Quarter 1, 2010 – Permanent TSB/ESRI Index crashes 10.3% for Dublin

Today sees the publication of the first Permanent TSB/ESRI QUARTERLY house price index which replaces the old monthly index which was suspended following publication of the December 2009 index because of thin sales. The index published today tells us that the price of residential property has fallen by 4.8% since the end of December 2009 to the end of March 2010, ie an average monthly fall of 1.6%. The indication is that the pace of price falls is easing overall. The average price of a property nationwide is now €204,830. However prices in Dublin crashed 10.3% in the quarter which is worse than the 7.5% fall in Q4, 2009. The press release fromIrish Life and Permanent, Permanent TSB’s parent, is here.

The National House Price index stood at 91.0 at the end of March 2010. The last time it was at this level was in November, 2002  when it stood at 91.2. The following shows the index since June 1999 at the end of each quarter (Mar, Jun, Sep, Dec).

The Dublin House Price index stood at 83.0 at the end of March 2010. The last time it was at this level was in June, 2002 when it stood at 83.3. The following shows the index since June 1999 at the end of each quarter (Mar, Jun, Sep, Dec). The average price of a property in Dublin is now €250,872.

The Outside Dublin House Price index stood at 95.9 at the end of March 2010. The last time it was at this level was in March, 2003 when it stood at 96.3. The following shows the index since June 1999 at the end of each quarter (Mar, Jun, Sep, Dec). The average price of a property is now €183,309.

So the key questions : are prices still falling? We don’t exactly know because we only have a total movement for the three-month Quarter 1 and it’s not borken down by month so conceivably we could have had a 10% drop in Jan/Feb and a 5.2% recovery in March. However it is certainly the case that prices have, in overall terms,  fallen since December 2009. The fall in Q1, 2010 at 4.8% is less than the fall between Sep-Dec 2009 (quarter) of 8.5% – so in overall terms the pace of fall has moderated.

How far off the peak are we? The peak according to ESRI was in January/February 2007 when the index for both months stood at 139.5. Today’s figure of 91.0 for March 2010 indicates that prices have dropped by 34.8%.

How much further will prices drop? We’re at the bottom according to Brian Lenihan (again) on April 4^th, 2010. If Mr Lenihan is not careful wags will rename the Government Buildings on Upper Merrion Street as “The Bottom” because he has now said on several occasions that this is where he’s at. Morgan Kelly indicated at the outset of the crash that prices may end up 80% off peak and as recently as November 2009 he was predicting further falls of 50%. David McWilliams thinks prices may have 45% to come off current prices before there is some sort of equilibrium between the sale and rental markets. Pundits at the start of 2010 thought prices would drop by a median of 9% in 2010 though that was generally packaged as a net of a fall during the first part of the year followed by a recovery during the latter part of the year. Morgan Kelly and David Macwilliams are arguably pessimists or realists depending on your viewpoint – apart from Mr Lenihan there have not been many loud cries supporting a rebound in prices to show  counterpoints. The ESRI indicate prices are 34.8% off peak – NAMAwinelake predicts a fall of 60%.

What does the index mean for NAMA? NAMA has chosen a valuation date of 30^th November 2009 to value the current market value of property. The NAMA Long-term Economic Value Regulations state that evidence produced after 10^th January 2010 by the ESRI is not to be considered when evaluating future conditions in which the long term value of the property will be calculated. So on the face of it, the fact that residential property has fallen by 8.3% from 30^th November 2009 to 31^st March 2010 would indicate a recovery of 20% is required so that NAMA can break even and of course that ignores any further falls after 31^st March 2010.

YOU CAN NOW DOWNLOAD THE SPREADSHEET WITH THE INDEX DATA HERE

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Permanent TSB/ESRI House Price Index…

The Index has now been published – see main entry here.

Should be available later today if they are to keep to their commitment to produce in April the State’s only actual transaction price index. The monthly House Price Index was suspended following the publication of the December 2009 result (which saw a drop in residential prices of 3.6% in one month on thin sales). Comment and analysis including an exclusive downloadable spreadsheet will be available here. The link to the ESRI website House Price Index page is here.

Meanwhile one of the biggest auctions in recent times is taking place today in the Shelbourne on Stephen’s Green from 11am. 59 or so lots are up for grabs. The catalogue is here and the results will be here. (interesting that auction results don’t offend the Data Protection Act on disclosure of sales prices but other sales do!) Whilst there would normally be withdrawals of lots before such a large auction and some lots may not reach reserves and may be sold later and the word  “shilling” has a particular meaning in the context of  auctions, the results (although they should be treated with caution) should give some indication on prices. UPDATE: Preliminary results available at boards.ie indicate that there were 71 lots and only 6 were sold at an average discount of 7% on the AMVs, 26 were unsold where the average maximum bid/opening bid was 24% less than AMV, 25 attracted no bids/unsold, 14 were skipped/withdrawn – all in all, a washout.

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