Growing optimism over property prices helps to dispel the gloom
FOR better or for worse, one of the bellwethers of our economy over the past 20 years has been the price of houses.
As part of our Millward Brown 2020 Consumer Sentiment study, carried out earlier this month, we sought to ascertain the fiscal mood of the population.
Conducted immediately prior to the announcement of the 2014 Budget, all of our metrics point to a guarded sense of expectancy as to the future health of our economy.
Interest rates are at an historic low, and with banks now having more powers to repossess homes — along with Nama's property portfolio to be cashed in — nothing can be taken for granted.
And yet, consumers are optimistic. When asked if house prices will continue to rise over the next year, nearly half (48 per cent) believe that they will. Just one in five (21 per cent) disagree. Contrast this with just 15 months ago. At that stage we asked the nation whether house prices would continue to fall. Seven out of 10 agreed that they would. Consumers are clearly more upbeat more recently.
When we examine the data more closely, the dangers of a two-track society emerging in terms of employment, property prices and general consumer confidence are increasingly apparent. This schism is more evident depending where you live in the country.
If you are living in Dublin, you are generally more upbeat for the future — with more than half (59 per cent) believing that property prices will continue to rise. Dubliners are also most likely to feel that their personal financial situation will be more positive this time next year — although just 23 per cent of them believe this to be the case, it is still far ahead of the national figure of 14pc.
Similarly, nearly one-in-four (23 per cent) believe their financial situation has improved over the past 12 months, versus just 12 per cent across the board generally.
As was noted a couple of weeks back, confidence in general is improving — but this confidence is returning at different speeds.
However, if you are outside Dublin, in the Leinster commuter belt, there is a sense that the recovery in property could take some time yet.
Seventeen per cent in this area feel that the time is not right to buy a property — suggesting a feeling that there may be some way still to fall in these areas, or that the economic conditions are not quite right yet (53 per cent of them feel they will be worse off next year, versus a national average of 45 per cent).
City dwellers in general are more likely to think prices will rise — 54 per cent of them believe property is on an upward trajectory, versus 29 per cent of rural dwellers who believe the opposite.
Another metric that would suggest some momentum returning to the property market is when we look at attitudes towards the banks, and their stance on helping potential house buyers get a mortgage. We previously asked this question in May 2012 when the mortgage market was in a state of deep freeze. Just 14 per cent felt they were doing enough, versus three in four (74 per cent) taking a less benign view.
Fast forward 15 months, and there is evidence of a softening of opinion towards banks, and the help they are giving. The antipathy towards the banks is gradually thawing. Fifty seven per cent feel the banks are still not stepping up to the mark — but this is down seventeen percentage points. It would seem that getting the property market back to normality is moving at a glacial pace, but moving all the same.
Those most likely to feel that the banks are beginning to step up to the mark are again Dubliners, and from the more affluent AB social grade.
Our latest poll snapshot reinforces the theory that that there is a sharp divide between Dublin's prospects in particular and the rest of the country. A Dublin-centric led revival is inevitable. For some, such a proposition is attractive in the short term at least.
However, as we saw during the boom, in the longer term it can become more destructive. If things do turn around, will we learn from our mistakes this time?