Friday, 5 March 2010

UCD report on Irish property market - uncomfortable reading for real estate dinosaurs

There’s been a property crash, right?  So you'd think that Irish estate agents would be snapping at each other in a life-or-death struggle to get what little business is out there, wouldn’t you?

As regular readers will know, I’ve been looking to trade up to a somewhat grander manor – or as grand as you can get out this way, anyway  – for some time now.  Prices are falling, and that little pile of Ansbacher cash under the mattress is becoming more valuable by the minute.

The week before last, we viewed a prospective abode with extra-large shoe storage for the Lady of the Manor, and she phoned the estate agent back on Tuesday to ask a few questions:  “No, Mr Blah-blah is not availabe right now. He will phone you back this afternoon”.  No phone call.      Yesterday, same thing: “I'm very sorry.  Mr Blah-blah will phone you back straightaway. ”   No phone call.

Either Irish estate agents are the canniest business people in the world, or they are the dumbest, slowest-to-adapt-to-new-circumstances, smallest-brain-as-a-percentage-of-body-mass creatures since the brontosaurus. I’d go for the latter.

I wonder what they thought when they turned on the radio and heard the UCD/DIT report, led by Dr Brendan McWilliams, on the housing market?

    UCD/DIT report main points

  •  345,000 homes and apartments currently vacant – 17% of all housing stock in the country.
  •  Excluding holiday homes (and I would say there are people in trouble with these), derelict properties and the like, there are still 170,000 more houses and apartments than required.
  •  One-in-five homes empty outside Dublin, one-in-twelve empty in the capital itself.
  •  Vendors “unwilling” to reduce prices, but study finds further price drops are “inevitable” due to over-supply.
  •  Nama, and other market interventions which attempt to “prevent downward price corrections” likely to “delay rather than prevent market recovery”.
  •  House prices still at “very high” multiples of average incomes.
"Duuhh...  what's that big, fiery, red thing flying towards us from the sky?"

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Ella said...

Hi GM, thanks for bringing this to my attention. I shall keep on saving and watch the house of cards fall. I agree with the sentiments. I mean where you have rising unemployment, rising interest rates, a glut of property on the market (and this is before NAMA dumps onto the saturated market), well really house prices can only go one way. DOWN.

Anonymous said...

This place is ridiculous ,the scary thing is that a lot of politicians have enormous property portfolios and have such a strong vested interest in NAMA coming in to bring prices back to 2006 levels . How much does it take for Irish people to actually get pissed off enough to do something . The Greeks and the icelandic , now they know how to do it .

Anna said...

For a number of reasons I changed address a few times in Dun Laoghaire, from Oct- March.On looking at the Daft accommodation websites I noticed the same whole houses for rent, for several months. I read in Sept that the average rental turn around for a house in Dublin was now 70 days..
But I noticed some houses could sit there more than 4-5 months.
Yes, this terribly cold winter seemed to be an Exceptionally bad time for people to change accommodation. But I had also temporarily stayed in a V nice brand new house in Cabra / Blackhorse ave during the summer. That house reappeared on the DAFT website in Dec/ Jan- and vanished off it in 2 weeks -the rent was reasonable. You can now also get a whole new house to rent in Tallaght and other districts etc for 900 a month.
But Dun L? When I came there in 1997 it was V desirable area, and hard to get accommodation, as flats/ house would vanished quickly off the market, if you did not move fast the place you wanted would be gone on 2 weeks.
And rents were also a bit higher, as it is a V nice place to live. What’s it like now with a glut of new apartments especially, and also some new houses about?
Rent for a whole month are the same as 2006, (minimum of 1200- 1500 for 3 bed) - Despite the fact 100 houses will be Constantly available for rent on the Daft website- and some can STAY on it for 4 months( + +) . Never a thought of reducing the rent, despite the fact some estate agents and owners are shooting themselves in the foot by letting these long vacancies occur.

Anonymous said...

Frightening figures GM,yet somewhat strange. I know I heard similar stats about 3 or 4 years ago, around the time of “soft landings” and “Don't panic, don't panic, CRISIS what CRISIS.”

The real questions from such a scenario is, is this phenomenon purely Irish? Also how many of these houses were purchased in the last ten years, with credit many multiples the average industrial wage (not only an Irish contagion)? If these houses are just lying idle what kind of debt is out there, what pays for them???? Pension provision and negative equity don't mix!


The Gombeen Man said...

Hi Dakota. I think that figure includes unsold dwellings, such as in our numerous "ghost estates". I think this aspect is an Irish phenomenon, as these were driven by property tax breaks and shelters. Leitrim has the most of these per head, I think, but they are all over the shop. Lots around my way - hardly a light on when you go past at night.

Like our leaders - the light is on, but nobody's home!

It's mad stuff.

Anonymous said...

Overall, GM apart from the tragic individual debt, I think the ghost estates are going to be the big problem. I heard the minister for "housing" saying he was going to arrange for some of these dwellings to be given away, to those on housing lists. Interesting, I wonder how many Mary Bloggs, with 3 kids, from whatever area of Dublin will want to be trundled off to Ballygobackwards? With no amenities, no transport (well that wont be too much of a shock as theres none in Dublin either), the possibility of no street lighting, no public pathways? Don't get me wrong some of the houses built in rural parts were given some thought, though it really is sad to see where some of these estates were built. Those that were sold were past off by white collar sharks.


The Gombeen Man said...

Very true, Dakota. My kid sis lived in Dromod for a few years and a load of apartments mushroomed directly opposite her on the other side of the road. The majority of them lie empty.

I had a comment on this subject from someone in Spain, which I declined to publish as it degenerated into a personal attack (why the emotion, eh? An Irish investor stung by the - slow - return to price sanity?).

This person tried to make out that people wanted houses now "for nothing". No complaints when people were paying six and seven times yearly income for shitty shoeboxes, and greedy vendors and builders were cleaning up at their expense as they consigned these poor sods to a life of debt.

The World Bank uses the 3 times net yearly household income formula as a rough guide to affordability in the developed world. I don't know what the average household net income is, but if I did, even I could do the maths.

Ireland is a special case, I'm afraid. The banks, developers and Government have had an incestous relationship here for years. And mugs like you and me now get to pay for it. One of the reasons this blog would not be the most patriotic. Sure that would be like a battery hen taking a dizzy pride in her Bernard Matthews factory.

Yep, you are spot on. They can do what they like - there was never a market for those developments and there never will be.

Anonymous said...

"Sure that would be like a battery hen taking a dizzy pride in her Bernard Matthews factory."

Genius!!! lol

The Gombeen Man said...

Ah, now. ;-)

Greg Allen said...

There are still puzzling aspects to this 340,000 houses situation. 20% is the Spanish figure. We might say - well their economy and madness same as ours. Then Germany at 10% and France at 8%. So how is that squared? Then more to a hose in Ireland than all the rest of EU excpet CEE. It could be argued that there are delayed purchasers. Such as what is the average age of children at home now? 30? And then affordability is best for 15 years. And then Morgan Kelly's figures on average incomes look awful.. until you look at it from a 'disposable income' angle. Its worse than Northern Ireland. We need some detail on the empty houses ..