Saturday, 31 May 2008

Irish House Prices Crash - Boom To Bust

It's Boom To Bust for Ireland - in fact there are so many reports out that it's hard to keep up with them all!

Here's a section of an Irish Times report tôday:

"HOUSE PRICES plummeted in April as developers began to offload a glut of unsold houses at knock-down prices. But potential buyers grew more nervous about committing to the plunging property market, new figures show.

The drop in the price of new homes was almost twice the national rate, as builders were forced to discount prices in an effort to sell a backlog of houses and apartments rather than wait for a bounce in the market.

But figures from the Central Bank show that consumers have so far proved reluctant to take them up on the offer in great numbers, with the growth in mortgage lending last month falling to its slowest rate since 1992.

The monthly drop in house prices accelerated from 0.7 per cent in March to 1.1 per cent in April, making it increasingly unlikely that the housing market will turn around this year...

There were further signs that the Republic's housing boom has turned to bust at the High Court, as a provisional liquidator was appointed to two related property development companies...

Banks are now reluctant to lend vast sums of money to the beleaguered property sector, leaving developers with unsold stock exposed to cash-flow problems. Lenders have also imposed stricter lending criteria on individual mortgage borrowers.

Alan McQuaid, an economist at stockbroking firm Bloxham, said the increasingly sluggish rates of mortgage lending were "more evidence of a slowing Irish economy".

House prices fell 3.3 per cent in the first four months of 2008, exacerbating a 7.3 per cent decline in prices in 2007. The trend has left thousands of homeowners in negative equity, where their home is worth less than the value of their mortgage."

Dire Straits: Time To Tighten Belts In Ireland...

It's Dire Straits and and new tune called "Time To Tighten Belts In Ireland!"

The Irish Independent reports "Double trouble on fuel, house prices...

Last night economists warned that consumers will have to "tighten their belts" and avoid all luxury purchases if they want to ride out the economic slowdown. Figures from the latest Permanent tsb/ESRI index revealed that house prices fell by 1.1pc in April, bringing the annual decline in property prices to 9.2pc.

And an Irish Independent survey showed that the price of diesel has shot through the €1.40 barrier -- it has now increased by an average of 9c a litre in just two weeks.

Friends First chief economist Jim Power said: "I wouldn't be recommending to anybody to be going out there taking debt on board at the moment or living beyond their means.

"Definitely we are in a belt-tightening environment for the next couple of years. Anybody who behaves differently is being very naive and foolish."

Hauliers threatened to stage protests, while school bus operators said up to 600 routes were in jeopardy because of rising fuel costs. The housing gloom deepened with the monthly rate of decline accelerating in April as buyers and sellers decided to stay out of an uncertain market.

The average price paid for a house in April was €278,521, a drop of €28,000 from a year ago. But the fall in new-house prices has been even more severe, falling by 2pc in April or double the national rate of decline.

The pronounced slowdown in the property market was reflected in mortgage statistics yesterday which showed mortgage lending fell to its lowest level in 16 years in April, according to the Central Bank.

Growth in residential mortgage lending fell to 11.4pc, the lowest annual rate of increase since May 1992. April is historically a slow month in terms of mortgage lending due to the usual timing of the Easter holidays, but this did not apply this year as Easter fell in March.

The growth in overall lending in the economy fell also. There was a monthly increase of just under €2bn in private-sector credit in April.

This brought the average monthly change in 2008 to date to €2.4bn, compared with €3.5bn during the first four months of 2007. Economists said the poor lending figures were set to get worse.

Bloxham Stockbrokers economists Alan McQuaid said the fact that there was no immediate prospect of an interest-rate cut from the European Central Bank meant the Irish economy was set to weaken further in the short term.

The data showing a fall in house prices and a further easing in lending came as two more lenders increased their mortgage rates.

IIB Homeloans increased some of its fixed rates, withdrew two tracker rates and changed the lending criteria on other products.

Permanent TSB increased the rates it charges for buy-to-let investors in the housing market.
Friends First's Jim Power criticised what he termed 'official' Ireland -- the Government and various state agencies -- for continuously trying to talk up the economy when employers and consumers were increasingly aware of the harsher reality.

"The Irish economy is going through an incredibly painful housing adjustment and that was always going to be painful because we had become totally addicted to housing as a driver of everything in the economy, from employment to tax revenues to economic activity," he said.

"Things are pretty dire out there in the economy at the moment," he said.

Thursday, 29 May 2008

Back To The Future Goes West

I see on the Irish Times that "THERE'S A NEW realism in the west of Ireland property market, where Galway builders O'Malley Construction dropped prices on a scheme back to 2003 levels, in order to shift completed houses.

They offered homes at two schemes, Leargan on the Western Distributor Road, starting at €295,000, and also at Boireann Bheag with a mix of houses and apartments starting at €200,000.

The discounts varied between €25,000 and €70,000 and it looks like the gambit paid off with 40 deposits last Saturday, according to agent O'Donnelan & Joyce."

Saturday, 3 May 2008

Sure 'Tis A Soft Day...For Irish House Prices Anyway!

Latest figures confirm the "softening" in house prices and according to a report from the Irish Independent...

" HOUSE prices fell by 9pc in the past year, wiping €27,500 off the value of the average home.

National house prices fell by 0.7pc in March, according to yesterday's Permanent TSB/ERSI house price index. But the price decline for first-time buyer houses was greater, at 10pc, as potential buyers have been squeezed hard by banks hiking up interest rates for new customers.

A 10pc drop in First-Time Buyer (FTB) house prices will see some 40,000 new buyers go into negative equity by the end of the year, according to Davy Stockbrokers.

Negative equity is when the value of the mortgage is greater than the value of the home.
Economists also warned that prices will have to fall further if first time buyers are to be enticed back into the market.

New buyers have also been hit by the withdrawal of 100pc mortgages, and the need to find deposits of up to 10pc. Over a third of FTB's took out 100pc mortgages in 2006, according to Davy Stockbrokers.

In the first three months of this year, average house prices fell by 2.2pc compared with falls of 3.9pc last year. Prices fell 0.8pc in February and 0.7pc in January.

In the year to March, house prices were down 8.9pc. The average price paid for a house in March was €281,643 compared to €309,071 in March 2007.


Goodbody Stockbroker economist Deirdre Ryan said the pace of monthly declines appeared to have eased. But she warned that the worst was not over and further house price declines were likely for some time.

Goodbody expects house prices to fall a further 7pc this year, which would mean a drop of 15pc since prices peaked at the start of 2007.

Dublin house prices were down 0.2pc in March, while there was a reduction of 0.6pc in the rest of the country.

For the first three months of 2008, prices for Dublin were down 1.8pc and prices outside Dublin were down 2.8pc.

The average price paid for a house was €390,274 in Dublin and €242,300 outside the capital. House prices in the commuter counties fell by 0.5pc in March, and 1pc in February.

Permanent TSB's Niall O'Grady said the figures confirmed the softening in prices and transaction numbers across the market. "