Where in Ireland has seen the biggest increase in unemployment?

My recent attempt to put some figures on the scale of negative equity in Ireland – which concluded that about 40% of Irish homes are worth less than when they were bought and that as many as 20% of homes may be in negative equity – sparked some discussion here, on thepropertypin and most thoroughly on irisheconomy.ie.

The original post was designed just to put some numbers on the potential problem of negative equity, leaving aside for the time being the implications. Two important strands of discussion have arisen about the implications. The first relates to financial consequences, as mentioned by Karl Whelan, particularly in relation to the proposed NAMA and the fate of the banks. The second broad strand of discussion, being led by Liam Delaney, relates to how negative equity has labour market implications, particular when unemployment is on the rise. (Unemployment and negative equity are mirror images of the home ownership/labour mobility discussion being led in the US by Richard Florida.)

I’m currently working on estimates of how many households are affected by the dual problem of unemployment and negative equity. Combined with the likelihood of falling rents over the coming two/three years, rents being the alternative income a homeowner could get from their house, this is a cocktail for widespread misery currently partially staved off by all-time low interest rates and therefore mortgage repayments.

A next step in working out where both negative equity and unemployment will strike is looking in more detail at the problem of unemployment. The CSO provides very detailed statistics on unemployment by county/town and more occasional detail on the age profile and duration of unemployment. The map below gives an idea of ‘unexpected’ unemployment (original visualization here). It show the increase in those signing on by county in April 2009, compared to the average of 2005 and 2006, meant to indicate a natural level of unemployment (whether long-term or just switching jobs).

Unemployment in Ireland by county, April 2009 compared to 2005/2006

Unemployment in Ireland by county, April 2009 compared to 2005/2006

Those looking with relief at counties in a light brown – such as Waterford, Louth, Donegal and Mayo – should be aware that in all counties, the April 2009 was at least twice the 2005/2006 average. What’s more worrying, though, is that there are a number of counties where unemployment is three times what it was three years ago. In Meath and Kildare -stalwarts of Dublin’s commuter belt – unemployment has more than trebled. Likewise in Cavan and Laois.

The next part of the puzzle is to revisit county-level estimates of negative equity based on comments on the last set of figures and then try to put some numbers on how many households finds themselves faced with both unemployment and with a house worth less than their debt to the bank.

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How much are rents falling around the country?

The latest Daft.ie Rental Report is out today. It shows that rents across the country fell by more than 5% in the first three months of the year. The national average rent now stands at €840 per month, compared to just over €1,000 per month a year ago. Nationwide, rents have now fallen for 14 consecutive months. The fall since the peak early last year has been faster than the rise before that, and with rents 17.5% lower than the peak in early 2008, rents are now back mid-2005 levels.

The largest falls in rents have been in the cities. In Dublin and Limerick, rents fell by up to 6.5% in the first three months of the year. In Waterford and Cork cities, rents fell by 5.3% and 5.1% respectively. In Galway, the fall in rents was smaller, at 4.3%. Rents in Dublin’s commuter counties and in West Leinster (i.e. Laois, Longford, Offaly and Westmeath) – presumably an indication of their role as Dublin’s outer and further-outer commuter belts – have fallen by about 6%, more than the national average. At the other end, South-East Leinster (Carlow, Kilkeny and Wexford) and the counties of Connacht and Ulster have seen rents fall by less, typically by about 3.5%. Rents in Leitrim and Roscommon fell by less than 1.5%.

The county-by-county changes are outlined in the map below. As you can see, it’s the extended Dublin area that’s being hit most. For the full details on average rents by county and how much they’ve fallen in the last three months and in the last 12 months, check out the Manyeyes visualization here.

Change in rents by county, 2009 Q1

Change in rents by county, 2009 Q1

The reason for all this is clear – the rental market is feeling the brunt of too much supply and not enough demand. On the supply side, the number of properties available for rent is now over 23,000 – an all time high, certainly compared with the 5000-6000 range we saw on the site up to 2007. This means that landlords are having to fight for tenants, pushing down rents – and rent-a-room income – pretty much everywhere. Add to this falling demand, as Ireland’s most footloose workers head off to pastures new, and it’s pretty clear that the pressure on rents throughout 2009 and maybe into 2010 will be downward pressure.

This report’s commentary is provided by Brian Devine, Chief Economist at NCB Stockbrokers. He highlights the challenges and perils of forecasting facing economists today:

In relation to the property market there have been plenty of forecasts regarding how far residential prices (ranging from -35% to -60%) and to a lesser extent residential rents (ranging from -20% to -35%) are going to fall from peak to trough. Some studies/views on how far prices will fall are based on historical comparisons with previous OECD housing busts. Others invoke the idea of a “fair value” for housing based on, for example, one or more of the following: income-price ratios, mortgage repayment burden, rent-price ratios, rental yield, credit availability, population growth, interest rates and growth in per capita disposable income.

The problem with trying to forecast prices/rents based on the concept of fair value is that prices overshoot and undershoot fair value. The magnitude of the overshoot/undershoot is ultimately determined by psychology. While the psychology of never ending price rises fuelled the market on the way up, economic/job uncertainty and the expectations of further price falls will be the important psychological factors on the way down.

Next week’s property market post will have a look at affordability, i.e. the maths of buying versus renting, based on these figures, and how yields have been affected by the latest falls in rents.

Brrr… Sure ’tis cold in Sligo: A heat-map of Ireland’s property prices since early 2007

As those who’ve checked out/had to put up with my many word clouds on various different topics from Wicklow genealogy to Barack Obama will testify, I’m always looking for new ways to present data and information. For those with similar interests, a useful tool in that regard is Manyeyes, a free data visualization service offered by IBM. First thing you might do when you click through is have a wander around some of its featured visualizations, such as the OECD economic outlook or the World Cup Finals.

You needn’t stop there, though, as once you’ve registered, you can upload datasets yourself and visualize them. What’s particularly cool, in my opinion, is the ability to do maps with subnational data points, e.g. for the USA, China and, somewhat surprisingly until you remember IBM’s presence in the country, Ireland.

So I plugged in some county-level statistics from the Daft.ie database, in particular the year-on-year % change in asking prices by county from the first quarter of 2007 to the third quarter of 2008. The results are available for all to see on Manyeyes – I haven’t been able to put a live visualization up here, but you can get a sneak preview below and indeed the whole shebang just by clicking on the picture.
E9a845ba-c221-11dd-9c2e-000255111976 Blog_this_captionWhat, even clicking on the link is too much hassle? OK, here’s the lazyman’s version:

Heat-map of Ireland's property prices

Heat-map of asking prices for Irish property, 2007/2008

The easiest way to get the overview of the story – but with the minimum detail and surprise factor – is to go straight from 2007-q1 to 2008-q3. As you can see the map goes from totally brown to totally blue! But that naturally is hiding a lot of detail… So here are some other highlights on regional trends in Ireland’s property market:

  • Sligo is a constant underperformer – having enjoyed some of the smallest increases in the first half of 2007, it’s now suffering from some of the largest falls in 2008
  • Aside from Sligo, West Leinster was the first region in the country to suffer from falling house prices, in year on year terms, with Longford and Laois falling in year-on-year terms by (and we can pretty much throw in Westmeath there too, where prices were no higher than a year previously, in the same quarter)
  • In late 2007, asking prices in south-east Leinster (e.g. Carlow, Kilkenny) and neighbouring Munster counties (Tipperary, Waterford) were still rising in year-on-year terms.
  • Limerick was the last bastion of rising house prices. It’s the only county not to have registered two consecutive quarters of year-on-year falls in house prices… yet!
  • Have a look at 2007-q4… poor old Donegal just doesn’t get it! Even in early 2008, it was still at it. In Q3 2008, though, with prices down over 11% compared to a year earlier, it’s landing with a bang.

There are just some initial observations on the figures – overall, Manyeyes is a pretty useful tool, I’d have to say. I’d be interested in hearing anyone else’s observations on regional differences in price trends. What have I missed? Or indeed, what should I be heat-mapping?

400 years on: Forget Southfork & Dallas, for family infighting check out the O’Doynes of the 1600s

Recently, inspired by Irish Culture Night, I bought a copy of the O’Doyne manuscript, published by the Irish Manuscripts Commission in the early 1980s. The manuscript itself is in Marsh’s Library, Ireland’s oldest public library, and is dominated by documents relating to the lengthy legal battle between Charles O’Doyne (Cathaoir Ó Duinn) and his older brother Thady (Tadhg), the sons of Tadhg Óg Ó Duinn, lord of Uí Riagáin (Iregan – now Tinnahinch in County Laois). Charles was a graduate of Oxford (BA, 1586 and MA, 1591) – “a good scholar and a zealous Protestant” – and was Master in Chancery from 1602. Thady appears to have been more settled in Ireland and whereas Charles had no heirs, Thady had at least ten children, mostly from his second marriage.

I was not aware, when I bought the book, that I had stumbled across a battle that was marking its 400th anniversary. Tadhg Óg Ó Duinn was lord of Iregan from 1558 to 1607. When he passed away, the fighting began. This day four hundred years ago, on the 26th of November 1608, Ireland’s Lord Deputy, Sir Arthur Chichester (whose portrait appears in this post), issued his verdict. Sir Arthur, incidentally, came over to Ireland after the death of his brother John during the Battle of Carrickfergus in 1597 – John was apparently decaptitated and his head used as a football by a potential ancestor of mine, Sorley Boy McDonnell (mooted progenitor of today’s M(a)cSorleys through his first marriage).

So, would Arthur choose between the zealous bachelor Charles or the father many-times-over Thady? Read on… what follows is the verbatim letter he wrote:

arthur-chichester

Sir Arthur Chichester, Lord Deputy of Ireland, 1604-1615

Letter Directing Attorney-General to draw up Fiant for Letters Patent. 26 November 1608.

By the Lord Deputie.

To the attorney general.

We greete yow well. Where the King’s most excellent Majestie by his highnes letters under the signet dated the 29th of July 1608 hath signified unto us his Majesties pleasure on the behalf of Capten Thady Doyne esquire Cheiffe of his name, that his highnes is graciouslie pleased in Consideration of the said Tady is good service heretofore done to his highnes to graunt unto the said Thady his heyres and assignes the Contry of Iregaine and all the lands, tenements, tythes and hereditaments therein and thereto belonginge and all fellons goods and deodands therein happeninge, to be held of his highnes, his heyres and successors in Free and Comon Soccadge as of his Majesties castle of Dublin. And further to graunt full power and authoritie unto the said Thady, his heyres and assignes at his and their will and pleasure to hould and keepe within the said Contry of Iregaine in such fitt places at such convenient time Courte Leete and Courte Barrons, marketts and Fayres, as to us shalbe thought fitt. Theise are therefore to will and requier yow forthwith to make a Fyant or Fyants in due forme of Lawe of the particuler appearinge under Mr. Surveyor’s hand in the scedule hereunto anexed, and all other lands of right the said Thady hath or ought to have in the said contrey of Iregaine, Tythes, felons goods, deodans, Fayres, marketts, and other the premisses unto the said Thady his heyres and assignes to be houlden of his highnes as aforesaid. Incertinge therein such further ordinary Clauses as in such letters Patents are usuall. And leavinge blanks for the times and places for the said Courts, Fayres, marketts. And such Fiant or fiants so made to send unto us fayer written ingrossed in parchment under your hand that wee maie give further order for passinge the same unto the said Thadye under the greate seale of this Realme. And for your doeinge thereof this shalbe your warrant.

Given at his Majesties Castle Dublin this 26th of November 1608.

Dublin Castle

Dublin Castle

So Chichester went with Thady, giving him ownership of the land, the right to host markets and fairs, the right to host courts, the whole kit and kaboodle for Iregan… not that Charles took it lying down. Before the year was out, he had replied with a thirty point response to the Lord Deputy’s decision. The letters flew back and forth for the next four years, before the disgruntled Charles realized his options were running out. Ironically, Charles’ death in 1617 sparks the process off again among his own heirs!

So, 400 years on to the day, one thing we can say is that family feuds, wills, land and wealth – some of the staples of soap operas – have a long pedigree!