End of the Cult.

If I was in any doubt that property has consumed this country utterly, I doubt it no more. I actually wasn’t in doubt to be frank. I mean your powers of observation would have to be stunningly feeble, if you hadn’t noticed by now the obsessive fascination. We all know about the building boom economy, the tens of thousands of empty houses, the absurd price that land in Ireland commands, the property hot spot, off plan, globe trot and the unmerciful serial fleecing of deluded innocents. The evidence is there as plain as the soffit on your semi. This country has fallen victim to a fixation akin to the Easter Islanders destructive Maoi carving cult.

The Irish housing cult is crumbling now however. And the cherry on the apogee has to be the current brouhaha of an election campaign. A profoundly pitiable piss and wind affair, dominated by guess what? Houses.

Stamp duty, stamp duty, stamp duty U turns,
Stamp duty payments, renovations, decorations,
Market value procrastinations,
The boom is getting boomier,
The bust is getting loomier.


My advice? Lay low, keep you head down, and keep your mouth shut if you are tempted to say anything as (your) life threatening as ‘I told you so’.

Dublin House Prices 1970-2005

The Wave

Capturing something as indistinct and slippery as the public mood is difficult. But catching the fleeting moment when that mood changes is much more challenging.

Hunter S Thompson the American writer and originator of all things Gonzo, was particularly proud of this piece of writing which he described as; “probably the best thing I’ve written” He was right to be proud. He describes the feel good zenith of the San Francisco Hippie zeitgeist beautifully.

San Francisco in the middle sixties was a very special time and place to be a part of. Maybe it meant something. Maybe not, in the long run . . . but no explanation, no mix of words or music or memories can touch that sense of knowing that you were there and alive in that corner of time and the world. Whatever it meant. . . .

History is hard to know, because of all the hired bullshit, but even without being sure of "history" it seems entirely reasonable to think that every now and then the energy of a whole generation comes to a head in a long fine flash, for reasons that nobody really understands at the time — and which never explain, in retrospect, what actually happened........

There was madness in any direction, at any hour. If not across the Bay, then up the Golden Gate or down 101 to Los Altos or La Honda. . . . You could strike sparks anywhere. There was a fantastic universal sense that whatever we were doing was right, that we were winning. . . .

And that, I think, was the handle — that sense of inevitable victory over the forces of Old and Evil. Not in any mean or military sense; we didn’t need that. Our energy would simply prevail. There was no point in fighting — on our side or theirs. We had all the momentum; we were riding the crest of a high and beautiful wave. . . .

So now, less than five years later, you can go up on a steep hill in Las Vegas and look West, and with the right kind of eyes you can almost see the high-water mark — that place where the wave finally broke and rolled back.

Hunter S. Thompson Fear and Loathing in Las Vegas

At this juncture in the deflation of the Great Irish Property Bubble it is of course difficult to gauge the zeitgeist. But I think it is changing; and a few years from now it may be possible to look back at this time and see where the wave of folly and greed finally broke and rolled back.

Sign of the Times

The much heralded soft landing for the Irish property market is happening right now, according to the banks; the estate agents and Damien Kiberd. That being the case we have an opportunity here folks to witness something that has never, ever occurred in economic history, a soft landing after a prolonged period of rampant speculation in an asset class. So put on the kettle pull up a chair, make yourself comfortable and watch, a never to be repeated, inconceivable (until now) first.

But ah……before you get too comfortable in that chair, I have a confession to make (hangs head). It shames me to admit this but… when I first heard of the prophecy, that an economic miracle was to be bestowed upon this island, I was just a tiny weenie bit cynical. But not for long mind you. I know, I know. How I could possibly question a revelation bestowed on an assortment of estate agents, bankers and Damien Kiberd?. Please allow me to explain my fleeting moment of doubt. You see, I foolishly thought that the old rules of supply and demand still applied, I thought that the Irish were about as indebted as any nation could prudently get; and then some. I looked at the number of empty homes in the country (250,000) and thought, we have sufficient of the houses. Ha ha ha, I laugh now at my foolishness. Oh were it that that was the end of my irreligious uncertainty. You see I thought (don’t ask me why) that in the new ferociously competitive global economy that Ireland’s falling competitiveness would effect our ability to procure and keep high earning productive jobs, I thought that the liquidity gusher that is the Japanese Yen carry trade was unsustainable, I had a notion that rising interest rates and falling real incomes growth might hinder rather than help. I even looked at property markets abroad where prices are falling and mortgage lenders and estate agents are going bust, and thought (please don’t laugh) that this might be instructive.

But mercifully, thankfully I banished these wicked feelings that prevented me from seeing the blinding light that so fortuitously shone upon some bankers, Damien Kiberd and several estate agents. Verily they have been to the top of the market and they have seen the Promised Land (bank).

Ps
The only people busy in the Irish market at the moment are the FOR SALE sign makers. The lads have most of their stock sitting in gardens the length and breadth of the country. You see, when the market was busy they would stick up an agents FOR SALE sign then a few weeks later return and stick a SOLD slip over the FOR SALE bit and then after the new owners had moved in return one last time to remove the sign for good. Not anymore. The sign makers routine has been disrupted of late by the softly softly market . Its no longer erect sign, sold slip, remove sign, its more; erect sign, erect sign, erect sign, erect sign of another agent beside the one for the first agent that you put up couple of months ago.

The sign makers are busy making new signs, as their existing supply ineffectually just stands there, weathering.

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

Now Is The Season.

The autumn property selling season has ended. It was a selling season like no other, due to the fact that very little actual selling took place. The once hectic auction rooms are quite now, apart from the occasional stirrings of dispirited ghost bidders; across the land a multitude of hopeful For Sale signs are buffeted by depression driven winds from across the Atlantic. The market’s melancholy mood is indeed strikingly removed, from the hectic exuberance of blooming springtime.

The banks, auctioneers and the government like dutiful doctors fuss about the ailing market; variously offering comforting words, tinctures of interest relief and placebo like soft landings. But what is remarkable about the vested interests reaction to the utterly inevitable is their zealous denial. Denial in the face world beating indebtedness; rising interest rates, a glut of supply, ‘relaxed’ (to the point of comatose) lending standards and a collapsing real estate market in the United States.

But while I am surprised by this denial, I understand it. The bursting of the property bubble will do damage to this country, as have other speculative property market ‘corrections’ in other countries. Nevertheless, that the bubble was allowed to reach such epic proportions, that’s its bursting will cause misery, is much more than unfortunate.

Market Roller Coaster of the Mind

Essentially a road map of what we are likely to witness as a nation over the coming months this handy chart is an excellent guide to market psychology from boom to bust. I think the market in general is somewhere between Euphoria and Anxiety, however some of the better informed market participants are probably firmly in the Denial stage. My guess is that the Denial stage in the broader market will arrive sometime in the Spring selling season.