Sunday, January 07, 2007

Media Bears

The media seem to have emerged from the Christmas period like a bear with a sore head in their reporting of the Irish property market. Even The Irish Times the self styled organ of record, and a fervent housing bubble denier has allowed one, less than wholly enthused about things, observation on the venal grand illusion. But this week’s prize for bearishness goes to The Sunday Times and this leading editorial;

Our habit of throwing money around like it’s going out of fashion has only been reinforced by the dawning realisation that a slowdown in the property market may mark the beginning of an end of an era. The construction industry has been the engine of the Irish boom, and the levelling off of prices in recent months will have negative knock-on effects elsewhere in the economy. While there is no evidence yet of a freefall in property values, the possibility of price plunges and an accompanying collapse in house-building activity remains very real, with potentially devastating results.

The prospect of at least two further interest-rate rises before the election will also dampen sentiment in a market that has become notably less bullish in the past year. Always a background preoccupation, the fate of property values is likely to become an even greater popular obsession in 2007.

While house price rises have faded, inflation seems set to become the other defining feature of the year ahead. Provisional estimates suggest our inflation rate is likely to rise from 4.4% to 6% in the short term, and a further destabilising climb cannot be ruled out……..
We are embarking on a period of considerable challenge and no little uncertainty. As the election approaches, voters will have much to contemplate. The game is on, and it’s all to play for.

http://www.timesonline.co.uk/article/0,,2091-2534646,00.html

16 comments:

Papa Bear said...

There's a moment in every Road Runner cartoon where Wyle E. Coyote runs over the edge of a cliff, continues for a little bit (feet frantically spinning) then slowly realises that there's something wrong, before looking down and plummetting to the canyon floor below. This is that moment.

Anonymous said...

the article is in The Times (of London) not in The Irish Times.

Duplex said...

Hi Anon the blog entry does specify that the article I quoted is in the Sunday Times.

Papa bear this quote by John Kenneth Galbraith from his book "A Short History of Financial Euphoria":

"Those who had been riding the upward wave decide now is the time to get out. Those who thought the increase would be forever find their illusion destroyed abruptly, and they, also, respond to the newly revealed reality by selling or trying to sell. And thus the rule, supported by the experience of centuries: the speculative episode always ends not with a whimper but with a bang."

Seems to sum up where we might be.

Damien said...

I agree the most of the yesterdays Sunday papers had bearish comments on the property market. It's also interesting to note that the often mentioned "economist" article on the Irish property market may well be proved right. Back in 2003 it predicted a correction in the next 4 yrs (2007)...of course the property cowboys here only selectively quote from the 13 pages.

Alex said...
This comment has been removed by a blog administrator.
whizzbang said...

Roll on the "Spring selling season" lets see how that works out so ;)

Damien said...

Drop in Dec 2006 - confirms what the everyone suspects.

http://www.unison.ie/irish_independent/stories.php3?ca=184&si=1754870&issue_id=15112

Blindjustice said...

keep up the good work duplex



:)

Damien said...

No Shit!! housing in commuter belt may drop
http://www.rte.ie/aertel/p132.htm

Damien said...

More smoke and mirrors from a money lender...who participates
in these surveys? ..a bunch of estate agents and first time buyers.

http://www.irishexaminer.com/irishexaminer/pages/story.aspx-qqqg=business-qqqm=business-qqqa=business-qqqid=23572-qqqx=1.asp

ghdat said...

was 625K
http://www.google.com/search?hl=en&q=124+palmerstown+drive&btnG=Google+Search


now lists for 595K

http://www2.myhome.ie/search/property.asp?id=292325&np=&rt=search&searchlist=
Price drop in palmerstown D20

..Unable to log in at the property pin!

Anonymous said...

Ok, the economist predicted a correction in 2003. However, if i had bought a house for eur100k on Jan 1st 2003, it would be worth eur151k on Jan 1 2007 (Permo TSB Hse Price Index). So it would take a 33%+ fall in house prices to get me to a negative equity situation, on average. For Dublin houses, you'd need something more in the region of a 50-60% fall. Does anyone seriously see this happening in a young, mobile, and economically sound economy like ours with practically zero real unemployment and huge positive immigration? Is it any coincidence that almost everyone proclaiming the imminence of a property crash is a non-property-owning malcontent, whose real reason for yearning for a property crash is because they can't afford a house and are simply just envious of all the house owners? Maybe if u spent less time talking about the impending property apocalypse and more time working and looking for the undervalued elements of our housing market,(or were simply content with renting?!?!?) then you'd be less bitter and twisted.

Damien said...

Actually Anonymous, I bought my house in 1996 for 59K punts (mortgage now paid off) It's my home not an investment. With my investments I take a very objective view...for example my instrument of choice is equites but if I feel they over valued I sell them. Just cause I'm bearish on property doesn't mean I don't have my own home.

Anonymous said...

MESSAGE

Sceptical Man said...

Jaysus lads..... The Irish property market, sure you just can't lose.....

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