Article: House prices 'set for further 10pc fall' says leading economist

The_Conductor

http://www.independent.ie/business/personal-finance/property-mortgages/house-prices-set-for-further-10pc-fall-says-leading-economist-2108589.html



House prices will fall by another 10pc before the market hits rock bottom next year, a leading economist predicted today.

Jim Power, chief economist of Friends First, believes while the recession is likely to end around the middle of this year, consumer confidence and spending will continue to be undermined by wage cuts, an uncertain labour market and further reductions in state spending.

The finance house revealed six out of 10 consumers are not confident in the Government's ability to revive the economy, with a third backing a Fine Gael/Labour coalition to do the job.

Mr Power said it was difficult to be convinced the economic situation will improve considerably in the near future.

"The Irish economy is going through an extremely difficult adjustment and the situation remains precarious. It is way too early to sound the all clear," he warned.

"A fundamental reform of taxation and spending is required.

"The most economically efficient tax system is one based on relatively low marginal rates but spread broadly - the notion that the problem can be solved by increasing taxes on the so-called 'better off' is naïve and would go nowhere towards solving the problem."

In its quarterly economic outlook, Friends First examined the views of 1,000 Irish people on the current and future economic situation.

It found 86pc of those surveyed believe creating jobs is the biggest challenge facing the Government, followed closely by reducing Government borrowing (51pc) and enabling the banks to lend again (45pc).

The research also showed confidence in the Government remains low with with a third believing the economy will not return to growth until after 2012.

Some six out of 10 are not confident in the ability of Irish banks and NAMA to stimulate the economy.

Mr Power said he found it difficult to see where meaningful job creation might come from and predicted further job losses in construction, retail, hotel and restaurant, financial services and the public sector.

House prices, which he said had plunged by at least 50pc since a 2007 high, will drop another 10pc before bottoming out in 2011.

Mr Power also said it was critical that the cost of doing business and the cost of living in Ireland be further reduced to reap the benefits of a global economic recovery.

"This is the major challenge for Irish policy makers - to ensure that as the external environment improves the Irish economy is in a position to exploit it," he added.

Press Association

AARRRGH

Jim Power has the credibility of a turd.

The fact that he is saying 10% means the market has a long way to go.

ricman

Look at wage decreases, shortage of credit,oversupply, emigration,increase in taxes, unemployment, you don,t need to be a genius to say prices will go down, thats like saying if you go to the artic , it might be a bit cold.
ITS a completely obvious statement, like saying some irish people have been known
to drink beer.
THERE was an article in the independent about 5 days ago, a rating agency says prices will go down by 25 percent.
I reckon prices will go down by at least 20 per cent, especially for small apartments ,or houses outside dublin, cork, eg which mean long commutes if you work in the city.
Wheres all the new first time buyers gonna come from.
THE average young person is either in college, or on a low wage, or unemployed.
AN american agency says we wasted most on the boom money on
building houses.And the government is taking on 60billion in debt to rescue the banks.
ITS not gonna have much left over to stimulate the economy.

Cookie_Monster

only 10%

Treehouse72

My IQ dropped 10% reading that crap.

House prices will not fall by any less than another 30% across the board. More for apartments.

The_Conductor

Treehouse72 wrote: »

My IQ dropped 10% reading that crap.

House prices will not fall by any less than another 30% across the board. More for apartments.

It all depends on location tbh.
There are houses and apartments that have only got value for the land under them- and rezoned agricultural land at that- while there are vacant apartments in the greater Dublin area that will probably be used as a new social housing experiment (a la the proposals for Adamstown and Newcastle Lyons (though I guess Newcastle will be a hell of a lot more popular!))

Personally I'd guess your 30% fall from current levels across the board- is actually conservative. At current levels- we are still massively overpriced in historic terms- but if you factor in all the downsides- particularly interest rates- the writing really is on the wall.........

Duckjob

Amateur psychology tactics IMO.

Adopt the tone of somebody giving a bearish viewpoint to establish some credibility, when the real message is "property only has another 10% to go and then its up up and away again"

Like those "bearish" reports from EAs that were surfacing 12 months ago that did the equivalent of sucking air through the teeth and saying "the market could take 6 months to recover".

Parasites.

Duckjob

I'd also love Jim to explain how the market will hit "rock bottom" (nice manipulative language there Jim) next year, in an environment with interest rates (ECB and local bank rates) being racheting up steadily