Dublin Opinion

I see that the Now is a Good Time to Buy [NIAGTTB] crowd are back to sending out press releases. All bottoming out and slowdown in declines.

The usual suspects are saying that an average house price of €201,364 equals a kind of stability to the market. Well, it doesn’t. Given the type of employment we have in Ireland, and income levels of such where half of all workers who would meet the basic employment requirements for a mortgage earn less than €30,000 a year, the average Irish house price should be somewhere between €80,000 and €120,000.

Houses remain overpriced, on average, by at least 40 per cent.

Of course, that 40 per cent is based on wage levels before the government started its deflation drive, and before double-digit unemployment. As wages drop, the ‘natural’ price of housing goes with it. This is because the majority of people buy a house with a mortgage, and a mortgage is issued based on current and projected future earnings and employment. (At least, they should be issued under those broad terms, but we know that wasn’t the case over the past ten years.)

To argue that house prices are going to stabilise while the largest deflationary period we have ever experienced is still going on, at the end of the longest and most futile construction frenzy we have ever had, with 14 per cent unemployment and 300,000 empty housing units - including 12 per cent vacancy rates in Dublin and Cork, our two largest cities - is a fucking insult to our intelligence.

Whatever stability there is in the housing market, whatever slowing down in price drops is taking place, it isn’t because of wages or employment or savings, it’s because of one thing and one thing only: NAMA.

The Irish government has ensured that Irish house prices will remain detached from wages and employment markers. And they are using our money to do it. They are using our money to ensure we stay priced out of the housing market. It’s just insane.

Anyway, here’s a sample of some of the Permanent TSB/ESRI press releases since 2007, taken from their almost verbatim reproduction in the Irish Times. I’ve highlighted the optimism.

31 MARCH 2007 - PRICE DROP ENTICES CANNY INVESTORS BACK INTO THE MARKET

Oh dear, it looks as though house prices are falling for the second month in a row across the country. The latest report from the Permanent TSB/ESRI house price index shows that the average house price in April dropped by 0.8 per cent - down €2,452… It was better news in Dublin where prices grew by a fraction - 0.1 per cent - in April. While that doesn’t suggest that the market is recovering, it could be read as positive news as more and more first-time buyers finally take the plunge now that prices have become a little more realistic.

30 JUNE 2007 - HOUSE PRICES DROP FOR A THIRD MONTH IN A ROW

An 0.8 per cent dip in prices last month takes the fall in the property market for the first five months of the year to 2.1 per cent, according to the latest house price index from Permanent TSB and the ESRI… Permanent TSB’s head of marketing Niall O’Grady said confusion about stamp duty in the run-up to the general election had created an unwillingness to buy among first-time buyers, leading to a sharp drop in demand for houses… Permanent TSB and the ESRI are forecasting that prices will drop further over the next three months before making a slight recovery.

4 SEPTEMBER 2007 - AVERAGE HOUSE PRICES DECLINE 3 PER CENT THIS YEAR

The latest house price index figures released by Permanent TSB and the ESRI show that, on average, homeowners have seen more than €9,000 wiped off the value of their property over the first seven months of the year… Austin Hughes, chief economist at IIB Bank, pointed out that the pace at which house prices are falling has eased slightly, which may indicate a “very tentative sign of life.’”

5 OCTOBER 2007 - DECLINE IN HOUSE PRICES ACCELERATING, INDEX SHOWS

The decline in house prices is accelerating, according to date from the latest Permanent TSB/ESRI house price index, with prices in Dublin falling for the first time… Niall O’Grady, head of marketing at [TSB] said: “While we have seen attention-grabbing stories about declines in the asking prices for some houses, the index confirms that the actual rate of change in house prices across the country remains modest.”

2 NOVEMBER 2007 - HOUSE PRICES DOWN 3.6% SINCE JANUARY, INDEX SHOWS

house prices fell for the seventh month in a row in September and have now dropped by 3.6 per cent since the start of the year, according to the latest edition of the Permanent TSB/ESRI house price index.. The property market’s downward journey has steadily decelerated since the 0.8 per cent monthly price falls recorded in April and May.

24 NOVEMBER 2007 - SHARPEST FALL IN HOUSE PRICES SINCE 1996

The Permanent TSB/ESRI house price index said prices tumbled 1.3 per cent in October, the largest drop in a single month since the index began in 1996… However, in October, the decrease in prices in the capital (0.4 per cent) was less than the 1.2 per cent decline reported elsewhere in the State.

21 DECEMBER 2007 - FALL IN HOUSE PRICES SLOWED LAST MONTH

The rate of decline in house prices slowed in November, according to new data published yesterday… The Permanent TSB/ESRI house price index for November indicates that existing homes have suffered the brunt of the fall this year.

3 MARCH 2008 - HOUSE PRICES FELL 0.7% IN JANUARY, SAYS ESRI

House prices fell 0.7 per cent in January, a smaller reduction than the falls recorded in each of the last three months of 2007, according to the latest Permanent TSB/ESRI house price index… Niall O’Grady, head of marketing at Permanent TSB, said: “The rate of national house price reduction slowed in January compared to the experience in the final months of 2007. There is mounting evidence that sellers are adjusting to more realistic asking prices and buyers are getting better value.”

28 MARCH 2008 - HOUSE PRICES FALL AGAIN BUT DECLINE REMAINS SLOW

House prices fell again in February but the rate of decline remained slower than the drop in prices during the last three months of 2007, according to the latest Permanent TSB/ESRI house prices index.

3 MAY 2008 - HOUSE PRICES DOWN 8.9% IN LAST YEAR

House prices in Ireland continued to fall in March with the average property now worth 3.9 per cent less than a year ago, according to figures from Permanent TSB and the Economic and Social Research Institute… However, the pace of the decline has slowed from the fourth quarter of last year, when prices recorded a 3.9 er cent fall.

12 AUGUST 2008 - PRICE OF AVERAGE HOUSE FELL €15,000 IN FIRST HALF OF THE YEAR

The price of the average home fell €15,000 in the first half of the year, according to figures published yesterday by the ESRI and Permanent TSB… Niall O’Grady, general manager, business strategy, with Permanent TSB, said that declining consumer confidence was having a major impact on transaction levels, as “no one wants to buy at the top of the market.”

2 SEPTEMBER 2008 - FALL IN JULY HOUSE PRICES SLOWS TO 0.2%

house prices continued their descent in July, but at a slower pace, falling by an average of 0.2 per cent, according to data from the Permanent TSB/ESRI house price index.

27 MARCH 2009 - HOUSE PRICES FALL TO 2005 LEVELS

Average house prices fell by 0.8 per cent last month, according to the Permanent TSB/ESRI. This compares with reductions of -1.4 per cent in January, -0.9 per cent in December and -0.5 per cent in November, the Permanent TSB/ESRI house price index shows.

25 APRIL 2009 - AVERAGE HOUSE PRICE DOWN 10% OVER YEAR

Average house prices fell by 1 per cent nationally in March and are down 10 per cent over the year, according to the latest Permanent TSB/ESRI house price index… “Despite improved affordability and six reductions in interest rates, customers’ lack of confidence in the economy results in them staying out of the property market,” said Niall O’GRady, general manager, business strategy, Permanent TSB.

26 JUNE 2009 - HOUSE PRICES FALL BACK TO 2004 LEVELS, INDEX SHOWS

Average national house prices fall by 1.3 per cent last month and have declined 10.9 per cent in the year to the end of May, according to the [TSB/ESRI] index… “Ongoing low demand combined with a significant overhang of properties for sale continues to drive prices down, particularly in segments such as first-time buyers and houses in Dublin” said Niall O’Grady, general manager business strategy, Permanent TSB.

1 SEPTEMBER 2009 - HOUSE PRICES DOWN 24% FROM PEAK

House prices nationally have lost almost a quarter of their value since the peak of the property market in early 2007, according to the latest Permanent TSB/ESRI house Price Index.. However, there is some evidence that the pace of decline may be easing as the 1.1 per cent decline in July was smaller than the reductions for each of the preceding three months... In July the average price for a house in Dublin was 312,822, down from 351,096 last December. Over the same period, average prices for a property outside Dublin have fallen from 223,934 to 209,485 in July.

31 OCTOBER 2009 - HOUSE PRICES DOWN BY A QUARTER SINCE EARLY 2007 TO STAND AT 2003 LEVELS

“While the rate of decline is relatively stable over the past few months, there is significant differences in different parts of the country, with Dublin prices falling much faster die to the significant stock of unused property,” said Niall O’Grady, general manager at Permanent TSB.

3 NOVEMBER 2009 - HOUSE PRICES MAY HAVE HIT BOTTOM, SAY BUILDERS

House prices in Ireland may have already hit bottom, according to the building industry, which says the level of unsold stock is being exaggerated.

5 DECEMBER 2009 - HOUSE PRICES DOWN 26.7% TO LEVELS LAST SEEN IN OCTOBER 2003

Average house prices fell by 1.8 per cent in the month of October to €228,347.

29 JULY 2010 - PROPERTY PRICES FALL TO 2002 LEVELS

Permanent TSB’s Niall O’Grady said: “While prices continue to fall at different levels in Dublin versus the rest of the country, this reduction in the second quarter is the lowest recorded quarterly fall in almost two years.

“This may indicate that prices are starting to find a more sustainable level after almost three and a half years of decline,” he said.

Brian Devine of NCB Stockbrokers said:“Anecdotally, the general perception is that prices are in fact down somewhere in the region of 40- 45 per cent.”

“This may not be too far off the bottom. In fact, under certain assumptions it is even rational to purchase at current prices given the costs of renting,” he said.