For a bottom to be reached there needs to be sufficient liquidity, bottoms are usually set with a significant increase in volume. That isn’t happening yet and banks like Lloyds in the Uk are still increasing impairment charges on their Irish property loan books

i think you where wrong to put the ‘worse to come’ in with the view that No, house prices haven’t bottomed out. if you think that house prices havent bottomed out you will vote No on what you think is to be a fact. ‘worse to come’ is just an opinion of circumstances of a section of people who think NO that house prices havent bottomed out. there is a very large proportion of people who believe house prices haven’t bottomed out and gladly welcome further drops.

Why are further falls in still unaffordable house prices a ‘worse to come’ scenario?

I have since learnt S&P thinks house prices have fallen just 33% from the peak. With every metric I’m aware of suggesting at least 40% falls, I really do wonder how they concluded that! (Then again, these are the same ratings agencies that got the global economy into this mess in the first place…) Knowing that now, I can go and click the “No” button, as I’m 100% confident prices will fall by more than 33%… given that they already have.

I am not completely sure it would be a bad scenario. People who are currently renting would be able to own their home and pay in mortgage less than what they pay in rent. I guess the mistake is to look at property as an investment. It’s necessary evil. Whereas people who fell into the cheap mortgage trap and were caught in the bubble burst, well, they know what door to knock at.

I’d have to agree with Patrick and Conor. Further falls in house prices may be bad news for homeowners, particularly those who’ve bought since 2003 or so. However, they would be good news for the hundreds of thousands of people, from those currently in school to those in their early 30s (and beyond), who depend on Ireland regaining competitiveness for their own livelihood. Remember, only one in three households has a mortgage (at least per the 2006 Census).

One other point on the language – just because house prices stop falling doesn’t mean they start rising again straight away. Economic history tells us that house prices typically do nothing better than track inflation over time. (This, for example, has been the case for Ireland between 1977 and 1995, or in Amsterdam between the 1690s and today.) If we are in a low inflation environment as we now are, we may find that house prices are static for a good while. This shouldn’t worry us.

On the question itself, I found it difficult to pick one of the options, even aside from the language used. What are we using as the benchmark for house prices now? If we’re using the latest Dept Environment figures, I think they’re from early 2010 and based on a handful of transactions. If we’re using ptsb figures, they suffer from the same problem, even if they are more recent. If we use daft.ie asking prices, they are up to date but they are just asking prices.

And if we take daft’s asking prices as an upper bound for true prices, they throw up another issue: some places look much closer to levelling off than other areas. In parts of Dublin, prices are down 50% from the peak, with a smaller proportional overbuild from the boom years and a much healthier relationship between rents and house prices. In other parts of the country, asking prices are down just 35% from the peak, and there is still significant stock sitting on the market and the balance between rents and house prices looks less healthy.

If we take prices achieved in the Allsop’s fire-sale aucution last month, they suggest we are about 65% below peak levels. That may indeed turn out to be the plateau for prices. But it would also suggest that asking prices in some parts of the country are perhaps only half way through their adjustment, even if they are much closer to bottoming out in parts of Dublin.

“I think in the context of the recession gripping the country, and the fact that 13 per cent of all households are now in negative equity (including 1 in 3 who took out a mortgage since 2004), most people would view further falls in house prices as a less than positive development.”

Jennifer, I have to disagree with you on this. While those who are in negative equity would be understandably miffed, the simple fact is the cost of living in Ireland is too high. A key component of that is accommodation. This has knock on effects to our competitiveness on a global scale.

From an economic point of view, if you want the recession to end, we need more jobs. We’re not going to get them if houseprice driven salary demands are too high. So most people who actually care about the economic future of this country would prefer to see house prices drop off still further to some reasonable level where it’s possible to buy a house on an average salary and have some semblance of a normal life. We don’t have that in this country. Protecting the few in negative equity at the cost of the many who are required to rebuild this country is a short sighted point of view today. I am sorry for them but negative equity is not the end of the world, particularly if they can keep funding their payments unless the economy never gets going again.

And if the economy never gets going again, they’ll have a lot more to worry about than the fact that they are in negative equity.

There’s no reason house prices have to be high. When people forgot that houses were for living in, things went badly wrong in this country. We kind of need to start remember houses have utility value, and are not a measure of your intrinsic worth.

I think the reaction to this article speaks volumes of the demographic of the Journal readers , professionals in there 20’s,30’s renting and looking to buy their own homes in the future. The boom was a mass transfer of wealth from the young to the old, this still continues through rent. Let’s face it we all know people in their 50’s/60’s with a couple of houses who are under no pressure to sell as they are renting their places and won’t sell as a matter of principle with the mentality “won’t sell for less than it’s worth”. The FF/FG government support this unfair market via NAMA and other schemes and in doing so have disenfranchised the younger generations of owning their own homes. As a potential future property owner my eye is on the increased taxes incurred through property ownership that are being brought in, if an asset costs you money then it is a liability and has negative value. At the end of the day we would all be wise to remember it’s just bricks and mortar.

” recession gripping the country”

Yes, and one of the reasons for recession is that businesses are _still_ closing down because rents are too high. And why are they too high?

As someone pointed out on the pin, in a current receivership sale of apartments in Dublin 4, the price per square foot of properties is still same as peak prices in New York.

P.

A few things..

(i) When you have Ireland’s main current affairs show camping out at the sale of a mere handful of houses – mostly to cash buyers – there’s reason to believe that the Irish mania for property hasn’t ended and that there are still people overvaluing property.

(ii) These handful of houses are still being sold at high /m2 prices, despite big headline falls from peak. There’s more to fall.

(iii) Whether you think prices falling or rising is a good thing depends on whether you’re a potential buyer or seller. The judgement of “better” or “worse to come” is symmetric and the govt has no business favouring one side over the other.

I think,( it is just a friendly suggestion), a good reporter never includes his own opinion when he asks a question. It probably will be better to ask a question like this:

Poll: Have house prices REALLY hit rock bottom?

YES
NO

I personally think it will. Time to jump ship to a new country.

Standard and Poor could not predict anything, they missed the world recession.

Nick, When do you think they will bottom out? I seriously don’t think they will bottom out for at least another year, maybe two. I viewed a property about a year ago and the estate agent told me he thought the market had finally bottomed out but i didn’t believe it then and i don’t believe it now. Personally i think buying now because i believe they are still falling and will continue to fall for a while. It would be a mistake because there is no point getting a mortgage for a property that will cost more than actual property is worth. The problem is not just with property prices though. Banks are not lending nearly enough. They have gone from one extreme to the other. Before the crash, they were handing out 0% mortgages like they were going out of fashion but now you need at least a 20% deposit before you can even afford a property. Even then there is a shortfall between what you need to buy a property, your deposit and and what the bank is giving you. They are saying you need 10% but in practice, its a lot different. They say property prices are back to 2001/2002 levels but i think even then they were still too high.

The rise in interest rates will see a further fall in house prices. My guess is that prices will fall about 15% in 2011 and I bet I won’t be too far off the mark. Prices won’t bottom out until interest rates are stable and the banks start to lend.

“Great little nation and feck the moaners”

Looks like Bertie Ahern has been reduced to changing his name.

P.

The wording of this poll is awful, obviously written by somebody in negative equity. Poor, emotive journalism.

Also, we’ve been hearing the same thing for at least two years now, why are we to believe that it is any different now? There is a basic rule of economics which I think everyone is aware of: Supply and Demand. When the supply of a good or service is higher than the demand, the price falls. Now I’m open to correction on this, but as far as I am aware there are far more houses in Ireland than there are people to buy them (or even live in them). It doesn’t take a genius to figure out that this means there is only one way house prices can go from here. (In case you didn’t get it, the answer is down.)

“The wording of this poll is awful, obviously written by somebody in negative equity. Poor, emotive journalism.”

For the sake of openess, it would interesting to know if the journalists involve own property.

P.

When I was o young lad we had notting only a positive outlook on life we were always upbeat and looked straight ahead now it like all we can do is look in the past the old people always said be positive come on boys and girls let’s bring back the best of Irish in ourselves
And be positive again and rebuild our
Great little nation and feck the moaners
Yes we can