Most of the news reporting on the Irish Auctioneers and Valuers Institute (IAVI) Annual Conference two weeks ago focused on the role of NAMA and impact of the economic crisis on the property market. But where was the attention to the elephant in the room – the very possible emergence of a two-track property market and its implications for the social and economic fabric of our communities? While the two keynote speakers at the conference, Alan Ahearne (Special Adviser to the Minister for Finance) and Colm McCarthy of Bord Snip Nua, focused on the operation of NAMA and calls for the reform of stamp duty to kick-start the property market again, nobody considered the spatial nuances of a market in crisis. Estate agents and auctioneers within and outside Dublin both face crises but of two different kinds. Within the M50 ring, estate agents cannot find property to sell. They are actively seeking new properties to add to their books and the limited stock coming to the market is having severe implications on the sustainability of employment in this sector. This may be for a number of reasons but one of the clearest explanations is that property prices escalated to such an extent during the boom and have fallen back so far, that people just cannot afford to sell. In recent months quite a large number of properties in south county Dublin, for example, have come to the market to be relatively quickly withdrawn because the market simply can not sustain the prices asked and vendors cannot afford to drop the prices any further. The market is thus paralysed.
Outside of Dublin and major urban centres, the opposite trend is evident with estate agent windows full of properties that people simply do not want to buy. Again the sustainability of this sector is at risk as supply far exceeds demand and properties remain unsold indefinitely. The implications of such over-supply on property prices means that buyers are reluctant to take a risk in purchasing and thus this market is also paralysed.
The key question for NAMA therefore and all other decision-makers with influence on housing and planning policy is whether national policies can possibly address the crisis in the property market in a one-size-fits-all manner. The current problem of property market stagnation has two very different causes and no single policy approach can address both aspects. The adoption by government of a nuanced and scalar policy approach taking account of geographical variation is a possibility, but unlikely to happen. Conceivably in the next five years, a two-track property market will emerge in Ireland with prices in Dublin and other major urban areas stabilising and beginning to rise again due to lack of housing supply and the opposite trend continuing in most other places around the country.
Niamh Moore
Ireland after NAMA 
February 11, 2010 at 11:39 am
I absolutely agree Niamh. It would be interesting to see how arrears and repossession rates are working between core urban areas and spatially dispersed locations.
We might also consider how islands of debt are being accumulated in the hinterland of Dublin, considering one would expect prices to rise quicker in core locations (and by extension decreases in the level of negative equity).
As labour becomes spatially fixed in hinterlands, unable to sell or to switch tenure, it may become a significant issue whenever our economy begins to produce jobs. Again, one would expect these to be concentrated in core regions in the begining of the economic cycle. Workers become restricted by inflexible mobility, something business will absolutely require in the early stages of recovery. Competitiveness issues may arise.
As for NAMA, I think we can recognise this as a consolidation of financial and class power. As witnessed with BOS Ireland ealier in the week, this may just be the begining of the process.
February 11, 2010 at 12:16 pm
As rentals stabilize, then the buy to occupy market will start the long slow comeback.
Will they stabilize? Sure, soon. Just like in Japan. With emigration, the fundamentals are not improving. Has anyone graphed rental asking rates?
February 12, 2010 at 10:05 am
In response to Pat’s query if anyone has graphed rental prices see this website http://www.property-vultures.com/. For those who don’t know the term Property Vulture describes a person or, in the Irish case, a group of cash rich individuals, who pool their money in order to acquire distressed commercial and residential assets. Whilst the term and the practice might seem odious it should be bourn in mind that this is how capitalist markets work.
The highlight of http://www.property-vultures.com are a number of reports and graphs, produced on a weekly basis, of the number of changes (increases and decreases) in the price of houses that are currently for sale. These data, though dependent on official ‘asking prices’ rather than on what sellers are willing to accept, provide an invaluable summary of the market in aggregate terms. For example, in November 2009 2860 vendors dropped their asking prices whilst 154 increased theirs. This equates to a ratio of decreases to increases of 18.5:1. When graphed this ratio provides the slope of the market i.e. downwards, flatlining, bobbling or upwards.
Vultures circle the market looking for an opportunity and whilst they may occasionally go after a particularly distressed asset (too small for NAMA, to big for SVP) they prefer to wait until the downward risk is lower. They are not trying to call the bottom of the market (a fools past-time) but rather are seeking to avoid excessive risk, something our banks might have tried a few years back.
Of greater interest to the geographer is the detail of each report. Addresses of individual houses are given alongside details on the changes in price. I know of one geographer working for a vulture fund plotting these data for the Dublin area to identify the spatial patterns of price changes in both residential and rental stock. This allows the fund to get a spatially nuanced view of segments of the property market and trends in particular areas. Outside of Dublin there is insufficient data at the local level to provide reliable analysis. This is a function of the data sources and widespread distribution of housing in rural areas for sale.
February 16, 2010 at 4:43 pm
@Niamh Moore
From poster MsAnneThrope on politics.ie:
“A 56-house development, a crèche and a community centre in the village of Fenor was given the green light by members of Waterford Co. Council yesterday (Tuesday) but only after a vote went right down to the wire.”
http://www.waterford-news.com/news/story/?trs=mhcwcwauql&cat=news
The council director of service was supportive as it gives the village a public water supply.
Posters on the politics.ie thread pointed out:
1. Fenor is an award winning village.
2. Daft.ie shows plenty of property available in the area (500 units available).
3. Waterford is having a terrible recession.
I believe that the government, the builders and the banks deliberately allowed the house mountain to build up. That was bad enough but to now add to it, in an unspoilt village, is pure insanity.
http://www.politics.ie/munster/123935-developer-former-progressive-democrats-councillor-gets-green-light-56-house-development.html
February 16, 2010 at 7:45 pm
@Niamh Moore
Sometimes we all need to step back and remind ourselves of what really matters – the facts, especially on an issue as big as NAMA.
Experts say that NAMA is a bailout for developers.
http://www.irisheconomy.ie/index.php/2010/02/12/forbearance-and-bailouts-for-builders/
I have it on Willie O’Dea’s word of Sept 13, 2009 that this is a myth, no more real than Big Foot.
“Kerrigan is unquestionably entitled to express his own views and opinions, but his article last week was built upon two absolute myths about Nama — that the State is bailing out developers, and that tax will have to be raised and/or spending slashed to give money to the banks…”
Not only that:
“…The Government will not pay anything to the banks. It will issue them with IOUs they can use to get funds from the European Central Bank (ECB)…
And even better:
“Nama is likely to make a profit or at least break even.”
But best of all:
“The first batch of IOUs is expected to be issued and cashed at the ECB within months, giving the country a much needed cash injection in the run-up to Christmas.”
Let me end by quoting Minister O’Dea’s own declaration on the importance of getting the facts right:
“Nama may be complicated…It is worthy of substantive debate — one based on factual analysis, not misinformed cynicism.”
http://www.independent.ie/national-news/call-spade-a-spade-and-bury-the-myths-1885338.html
If anyone here is ever tempted to be inaccurate just remember the code Minister O’Dea lives by: always the facts.