People share, and when mover Mark says it’s true, I believe him …

People share, and when mover Mark says it's true, I believe him ...

If you want to know what is going on in the real estate market, don’t speak to a real estate agent. The best leading indicator in the market is Mover Mark – the king of furniture removals. Talking to a fellow in a big white delivery truck stuffed to the gills with someone else’s property is by far the most instructive command you can get in the real estate market.

typically the Irish guy these days is a subcontractor and the guys who do the heavy lifting are Brazilian “students”. The Brazilians appear to have cornered the end of the moving company market. But Mover Mark is the man who can tell you the real story.

Over the past three months, according to Mover Mark, its prices have risen as demand has risen dramatically. You can see it for yourself on the relocation website. People are out and about, and instead of doing it themselves, they hire guys to do it for them.

As a result of some of these conversations, and taking into account the evolution of the economy, it looks like 2017 may be the year house prices rise again in Dublin, especially in the more upscale areas that, contrary to popular belief, were in the doldrums of the past Year.

In today’s excellent addition, we capture a market that is recovering strongly in metropolitan areas outside of Dublin, but not in the capital itself.

The key to understanding where the housing market is headed next is not just what happens to new builds, but what happens to the stock of houses as well.

This is because the existing inventory is (a) much larger and (b) should reflect demographics.

As people get older and their incomes rise, there is a tendency to sell their starter homes to the next generation of new families and move upscale homes to homes sold from empty nests.

This should happen in a healthy market and it was the case in Ireland until recently.

However, it is difficult to overestimate two demographic factors that have changed the way the housing market works.

The first massive change is that early 2000s buyers still have significant negative equity and cannot afford to move at all. As long as there is negative equity, people cannot trade without taking a massive blow.

For this reason, the home improvement market is experiencing a massive surge in growth, as the traffic to IKEA shows.

The second factor is that children no longer leave the nest like they used to, mainly because of (a) the cost of housing and (b) the fact that Irish parents are (possibly) the first time allowing their children to sleep with their partners Home. If you can sleep with your girlfriend at home, do your laundry, and have beer money that you would otherwise have coughed up for rent, why the hell should you move out?

Adult children postpone moving out because they have no traditional reason to do so! Be honest, why did you really move out when you were 21? Nowadays tens of thousands don’t move out until they have children of their own.

The massive outflow of Irish children in their early twenties that was a feature of my generation is not happening. As a result, down-trading is no longer the way it used to be.

So the market is stuck.

The first-time buyers of the first decade of the century cannot trade up, and the parents of the 80s who should trade down are left with their children as their children are now billeted at home right under their noses.

That was the status quo from 2008 until today. However, it changes due to population dynamics. The number of Irish children in their twenties is actually falling. There are many more people in their thirties in Ireland than in their twenties.

This is due to the collapse in the birth rate in the 1980s and 1990s. The thirties are having children later now, but they are having them; and now they go out to nest.

Even parents who have replaced mass with little Sophie’s breakfast on a Sunday morning will find that there are fewer friends over the weekend. Irish family size shrank dramatically in the 1980s and now these smaller families are moving out and allowing their parents to trade down.

This is happening slowly because demographic changes are slow, but we can see signs that it is beginning. These are the real real estate market fundamentals and this explains why prices have risen in commuter circles outside the capital.

These are the places where the young couples go shopping.

The next phase of this family / demographic trend will be more mature Dublin homes.

Now think about the first-time buyers of the 2000s too. When property prices rise in the commuter belt, they are the ones to win. When their balance sheets recover, they will start selling because they run out of negative equity.

So they are able to bid Dublin houses for the 1980s. These are the very houses that the people who want to trade down are looking to sell. So what is likely to happen?

Price expectations in established areas will change in the coming months, and indeed upwards.

If prices are expected to go up, it is understandable that the landowners would wait for prices to go up, putting pressure on potential buyers. It is also understandable that when prices go up, potential buyers panic and bring their demand forward so they are not left behind.

What do you think will happen to the supply?

Traditional economics suggests that supply goes up when price goes up, but does that actually happen in real life? If land and home owners believe prices will go up, wouldn’t they be crazy to sell now when they can delay making more money? The supply does not rise when price expectations rise, it actually falls.

Only demographic change can change these psychological dynamics. The demographic change is here. So the senior home market in Dublin is becoming more liquid as parents sell with now empty nests. The first-time buyers who have recovered from negative equity will buy and prices will go up.

At least that’s what Mover Mark told me, and I’ll always refer to his “on-site” view of any top-down analysis.