Thursday, November 20, 2008

Christmas Sales

Many homeowners ask us should they leave their home on the market at this time of year. Traditionally the Christmas period was always slow from a property perspective. When I started in property, back in the 80’s (!), we might as well have shut down the office from December 1st to January 10th each year. When the Christmas sales were over and the kids had gone back to school, house hunters began to emerge again and deals were done. It was very rare to even have a viewing over the Christmas period.

There were some exceptions. I remember in the mid-90’s agreeing a sale on the 23rd December. The house looked great decked out for Christmas and I think that this, plus the Christmas cheer, helped the owner get a good price. (My negotiation skills might have had something to do with it also!)

In December 1999, against my better judgement, a developer persuaded us to advertise a new development for an official launch in January. I will never forget the sight as I drove around the front of the office on January 2nd. There was a queue, admittedly only 3 people, but a queue nonetheless, to book a house in the development. The rest of the development, all 35 homes, sold out within the day. The Great Celtic Tiger property boom had arrived.

Now that the property boom has disappeared, prices are back quite a bit from their heights of 2006/2007. Some homes are down by 25%. Some are unable to be sold at any price, due to the lack of available finance.

So, back to the question. Should a house stay on the market over the holiday period? My reasoning is that a house can only be sold if it is for sale. The market is so tight that if a house is not in view, either on the web or in our offices, it will not sell. I am sure that some homes will sell over the Christmas period, maybe yours will be among them.

Wednesday, November 19, 2008

What's going to happen next?

With bank shares at yet another all-time low, dire economic forecast on every news bulletin, house prices down 15-20%, doom and gloom all around, one has to wonder what’s going to happen next? While the rest of the world appears to be stabilising slightly, it seems that Ireland is sinking further and further, with no sight of the bottom yet.
The banking crisis has been the trigger for all the difficulties we are facing today. Over-lending for property and personal spending reached epic proportions in 2006 and 2007, while Ireland Inc. partied like there was no tomorrow. We are now suffering a collective hangover, with no immediate remedy.

According to reports, the Taoiseach told the Dáil today that recapitalisation of the banks alone will not solve the issue of access to credit for small businesses. During leaders' questions, he said the Government was looking at range of measures to remedy the liquidity problem but he said he was constrained in revealing what they were.

This is bad news. This Government has failed in every major initiative it has tried to launch, including its Budget. They do not seem to have any imagination, and even when they decide on a course of action, they are unable to see it through to finality. The fact that they are “looking at range of measures to remedy the liquidity problem” probably means they have little or no idea what to do! Even if they do, they will probably be too hamstrung to put it into action.

Unless they can come up with a comprehensive plan and can put it into action now, it now seems likely that a number of our banks may fail, while others might be taken over by predatory foreign interests. This will be a disaster of unimaginable proportions for the country. Even now, there is little or no hope of small businesses getting credit. This is causing huge cash-flow difficulties. Many solid businesses will go broke. Unemployment will soar at a time of low tax revenue. We can only hope it does not come to pass.

Tuesday, November 11, 2008

Light at the end of the tunnel?

Over the last 2-3 weeks, we have noticed a marked upswing in home viewings. This has resulted in an increase in the number of pending offers received at our Clonmel office. The web stats are up and the phone is ringing more. We are all a little busier.

First-time buyers are coming back into the market. I see a lot of people that have been sitting on the sidelines, watching the market fall over the last year, now move to get mortgage approval, view houses and make offers. House prices are at about 2003/2004 levels, while interest rates are on the way down.

Money is still difficult to get, the banks are very selective about who they will (or can!) lend money to. It seems that job security is once again a prime focus for the banks. A lot of the newly approved potential home-buyers are in Government jobs, or very secure businesses.
The maximum loan-to-value ratio seems to be 92%. The people who are now bidding for homes have been saving for the last year or two and are in a position to come up with the 8% balance and solicitor fees of approx. 0.7-1%.

I speak to potential buyers numerous times a day. When we meet at a property, the state of the market is always a topic for discussion. A number of common themes are emerging. The general consensus is as follows:
1. House prices have fallen...a lot. First-time-buyer houses, which typically cost €230-250,000 in early-mid 2007, are now priced around €200-215,000.
2. Interest rates have fallen, and it seems are due to continue falling, improving affordability.
3. As stated, these potential home-buyers have spent the last year or two doing what their parents urged them to...saving.
4. Vendors are more acclimatised to the drop in prices and will listen to reasonable offers. They will include more in the house sale and are now bending over backwards to entice buyers.
5. First-time buyers are the only group that banks are targeting at present, so they know that they are the only buyers in the market. This gives them more confidence.
6. That same knowledge is also a big driver to them. Their friends are starting to put in offers on houses and they see more and more houses being marked as Sold on and in our office. They do not want to be left behind!

In other words, they feel that the market may have bottomed out, or be close to doing so. They realise that if the Government inject money into the system, resulting in more liquidity, then prices will stabilise, if not harden slightly. With lowering interest rates and lower house prices, it really is now much more affordable to buy than to rent. Of course, the money paid on a mortgage is actually for their own benefit, unlike rent, viewed as “dead money.”

Is this the start of an improved outlook for the housing market? Time will tell. All I know is that people that only a year ago thought they would never afford a home are now completing purchases and will be in for Christmas.

Thursday, November 6, 2008

South East Business Confidence Study October 2008

The business outlook in the South East has deteriorated further in the past six months according to the findings of the latest South East Business Confidence Study. This is the second in a series of twice-yearly surveys conducted on-line with businesses in the South East of Ireland. 400 organisations across the region took part.

The findings show that the expectations of businesses for 2008 in terms of turnover, profit and employment are much lower than in the first survey conducted in May 2008. In the region as a whole, more businesses expect their turnover, profits and workforce to be lower at the end of 2008 than they were at the end of 2007, a sure sign that a recession is underway.

There has been a very noticeable lowering of expectations in the last six months and businesses are now facing up to more difficult trading conditions. The biggest change in this period has been the fall in consumer confidence and this is now cited as the biggest challenge facing businesses throughout the region. However, there are positive signs as just 20% of businesses expect to have to implement redundancies during 2008 though opinions are evenly divided on whether things will get better or worse next year.

"How do you think your business will do in 2009 compared to 2008?"

Source: Market Dynamics, October 2008

Key Findings
Sales / Turnover / Profitability
More businesses (42%) expect their turnover to fall in 2008 than expect it to rise (37%).
Medium sized companies (those with 25-49 employees) seem to be feeling the pressure most with more expecting a drop in turnover (39%) than an increase (38%).
Businesses in construction, financial services and retail/wholesale sectors appear to be finding the environment toughest. However, organisations in transport / distribution / communications and business services believe they will buck the trend with 56% and 47% respectively expecting increased turnover this year.
Just a quarter of firms (26%) expect their profitability to be better than last year.

Source: Market Dynamics, October 2008

Employment Levels
A total of 41% of businesses expect to be employing fewer people at the end of 2008 though 45% believe numbers will be maintained.
Over 60% of businesses with between 25 and 99 employees surveyed expect to employ less people by the end of 2008.
Just 20% of businesses expect to make workers redundant this year while 49% don’t expect to reduce capacity at all during this year.

Source: Market Dynamics, October 2008

Business Challenges
The decline in consumer confidence, cited by 56% of respondents, is the biggest challenge facing businesses across the South East followed by labour costs and energy costs.
Just 31% claimed that the availability of credit was a challenge and 20% still have difficulty in finding suitable staff, despite the economic downturn.

Expectations for 2009
When asked to say whether they expected business in 2009 to be better or worse than this year there was a divergence of opinions. While 44% expect business conditions to be the same as this year the proportion who expect business to be worse in 2009 is exactly the same, at 28%, as the proportion who expect things to be worse. It is clear that most businesses are expecting two tough years.

Positive Impact of Downturn
Around one in five businesses stated that the downturn has had some positive effects on their businesses. Some expect competitors to come under pressure while others will take the opportunity to examine their internal structures.

Given the amount of emphasis by Govt agencies on training it is perhaps surprising to see that just over one in four businesses consider it to be very important while a exactly half the businesses surveyed think it is moderately important. One in four organizations don't use any external training and of those who do 79% consider they get value for money.

Lisbon Treaty
Only 1 in 10 organisations felt that the outcome of the Lisbon Treaty referendum had had a negative impact on their business to date. Agreement on this was solid across the counties with Wexford highest at 15% and Waterford lowest at 5%

National Pay Agreement
Nearly two fifths of organisation felt that the outcome of the recent national pay agreement was as they expected with around 1 in 4 expressing the view that it was worse. Interestingly, 1 in 3 felt that it was of no relevance to their business.

Public Sector
When asked their opinion on the recently expressed view that the public sector is “destroying the morale of those who drive the economy forward”, the majority, 63%, either agreed (38%) or agreed strongly (25%). Just under 30% expressed no opinion on the matter, neither agreeing or disagreeing and only 8% disagreed or strongly disagreed.

County Summaries
Carlow: Continuing the trend from the May survey businesses in Carlow expect to weather the storm of the downturn better than most with more expecting turnover to be up this year than down. Carlow also has the most positive outlook for profitability of any county. The proportion (19%) who expect to employ more staff at the end of 2008 than at the end of 2007 is also higher than most other counties. Carlow-based organisations are also most positive about prospects for 2009 with 41% expecting business to pick up next year compared to the regional average of 28%.

Kilkenny: Kilkenny businesses are most polarised in their expectations for this year with just 45% expecting lower turnover and 41% expecting higher. The outlook for profitability has deteriorated rapidly with just 31% expecting to increase profits this year compared to 48% in the May survey. In relation to employment prospects Kilkenny is slightly better than the regional average with 21% of businesses expecting their workforce to be higher at the end of 2008. Kilkenny businesses are the most negative about 2009 with over a third expecting business to be worse than in 2008 compared to just a quarter who expect an improvement.

South Tipperary: South Tipperary based businesses are the most positive about 2008 as they were in the previous survey. Just 31% of businesses expect turnover to be down. They are also the most positive about their ability to maintain or improve profits this year. As a consequence, the outlook for employment in the area is also good with just 29% expecting to reduce their workforce in 2008 compared to the regional average of 41%. In addition, 24% of businesses will increase their workforce this year.

Waterford: Businesses in Waterford are most negative about turnover in 2008 and just behind those in Wexford on the outlook for profitability. Just 9% expect their workforce to increase during 2008. In addition, just 21% of Waterford businesses expect things to improve in 2009 while a third expect a worse trading environment.

Wexford: Businesses in Wexford are close to the regional average in their expectations for turnover in 2008 but have the most negative outlook on profitability with 55% expecting lower profits this year. The county has gone from having the lowest proportion expecting to reduce staff numbers this year, to having the highest in the region at 45% and the lowest proportion who expect to increase at 9%. However, businesses in Wexford are the next most positive after Carlow about prospects for 2009. A total of 33% expect an improvement next year with just 21% expecting things to get worse.

If you want any further information on the South East Business Confidence Study and its findings please contact Fiona Macrae or visit .

Clonmel Song Festival

A short post to remind you all that the Grand Final of the Clonmel Song Festival is on this Friday, 7th Nov. in the White Memorial Theatre on Wolfe Tone St. Doors open at 7:30pm.

Info and clips of some of the artists are available on The Platform TV. Have a look and let me know what you think.

It is great to see a National contest such as this being run in Clonmel. A large number of side shows are being held over the week, including workshops at the Tipperary Institute.

Wednesday, November 5, 2008

Does it Flood?

When meeting people who have come to Clonmel for the first time, either as retailers or potential homeowners, one of the first questions they ask about a property is “Does it flood?”

We have gotten headlines in the National media for all the wrong reasons at one stage or another, due to a couple of spectacular flooding incidents over the last 10 years. Despite global warming and an increase in the amount of rain that falls each year, Clonmel actually needs a combination of a number of factors to flood badly. A lot of rain is obviously a pre-requisite, normally 3-4 days of the heavy constant type. This allows the rivers to rise due to the initial rainfall, then to be further swelled as the rain washes down from the surrounding mountains and higher ground. A strong South-Easterly wind, coupled with a high tide, slows the River Suir’s progression to Waterford and voila, parts of Clonmel start to flood.
The fact that it is the run-off from the mountains that really does it means that the worst of the weather has generally passed by the time that the flood gets underway. This gives an eerie sense of stillness to the flooded areas, where no cars or people move. When you get up close though, it is anything but calm, with the powerful force of the water pushing through streets close to the River and into houses and offices nearby.
Generally, the area around the Quay and the lower-lying areas of Old Bridge are most at risk. The Waterford Road area can be hit also, with the road being blocked and some properties (Garages and Supermarkets) being damaged. We rarely see any damage elsewhere. In the town centre, some basements flood on O’Connell St. In the worst recent flood, 7 years ago, our office on Gladstone St got a few inches of water in the basement, but it disappeared within 24 hours.

The Flood Relief plan is well underway, with approx. €9m of a €25m budget spent.
The picture shows the wall built from Irishtown to the Old Bridge. It is intended to fill the concrete spaces with stone.

This picture shows the existing railing from there onwards. If you look carefully, you can see Worldwide Cycles, where Barry and Ray offer great advice and products to the cycling fraternity. The railing is not much good at containing the river! On many occasions during a flood spell, these railings are completely under water, as a picture above shows!

This is why it was decided to erect a wall. Unfortunately the wall will obstruct the view of the river and in some cases the mountains. It is a huge amenity loss to the town, but if you were in the Flood Zone, I think that any remedial measures that work would get your vote.

The picture from 1949 shows the same view down Anglesea St. as the adjoining one taken in 2004. The 1949 flood was probably worse than 2004. What about global warming?

I hope that when the works are completed, the town will not be remembered for its flooding, but for it’s great commercial nature and beautiful natural surroundings.

Thanks to Bill Flynn for some of the great pictures above.