlords fighting for that marginal new renter.

Naturally if rents dont recover, the next shoe to drop is house prices. At the moment it appears to me as if rents are falling almost twice as fast as house prices. [Its an easier pill to swallow to cut that rent for 12mos only Vs actually selling the asset at that level]

A thin market, in the end, but it was pretty close - the final figure for the Jan yr-on-yr fall in rents was just below 13%.
I’ve put up one for asking prices. It might be trickier to guess this as it’s year-on-year rather than from peak, so is the pace of falls accelerating or not? I don’t know…

Anyway, here’s the market (free to play as before, it’s not real money) - will be impressed if the market gets right!
hubdub.com/m32988/How_far_lo … ar_earlier

R

I’d say we’ll see 50% drop in rents over the next 5 years