A member survey by the Irish Auctioneers & Valuers Institute (IAVI) has confirmed that value of houses has dropped by an average of 9.2% nationwide in the second quarter of the year.
While this will not come as a big surprise to many it is good that this news is coming from the mouths of those who have for so long stoked the fires of the property bubble. If the auctioneers are resigned to the fact that the falls in prices are drastic then you know it must be true.. or even worse.
The economist illustrate how the steady decline in house prices in countries around the world has encouraged some people back into the market very recently. Ireland, however, is one of the few exceptions to this trend. The economist sights Ireland and Spain as having “big supply gluts” which are likely to push down prices for a long time.
Every person is fully aware that in the past week there have been some very bad announcements when it comes to jobs but given that it is a new year January was always going to be a bad month. The big companies were always going to wait until after the holidays to make major announcements. The smaller companies, however, didn’t have the luxury and December saw 16,300 people going onto the live register topping off the highest single year rise on record. A 71% rise in unemployment in 2008.
In order to assess exactly where this country is in terms of unemployment it is worth looking at 2 charts. The first is the number of people on the live register:
The second is the unemployment rate:
Looking simply at the first chart it is clear to see that the amount of people on the dole is shooting up and within the next few weeks it will be at the highest point it has ever been.
Comfort will be taken from the second chart where we can see that as a percentage of the labour force the situation is nowhere near what it has been in the past few decades, at least yet.
Nothing more needs to be said other than keep an eye on these charts through the next few months. They will be the reason behind every other statistic, from house prices through retail sales figures.
House prices are continuing to fall as indicated by the latest ESRI/ permanent TSB House Price Index. The chart below illustrates just how much has fallen of the average house in Ireland since prices peaked in 2007.
Expectations of a return to a vibrant market are very hopeful. The property donkey is dead and if we compare our situation to other countries then we can expect a 40%-60% drop in prices. Dublin prices peaked in April ‘07 and have since seen a drop of 16.6%. With a stockpile of empty property, banks not willing to lend, people not willing to buy and a very uncertain future for the economy it is inevitable that property prices will continue to slide.
In the first 10 months of 2008 there were 43,513 property completions. The total for 2007 was 78,027. A signs of the times. 2009 is going to be a tough year for the sector and as a result the country that relied so heavily on it.
