Tuesday, January 22, 2013

22/1/2013: RPPI, Ireland: December 2012


In the previous post I took a quick look at the Residential Property Price Index (RPPI) annual series. Here are monthly frequency observations.

All properties:


  • December 2012 All Properties RPPI stood at 65.8, the same level the index was at back in between March and April 2012 and again in September 2012. In Other words, the index de facto is running flat.
  • Put differently, the index has now fully erased the miraculous gain of November 2012 and returned prices back to September levels.
  • Monthly rate of change in the index was negative at -0.454% and the index is running well below 65.77 12mo MA.
  • Year on year the index fell 4.5% in December 2012, after posting a 5.71% decline in November. Thus December represents the slowest y/y rate of decline in the series since May 2008. Which is good-ish sort of news.
  • For Nama valuations, latest data suggests a fall in values of 33.26% net of burden sharing cushion.
  • 12mo MA monthly rate of change is at -0.378% which is shallower than December 2012 m/m decline of 0.454%
  • Putting things into a bit more longer term perspective, simple average of RPPI for the period from January 2008 through present is 90.02, which stands contrasted with 2012 average of 65.73 and 2011 year average of 75.37.
  • On shorter term comparatives: H1 2012 average reading was 65.92 against marginally lower H2 2012 average of 65.53. 
  • Relative to monthly peak, RPPI stood at -49.58% or comfortably rounded off to 50%. This reading for December 2012 was statistically indistinguishable from the 'nominal' monthly low of -50.34% set back in June 2012.
  • Thus, monthly volatility aside, there is no increase in prices. As I noted in November data analysis, we are bouncing along the bottom, which may or may not be a 'true' bottom or a 'false' bottom. This conclusion is further supported by the factors that are likely to impact prices going forward that I outlined in September 2012 data analysis (link here).


House prices sub-index:

  • House prices subindex declined marginally from 69.1 in November to 68.7 in December, thus erasing completely any gains delivered from September 2012. 
  • House price dynamics are virtually identical to those of the overall RPPI as outlined above.
  • 2012 year monthly average index reading was 68.57, slightly behind 68.7 recorded in December. However, 6mo average through H1 2012 was 68.7 and this has fallen to 68.43 average for H2 2012. 
  • Y/y index fell 4.18% in December, marking the shallowest rate of decline in the series since May 2008.
  • Frankly, all of the changes are within the range of being statistically insignificant, so the theme of 'flat line market' continues unabated.


Apartments show the same dynamics as Houses, so let's avoid repetition and note that

  • Houses prices are down 47.95% on peak, while Apartments prices are down 62.15% on peak.




The index has been criticised, for the n-th time by the realtors for failing to reflect the 'great demand' from the cash buyers. Alas, my view is that cash buyers are not, repeat, not a normal market, but rather an aberration that is bound to be short-lived. In this sense, if we want a gauge of real market activity, then the CSO data provides a far better picture than testosterone-fuelled hype of few whales with cash stashed from CPOs of the old days bidding each other out to land a 'family home suitable for conversion into student bedsits'.


Dublin, last.


  • Property prices in Dublin slid from 60 in November to 59.2 in December, marking 1.33% decline m/m and 2.47% drop y/y. 
  • Relative to peak, Dublin market is down 55.99%. Which is above the absolute low of 57.40 achieved in August.
  • On dynamics side, 12mo average is running at 58.32, worse than December reading, but well below 2011 average of 67.86. H2 2012 average is at 58.57 and virtually identical to H2 2012 average of 58.07. In other words, medium-term dynamics are flat. Flatlining is the theme here again.


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