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Chronic Oversupply Of Property In Ireland!


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Saturday, January 20, 2007

93,419 new Irish homes seeking buyers

According to this article in the Irish Examiner, there were 93,419 new homes constructed in 2006. This is an increase of 15.4% over the number constructed in 2005. Note that this doesn't represent a 15.4% increase in the total number of homes in Ireland (which presumably would require a 15.4% increase in house buying population). Looking at the 2002 CSO count of 1,287,958 households, if these new homes were filled, it would mean we've had a 7.3% increase in the number of households since 2002. But by my reckoning, the population of Ireland has only increased 3.7% during from 2002-2006. When the music stops it looks like there will be almost twice as many new homes as there are buyers seeking new homes. That is... unless the specuvestors hang on until doomsday.

posted by an_dochasach at 3:00 PM

Brought to you by:

http://irishpropertybubble.blogspot.com/

and

Edited by tara747
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From the daft.ie discussion boards:

Re: Can't Sell My House.

Author: seanstaunton

Date: 21/2/2007

Comments:

Simple issues with the house sale

1. Market in general was quiet in Sep - Dec 06 partly due to Mr McDowell

2. Market is now quite active but there has been an overhang of houses from the last quarter giving the impression of a buyers market, this will be shortlived as demand is creeping up to match supply at current market prices.

3. Because of the "perceived" buyers market houses that are anything less than immaculately laid out are not seeing much action - and some owners are reducing price to account for this and stimulate demand. There has been no real reduction in the market price.

4. Wait for the next HPI House Price ndex to come out - it will show nil to moderate price growth but no negative price growth.

Pay no attention to the Doom's Day Cult followers that have permeated the website

Re: Can't Sell My House. Reply to this message

Start a New Discussion

Author: TheOrb

Date: 21/2/2007

Comments:

Sean Staunton "..There has been no real reduction in the market price"....

E: [email protected]

T: 01 690 4554

It is obvious you did not have to take economics 101 to obtain your mortgage qualifications (that is, if you have any).

Like some many other of the vested interests you are not telling the truth and you are giving false hope to people .

- Interest rates of 4.25% by year end are looking more and more likely ( 4.00% in June is now a certainty ) working with mortgages Sean, I thought you would at least understand each increase in interest rates means borrowers can borrow a lot less money i.e less money to spend on a new house purchase .

- The stamp duty issue has thrown even more uncertainty into the market.

- Are you honestly saying buyers will rush back into the market ignoring both these issues??

And FYI Sean, 0% growth in houses prices coupled with our current inflation rate of close to 5 % , means in real terms house prices are falling .

It is people like you that have created this mess. All you are interested in, is your commission. You obtain jumbo mortgages for people ,that they will simply not be able to pay back. What happens if we hit 5% interest rates? You should be a shamed of you self.

Re: Can't Sell My House.

Author: poplar

Date: 21/2/2007

Comments:

seanstaunton open your eyes will you, heres two cold hard facts for you:

1: the overhang isn't going away and is getting worse as more and more people trying and exit the market with profit, this is on top of the 170,000 vacant houses indentified in the last census - heres the proof - http://daftwatch.atspace.com/

2: the last daft report actually showed houses prices began to fall last quarter so bang goes that idea of yours that no prices have fallen yet. hell if you don't believe me why not check out http://irishhousepricesfalling.blogspot.com/ for a VERY comprehensive list of house prices that have already begun to fall

:lol::lol::lol:

http://daftwatch.atspace.com/ - this shows the inventory (rising daily!)

http://irishhousepricesfalling.blogspot.com/

www.thepropertypin.com/forum

Edited by tara747
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A great post from The Property Pin!

Some facts for Walter from the wikiedia entry:

Inventory is rising fast all over Ireland at unprecented levels http://daftwatch.atspace.com

12.6% of the Irish workforce is employed by the construction industry.[11]

23% of Irish GNP is dependant on construction. Of this new residential housing construction makes up nearly 13% of GNP.[12]

There is no true shortage of land, only a shortage of planning permission. Even in Dublin, Cork, Limerick etc. there is no shortage of land.[13]

The p/e (Total Price divided by annual earnings) ratio for private housing is at an all time high. A Davy Stockbrokers report (Mar 06) suggests that for prosperous Dublin suburbs the ratio could be approaching 100 times. Davy states that these ratios can only be justified if investors are extremely bullish about rental growth. Given the plentiful supply of rental properties in these areas however, Davy suggests that it will be an adjustment in property prices, rather than rents that will eventually bring valuations down to more realistic levels.[14]

The Daft.ie Report Quarter 2 2006,[15] which provides a comprehensive analysis of recent trends in the Irish property and rental markets has indicated that the average gross yield of a Buy-To-Let property investment in Ireland is 3.27%. This rate of return is considerably lower than any available mortgage rate in Ireland [1] and also lower than the Jan 2007 ECB base rate [2].

ECB interest rates (Jan. 2007) are at an accommodating 3.50%, with many Jumbo mortgages taken out in Ireland.

Consumer behaviour in Japan is really not so different from Ireland or indeed any other capitalist society. If house prices decreased there for 14 years, then the same is possible in Ireland.

A very high proportion of new houses in Ireland remain unoccupied.[16]

A slowdown in property value growth combined with more profitable property investments abroad could reduce the number of domestic property investors thus exacerbating any slowdown.

The number of houses per thousand of population is lower (~391) than the EU average (~428).

Such is the state of the property development 'buzz' in Ireland, that in October 2006, city councillors and national news media organisation RTÉ, were duped by a promotional campaign for 'Seamróg City' - a supposed Dubai-type development in Dublin Bay, which featured a website www.dublincoastaldevelopment.com, and a video purporting to be about the proposed development - including a giraffe only zoo! Youtube Video It turned out to be for the benefit of property website funda.ie

Prices are starting to fall: irishhousepricesfalling.blogspot.com[3]

I honestly thought that the UK would be first and then Ireland, but it looks like it is definitely us diving into the crashpit first!

Edited by tara747
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I'm going to have the thread to myself, so! hehe

This is from thepropertypin.com/forum, looks like the number of vacant properties is even higher than quoted above:

Blindjustice BATONEFFECT

Posted: Wed Feb 21, 2007 2:46 pm Post subject:

--------------------------------------------------------------------------------

just over 40% of the mortgages for new property drawn down last year were for Residential Investment Lettings? That indicates a huge level of speculation in the market since the rental yield has been falling to under 3%. (Yields started to pick up in the latter half of 2006 in Dublin). Yet despite strong immigration and population growth, the Central statistics office found 275,000 empty properties accross the country in April 2006. This indicates a huge level of speculation based on the expectation of capital gains in the market, and indeed house price inflation has nominally been about 14 percent per annum in nominal terms. In Europe we also have the highest level of employment in construction as a percentage of the workforce and its estimated 100,000 of those working in the sector will need to seek alternative employment over the next 10 years.

Here are the references for the above facts. They are facts and cant be disputed - only how they are interpreted.

http://www.ibf.ie/pdfs/ibf_pwc_mortgage_q3.pdf

http://www.davydirect.ie/other/pubarticles...ncr20060329.pdf

http://www.davydirect.ie/other/pubarticles...lds20061027.pdf

http://www.unison.ie/irish_independent/sto...;issue_id=14880

http://www.finfacts.com/irelandbusinessnew..._10006332.shtml

Edited by tara747
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Gets me thinking...are the government so corrupt, incompotent and bad at planning that they have allowed this to happen,

or,

Is there a reason that we need all these houses - like a planned, managed and vast increase in immigration.

Ireland has, after all, one of the lowest population density ratings in Europe.

I dont actually have an opinion on this, but if the oversupply figures are true then......I have great difficulty believing that a government operating within and under EU direction could get this so badly wrong.

If the figures are true, that is.

Edited by needle
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If you think its bad in Ireland, take a look closer to home. In the SE new listings are flooding the market in the commuter belt of Surrey. This famous website added 1,302 new properties seeking a buyer in the last 7 days alone:

http://www.findaproperty.com/searchresults...&allareas=1

Properties for sale in Surrey
[save this search]
Buy a property in Surrey with FindaProperty.com
Showing 1-20 of
1302
properties for sale. (196 in the last 24 hours alone)
Added in: last week

_______________________

Cue d23: "We have gone through this before. Just because more properties are being added does not mean there are more properties being added for sale."

Cue Tuffers: "It just means more property is coming to the market because there are more EAs selling more property. This does not mean there are more houses for sale."

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Isn't the Irish market doing rather well?

Do you have some facts and/or figures to back this up? Because daft.ie, finfacts, thepropertypin and lots of other sites have hard facts to back up the view that it is doing pretty badly!

:lol:

Is it some subtle joke by a property bear to call the Irish property website 'daft'?

Peter.

It's an acronym, stands for Dublin Area something. Started as a rental search site, spread into sales and has grown to be the biggest property search engine/info point in Ireland.

Here's the daft.ie Q4 2006 report, see the comments at the bottom!

http://www.daft.ie/report/index.daft

:lol:

Edited by tara747
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It's an acronym, stands for Dublin Area something.

http://www.daft.ie/report/index.daft

:lol:

Tara, it's stands for the 'Dublin Accommodation Finder Terminal'

According to this website the inventory for the part of Dublin I live in has increased by over 50% in about 6 weeks. Was 40 - now 62. This is by no means conclusive as the myhome.ie website lists even more properties for sale - but still......

Perhaps a new acronym is called for instead of DAFT. As most BTL'ers are living in a fantasy bubble may I suggest DISNEY:

Dublin Investors Stampeding for Nearest Exit. Yikes!!!

Edited by Frankk
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Tara, it's stands for the 'Dublin Accommodation Finder Terminal'

Thanks!

According to this website the inventory for the part of Dublin I live in has increased by over 50% in about 6 weeks. Was 40 - now 62. This is by no means conclusive as the myhome.ie website lists even more properties for sale - but still......

Perhaps a new acronym is called for instead of DAFT. As most BTL'ers are living in a fantasy bubble may I suggest DISNEY:

Dublin Investors Stampeding for Nearest Exit. Yikes!!!

And

:lol:

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http://www.finfacts.com/irelandbusinessnew..._10009175.shtml

Annual Irish Consumer Price Inflation increased to 5.2% in January; Service Inflation at 9.1% - Goods Inflation at 0.6%
By Finfacts Team
Feb 22, 2007, 11:14

Hyperinflation coming? The price of irrational exuberance I am afraid. Something had to give and it just did. :o

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Still, if house prices are dropping fast then service cost inflation should also drop as people won't need massive pay rises to buy houses. Plus the companies will be able to hire all those builders who are going to be out of work and cut the pay rises they hand out.

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Still, if house prices are dropping fast then service cost inflation should also drop as people won't need massive pay rises to buy houses. Plus the companies will be able to hire all those builders who are going to be out of work and cut the pay rises they hand out.

Interest rates this year will easily hit 4% - double where they were just over a year ago. Debt servicing costs are going through the roof and the public sector unions will demanding big pay rises. Indebted business that are struggling to retain operating margins are attempting to pass costs on customers, hence the 9.1% service inflation.

It doesn't look good, and there is no easy way out. Economic growth could well grind to a halt as more foreign investors get spooked about the cost of doing business here.

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