"Scarcity drives year-on-year rents up for the first time since 2007"

mathie

http://www.ronanlyons.com/2011/02/08/scarcity-drives-year-on-year-rents-up-for-the-first-time-since-2007/

Does this make any sense?

listermint

mathie wrote: »

http://www.ronanlyons.com/2011/02/08/scarcity-drives-year-on-year-rents-up-for-the-first-time-since-2007/

Does this make any sense?

Well realistcally no, but tbh there is alot of new property sitting under Nama which will not see rental market until god knows when. Many complexes half full or even only 2/3 apartments full.

Again its location driven I am assuming, where lack of rental property would spur this.

pennypocket

mathie wrote: »

http://www.ronanlyons.com/2011/02/08/scarcity-drives-year-on-year-rents-up-for-the-first-time-since-2007/

Does this make any sense?

Meh. One of the economists with a well-known property website who have been bullishly upselling the recovery. Pinch of salt. Take.

hinault

Take a stroll around Dublin City Centre and look at the number of residential and commercial properties with "To let" signs up?
Each street has at least several of these signs.
Walk down Fenian St, take a stroll around Fitzwilliam Square, you will see "To Let" signs littering the streets on those routes.

I think Lyons is mistaken.

mathie

hinault wrote: »

Take a stroll around Dublin City Centre and look at the number of residential and commercial properties with "To let" signs up?
Each street has at least several of these signs.
Walk down Fenian St, take a stroll around Fitzwilliam Square, you will see "To Let" signs littering the streets on those routes.

I think Lyons is mistaken.

An in-depth analysis of the Daft Report by an economist vs observations by a casual punter taking a stroll around a few streets?

Cavehill Red

mathie wrote: »

An in-depth analysis of the Daft Report by an economist vs observations by a casual punter taking a stroll around a few streets?

A load of reality-denying blather from a vested interest Vs the evidence in front of your own eyes?

mathie

pennypocket wrote: »

Meh. One of the economists with a well-known property website who have been bullishly upselling the recovery. Pinch of salt. Take.

Please provide some evidence of this.

mathie

Cavehill Red wrote: »

A load of reality-denying blather from a vested interest Vs the evidence in front of your own eyes?

So maybe you can provide evidence of either of those two assertions?

Cavehill Red

mathie wrote: »

So maybe you can provide evidence of either of those two assertions?

Well, firstly, in order to allege a shortage in Dublin, Lyons fiddles his figures so that 200% becomes 100%.
So that immediately invalidates his entire argument.
Furthermore, he's been talking up property for a long time. This is directly related to his being employed by Daft.ie, a property website, to do so.
I guess you want this 'research' to be true, Mathie. Perhaps you have rental properties yourself and would love to imagine raising the rents.
Good luck with that.

mathie

Cavehill Red wrote: »

Well, firstly, in order to allege a shortage in Dublin, Lyons fiddles his figures so that 200% becomes 100%.
So that immediately invalidates his entire argument.

Please explain?

Cavehill Red wrote: »

Furthermore, he's been talking up property for a long time. This is directly related to his being employed by Daft.ie, a property website, to do so.

Any links to him talking up property would be appreciated. I've only ever seen his articles as providing analysis of statistics so please prove me wrong.

Cavehill Red wrote: »

I guess you want this 'research' to be true, Mathie. Perhaps you have rental properties yourself and would love to imagine raising the rents.
Good luck with that.

I've no leaning either way. I'm just interested in truth.

You paint me as a landlord if you like. Sure only landlords would want to analyse statistics on property right?
:rolleyes:

Just like 2006 all over again.
Anyone who points out some information that goes against the herd gets abuse.

Wudyaquit

hinault wrote: »

Take a stroll around Dublin City Centre and look at the number of residential and commercial properties with "To let" signs up?
Each street has at least several of these signs.
Walk down Fenian St, take a stroll around Fitzwilliam Square, you will see "To Let" signs littering the streets on those routes.

Exactly. Looking for accomodation was a nightmare 3/4 years ago; now any house you view you'll be offered if you want it.
A 2% increase in some areas against a backdrop of falling rents elsewhere doesn't point to a shortage - the 2% is coming off the backdrop of substantial drops over the past couple of years, and is all but insignificant over a longer timescale.

Cavehill Red

mathie wrote: »

Please explain?

Did you read it at all? He reinterprets 200% to be 100% in order to claim that there is now a shortage, when in fact there is an overhang of nearly 100%!

mathie wrote: »

Any links to him talking up property would be appreciated. I've only ever seen his articles as providing analysis of statistics so please prove me wrong.

Analysis and interpretation. I'm not saying he's regularly wrong or right, but he talks his book.

mathie wrote: »

I've no leaning either way. I'm just interested in truth.

The truth on this one isn't difficult to discern. Property prices are crashing. BTL investors are screaming and going to the wall. There is an enormous overhang of property throughout the country and the city. Anyone, including Mr Lyons, who believes there is any form of property scarcity is either living in a cupboard or taking heavy medication.

mathie wrote: »

You paint me as a landlord if you like. Sure only landlords would want to analyse statistics on property right?
:rolleyes:

It's rather that you seem resistant to the idea that Mr Lyons is wrong. You came on asking for comments. You got some and they all said the same thing. You started junking them. This is known as confirmation bias.

mathie wrote: »

Just like 2006 all over again.
Anyone who points out some information that goes against the herd gets abuse.

Oh, puhlease. The victim card? Really?

ronanlyons

Cavehill Red wrote: »

Well, firstly, in order to allege a shortage in Dublin, Lyons fiddles his figures so that 200% becomes 100%.
So that immediately invalidates his entire argument.
Furthermore, he's been talking up property for a long time. This is directly related to his being employed by Daft.ie, a property website, to do so.
I guess you want this 'research' to be true, Mathie. Perhaps you have rental properties yourself and would love to imagine raising the rents.
Good luck with that.

Hi Cavehill Red,
While we all know the giddy thrill of anonymously casting asparagus on people's reputations online, perhaps you could - as Mathie suggests - provide some evidence that I've been talking up the property market for a long time. I'd be the first to point out that I made the wrong call in mid-2007 in relation to the rental market (http://www.daft.ie/report/ronan-lyons), but then again I'd been "talking down" the sales market for about a year at that point - daft.ie was taking serious criticism for "talking down" the sales market throughout 2006 when we first produced our asking price index and it showed the market slowing. Since I set up my blog two years ago, I've used yield analysis to point out how Irish property looks over-valued and my rent-or-buy calculator has been used by thousands of people to see what kind of flows of cash are involved over the lifetime of a mortgage or renting the same property.

It would be interesting if you could explain why daft would be interested in ruining its brand by having some corporate line for these reports which would mean at best calling it wrong and at worst denying market realities. If you want to get down to the monetary incentive, Daft makes money from people going to its site to find a place to live. That money doesn't go up in good times, or down in bad times, so it's hard to see why Daft would to try and turn one into the other. Also, why would I - as an academic researcher - jeopardise my career by spewing out some corporate message? And also, if that is what is going on, why have we been so bad at it, consistently putting out the message that prices are falling and the market is over-supplied?

As Mathie suggests, it sounds like you're a victim of group-think. Anyone who points out something you don't like the sound of has to be in some sort of conspiratorial plot, "cos it couldn't possibly be true".

I do think you have made one substantive point, on the level to which it must fall back. You say I've arbitrarily picked 200, not 100. Unfortunately, if you'd read the post, you would see that there's a perfectly good reason for 200, not 100. And that is that the market is processing each month about twice as many properties now as it did in 2007. If you want more details on that, you only have to look at the entry on my blog for the last Daft Report before this one, in particular the second graph:
http://www.ronanlyons.com/2010/11/23/as-rents-stabilise-the-urban-rural-gap-widens-in-the-rental-market/

It's been obvious since late 2009 to anyone in the albeit small group of people who look at the stock on the rental and sales markets in Ireland that if trends continued (which they did) a shortage of Dublin properties would emerge. Hence my making the following comment a year ago on another forum:

For what it's worth, I would expect city rents at the end of the year to be not too far from where they are now, but rents in other areas - due to fundamental supply factors - to be falling still.

Cavehill Red

Seems like the jungle drums have been beating this morning.
Greetings, Ronan, and congratulations on managing to transform an online discussion into an advertisement for your personal brand.
You're spot on in pointing out that neither you nor Daft.ie are dumb enough to engage in obvious market-denying realities in general. That would erode credibility.
And yet, here we are, discussing your having just engaged in exactly that. At least you admit doctoring the figures, but your excuse for doing so doesn't stack up. It doesn't matter if the market 'processes' a hundredfold times the number of properties as it did in 2007. The rate of churn does not influence the fact that there is a vast oversupply which in turn is driving rents down, not up.
As for my being a victim of groupthink, I was writing to warn about the property bubble from as early as 2004, and was roundly excoriated for a long time for doing so.
If there is a groupthink occurring currently, it appears to me that the victims of it are those with vested property interests hoping for soft landings, green shoots, corners turned and rising rental incomes.
Unfortunately, and this isn't a popular thing to say, property in Ireland will return to its fundamentals, which in turn are directly affected by trends such as unemployment, net emigration and deflation.
In short, the downside has a long way to go yet, and this will be reflected in sale prices, sale volumes and rents.

mkdon05

Surely if people are choosing not to buy houses but rent instead, the demand for rented properties rise and rents rise with that or at least don't fall. My simplistic view of it anyway!

ronanlyons

Greetings, Ronan, and congratulations on managing to transform an online discussion into an advertisement for your personal brand.
You're spot on in pointing out that neither you nor Daft.ie are dumb enough to engage in obvious market-denying realities in general. That would erode credibility.
And yet, here we are, discussing your having just engaged in exactly that. At least you admit doctoring the figures, but your excuse for doing so doesn't stack up. It doesn't matter if the market 'processes' a hundredfold times the number of properties as it did in 2007. The rate of churn does not influence the fact that there is a vast oversupply which in turn is driving rents down, not up.

Wow, hang on a sec there. Who brought up my personal brand? You did. You have plenty of strong opinions about it - it's presumably only fair that I do too. I am an academic economist, hired to compile the most accurate report I can for daft, who want to be accurate with their reports because that's what they believe will reward them in the long-term. Market-denying is just not an option, because people will see through it.

I'm not sure what your blind spot is with market churn. I'm not doctoring figures, I'm making sure we're comparing like with like. Do you honestly believe that a stock of 15,000 properties on the market in the UK is the same as in Ireland? Because that's the logical implication of your line of reasoning: churn doesn't matter. That's simply not true. How 15,000 properties sitting on the rental market is interpreted will be completely different in a market that churns 100,000 a month than in a market that churns just 1,000. Ireland's rental market has moved from one that churns 7,000 to one that churns 15,000. That matters.

You mention some downside risks as if I haven't thought about those. Clearly, they matter - as do the factors I mentioned at the end of the blog post in question. Generally, though, I don't do predictions, certainly not in any sort of official capacity for Daft, as the report is about what happened, not what's about to happen.

For those who are interested in what I actually think will happen, here's a quick overview:

• Rents in the cities to largely stabilise, with perhaps some further fall off in the 1-2 bed segment, when NAMA/ghost estate oversupply comes on to the market, coupled with weak demand from mid-20-somethings
• Rents outside the main cities to fall another 5% or so throughout 2011, and possibly into 2012 if active oversupply persists
• Yields on residential property (that's the rent-house price ratio) to slowly correct back up towards the 6% mark... this means house prices falling 55%-60% from the peak.
• Dublin prices are already about 50% off the peak, so house prices in the capital might level off as early as second half of 2011 or else in 2012
• House prices outside the main cities are down only perhaps 35% from the peak. That, plus significant oversupply generally in the non-city markets - coupled with weak demand due to weak jobs growth - to mean a more prolonged adjustment (perhaps as long as another seven years in some counties) but probably ultimately of the same scale, i.e. down 55-60% from the peak.
• (Other cities to be somewhere between Dublin and the non-city parts, probably closer to the Dublin scenario.)

mathie

Cavehill Red wrote: »

Analysis and interpretation. I'm not saying he's regularly wrong or right, but he talks his book.

I'll ask again for you to provide evidence of him "bullishly upselling the recovery". You simply can't make those assertions without backing them up.
Like you tried to label me a landlord.

Enough of the mudslinging please.

Cavehill Red wrote: »

The truth on this one isn't difficult to discern. Property prices are crashing. BTL investors are screaming and going to the wall. There is an enormous overhang of property throughout the country and the city. Anyone, including Mr Lyons, who believes there is any form of property scarcity is either living in a cupboard or taking heavy medication.

I wouldn't deny that house prices have and are decreasing.
The PTSB ESRI index clearly points that out.
I'm merely trying to see how this next phase will play out.
Like mkdon05 said if people aren't buying (due to house prices falling) then maybe they're renting and pushing prices up?

The housing and rental markets aren't the same beast.

Cavehill Red wrote: »

It's rather that you seem resistant to the idea that Mr Lyons is wrong. You came on asking for comments. You got some and they all said the same thing. You started junking them. This is known as confirmation bias.

Where did I 'junk' comments?

You might be referring to this "An in-depth analysis of the Daft Report by an economist vs observations by a casual punter taking a stroll around a few streets?". I'd hardly call that 'junking' someones comment.

If a doctor tells you that you need an operation and your mate who isn't a doctor says 'Ah you'll be grand' who do you trust?

Cavehill Red wrote: »

Oh, puhlease. The victim card? Really?

Well if you're playing the 'anyone who doesn't say house and rental prices are falling is wrong' card then we can all have a go!

gurramok

Ronan, can you comment if Daft have been removing long term rental adverts in order to reduce said rental stock?(where advertisers could not be bothered to pay for a new advert when for example a lease in up)

Also, can you comment on how Dublin rents are 'rising' when in fact only Dublin city centre and South County Dublin only saw rises. Have ye calculated the volumes for this?

For Dublin, 4 areas have seen a reduction in rent quarter on quarter, one area has seen a rise(city centre) and another area is static. For year on year changes, 4 have gone down in rent and 2 have risen. (Dublin city centre and South County Dublin)

Zamboni

Could anyone help me out and list the artificial variables that are preventing the property market (sales and rental) operating freely?
So far I have minimum mortgages of 150k, rent allowance, ghost estates in Nama, new FTB stamp duty. i.e. Witholding supply, reducing demand, artifical bottoms etc
Are there other obvious intereferences I am leaving out?
Thanks

ronanlyons

gurramok wrote: »

Ronan, can you comment if Daft have been removing long term rental adverts in order to reduce said rental stock?(where advertisers could not be bothered to pay for a new advert when for example a lease in up)

Also, can you comment on how Dublin rents are 'rising' when in fact only Dublin city centre and South County Dublin only saw rises. Have ye calculated the volumes for this?

For Dublin, 4 areas have seen a reduction in rent quarter on quarter, one area has seen a rise(city centre) and another area is static. For year on year changes, 4 have gone down in rent and 2 have risen. (Dublin city centre and South County Dublin)

Yay, substantive questions!
No, daft have - to the best of my knowledge - not changed their policy in relation to how long ads stay up without renewal. I think it's reasonable that if an ad is taken down after, say, a month without being renewed it's either been let out or the landlord has stopped actively searching for a tenant. There remains an underlying distinction between active supply and latent supply which is very valid, though.

The average figures are derived using Census 2006 weights. It was by this method that the significant rises seen in two areas (2-3%) outweighed the one significant fall (2%) and the three much smaller falls (~0.5%). It will be worth watching in the next report whether the two "leading" areas are just that, or are just exceptions.

hinault

Ronan : good man for turning up on this site to try to defend your view.

Unfortunately the visual evidence suggests that the number of properties in the city centre of Dublin, both residential and commercial property, to let is very substantial.

In the suburbs, I would contend that the situation is worse.
If you get the chance take a drive along the Ballymount Road.
The number of boarded up/vacated properties is very apparent.

mathie

hinault wrote: »

Ronan : good man for turning up on this site to try to defend your view.

Unfortunately the visual evidence suggests that the number of properties in the city centre of Dublin, both residential and commercial property, to let is very substantial.

In the suburbs, I would contend that the situation is worse.
If you get the chance take a drive along the Ballymount Road.
The number of boarded up/vacated properties is very apparent.

You see Ronan your access to the most comprehensive rental database in the country is no comparison to the anecdotal evidence of people walking down the road I'm afraid!

Zamboni

mathie wrote: »

the most comprehensive database of 'asking prices'

FYP

hinault

mathie wrote: »

You see Ronan your access to the most comprehensive rental database in the country is no comparison to the anecdotal evidence of people walking down the road I'm afraid!

You're becoming a tad fcuking tedious, mate.

Are there not "To let" signs littered throughout central and suburban Dublin?

mathie

hinault wrote: »

You're becoming a tad fcuking tedious, mate.

Fcuking tedious how, mate?

You're the one who has repeated his point three times now...

hinault wrote: »

Are there not "To let" signs littered throughout central and suburban Dublin?

hinault wrote: »

Unfortunately the visual evidence suggests that the number of properties in the city centre of Dublin, both residential and commercial property, to let is very substantial.

hinault wrote: »

Take a stroll around Dublin City Centre and look at the number of residential and commercial properties with "To let" signs up?
Each street has at least several of these signs.
Walk down Fenian St, take a stroll around Fitzwilliam Square, you will see "To Let" signs littering the streets on those routes.

And to answer your question "Are there not "To let" signs littered throughout central and suburban Dublin?"
I couldn't tell you.

But what is your point?
There are more "To Let" signs now that a few years ago?
That walking around and noticing a lot of signs up should be taken more seriously than a report on a database of rental asking prices?

Wudyaquit

ronanlyons wrote: »

The average figures are derived using Census 2006 weights. It was by this method that the significant rises seen in two areas (2-3%) outweighed the one significant fall (2%) and the three much smaller falls (~0.5%). It will be worth watching in the next report whether the two "leading" areas are just that, or are just exceptions.

Are you saying that 2 areas rose 2-3% and 4 areas fell, but the average overall in Dublin is a 2% rise - even if the rises were fully 3%, I can't see how this would be the case???

mathie

Wudyaquit wrote: »

Are you saying that 2 areas rose 2-3% and 4 areas fell, but the average overall in Dublin is a 2% rise - even if the rises were fully 3%, I can't see how this would be the case???

As Ronan said they were weighted with Census 2006 weights. So the areas with the rise had far more properties.

hinault

mathie wrote: »

And to answer your question "Are there not "To let" signs littered throughout central and suburban Dublin?"
I couldn't tell you.

You couldn't tell.

Maybe you wouldn't tell is more accurate, right?

mathie wrote: »

But what is your point?
There are more "To Let" signs now that a few years ago?
That walking around and noticing a lot of signs up should be taken more seriously than a report on a database of rental asking prices?

Yeah, I would suggest that what one can see with ones own eyes is quite reliable in terms of trying to guage the number of properties that are "to let".

I'd also take a look at the number of classified ads as a good indication of demand for rented accomodation and the rates of rent used in those ads.

I'd also take in to account the wider economic situation : unemployment rate, level of business closures, the rate of emigration, the debate about upward only rent reviews.......................

Archie D Bunker

mathie wrote: »

That walking around and noticing a lot of signs up should be taken more seriously than a report on a database of rental asking prices?

Here lies one of the problems - a database of ASKING prices. Asking prices don't really mean much these days - no one these days rents and pays the asking price.

Theboinkmaster

ronanlyons wrote: »

Wow, hang on a sec there. Who brought up my personal brand? You did. You have plenty of strong opinions about it - it's presumably only fair that I do too. I am an academic economist, hired to compile the most accurate report I can for daft, who want to be accurate with their reports because that's what they believe will reward them in the long-term. Market-denying is just not an option, because people will see through it.

I'm not sure what your blind spot is with market churn. I'm not doctoring figures, I'm making sure we're comparing like with like. Do you honestly believe that a stock of 15,000 properties on the market in the UK is the same as in Ireland? Because that's the logical implication of your line of reasoning: churn doesn't matter. That's simply not true. How 15,000 properties sitting on the rental market is interpreted will be completely different in a market that churns 100,000 a month than in a market that churns just 1,000. Ireland's rental market has moved from one that churns 7,000 to one that churns 15,000. That matters.

You mention some downside risks as if I haven't thought about those. Clearly, they matter - as do the factors I mentioned at the end of the blog post in question. Generally, though, I don't do predictions, certainly not in any sort of official capacity for Daft, as the report is about what happened, not what's about to happen.

For those who are interested in what I actually think will happen, here's a quick overview:

• Rents in the cities to largely stabilise, with perhaps some further fall off in the 1-2 bed segment, when NAMA/ghost estate oversupply comes on to the market, coupled with weak demand from mid-20-somethings
• Rents outside the main cities to fall another 5% or so throughout 2011, and possibly into 2012 if active oversupply persists
• Yields on residential property (that's the rent-house price ratio) to slowly correct back up towards the 6% mark... this means house prices falling 55%-60% from the peak.
• Dublin prices are already about 50% off the peak, so house prices in the capital might level off as early as second half of 2011 or else in 2012
• House prices outside the main cities are down only perhaps 35% from the peak. That, plus significant oversupply generally in the non-city markets - coupled with weak demand due to weak jobs growth - to mean a more prolonged adjustment (perhaps as long as another seven years in some counties) but probably ultimately of the same scale, i.e. down 55-60% from the peak.
• (Other cities to be somewhere between Dublin and the non-city parts, probably closer to the Dublin scenario.)

Ronan

Unfortunately I find your posts full of nonsense. You work for DAFT therefore you are not impartial and are a vested interest. You want activity to return to the market so please stop pretending otherwise.

You keep talking about peak prices - this is completely irrelevant. House prices to level off in Dublin in 2011 and 2012?!?! You're actually having a laugh mate. Please explain why you think house prices in this country will not continue to plummet when:

A) Income taxes will rise substantially for everybody
Significant Property taxes will be introduced for owners
C) Significant Indirect tax increases- VAT/Excise
D) Interest relief for investors will be further reduced from current 75%
E) Rent Allowance will be decreased by some material percentage
F) Personal Insolvencies will increase when the law is changed in their favour
G) Continued downward wage pressures-or no pay increases at least till 2013
H) As competition in Banking is reduced then mortgage margins will rise
I) Emigration will continue by current and future potential homeowners
J) NAMA releasing finished properties onto the market mopping up demand
K) ECB raising interest rates to normal levels, ie by 1.5%-2.5%
L) Property owners/investors in tight financial straits will be forced to sell
M) People realise that property in Ireland is still expensive vs other countries
N) More builders are put into receivership and properties are sold at large discounts
O) Rising fuel prices decrease disposable income and discourage commuting
P) The Croke Park aggreement falls apart and public sector pay falls
Q) Unemployment rises and
R) Deflation or very low inflation causes debt to have to be repaid in full rather than inflated away at lenders expense.
S) Stiffer regulation forces banks to provide mortgages with more caution
T) Interbank lending to Irish Banks does not return to precrisis levels and the Banks have to price margins very conservatively-A given
U) Building costs decline further as NERA is disbanded and new build houses can be profitably sold for less.
V) Development land has plummeted so land costs can lead to further downward pressure on prices of future developments.
W) Commercial rents continue to decline and contagion negative pressures apply to residential rents leading to lower property asking prices
X) Contrarily the current booming birth rate will provide demand in 25 years time-for subsidised housing at the least

ronanlyons

Theboinkmaster wrote: »

Ronan

Unfortunately I find your posts full of nonsense. You work for DAFT therefore you are not impartial and are a vested interest. You want activity to return to the market so please stop pretending otherwise.

Hi,
Clearly, you have your mind made up about what Daft is and does. Careful, they own boards.ie so if you're the conspiratorial sort, you might want to worry about hired goons knocking on your door late at night!

I'm kidding of course. I'm sorry you feel that way but I would like to point out that there is no evidence for your claims. As I mentioned above, daft are perfectly happy as long as people need a place to live (either renting or buying) - that fundamental need doesn't change with the business cycle and hasn't changed so daft keeps chugging along. If Daft wanted prices to rebound so badly, why was the Daft report the first to point out (1) slowing house prices, (2) falling prices and then (3) falling rents? Daft clearly aren't very good at manipulating the market, if that's what they're trying to do.

I do think your list of factors is a good one for those thinking about buying. Points (B), (F) if it happens and (K) are more than likely not factored in and could each have a significant impact on equilibrium prices. (Q, S, T and V, on the other hand, have largely had the bulk of their impact, IMO, while I don't necessarily buy W.)

Personally, I don't own a house and while my circumstances mean I'm not in a position to buy now anyway, I don't think I would for a good while yet, unless the "dream house" came along at the right price.

However, I would caution against believing house prices can go down for ever. Ask your parents or someone who had a mortgage in the 1980s: houses are never cheap, relative to your income, so don't wait around expecting them to be so. And I do think it's worth re-emphasising the regional differences in over-supply, this time on the sales market. The best available figures we have (NIRSA - Dept Env't) suggest that while there is a huge overhang of properties (esp 1-2 beds) in some parts of the country, in particular the Upper Shannon, there is practically no overhang in the 3-4 bed segment of the urban markets.

Snakeblood

Zamboni wrote: »

Could anyone help me out and list the artificial variables that are preventing the property market (sales and rental) operating freely?
So far I have minimum mortgages of 150k, rent allowance, ghost estates in Nama, new FTB stamp duty. i.e. Witholding supply, reducing demand, artifical bottoms etc
Are there other obvious intereferences I am leaving out?
Thanks

Affordable housing. Soclal housing.

Mr. Loverman

ronanlyons wrote: »

I would caution against believing house prices can go down for ever.

Straw man alert... I don't think anyone has said they believe house prices will go down forever...

In fairness to you though you have consistently been one of the more "honest" economists who work for a property related company.

man.about.town

mathie wrote: »

An in-depth analysis of the Daft Report by an economist vs observations by a casual punter taking a stroll around a few streets?

+1

Victor

Folks, a bit of civility please.

hinault wrote: »

You're becoming a tad fcuking tedious, mate.

Language, Timothy!

ronanlyons wrote: »

Clearly, you have your mind made up about what Daft is and does. Careful, they own boards.ie so if you're the conspiratorial sort, you might want to worry about hired goons knocking on your door late at night!

Ronan, I was going to comment on you intellectually beating people up, but literally beating them up isn't good either.

---

Someone commented than Ronan was shilling daft. I'm not sure if that is possible.

While I am willing to hear voices, I think its a good thing for Ronan to take part in this conversation and therefore he is welcome.

johnnyskeleton

mathie wrote: »

http://www.ronanlyons.com/2011/02/08/scarcity-drives-year-on-year-rents-up-for-the-first-time-since-2007/

Does this make any sense?

Hasn't he peddled that line before? It's almost a yearly bit of spoof at this stage:

http://www.ronanlyons.com/2010/02/16/stop-the-press-rents-go-up-in-january/

Yawn!

Supercell

I think the most important question is why the "churn" has doubled and if this is leading us into a tautology of thinking. Churn has doubled therefore its reasonable to assume that rents are rising -> yields are improving -> bottom of the market etc

However one could also argue that the churn has simply increased because people are choosing to rent rather than buy now for several years whereas many would have by now taken the plunge and bought leading to lessened demand.

I guess only the PRTB could answer the all important question here - Is the total rental stock falling , rising or stable right now?, without that figure then false conclusions or self fulfilling spurious tautologies likely result.

Personally, I thin,k yes rentals are likely to rise in the near future but with increased taxes, huge unemployment, market fear and bust banks it's far to early to call a halt to the bust as early as end 2011 or 2012 (maybe Q4 - finger in the air guess).

pennypocket

Ronan, is this market stabilisation a temporary or long-term phenomenon in your estimation? It just seems reasonable to suggest that if you included the 'long-term factors' that you say you didn't deal with in your analysis the picture could be somewhat different.

Zamboni

Is it possible we are just coming to the artifical floor created by social housing and rent allowance?
Or would that be signalled by an increase in landlords accepting RA tenants?

The maximum RA in my area is around €1100 funded by you and me.
That is more than a lot of actual taxpayers/renters can afford to pay.
Absolute madness.

mathie

johnnyskeleton wrote: »

Hasn't he peddled that line before? It's almost a yearly bit of spoof at this stage:

http://www.ronanlyons.com/2010/02/16/stop-the-press-rents-go-up-in-january/

Yawn!

Well spotted.
Maybe its an annual phenomenon due to Christmas or something?

If in doubt blame the Catholics

ronanlyons

johnnyskeleton wrote: »

Hasn't he peddled that line before? It's almost a yearly bit of spoof at this stage:

http://www.ronanlyons.com/2010/02/16/stop-the-press-rents-go-up-in-january/

Yawn!

Hi johnnyskeleton, did you read both posts? I'm going to claim that I don't often toot my own trumpet but it's clear from what's happened that I was right a year ago! Read that Feb 2010 post and read the one from this week: one made a prediction, the other confirmed that it happened. So while many doubted it at the time, rents did stabilise following that strong January showing.

@Zamboni
Your question is about prices rather than quantities. You could very well be right, particularly for the 1-2 bed segment. The equilibrium rent could be maintained artificially high by RA. I guess the point I was trying to make here is that even if the price is off, there looks to be a balance on the quantity side of the market. It's about balance between the number of people and the number of properties, not necessarily the price they trade at.

@pennypocket
Good question. Essentially it comes down to this: if you think there is some shock to the system coming down the line, e.g. NAMA is holding up not just some but a significant number of properties (relative to the overall market) which will come on to the market faster than demand, then that will push down rentals. Shock means here something that's not already factored in - so if people are factoring in three more tough years already, that might not have a big impact on rents.
The point of the blog post was in the absence of any such shocks, Dublin (and the other cities) are not as awash with rental properties as some might have you think. The long list of factors someone posted earlier are reasons why house prices might fall - most of them (the obvious exception being emigration) do not affect the underlying need for accommodation and thus some of those factors may even - at least temporarily if people opt to rent not buy - increase demand for renting.

Kosseegan

ronanlyons wrote: »

Ask your parents or someone who had a mortgage in the 1980s: houses are never cheap, relative to your income, so don't wait around expecting them to be so.

Houses were cheap in the 80's. A friend of mine had a 3 bed house in a private estate in Lucan bought in 1985. After tax relief the mortgage cost about £32 (40 euro) a week. That was the price of a bedsitter in Rathmines at the time. The big difficulty was accumulating a deposit and money for cost of purchase. Banks lent hardly at all for private houses. Building Societies were very conservative. Most demanded 20% on deposit for a lengthy period before considering an application at all. Two solicitors had to get 1% each for the conveyance. There was stamp duty of 4% to be paid on the house price as well as stamp duty on the mortgage.
The result was house prices were low and very affordable when a deposit was built up. Couples that time spent years saving and living very frugally before buying.

mathie

Kosseegan wrote: »

Houses were cheap in the 80's. A friend of mine had a 3 bed house in a private estate in Lucan bought in 1985. After tax relief the mortgage cost about £32 (40 euro) a week. That was the price of a bedsitter in Rathmines at the time.

Do you know what percentage of salary was the mortage?

How would the price of a 3-bed in Lucan compare to a bedsit in Rathmines now?

Cheers

ronanlyons

mathie wrote: »

Do you know what percentage of salary was the mortage?

How would the price of a 3-bed in Lucan compare to a bedsit in Rathmines now?

Cheers

Table 1 and Figure 4 of this paper might help:
http://www.esri.ie/pdf/QECSA0604_Duffy.pdf
As a general rule, the typical mortgage costs 25% of disposable income and while it fluctuated, the figure in 2004 was not wildly different from the figure in the 1980s.

MuffinsDa

ronanlyons wrote: »

Table 1 and Figure 4 of this paper might help:
http://www.esri.ie/pdf/QECSA0604_Duffy.pdf
As a general rule, the typical mortgage costs 25% of disposable income and while it fluctuated, the figure in 2004 was not wildly different from the figure in the 1980s.

Away with that fancy academic talk. My short walk in Ballyfermot proves that you are totally wrong, haven't you seen them "signs"?!

fred252

Ronan,

Off topic a bit: my parents were trying to sell their house at the height of the bubble. months later they asked the estate agent to remove the ad as they had decided to wait until the market recovers (they don't really need to sell). recently i noticed the house was advertised on myhome at the original asking price (about twice what its worth now). i told my parents they should have it removed as it would be skewing statistics. (among other reasons)

Is there any reason why an estate agent would want to advertise a house at an inflated price that would never sell?

Zamboni

fred252 wrote: »

Is there any reason why an estate agent would want to advertise a house at an inflated price that would never sell?

Just my 2 cents

EA's are ultimately the main data inputters on daft/myhome websites.
Daft/Myhome get economists to do reports on that information.
Those reports generate media coverage.
That media coverage can influence people perception of the market.

Ergo, EA's may place/duplicate/inaccurate adverts to ultimately present an untrue picture to the public.
Websites don't care as they generate advertising income and are profit driven business.
Economists get paid to do a report based on information given (regardless of the quality of the input from EA's)

Kosseegan

mathie wrote: »

Do you know what percentage of salary was the mortage?

How would the price of a 3-bed in Lucan compare to a bedsit in Rathmines now?

Cheers

A bedsit in Rathmaines now costs €450 a month. Repayments on €250k about €1K per month.

Repayments out of net takehome in the 1980s about 25%.

ZYX

Kosseegan wrote: »

A bedsit in Rathmaines now costs €450 a month. Repayments on €250k about €1K per month.

Repayments out of net takehome in the 1980s about 25%.

Can you still get bedsits?

Comparing areas of Dublin 30 years ago to now is pointless. The city has changed massively. Its population has increased by about 33%. 30 years ago Lucan was firmly out in the country. Cows grazed in the fields of Lucan. Not many cows grazed in Rathmines.

ronanlyons

Zamboni wrote: »

Just my 2 cents

EA's are ultimately the main data inputters on daft/myhome websites.
Daft/Myhome get economists to do reports on that information.
Those reports generate media coverage.
That media coverage can influence people perception of the market.

Ergo, EA's may place/duplicate/inaccurate adverts to ultimately present an untrue picture to the public.
Websites don't care as they generate advertising income and are profit driven business.
Economists get paid to do a report based on information given (regardless of the quality of the input from EA's)

@fred252
If your parents don't want to sell their house, the ad should not be up there. End of. They should have strong words with their EA about that. As to why the EA did it (beyond laziness or forgetfulness), clearly zamboni hasn't talked to an EA for a long long time! Their goal now is the sale, not the price, so the EA would be hindering the chances of a sale with this tactic. More likely is the belief on the part of the EA that your parents would change their mind and thus they kept the ad up on myhome rather than take it down and have to pay for a new one (myhome charges on a per ad basis, daft incidentally doesn't).

@zamboni
It's worth digesting the point above: i.e. often the battle now is EAs trying to convince sellers that their home is "only" worth €250k and not the €500k that so-and-so got four years ago. Your way of thinking about the typical EA was probably spot on in 2007, but this is 2011.
Also, on a more technical note, leaving an ad up would not skew the statistics. Asking price indices are based on the ads posted in particular month, not all ads up in that month, so there's no chance at all your conjecture is right.

Zamboni

ronanlyons wrote: »

Also, on a more technical note, leaving an ad up would not skew the statistics. Asking price indices are based on the ads posted in particular month, not all ads up in that month, so there's no chance at all your conjecture is right.

It was my inner Jim Corr talking.