Happy New Year to you all.
So many different events occurred last year- that few of us could scarcely have imagined possible- which will reverberate for a significant time to come- and effect us in ways that will present both opportunities and threats to all of those with a vested interest in the Irish property market- both in 2017- and years hence.
We have many developments, specific to Ireland- which may help further stabilise the market here- some of the pertinent developments are of course:
1. The Minister's most recent indirect meddling in the BTL market, which has introduced national rent control by the back door (of course its not called this- but lets call a spade a spade). In recent months- BTL investors have, according to several chains of national estate agents, represented over 50% of all purchasers in the market. It is entirely foreseeable that this will slow markedly- which may tighten the amount of growth in our supply of rental property- which simultaneously give a few opportunities to other prospective purchasers that they might not otherwise have.
2. Construction of new residential units- is increasing incrementally- and the ESRI and CFI (who rarely agree on anything) are both predicting somewhere between 17,400 and 18,000 new units being completed in 2017. This is still significantly below the 25,000 to 30,000 which is commonly stated as the quantity of new properties we need to satisfy annual demand- however, its a remarkable turnaround in only 3-4 years. Its predicted we will hit 20,000 units in 2018 and possibly 25,000 units in 2020- which I'll believe when I see. The bigger issue is of course- location, location, location. Where are these units to be built? Dublin City Council reaffirmed its opposition to any relaxation on height restrictions in Dublin- only last week. This is worryingly short sighted, and does not bode well for the future of Dublin. The Minister is on record as saying Waterford could construct another 24,000 units by 2025- great- however, in a national context- we can't tell anyone who wants to buy a new home to sod off to Waterford and commute where-ever they need to go (I've nothing whatsoever against Waterford, or the Sunny Southeast- I do however despise commuting for several hours a day).
3. Finance- Our lenders have embraced the loosening of requirements for first-time-buyers, and along with the ongoing repairs to their balance sheets- are a lot happier to lend than they have been at almost any time in the last 9 years. Interest rates, although they continue to be at historically low levels, are creeping up- assisted in no small part by the likes of the Fed who have signalled an end to cheap money and most commentators now expect 3 interest rate rises from them next year. The ECB- under whose governance we operate- sent a chill through the market in their own right with their December statement- where they shocked market pundits by heralding a severe curtailing of the quantitative easing programme- cutting the amounts of bonds and securities they are going to purchase on a monthly basis going forward. In an Irish context- it doesn't affect us as much as it might- as there is a limit to the percentage of a sovereign's outstanding debt the ECB can hold- and we're damn near our limits.
4. The Irish Macro economy- is shrugging off the chill effects of Brexit- and of course the impending inauguration of President Trump- and we are predicted to be the fastest growing EU economy, once again, in 2017. Predictions in our growth rates have been cut significantly- however, the predictions in the growth rate of other member states- have been cut even more. Aka- things are getting worse- but not as fast as in other member states.......... At the moment it looks like we may hit an official unemployment rate of 6% in 2017- which is defacto full employment- and is already affecting pay rates in many high demand sectors- unfortunately the construction sector is top of the list- as if we haven't learnt anything from our previous boom and bust scarcely a decade ago.
What do I expect to happen?
Rent control is now in place- however a 4% rise will be the norm- rather than the exception. Expect a court challenge to the Minister in due course.
Property prices in Dublin, Cork, Galway and Limerick- will actually increase in pace again- as it looks like the local authorities are taking very short term positions and the Minister looks set on the historic 'Gateway' Town/City solutions which proved so elusive in the past.
The census data should be formally released in the Spring- which may focus a few minds- particularly on the needs of those counties which act as dormer/commuter counties for Dublin.
First Time Buyers- who imagine they are going to grow massively as a portion of the purchasing population- may be disappointed- and this is despite the relaxation of central bank rules etc.
The Irish market is a mess- and with government interventions its getting messier- rather than more stable.
I'm not even going to predict percentage increases or decreases in property- though I'd welcome other people to do so- along with their thoughts on why they come to their figures.
Have a good year all!
Have you a link to an official government website which says that 4% is that cap and that it is currently in operation?
There's slightly more to it than a flat 4% cap but here you go:
Nothing usable there...
You asked for an official government source, read the document 'Planning and Development (Housing) and Residential Tenancies Bill 2016 as passed by Dáil Éireann'
Citizens information have a broad summary here:
Damn, they don't make it easy to find and then it's sooooo complicated!
I assume someone just has to be sent a PDF file and then update that page.
until then, I doubt there's any changes from
which is at your link
This is in it:
Anyone can draw up a bill. If it ain't an act, it ain't the law
Will interest rates rise and what effect will it have on the property market
With a large amount of first time buyers going for "new builds" due to the governments help with the deposit, what will this mean for second hand first time buyer property's. Who will buy this stock that was in the region of 180 to 200k in price.
Don't see it having any impact. Limited amount of new builds, shortage of properties for sale. Because the deposit cap above 220k has been removed more people will have deposit. I see prices at all levels rising.
It was signed into law by our president befor Christmas...is it not in law...am I missing something.
Report from RTE on price moves over the year http://www.rte.ie/news/2017/0103/842302-housing-help-to-buy-scheme/ another 5-10% increase this year seems achievable. About the only advantage to these above inflation increases are households being lifted out of negative equity.
It is law. No-one has uploaded the version of the document which was signed... the Act .. yet. The Bill is probably unchanged so I worked off that instead.
The ECB actually shocked the market at its meeting in December- where they severely curtailed the bond buying project- which caught most pundits offguard as no curtailment had been expected.
Its highly unlikely that there will be interest rate rises- but particularly with an election in Germany this year- the ECB will most probably further curtail its market activities.
ECB rate rises at this stage would cause problems with the big struggling EU economies like Italy. We might be in a very improving place, but the PIGS are all still very shaky economically. And the EU doesn't need any economic problems right at this moment in time.
ECB rates are going nowhere for 3 years.