Britain's housing market needs a dose of Irish realism
The British public has been living with its head in the sand when it comes to the true state of the housing market. So, it's a refreshing change to see the Irish are under no such illusions with theirs.
There's a surprisingly truthful article on the front of last weekend's Telegraph property section.
Most property sections still work to keep up the myth that all is well with the UK housing market. But this piece by Max Davidson, is having none of it.
The situation outside London, he says, is "patchy". The market as a whole is "challenging". And "substantial properties that would once have sold in no time are now taking up to a year to shift."
It is nice to see some realism in the UK papers, but if you want to see how a real crash is reported, you need to go to Ireland where I was last weekend. Along the way, I picked up a copy of the Sunday Business Post.
The cover story is about a "radical plan" to write off in part at least the mortgages of some 10,000 borrowers in severe arrears with AIB. There are to be serious conditions attached "write offs are only likely after a period of time and based on strict criteria" but nonetheless you need a real crash before banks start publically writing down debt.
Move through the paper and you will see that the "well known" Dublin pub, the Players Lounges, has just had receivers appointed. Next up you will learn that the G8 summit is to be held at the Lough Earn hotel in Fermanagh. The hotel is up for auction by its administrators and, as the auctioneers have it, is "priced to sell."
Page six tells us of the misery of property developer Paddy Doyle currently seeking bankruptcy in Britain (similar stories on different property entrepreneurs are covered on two other pages). Page nine comes with a full page on the property market noting more in hope than expectation that the OECD now "describes the Irish housing market as undervalued" even though prices are "still falling." It also comes with a helpful chart showing that Dublin apartment prices are down 63.7% from their peak in nominal terms. Everything else is down 50-55% and "conditions in the country remain very poor".
Finally, anyone still thinking that they might like a house after all that can turn to the actual property section, where they will be reminded just why house prices in Ireland had to fall 50%: even today an average four-bed house in not quite the centre of Dublin will set you back well over €1m.
On the plus side, there is value out there. Anyone who fancies the idea of holidaying in Ireland (me for example) might rush to look at Cois Cuan, a contemporary house with direct beach access in Cahore, Wexford. It looks rather lovely and is up for auction on 27 June. Guide price? A mere €200,000.
In a sad story buried on page seven of the paper, we find out that there is good reason for its writers to feel a little more down than most. "Seven different classes of creditors of the Sunday Business Post will be asked to vote on a rescue package for the business at a series of meetings this week." Part of the plan is a 6% pay cut across the board (this is part of what the economists inside Europe like to call "internal devaluation" and it isn't very nice).