WEAK ECONOMIC CONDITIONS CONTINUE TO AFFECT BOTH HOUSE BUYERS AND SELLERS - Property websites MyHome.ie and Daft report that residential property prices continued to fall in the last three months of 2011. Overall for last year MyHome.ie reports an annual rate of decline of 13% with Daft.ie reporting an 18% fall. MyHome says asking prices nationally are now down by 43% compared to the peak while Dublin prices are down 50% over the same time. Daft says the 18% yearly fall was the same as in 2009 and that the average asking price for a residential property is now just over €175,000, which it says is 52% below the peak of €366,000.
Daft's economist Ronan Lyons says that two factors are continuing to affect house prices - these are the greater realisation of the state of the market by sellers and the increased general pessimism in the economy as poor economic news affects both buyers and sellers. He says it is better for prices to race to a bottom rather than crawl there, but stresses that it is vital for the property market for banks to start lending again. He says in order to revitalise the housing market, the Government should change the way it does stress tests as under the current situation banks are punished for any new lending they undertake.
Economic consultant Annette Hughes of DKM, who compiled MyHome's report, says the third quarter economic figures were very disappointing after two good quarters of growth. She states that the economy is in a very fragile position, but adds that there is pent-up demand in the market. The positive measures for first-time buyers in the Budget and the lower interest rates as the ECB continues to cut rates shows that there is value for money in the market. She says it is actually quite hard to gauge the state of the market as there are so few transactions.
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MORNING BRIEFS - Manufacturing companies saw another deterioration in operating conditions in December - the second such worsening of conditions in a row - as the rate of decline in new business accelerated. The NCB Purchasing Managers Index says that the fragile economic conditions and uncertainty in the euro zone led to a reduction in total new orders last month. However, new export orders rose marginally in December, ending a three month period of decline with companies reporting an increase in orders from the UK.
*** European shares hit a two-month high in their first trading session of the year yesterday. This morning Asian stock markets rose on the first full day of trading in 2012, boosted by better-than-expected economic data.
*** Germany's Joerg Asmussen and France's Benoit Coeure replaced Juergen Stark and Lorenzo Bini Smaghi on the European Central Bank's six-member Executive Board at the start of the year. Joerg Asmussen's responsibilities are yet to be decided, but his predecessor Juergen Stark held the influential economics portfolio as well as those for information systems and statistics. Benoit Coeure replaces Lorenzo Bini Smaghi, who was responsible for international and European Relations, legal services and the new ECB premises.
*** The French President Nicolas Sarkozy will meet German Chancellor Angela Merkel in Berlin next Monday, January 9, to prepare for upcoming European Union talks such as a Council meeting at the end of the month. The two leaders are expected to build on proposals, agreed at a December EU summit in Brussels, for a new treaty to forge closer fiscal integration as Europe battles its sovereign debt crisis.
*** Danish brewer Carlsberg expects its key Russian beer market to begin recovering in 2012 although the decline in western European markets could intensify over the next three years as the euro zone crisis bites.
*** On the currency markets, the euro is trading at $1.2986 cents and 83.39 pence sterling.
