Northern Ireland house crash 'among world's worst'

deary65

To get a sense of just how severe the house price crash has been in Northern Ireland it is illuminating to read the work of two US economists Carmen Reinhart and Kenneth Rogoff.
http://www.bbc.co.uk/news/uk-northern-ireland-15757932

Chickabee

Well thats cheered me up no end!

wanchai_2

As a potential FTB, falling prices are excellent news.

x12yhp

Honestly I am not sure how much trust to put in that. In East Belfast, advertised prices do not come close to 40% falls (my own anecdote, of course) and I suspect that 'popular' areas basically are not included in the sort of stats that make up this report. I do not mean it quite as explicitly as I just stated but as a secondary effect of people simply not selling. If the properties don't sell then they aren't included in the stats. In an area like East Belfast it is pretty easy just to stay put and the rates etc as they are means no massive financial incentive to move on. Contrast this to more peripheral locations and the story is different. I have seen loads of properties selling (still slowly) at big big reductions. Look at new builds as example, there are many will have dropped well above 50% because the buyers have realised the folly of a dull estate in the back end of nowhere - so have the sellers and they adjust accordingly.

Basically I think that volumes remain too low to make definitive statements about a market as small as Northern Ireland. I think another measure is required to attempt to quantify the impact of the crash on a market as special as ours.

Mistral001

There is definitely a situation where it is difficult to tell how far house prices have dropped because the official statistics are based on so few sales. But is every sale included in these statistics? I doubt it. Is it compulsary for all estate agents to give the sale price to these statistical bodies? What about private sales where no estate agent is involved and sales for cash or where the estate agent is not a member of the RICS.

Does anybody know how the statistical people get their prices upon which to base their figures?

A.L.D.A

x12yhp wrote: »

buyers have realised the folly of a dull estate in the back end of nowhere - so have the sellers and they adjust accordingly.

On newly completed houses you will see an instant sharp drop, because the developer, or the receiver, has to sell. With owner occupier generally it take longer.

The highest percentage declines have been in terrace and town houses with around 40% drops in 2 years in many areas, but the prices for those houses should never have shot up to the levels they were at in the first place. More recently the falls have been most acute in the detached house sector, but no clear pattern I can see, some areas seem less stable than others. Recently there are signs of a slower rate of decline , but who knows if that is just a temporary blip followed by further decline or indication of a floor? No point trying to guess.

Where I live definitely not a general 40% drop on new or old houses, as far as I can see, unless the price agreed is massively below the asking price.

I think transport costs are also starting to become a significant factor. No real proof, just an impression. Also people may be staying put, because moving is in itself a major expense. Why bother moving in the current 'market'? People endlessly visiting house, sales falling through etc. Life is too short.

Mistral001 wrote: »

There is definitely a situation where it is difficult to tell how far house prices have dropped because the official statistics are based on so few sales. But is every sale included in these statistics? I doubt it. Is it compulsory for all estate agents to give the sale price to these statistical bodies? What about private sales where no estate agent is involved and sales for cash or where the estate agent is not a member of the RICS.

Does anybody know how the statistical people get their prices upon which to base their figures?

It is very difficult to get reliable figures for NI region. Many 'UK' stats fail to include NI as a region. In England and Wales you can easily find out what houses actually sold for, I don't think you can do that here. Basically we are left with University of Ulster's commendable quarterly reports, but I doubt if they are all inclusive as it seems they rely on Estate Agents providing the information and there are many Estate Agents not on the list of contributors. It is probably as good an overview as you will get.

Mistral001

x12yhp wrote: »

Honestly I am not sure how much trust to put in that. In East Belfast, advertised prices do not come close to 40% falls (my own anecdote, of course) and I suspect that 'popular' areas basically are not included in the sort of stats that make up this report......
.

Sometimes I think anecdotal prices are the best. I have compared the auction sites guide prices with those advertised on the property sites and estate agents windows. The two are not at all comparable even taking into account the fact that auctioned house will generally sell for less because of quick sale. So the conclusion should be that the autioned houses will sell at more than their guide price and the estate agent houses will sell for less than their advertised price.

x12yhp wrote: »

... Look at new builds as example, there are many will have dropped well above 50% because the buyers have realised the folly of a dull estate in the back end of nowhere - so have the sellers and they adjust accordingly.
---.

Yes that is my impression also, especially in rural areas. Most have just been rented out rather than sold at less than 50% of 2005/2006 prices when construction of them were started.

Mistral001

One other thing is that I hear stories of "oh the bank owns that development" in the cases of developments that are half finished where the developer is still building but at about a quarter of the rate of production they had planned.

Does anybody know anything about that. Are the banks sitting with lots of property as assets?

BTW there is a Spotlight programme on BBC NI this evening about property. The trailers I have seen suggest that things are not looking good for property market.

A.L.D.A

With auctions they are being bought by people with cash in place.



Rumours about banks abound, financing developments they control, being more ready to approve mortgages to properties they own, but no proof and could well be malicious given overall sentiment. There are also people offering services to Banks to enable them to formulate better strategies and manage some of the portfolios. Why not complete and rent, or repair and rent rather than sell? They claim to be getting work.

I do have direct experience of Banks simply selling repossessed sites for as little as 2.5% of original (inflated) value, but that is exceptional. Incomplete flats have also been sold for a few thousand an apartment. These are being bought as are low end houses. Some with available cash are buying to let, and some are considering building to let. Again only my personal experience and. I am not trying to suggest it is a widespread trend. The ‘to let’ end is much more confident than the ‘develop to sell’ end among my contacts. This does not sit well with my overall view of how the world should be ordered.

The cheap development sites people are buying and holding. It is generally not speculation as many want to build to keep their 'team' employed. They cannot commit until they have some idea that they can build and have some prospect of selling with profit. Others have now gone beyond that position and are asking what if we cannot sell, what are the rental returns, but those are people with access to adequate funds to build.

General uncertainty and lack of confidence persists, but it is not universal, some claim to see ‘opportunity’? I wish there was a historic chart of the percentage of purchases for owner occupation against purchases for rental or development. Cash is King at the moment and the speculators who made money 2005 & 2006 are probably well placed. The devil looks after his own!

wanchai_2

Mistral001 wrote: »

One other thing is that I hear stories of "oh the bank owns that development" in the cases of developments that are half finished where the developer is still building but at about a quarter of the rate of production they had planned.

Does anybody know anything about that. Are the banks sitting with lots of property as assets?

BTW there is a Spotlight programme on BBC NI this evening about property. The trailers I have seen suggest that things are not looking good for property market.

*makes note in diary* :cool:

warmhands.coldheart

Another Expert View from Queens.....

Glad I'm not one of the Approx 44,000 !!