The DOF release stamp duty figures which show that monthly sales volumes of secondhand houses are down over 50 per cent on last year Link
The monthly Permanant TSB/ESRI report is released 1-2 weeks earlier than normal showing that secondhand houses have dropped 4.5% in value in 2 months. Link
The EA’s and the normally bullish bank economists are gone all quiet and some are even talking down the market. Even media commentators are getting in on the act.
Could it be that the VI’s who stand to lose most when sales volumes are low (e.g. banks, EA’s, newspapers, government etc.) are breaking ranks with the developers and encouraging the crash in order to get the market back up and running in the minimum time?
Well spotted Banjo. However, I think dropping the stamp duty is not gonna happen this budget. Cowen has said so even after all the sneaky VIs applying pressure.
Here’s another conspiracy theory.
Cowen knew what would happen when the expected crash happened so he didn’t close a little loop hole whereby builders can avoid paying 2 million Euros on sites. He didn’t close off the loop hole last budget despite it being well highlighted by the media. The reason he let it be is so he has some bargaining power with the builders when he refused to drop stamp duty. Listen for the builders complaining about stamp duty. See, nothing. You get the other VIs but the builders have been very quite. Cowen has told them to shut it or he’ll close this little loophole.
I didn’t mean to imply it would. More that a group of VI’s are resorting to encouraging a housing crash in order to get things moving. Now that Cowen as made it clear that he is not going to provide a market boost in the form of a stamp duty drop they may even have concluded that a crash is the only answer.
a quick crash suits me better.
long drawn out germany or japan scenarios are too agonising.
a quick, sharp bust and recovery is a lot more survivable. I dont mean financially, just ive no patience.
Unfortunately I see the long drawn out scenario occuring here.
quick busts are normally brought about by a sharp and sustained increase in interest rates, followed by the inevitable reduction once the market bombs.
Look at the USA, 1% went to 5.25% (i think this was the high), market suffered and now rates are falling again. When rates fall the market becomes viable to invest in again … and the cycle resumes.
Ireland, on the other hand, went from 2% to 4%. so while the market suffered, its not as sharp. But the biggest problem for us lies in the fact we do not control our rate, so when the market falls to the level that necessitates a cut, we cant, prolonging the fall.
All brings me to concluse that the UCD professor (whose name escapes me) will be proven correct.
As do I…not least because of the Irish propensity to owning property, whatever the cost. God knows how many people on this board alone have said they have the money to buy but are just waiting for prices to fall a bit further.
This means in practice that prices will stagger slightly before these mass of homeowner-wannabes rush in. And repeated ad infintium.
I begin to think that Ireland is more like Finland or the US, that we are already in the beginning of a short, sharp crash, that will in full charge once developers bite the bullet and lower prices (based on the large falls in the second-hand market - heading towards 10%+ for the year).
The worrying implication of this is the effect it will have on the banking sector. In Finland it precipitated a banking crisis. In the US, many smaller banks have already collapsed (as the FDIC protects depositors better, it’s not such big news). With a short-run (in years) collapse, there is less scope for banks to write-off the losses against profit from other activities.
On a separate note, I was wondering how our politicians have been able to fly round the world extolling the virtues of the Celtic Tiger. I wondered how they fit the Tiger in their suitcase. Now I know how; it’s collapsible!
People who want to move to a bigger place would potentially buy a new build bigger than 125m2.
This is a foolishly small number but builders aren’t good at maths. They have proved that by deciding to rent out their new builds rather than sell.
I have a wacky idea, is there some way someone cleverer than me could work out what the average actual real selling prices are now, by using the amount of stamp duty collected and the amount of houses sold and some kind of average for the different thresholds? Then stamp duty yields would tell us what the houses are actually selling for instead of us having to rely on asking prices.
The SD exemption is only for owner occupiers. Seeing as less potential owner occupiers seem to be interested in one-bed shoeboxes, the best way of flogging these is to investors. And a change in SD here would certainly help the developers
“Everybody” will never have bought unless the fertility rate drops to zero and we prevent all immigration. True that there will be less people looking for property in the next few due to fall off in birth rate after 1980, but it will be a gradual fall off with a corresponding gradual drop in prices IMHO.