Panic?

Looking like a busy week for price drops. €750k is the new €1m.

As prices drop, lots of sale agreeds will be unagreed. Am I dreaming of is there a push on to get it gone for September?

Not so much panic as continuing steady slide afaics. €300/sq.ft. is definitely the new €400/sq.ft. in the areas I’m watching – Killiney, Glenageary, Dun Laoghaire, Sandycove … with Dalkey sticking stubbornly to its overpriced guns.

All good things come to those who wait.

The longer the readjustment takes. The bigger the falls will eventually be.

I think panic is a close enough word to describe the sentiment among many vendors. There’s a BIG push by some to get on the market and sell before the season gets going. For good reasons, I think:

  1. On the pin, we all know which way the market is going. It’s taken vendors and EAs a long time to recognise and accept it. anyone who can see their way to accepting their negative equity is finally beginning to realise that the price drops of the past four years are not just ‘price drops’, but a fundamental readjustment.

  2. The next budget is only around the corner and it will be a stinker. To allow time to close the sale before then, you’ve got to go sale agreed at least two months before.

  3. Debt-forgiveness, schmebt-forgiveness. At most there will be a modest mortgage relief plan - they can call it what they like, but it will be means-tested, granted in practice to very few, and certainly NOT a get-out-of-jail free pass. Even the most optimistic mortgagees know this in their heart of hearts.

  4. It looks to me like the banks are increasingly willing to take the hit and accept/encourage/coerce people selling investment properties that are in negative equity, as long as there is another home that they can keep their claws in. (Can’t support this with further details for now, except to say that a couple of investors I know are being pushed into selling while deep in negative equity.)

  5. We may even be at the beginning of a paradigm shift in which, rather than viewing the price drop of four years as ‘a fall from the peak’, it is seen as a fundamental readjustment. It’s about looking ahead from today at what future values will be, rather than into the past at what they once were. Those who look forwards rather than backwards will realise that, given the likelihood of a further 20% fall or more from today’s prices, we are currently at the **top **of where the market will be for at least the next five years.

Do we have a “Cycle of Market Emotions” quarterly tomorrow?

Ed: Sorry, no don’t think so. Getting abacus out to confirm…

Lisneys are defo top of the drops. They seem to put everything on the market for silly money and cut the price within weeks.

Yes there should be - but it would then be the usual 4th quarter offset by a month - so I was going to let it slide until October.

Interesting analysis. I think you are spot on in relation to the budget and to debt forgiveness. Plus the paradigm shift is beginning to come, albeit much more slowly than one might expect, given the unrelenting bleakness of the macro-economic environment for the last three years (at least) and counting.

Where does the five year figure come from in your analysis that we are at the top of the market-to-come?

Not sure about this, in terms of “the most optimistic mortgagees know this in their heart of hearts”.

Remember, you’re living on an Island where people thought property prices would rise forever.
I should come as no surprise that ‘debt forgiveness’ means ‘getting your house for free’ to many of these people.

Its a sort of reverse-greed; I might not make the most but I’ll lose the least.
Thus far they’ve been hanging on for about 5 years for property prices to ‘come back’.
What makes you think they’ll give up on debt forgiveness (and a free house!) so easily?

Off the top of my head in about 30 seconds, I reckoned that if we see a fall of another 20% over 18 months, we’d then be at 80% of today’s values. We’d need a 25% increase from that point to get back to today’s value, and that would mean an annualised increase of the order of 7%. Hardly likely, so five years is a conservative estimate IMO.

On reflection I’m not too sure about that myself! There will probably be a bit more foolhardy hanging on by those who refuse to wake up to reality. Hopefully the ‘free house’ concept will be wiped out by the next budget.

Denial it is then.

:slight_smile: I know someone was giving me grief about putting them out in September and I promised to put it off to October this time.

Also - I reckon this September is going to be a doozey! So things may look very different in October :nin

Ah, ok. I thought it might be result of some very detailed macro-economic analysis and my afternoon suddenly got brighter at the thought that one of the bears on the pin had come to the conclusion that the worst might be over in the relatively short time frame of 5 years …

Guess not so :confused:

I was working through this last night too. My guess was 10% depreciation next year, 5% the next and flat for the following 3 years. The Euro isn’t going to get out of its mess for another 2 years at least, we’re going to face at least 2 (if not 4) more austerity budgets, and in such a contractionary environment, I can’t see the banks growing their mortgage books. Unless Ireland fixes its competitiveness problem by pushing down wages still further or cutting taxes (which implies cutting public service spending, itself contractionary) then I don’t see how consumer/business optimism grows and the national (non-exporting) economy grows in any meaningful way.

I can see five years being when house prices drift along the bottom, not when we finish a sustained price increase to bring us back up to 2011 prices.

Not seeing much panic around d6/6w. Just the usual drip drip…
Still lots of places ask 500+/sq ft.

Still, the 20K/year I’m paying in rent is small in comparison to some of the price drops…

I’ve been renting in Dublin for 5 years since returning from elsewhere, and it does cheer me up in gloomy moments that 5 x the €11,000 pa I pay in rent = €55,000. That is significantly less than the price fall on (literally) every property in the country in that time. Throw in costs of ownership and that would mean I’d need to find a property that’s only fallen €50,000 in value to beat what I’ve done in renting. Since that’s not really possible, I must be ahead by a decent margin.

The Allsop Auction could be a real bell weather. The cash buyers could take fright.

Denial is on the way out with summer. Panic stalks the land; it is a plague. Once it infects enough vendors and agents, it will be unstoppable.

Competitiveness is about an awful lot more than wages. The World Economic Forum, which compiles rankings, includes things such as market openness, government regulation, infrastructure, education, etc. We still have a long way to go if we plan to get most of those right.

Don’t forget to count the interest you didn’t pay on that mortgage you don’t have (prob at least 20k in your case). Oh and there’s also the interest you have earned on the money you didn’t hand over as a deposit!