Towards tiered house prices in Ireland

Over on another thread about further falls of 30%, crashandburn issues a call for more nuanced analysis in the following terms:

Well, the first good news is that the Daft Report does control econometrically for just that level of analysis. Finglas and Blackrock are in different regional markets, and within regional markets, further controls are made for bedroom number, house type and specific ‘micromarket’. So regional statistics presented on the various pages of the House Price Report can be relied upon to do all those reasonable things.

However, I’d be the first to admit that econometric regressions are not crowd-pleasers. (Well, maybe not the first…)
In that spirit, I’ve posted an analysis of median house prices across a range of areas on my site: … n-ireland/

From there, here is a graph of four-beds in different regions around Dublin, with 2007 set as 100:

Two interesting findings:

  • The more expensive areas are currently witnessing much larger falls in house prices. In Dublin 6 and in Blackrock, the asking price for the typical 4-bed in 2009 so far has been almost 30% below that of 2008. In Lucan and Balbriggan, 2009 asking prices are less than 10% below 2008 prices.
  • Also, while less pronounced due to the fact that areas like West and North county Dublin started falling earlier, the fall so far from the peak is greater in Dublin 6 (38%) and Blackrock (28%) than either Lucan (21%) or Balbriggan (17%).

I’m interested in others’ thoughts or comments on why we’re seeing what we’re seeing. My own thoughts, as per the post, are that confidence is currently driving short-run falls, and because the more expensive the price brackets are determined more by confidence and future expected value, they’re being hit harder. The medium/long-run will presumably be determined by the implications of what we’ve seen over the past few years, i.e. areas worst affected by per capita construction.

I’m as per usual open to suggestions for other regions and house segments to look at. Consider it a relatively open call for your very own report! (Time constraints may, unfortunately, mean only a few are done…)

All the best,



those areas witnessing the greater falls did, I believe, see the greater gains as well. As talk of a property downturn developed, there were comments that a) Dublin would be safe (it wasn’t) and b) even when Dublin was hit, the so called better areas would be protected because they would always be desirable (they were not).

What you see is a bunch of chickens coming home to roost.

I must confess that the ‘d6 paradox’ surprised me. I did not expect that in 2005 or 2006 but maybe the answer is that more risky IO mortgages were taken out there than in perhaps Athy and that the pressure to liquidate and pay back was greater .

Were you to run Blanchardstown D15 vs Navan and also Lucan vs Newbridge vs Athy vs Carlow I would expect tiering of 3 bed semi by distance from Dublin ( grouped by corridor) to be apparent though …like for like house ( ish)

Surely you have to recognise that after a property bubble the “future expected value” has outstripped any sort of fundamental valuation. The supply of individuals who both expect prices to remain at current levels (or rise) and have the money to back it up (either through access to credit or ready cash) has been exhausted.

While you could say it’s a “lack of confidence in the current price” levels I think this is a misuse of the term. A lack of confidence usually indicates the economic fundamentals are ok but mere sentiment is holding things back.

The problem with these markets is not confidence and it’s not sentiment, it’s that very very few people earn the kind of money that would suggest they can afford these properties. We’ve just come out of a period of **over confidence ** so it’s a bit like saying the problem with the heroin junkie is the lack of dopamine levels in his brain 10 hours after his last fix. The Irish market has the shakes and it has them bad but that’s what happens when you let things go wild and run free for 10 years, the irrational people ran out of money and the irrational bankers ran out of money to give them.

Confidence in those sorts of prices probably won’t happen for 30 or more years (i.e. until the economy can support them) so I’d suggest the problem is the prices not the confidence.

I didn’t expect this either albeit the nature of this crisis has since demonstrated the good and the rich were upto their eyes in credit just as much as the unwashed. I’d normally expect the savvy rich folk to be somewhat immune from a credit crisis but sometimes “Ireland is different”.

The debt-monkeys were bigger in D6? The salary multiples and future income expectations from the dog-grooming business more outlandish?

I have sometimes wondered if the more expensive areas have more employers in them, i.e. business owners who did well during the celtic tiger years; whereas, on the other hand, less expensive areas (not where there is social housing) have more employEES.

A successful business owner is capable of earning a huge deal more than a PAYE worker and is capable of reaching greater financial heights and can thus earn the kind of money that can buy a house in D4 or D6.

Rightly or wrongly, I associate expensive houses in expensive areas more with people who own their own businesses. I’ve also noticed a lot of taxis frequently parked around the more expensive houses… :angry: 1

Now that the ordinary PAYE workers are spending less, the same businesses are not getting a good revenue stream. People who work in the PAYE sector suffer fewer financial extremes than business owners, who can swing from one end of the pendulum to the other very fast

1. Do they pay any tax?

I predicted this for a long time.

Here’s the reasons why.

In the bubble years where credit was easy and notional values were skyrocketing the discrepancy between the reasonable value of a house and the market price based on income was much larger in the more desirable areas than in balbriggan.

Incomes were inflated accross the board but those of the elite were inflated many times more by virtue of their benefitting most from the Bubble. Now much of that surplus of valuation in assetts over the liabilities has turned into a deficit.

Meaning that there is a surplus of owners trying to sell assetts to keep themselves afloat over wealthy buyers.

The more expensive homes also suffered the largest gap in actual cash terms between the rental return for a property and the sales price.

In a falling market people are far more aware of the consequences of overpaying for a house and the actual price in € is very important.

If you pay 300k for a house in Balbriggan and the house falls by a further 50% you lose only 150k

If you pay 1.1 million in Blackrock and the house falls a further 50% you lose €550k

So people worried about their futures and their jobs and even people with large savings are less inclined to pay an outragous premiuim to live in the higher bubble areas.

They see clearly in a falling market the significant amounts of money at stake and are more risk averse.

There are houses on the market which would require 5-6k pay per month to cover a 90% mortgage which are available for 2k to rent.

This will continue.

In short the places most overvalued were the premium areas rather than the middle or even lower areas and these will continue to suffer the greatest losses.

It will not be the big expensive houses that recover first, rather the modest three beds and four beds on the Northside which will be first to approach a reasonable value in relation to the average industrial wage.

You can add into the mix, ewd3, that there are some ‘protected’ groups that will continue to benefit - hospital consultants, barristers, some solicitors (depending on area of practice). So there will be demand for the ‘exclusive’ areas, but demand probably won’t exceed supply in the way it has in the past.

Interesting analysis. It’s very interesting that price falls are much higher in places like D6 and Blackrock than in Balbriggan and Lucan.

One reason for this may be that Blackrock and D6 are mature areas, full of people who bought their houses 10-40 years ago for a tiny fraction of their current prices. These people have no significant mortgage, and can afford to sell at any price.

In contrast places like Balbriggan and Lucan are full of recent buyers. These people are deep in negative equity. They can’t afford to sell for less than the amount of their mortgage, so they can’t drop their price. If this were the US, any of these people who got into financial trouble would either return the house to the bank, or the bank would foreclose once they started missing mortgage payments. A lot of houses in these areas would come onto the market, and prices would drop. This is exactly what has happened in the US. House prices in less affluent areas have fallen much more.

However, in Ireland there are three things preventing this happening. First, those in negative equity can’t simply return their house to the bank, and get out of their mortgage because out mortgage laws are different. In fact, they can’t sell at all without permission from the bank. Secondly, due to political pressure the banks have agreed to delay foreclosures for a long time. Thirdly, the banks have a huge incentive to keep property off the market for the moment, because they don’t want to see property prices fall ahead of the NAMA purchase of their loans. The banks are willing to go to extraordinary lengths to keep insolvent developers on life-support for a few more months, so they are not going to foreclose on any significant number of people who can’t pay their mortgages in the next few months.

So in summary, prices have fallen a lot in places like D6 and Blackrock because there is a properly functioning market in these areas. In contrast, in places like Balbriggan and Lucan the banks call all the shots, and as a result the market is not functioning in these areas at the moment due to government interference in the banks.

I don’t know whether this is actually what is happening, but the explanation seems consistent with the facts.


That’s also an interesting theory BG. Is there any support for it in figures of how many properties are actually sold in the respective areas. If there is a proper functioning market in D6 and Blackrock, then there should be more sales there as a percentage of the houses offered for sale. Conversely, the number of properties for sale in Balbriggan or Lucan should either be low as people can’t put them up for sale or high as they remain unsold due to unrealistic prices. In any event the number of sales should be low if the market is not functioning. I don’t know if there is a means of counting the numbers sold in each area, but you do sometimes see Sale Agreeds up on daft, maybe counting those would be indicative.

Anecdotally, there were reports in threads of relative movement in the housing market in Dublin 15 which I would have guessed was more like Lucan/Balbriggan than Blackrock/D6.

There are a couple of other possibilities which have been touched on. One is the affordability criteria for mortgages. While this is a little opaque, it seems reasonable to expect that the more you earned the higher multiple you could get as a mortgage. In other words, 40k income would get you 160k, 80k income would get you 400k as you have more spare income to make repayments from. As credit dries up the multiplier effect of leverage causes the higher priced areas to fall further.The IBF figures do show the average mortgage falling in value but you couldn’t really tie one to the other without more detailed figures.

Secondly your point about mature areas is kind of a double edged sword. People who have been living in those areas for a long time can well be in positive equity and afford to sell at lower prices but equally why would they sell at all unless these are forced sales such as deaths or divorces. I live in a mature area and the only houses up for sale at the moment are executor sales. This could be skewing the figures in older areas.

I think the opposite is true.

It was the aspirant classes who suddenly found themselves with inflated incomes that were out of line with, say, what their parents earned, or what people with similar education/qualifications/training would have earned 10 years earlier. This happened through increasing employment in construction and services. Moreover, these household’s buying power increased as many were 2-income households unlike previous generations.

Doctors and lawyers would have been rich anyway, bubble or no. It is the Lucan and Balbriggan folk who had an adrenaline shot to their incomes - and that is why they are the ones being so decimated now that it’s all gone wrong in the economy.

TBH asking prices have about as much relevance to actual prices as the bookies odds on a horse do to who is going to win the race
You can take all the cool charts you want and still never know the real score until actual prices are public knowledge


Nice analysis (interesting also).

A long time ago I read a paper that analysed house price bubbles (unfortunately too long ago to remember which journal) and the conclusion was that expensive areas fell more quickly and earlier than the cheaper areas. I particularly remember that the paris bubble was mentioned.

Also separately I have seen that the most expensive areas stop falling first - I think this happened in London - 7 vs 11 years of falls (or was it 7 vs 11 years to return to peak prices?) - perhaps someone could confirm that.

I see no reason at all why the Irish falls will not follow these patterns also.

Also I don’t think it is at all hard to understand these dynamics. People living in these areas (more expensive areas) have access to much better information that most people. This is after all where the VI’s live. Better information means that they will react to a changing market quicker.

Also prices here are more influenced by capital accumulation and returns to capital precede returns to labour in the business cycle.

There was an interesting article in the Economist recently (which I can’t find right now but will try) that looked at the scale of property falls in areas of the US and found price elasticity as one significant determinant. PE tended to be lower in the more desirable areas. The result was that when prices rose, they could rise significantly in these places without overly reducing demand. The converse was that when prices were falling, they needed to fall more in these areas to stimulate demand.

Seems to agree with London i.e. the fall and recover faster.

Don’t know if anything similar was ever looked at here.

As per the suggestion by doubleglaze through a PM last week, here are some equivalent tiered house price statistics for Galway: … d-hardest/

So that’s now two cities down (Dublin last week and Galway this week), and the rule that the more expensive they are, the harder they are falling still holds. While the city centre area seems to buck the overall trend, comparing Salthill/Knocknacarra with Roscam and Rahoon (the four next most common areas) adds in an extra finding: the more expensive areas started falling earlier. That was certainly indicated by the county heat/cold-map based on the regression figures, so interesting to see it pop up through the median 4-bed stats too.

Here’s the graph (it’s 2006 = 100):

As before, suggestions for other places to look at welcome. Time permitting, I’m hoping to have a look at Cork, Limerick and Waterford next. Any specific areas of interest, let me know and if there are enough observations, in she goes!

how about doing it on a county level with just 2006 and 2009

We bought recently (Waterford City). Small 100-home estate where few houses come up for sale. There were three on at €299k, €287k (both these for over a year AFAIK) and the one we bought (executor sale) at €195k (All three in excellent condition - good sized 3-bed semis). We paid €175k, which equated roughly to March 2000 prices, or nearly 50% off the peak 2006/7 asking price of €320k-ish.

Since we bought in the past few weeks the €299k house has dropped to €215k. “Market forces at work” I think is what it’s called.

No doubt the €215k will go for around the same as we paid. Auctioneer (and resident) obviously took heed of how fast the house moved. Interestingly, I had a chat with the seller upon handover and he said he wasn’t interested in putting it on at an unachieveable and unrealistic price, dropping it by €5k every so often. It worked. He sold. There’s a message there somewhere…

The house we’re renting (cramped 4-bed semi-D) was on at €265k last December and we offered €200k. It was refused (thankfully) and these are now changing hands for under €190k. There are several of the 4-beds for sale and they can’t shift them. Yet, unbelieveably, someone put a smaller 3-bed semi-d in the same estate on at €310k :open_mouth: last week.

Hello Ronan

I havent read all the other comments yet, so I hope i’m not duplicating

I had this very same conversation with a group of friends way back in 2006/7.
They claimed the old adage that ‘good’ areas hold up better than ‘bad’ areas.
I had a multiple of reasons why this wouldn’t happen, but chief amongst them was the role of INCOME TAX Vs CAPITAL GAINS TAX.

Many houses in ‘good’ areas were bought on the back of capital gains (as well as remortgaging of investment property), which were only subject to 20% CGT.
Income tax is much higher.

Consequently, the differences on regional house prices were amplified by the difference in tax rates.

Now we can see that, when the tables turn and capital gains are no longer available, the money disappears almost completely and the bottom falls out of this market much more violently.