Media reports on property market

Darragh29

Just today I was listening to Newstalk who did a few hours on the appararent slowdown in the propery market and they reported the following:

"There are signs of a drop in property houses OUTSIDE Dublin only, particularly in towns that fall within the Dublin commuter belt."

This drop in house prices, which is apparently only happening outside of Dublin in the "Dublin Commuter Belt" area, represents a drop of 3.6% in the first 4 months of the year, so a house in Louth, Meath, Kildare and Wicklow is 12,000 Euro less now than it was last December. All of this is apparently confined to outside of Dublin.

As it happens, myself and my girlfriend recently had our apartment on the market in Dublin (Tallaght area), for 310K.

My girlfriend originally bought this apartment with her sister a few years ago, and I bought out her sisters share in the apartment last August. Last August we had to get the apartment valued for the purposes of me buying her sister out, and the apartment was valued then at 355K.

Now, despite everyone talking up the market in Dublin, my experience has been that this apartment has fallen in value by 45K since last August. This is a drop in value of 12.7%. We have not got an offer for our apartment so we took it off the market. If we left it up there, we could have ended up taking less than the price that we advertised, which was 310K.

Having looked at myhome.ie and looked at the prices of apartments up for sale in our area, this would appear to be happening to other properties in our area also. So, I just want to put the truth out there, property prices in Dublin are dropping, they are dropping by more than properties are dropping by outside Dublin, or at least this is what I'm seeing with my own two eyes, despite the vested interests like the estate agents and banks screaming otherwise...

Dirk Gently

There certainly is a lack of reporting on house price drops in Dublin. You might find the odd report stashed away on the rte business section of their website but little in the way of high profile reporting. The media may be cautious about adding fuel to the housing slow down by frightening off new sales should they report more on falling prices. When the housing market goes the economy goes and a lot of people could find themselves unable to pay the debt. The media may be wary about speeding up the process.

http://www.thepropertypin.com/forum/

^^ click on the dublin region forums to see price drops in Dublin

Darragh29

clown bag wrote:

There certainly is a lack of reporting on house price drops in Dublin. You might find the odd report stashed away on the rte business section of their website but little in the way of high profile reporting. The media may be cautious about adding fuel to the housing slow down by frightening off new sales should they report more on falling prices. When the housing market goes the economy goes and a lot of people could find themselves unable to pay the debt. The media may be wary about speeding up the process.

http://www.thepropertypin.com/forum/

^^ click on the dublin region forums to see price drops in Dublin

Thats a great website, its excellent to be able to see exactly what people are seeing on the ground without the spin you get from the estate agents and vested interests.

flogen

Well there is a fear of us talking ourselves into a property crash, not to mention the dependence some media outlets (mainly in the area of print) have on the property industry - which could both discourage outlets from telling the whole truth.

Reporting of any serious price drops usually uses careful terms like "correction" rather than "crash" - the latter would be a tad alarmist at this stage.

Keep in mind that the reports we get are usually a few months behind too - the latest one covered February, I think... that wouldn't explain the OP's example completely but it might make more sense for those feeling the pinch from the recent hesitance (spurred on by Stamp Duty uncertainty).

Also, you have to look at the definition of each term. Tallaght, while in the county of Dublin, isn't exactly central to the city - perhaps that's included in the general "commuter belt" in this report, after all it is one of the main sources of daily commuters to city-centre jobs. So maybe they are reporting a price drop in Tallaght by grouping it in with the overall commuter belt (including the Greater Dublin Area etc.). Maybe when they say 'Dublin', they mean Dublin City or Central Dublin too... and the 4.3% drop is an average - it might be 10% in Tallaght but 0% in Ballbriggin etc.

Dirk Gently

On a more personal observation, I know of people who are selling property and their estate agents have told them to sell up asap and take what ever is offered. Other people I know looking to buy have been told to make any kind of offer on the property (way under asking price) and there will be a good chance it will be accepted. So outside of the media the word certainly seems to be sell now for sellers and wait a while for buyers. I've put off doing a self build for the past year or so because I've been waiting for a crash. Looks like I made the right decision.

I can understand why the media may not want to report on falling prices. Perhaps there is an unwritten rule they are all honouring in the national interest? It's the peole who bought in the last couple of years I feel really sorry for. More than likely the value of their houses will be worst hit and their interest rates are going to rise to boot. Double kick in the nuts.

mike65

The media whores don't want thier own homes bneing devalued!

Mike.

silvine

The media whores don't want thier own homes bneing devalued!

Nice to see you don't have an axe to grind then!

flogen

clown bag wrote:

On a more personal observation, I know of people who are selling property and their estate agents have told them to sell up asap and take what ever is offered.

Just to give a potential explanation for this that doesn't relate to the state of the housing market - if you get the chance, you should read the Freakonomics article about estate agents which theorises that all (dodgy) estate agents try to sell up quick and aren't too concerned about price.

Just to explain the theory briefly using a hypothetical scenario:
Estate agents work on commission - let's just say 1% of the total sale price (haven't the first clue to what it would realistically be).

So let's say an offer comes on a house after 2 weeks on the market - the offer is for €300,000, so they'd get a €3,000 commission.

Now, while it's in the interest of the owner to hold out for the best offer possible, it's not for the estate agent. Simply put, it could take weeks of extra work to get an extra few thousand (let's say €20,000) on the offer, and while that extra cash is very important the owner it's only an extra €200 to the estate agent.

That kind of money for 2 weeks work is poor in anyone's books, and they could have spent that time selling another house for the first offer and bagging another big commission. So it's in their interest to get a high amount of mid-price sales rather than a low amount of high-price sales.

So they have a choice. Spend 4 weeks selling two houses at €300,000 each, netting a commission of €6,000 in total, or spend 4 weeks selling one house at €320,000, netting a commission of €3,200 in total.

In Freakonomics they cite incidents where the estate agents told the seller that the market was slowing down and they should take whatever they're offered, while simultaneously telling buyers that the house was a bargain and the local market was booming (so the house could easily be sold at a profit down the line). They also found that on average estate agents tend to hold out for a sale on their own houses longer than they do on their clients' houses... no guessing why that's the case!

And of course if the estate agent is working on a flat-fee basis the deal is the same - they're going to get X amount no matter how much your house eventually sells for, so wrap up the deal quick and get as many in per month as you can.

FYI

clown bag wrote:

I can understand why the media may not want to report on falling prices. Perhaps there is an unwritten rule they are all honouring in the national interest?

I doubt very much that the media assumes it has a duty to 'honour the national interest'; as businesses their only real duty is to make profit - if that means keeping the property advertisers happy, then so be it. If on the other hand it means 'scaremongering' then so be it, but I assume this is less likely, as speeding up the inevitable (?) crash is probably not in anyone’s interests. From my point of view I think there has been very little (comparatively speaking) discussion of the potential crash - which is very worrying, given the probable frightening implications for quite a substantial number of people - rent will no doubt shoot up in the short term, properties devalued, an exodus of construction work etc etc.

For all the talk of 'talking ourselves into a crash', we cannot on other hand simply pretend it isn't happening/going to happen and remain unprepared.

Fintan O'Toole commented on the media reporting here:

"MB - You have probably seen the documentary on RTE recently concerning the 'looming' property 'landing'. While it was to a degree one sided; this was definitely something that needed to be said. Yet the next day there is an article in the Irish Independent asking why RTE was scaremongering - 'RTE broadcasts fear in the market'.

FT - You are absolutely right about that. It was interesting that RTE did that. RTE are one of the few media outlets that don't take property advertising. It's not a simple one plus one equation, though it is undoubtedly true that if not the choice of subject, but the prominence that is given a certain subject has to be related to the direct interests of the media outlets themselves. There is no question that almost all of the Irish media for the last 10-15 years has had a crucial economic stake in a rising property market. Because property advertising is very lucrative and is a very important part of what makes the Irish media tick. It's not that a newspaper like the Irish Times will not publish things that say 'this is a bubble'. It has published a number of pieces and very authoritative pieces, but in a sense it's where are those pieces going to appear. How are they related to the broader agenda, in terms of how we understand our society at the moment? So I'm not saying there is an absolute mechanical relationship between certain interests and what appears, but I am saying that the relationship exists. People need to understand this, it is not a council of despair - well you know there is nothing you can do about this. A critical understanding of how the media works is one in which people understand the kind of relationships that are involved and how to read and see that it is not necessarily an objective and accurate reflection of everything that is important to Irish society."

http://www.mediabite.org/article_The-Corporate-Media---Part-1_474268952.html

A Random Walk

I think the huge income the media have been receiving from property advertising has badly skewed their independence. The articles written in the property section of even the quality newspaper(s) do not qualify as journalism but as naked advertising masquerading as such.

The front page of the Irish Times today has a 1/8th ad for an overseas property expo, where Irish people can "invest" their money in countries they couldn't even find on a map.

constitutionus

plus lets not forget the media may just not have a clue what theyre talking about. the commuter belt area they were refering to is well outside tallaght. were talking meath, kildare, cavan and so on and its much easier to see large reductions out there because most people living there probably wanted to live in dublin in the first place hence the appearance that dublin is holding up better because theyre selling up and comming back.

still i know what your talking about. the houses in my area, and i live in dublin with great amenities and transport, have dropped by 40k since this time last year. for example a mid terrace across the way from me went for 338k. now theres another just sold for 295k ,in fairness it was a quick sale so they might have got more if they held out , but even so thats bad and theres an end of terrace with a fair bit of land going for 317 and its not shifting.
im not reading anything like that in the newspapers. usually they twitter on about 2% reductions but im seeing way more than that. in fact i know the tallaght area quite well and its interesting to see how appartment prices have collapsed. the belgard cross ones behind the square were originally going for 330k. now theyre 317.500. and the priorsgates ones slap bang in the middle of the village are going for 285k which smacks of a developer trying to get his money back before the market implodes. yet in the media . nothing

the problem with dublin is its so hard to give an average view. for instance if you put the sales of areas like aylesbury road up as an example you could make a good case for a crash now seeing as millions have been knocked off their prices but theyre not exactly representative of the county as a whole still its obvious to even the casual observer theres a big change happening and whilst i have sympathy for the "talking ourselves into a recession/crash" arguement theres only so long before it starts to look like youve got another agenda which, as was already mentioned in regards to the revenue papers get out of the property market not to mention the fact they own alot of these propertie sites online, seems to be the case.

sad fact is the main media outlets in terms of print and even broadcast to a degree are compromised by having an interest in the property boom going on and just like the banks its only when it all fall's down they'll all say "sure, wasnt it enevitable! the market was due a readjustment "


EDIT. incidently i was listening to newstalk and the last word on thursday and for the first time i heard someone say things are looking dodgy and we may be seeing a "readjustment". maybe the media mightnt be able to avoid this issue anymore