The non-recovery recovery which is or isn’t happening

Robert Kitchen of NUIM did a great post on people talking up the market. He stated that “What the data shows is that housing unit sales are relatively consistent over the past three and a half years, except for a brief surge at the end of 2012“.

As a person who trades in this area I don’t share the view that it’s totally consistent, there are peaks and troughs as seen in the graph from that blog.

rob kitchin graph

He also states that “The first six months of 2013 are very similar in pattern to 2010.  In fact, in the first six months of 2013 only 273 more units have been sold than the first six months of 2010.  The data does not suggest then that there has been a bounce back in market activity to any significant degree”.

I suppose that comes down to what you call significant, if you are looking for any trend activity then take a look at month on month figures from each year to look at it in relative terms (see the 2nd graph, and 2013 shows that it was the highest level of sales achieved for every month of the year to date with the exception of June & July, and in those instances 2013 was still better than 2011 & 2010).

Calling July ‘brisk’ is what stared some back and forth between Rob and I, and I must concede early that relative to last year it wasn’t ‘brisk’ it was worse and I was wrong. Relative to other years it’s ahead.

Dublin sales by month 2010-2013

However, we have to remember that the idea that the boom was ever a healthy place is wrong “the sales figures reveals that the market is still a very pale shadow of the height of the boom.  The Dublin housing market consists of 527,665 units (in 4 Dublin LAs).  Normal market turnover would be 5-7% units (higher in a boom), meaning that we could realistically expect in a normally functioning market 2198-3078 sales per month.   So far in 2013 the average monthly sales is 593 (1.3% turnover)“.

I don’t have the foundation for the 5-7% figure *anybody who does please post it!* but think that the absorption rate on available inventory is perhaps the more telling figure. If the supply of desirable housing is going down while transactions are going up and there is also evidence of price increases then taken together you do have ‘non- b”£l$hit talk up the market‘ reasons for thinking there is upward momentum evident.

That the market can even show any non-negative months is interesting given the low levels of credit flow, should credit start to flow it will probably be a game changer. There is also the issue of using the mean monthly sales, because January which is always slow in every year recorded drags that down to the 1.3% of stock turnover, the median (which is no better statistically) of 614 is puts it closer to 1.4%, and also denies the annual trend evident for the last two years in which the seasonality has favoured Q3 & Q4.

Obviously TRS caused a spike in 2012 but we don’t know if there will be a year end rush in 2013, there are reasons to think there might be (another tax relief is ending). The one thing I think we all agree on is that we are a long way from ‘normal’.


  1. Rob Kitchin

    Karl, thanks for this rejoinder. I think we’re roughly on the same page re. market being far from normal, though I think you’re a bit more of an optimist than me in interpreting the data. If there is an upward trend, taking into account the yearly cycles of sales, it is very marginal and was pushed up a lot at end of 2012 by MIR terminating – as your graphs show. The data does not support some of the rhetoric about market recovery I’ve been reading. I have just tweaked my original blog post as I was going back through spreadsheet and noticed a typo. It barely changes things but means that the difference between first six months of 2010 and first six months of 2013 is 328 units not 273. Your post allowed me to catch that, so thanks.

  2. Karl Deeter

    @rob if you had to eek a living in this opaque shallow trench I think you’d end up with some positive bias too – it’s the only thing keeping some of us sane!

    Because MIR/TRS ended in 2012 and 2013 early months were ahead I think it could signal momentum, my concern is that investors lured by low deposit rates and the CGT free period for 7 years might cause a distortion in 2013 and 2014 could be a wipe out.

    The total difference ytd is about 10% so it’s material (at least if we were looking at it in accounting terms!) but not a game changer when viewed as a part of total stock.

    Will do another post on the absorption rates because that is something we don’t hear about often.

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