With the introduction of the House Price Database due by June 2012, which should ensure all transactions – cash and mortgage – are publicly available, I hope we can finally wave “Good Riddance” to asking price and estate agent valuation indices in Ireland. That’s not to say the accompanying narrative isn’t interesting or valid, it’s just that it is faintly ridiculous to have so much analysis of what are asking prices or valuation estimates. DAFT says prices in Longford rose by 10% in Q1,2012 and prices in Carlow fell by 10% – no doubt, that’s what asking price data is saying, but does anyone believe it?
But for now we now have the usual quarterly troika of Irish residential property price surveys from DAFT.ie, Myhome.ie and Sherry FitzGerald , this entry is a roundup to see what the surveys are telling us. Here’s the overview.
(1) At a national level, prices dropped 2-7% in quarter one of 2012 and 16-21% in the last year and are now 47-61% down from peak.
(2) In Dublin, prices dropped 4-8% in quarter one, according to Myhome and Sherry Fitzgerald but rose by 0.3% according to DAFT. In the past year prices have declined 18-22% in the last year and are now 54-66% down from peak.
(3) DAFT.ie and Myhome.ie both provide 26-county-by-county results.
(3a) DAFT.ie says that for Q1, 2012, Carlow recorded the biggest quarterly decline with prices dropping 10.7%. On the other hand, prices in Longford rose by 10.4% in the quarter.
(3b) Myhome.ie’s county analysis PDF is corrupted so the following is for 4-bed semi detached property. Laois fell by 27% in the quarter and Kerry rose by 2.5%. In the past year Laois has fallen by 34% and Monaghan has risen by 8%.
In terms of how the different sources compile their statistics this is what each has to say.
(1) DAFT.ie : Its index is based on properties advertised on Daft.ie for a given period. The national average is built up from Census weights per county, in effect ensuring the average reflects where people live, not any variations from that that may exist in Daft’s market share. The regressions used are hedonic price regressions, accounting for all available and measurable attributes of properties and only coefficients with a very high degree of statistical significance (p < 0.001) are used. The average monthly sample size for sales during 2009 was over 10,000. Indices are based on standard methods, holding the mix of characteristics constant, with the annual average of 2007 used as the base. A working paper on the methodologies employed in both rental and sales markets will be published on the Daft.ie website soon. Stock and flow statistics are calculated using consistent series for the period covered. The change to the national average price is built up from Census weights per county, in effect ensuring the average reflects where people live, not any variations from that that may exist in Daft’s market share.
(2) Myhome.ie : Its index is based on actual asking prices of properties advertised on MyHome.ie with comparisons by quarter over the last six years. This represents the majority of properties for sale in Ireland from leading estate agents nationwide. The series in this report have been produced using a combination of statistical techniques. Their data is collected from quarterly snapshots of active, available properties on MyHome.ie. Their main National and Dublin indices have been constructed with a widely-used regression technique which adjusts for change in the mixture of properties for sale in each quarter. Since the supply of property in each quarter has a different combination of types, sizes and locations, the real trends in property prices are easily obscured. Their method is designed to reflect price change independent of this variation in mix.
(3) Sherry FitzGerald : Its index is based on the analysis of a basket of properties in its locations nationwide. Commencing in 1996 in the Dublin market, it was extended nationwide in 1999. Each basket of properties was chosen based on a weighted profile of properties in each location. The basket extends to over 1,500 properties, which are re-valued on a monthly basis for Dublin properties and a quarterly basis for nationwide properties with results produced quarterly. The basket is held constant and re-valued based on market evidence. Sherry FitzGerald through its franchise network is represented in every major city, town and county inIreland.
So two of the above are asking price indices and the Sherry FitzGerald index is a valuation assessment index (akin to how SCS/IPD and JLL compile the commercial property indices as far as I can see)
In addition to the above surveys, Ireland has two actual sale price series, one from the Department of the Environment Housing and Local Government which is an atrociously crude average of mortgage transactions and is issued six months after the event; the other is from the CSO and is issued monthly and is an hedonic index but only based on mortgages at nine Irish lending institutions. The bill giving legislative effect to House Price Database – called the Property Services (Regulation) Bill – has now been approved and should see a Database available from mid-2012 which will have historical prices from 2010.
In terms of outlook for property prices, who knows? This blog’s predictions for 2012 are here. These are the latest predictions/projects captured on here which I believe to be a comprehensive reflection of reported predictions and projections, though if you feel there is any omission, please contact me so that I can update the table; house price projections in Ireland can be a vexed subject!
NAMA Wine Lake 
Hi namawinelake,
I’m afraid we’ll have to agree to disagree on this one. You might think there is absolutely zero value in analysing the expectations of 27,000+ sellers a quarter, but I think that’s a stretch too far.
Even with the house price register, which at least for the foreseeable future may only be providing us with about 25% of the volume of observations of asking prices series, we won’t be able (without fairly extensive work) to do mix-adjusted series, let alone full hedonics, so we will need to be very wary of making national-market-level statements based on the register.
Also – be careful of your biases! Just because people like data series to be smooth does not mean that they will be. Remember what market conditions are like. The average house prices in places like Longford is now ~€110,000 so what you might regard as wild swings in prices (+/- 10%) is a change in average price of €10k. To me, these seem completely reasonable in a market as uncertain as the one we’re in.
Last thing – I’m not sure why your Dublin cell is empty. Nothing in the report has changed in relation to Dublin so however you were calculating it before should be do-able again. A population-weighted average of the six regions of Dublin gives the following:
Average price: €217,448
Q/Q change: +0.3%
Yr/Yr change: -17.7%
From peak: -55.0%
All the best,
Ronan.
@Ronan,
For quite some time DAFT has filled a void in Irish property price information. When all we had was the Dept of Environment non-hedonic averages published six months after the event and PTSB/ESRI’s mortgage-only – and PTSB-mortgage at that – DAFT and Myhome were there every quarter providing statistically sound information with great commentary. And both DAFT and Myhome deserve gratitude for that record.
However, as is constantly pointed out – by you, as much as anyone – the figures are asking prices and we all know the issues with asking prices and no-one is going to claim they are anything other than a highly imperfect substitute for actual sales prices.
Let’s see what information the PRSA produces but my experience is that if you combine PRSA actual sales prices with estate agent details or sales listings, you can get a pretty good hedonic index. As Ireland’s biggest listings site, no doubt DAFT is preparing for the launch.
So no, I don’t think nor have I said that there is no value in the DAFT report, certainly not that it has “zero” value. For its time, it was as good as any other source, but I for one will be glad when we have actual prices.
As for Dublin, there’s no mystery! In previous quarters YOU – yes YOU – have provided the figure directly as a comment on here! So that’s how previous quarters figures for Dublin in the table were populated – no calculation took place on here at all! And the table will be updated now with the figures you kindly provide above.
@NAMAWineLake
That’s some impressive politician-type spin between your post (“I hope we can finally wave “Good Riddance” to asking price indices”) and this comment (“I don’t think nor have I said that there is no value in the DAFT report”)! :)
I will be as glad as anyone when actual prices are out there. But for a variety of reasons, asking price indices will still be relevant. Also, the Daft Report is more than just an asking price index – it includes a number of measures, such as stock on the market and time-to-sell. As I discuss over on my blog today, the figures from today’s report showing prices increasing in 11 counties must be taken in the context of these other measures of market activity.
One other comment: you assert “no-one is going to claim [asking prices] are anything other than a highly imperfect substitute for actual sales prices”. In work I’m doing with the Central Bank, it turns out that over time and across space asking prices are actually a very useful substitute for actual sales prices. Note that I’m talking about the prevailing level of prices, such as might be captured by an index (and not whether a particular property sells).
The problem with the DAFT report is the lack of activity in the market – during the boom it was a better indicator of the upward trend because stock was simply moving so fast.
I’d be interested in seeing how long the stock on the site is actually there. If we were to look at mortgage drawdowns, make a guesstimate of cash transactions totals – then we may find that the reality is that it’s the same stock that’s been there for at least 2 years.
If 5,000 mortgages were drawndown in 2010 and 3,000 cash buyers bought, then that is where the information regarding actual trends lie. You have 54,000 properties on the site – the fluctuations seem to be caused by newer property, coming on at lower prices, maybe in better locations selling faster.
I think DAFT is a good site – but I really think it needs to make some changes and be more advantageous to the buyer. At the moment if a property disappears from the site you can’t find it when you specify sale agreed, yet the EA will tell you it’s sold.
On the property coming up on sale agreed, I can’t seem to find an indication of when it went sale agreed. Also, there is property still for sale – although not when you contact the EA.
Another pet hate, and I complained to DAFT about this – is responding to a private ad and it turns out it’s an EA – again, no indication for the possible buyer.
It’s outdated and needs a good overhaul imo.
Regards.
MD
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So if we add NWL’s prediction of a 15 to 20% drop this year to say Sherry Fitzgerald’s reduction from peak figure of 61.4%(the most likely figures I believe) we get a possible reduction from peak of from 76.4% to 81.4% exceeding even Morgan Kelly’s prediction.Now if we consider where the axe will fall over the next 3 /4 years when the Govt. take approx. €3 billion out of the economy per year the question must be asked: what will people repay their mortgages with! It would seem that a severe shortage of money will drive even more people into negative equity and default.The only hope is growth and huge growth at that. Could we be looking at a 3 bed semi which was averaging €313,000 in the peak now fetching a possible €58,210 taking NWL’s higher percentage drop of 20% into account?If its happening in happy Allsop land it could happen generally considering where the economy is heading.
@SOP, no, no, thrice no. The prediction on here for 2012 is here
https://namawinelake.wordpress.com/2011/12/31/irish-property-prices-in-2012/
On the basis that we were at 46% from peak at the end of 2011, the prediction was that prices would fall 15-20% in 2012 but that is on the basis of end-of-2011 prices, so
Price at peak €100
Price at end 2011 €54
15% of €54 is €8; 20% is €11
Price at end 2012 (prediction) €43-46 or 57-54% off peak.
Sorry NWL but I took it from your reference to your blog of Dec.’11 that you were predicting an add on to SF’s current prediction of 61.4.However I still believe that the bottom is not reached and with huge amounts being taken from the economy the money will simply not be there to service mortgages, further depressing property prices to the 80% and greater level of reductions.
@SOP, no worries, though I see you took the biggest decline and then added the prediction on here by reference to peak values when the prediction of 15-20% declines in 2012 was by reference to end of 2011 prices, so both mistakes served to over-amplify the prediction! Here’s the table of predictions for 2012 from the blogpost. And as with any prediction, it’s worth noting the many caveats.
https://namawinelake.wordpress.com/2011/12/31/irish-property-prices-in-2012/
Completely off-topic, but I am just looking thorugh some of the banks’ 2011 results and comparing the mortage arrears figures to the CBI quarterly update.
Does ‘Private Residential Mortgages’ (the category the CBI use) account for owner-occupied only or are buy-to-let also included?
It would seem with the disagreements on the declines so varied CSO 48%,NAMA 58% and Dermot O Leary of Goodbody claiming 68%(via Allsop) we must as you say NWL, await the Govt.’s launch of the House Price Index which will give actual selling prices and only then will much more accurate predictions be possible.Anyway it is still felt that a 15% to 20% drop is a fairly reasonable prediction for 2012 on top of the current drop which may be around 58%
@SOP, that’s fair enough, and predictions are just that, predictions. In fact I see that the chart I reproduced below was given a title of “chickenentrails” when it posted, as if to emphasise the uncertain nature of predictions.
But to be clear, the prediction on here was on the basis that property had already dropped 46%, not 57% or 65%, but 46% which is what the CSO was saying at the end of 2011. And the 15-20% prediction of declines in 2012 related to prices at the end of 2011, NOT to peak values.
And as with all predictions, it’s worth bearing in mind caveats which, from this blog’s point of view, were listed in the 2012 predictions blogpost.
NWL It will be interesting when the HPI is launched to see who’s prediction was nearest the mark though.
@SOP, going forward, using the House Price Database, and hopefully a proper index, we should indeed be able to better see what is happening with property prices.
But to be clear, the prediction on here was on the basis of a 46% decline at the end of 2011 which is what the CSO was saying. If a House Price Database produces an index that says we were 60% off at the end of 2011, then the prediction on here would change drastically and wouldn’t be as high as 15-20%.
In other words, the starting point, the present house price levels is critical to the forecast on here of future changes.