Dead Cat Society

Mr.McLovin

I'm wondering if the dead cat bounce which was predicted is going to happen at all? Previous property crashes in other countries all seem to have had this bounce in their property market from what I have read. Maybe Ireland really is 'different' this time around. Has our cat hit the pavement and is now going to get up and walk off into the sunset or is this dead kitty bouncing spectacularly high with a big splat on the cards?

Of course this only applies to Dublin as far as I know.

murphaph

I don't know. People talk of a dysfunctional market because so few transactions are taking place, because most of those that are appear to be cash rich and very few first time buyers with large mortgages. To me this describes the German property market to a T. In Germany the property market moves at a snail's pace. No bidding wars. Relatively few sales (people tend to buy where they die) and generally big fat deposits required. Basically most people don't expect to be home owners, though it's a nice dream many have. Is that dysfunctional? Maybe what is really dysfunctional is a market where people flip properties every few years to "climb the ladder" costing themselves thousands in transaction fees (solicitors, valuers and estate agents all make money from these transactions and that comes from somewhere) each time they "move up a rung". Perhaps that's dysfunctional.

My parents bought the house I grew up in in 1972. My mother still lives there. That was the way we used to do it in Ireland as well, until this "property ladder" came along. Perhaps a return to a slower market is no bad thing.

Pawwed Rig

I agree with murphaph. My parents were the same. Bought their house in 1966 and stayed there for the rest of their lives. A good few of the neighbours we had when we were kids are still there.
There is an argument to say that as your life progresses you should change your house ie get an apartment in early 20's, a bigger house when you have kids and then back to the apartment/smaller house on retirement. I would personally be of the opinion that people shouldn't buy the apartments other than for investment purposes. They do not tend to be of sufficient quality and size in Ireland on which you can plan long term but are suitable for singles or couples with no kids.

stevedublin

Mr.McLovin wrote: »

Previous property crashes in other countries all seem to have had this bounce in their property market from what I have read.

Source?

Mr.McLovin

stevedublin wrote: »

Source?

I feel a little embarrassed here as every reference to dead cat bounces I have googled to where related to stock markets. Any analysis that suggests ‘the classic dead cat bounce’ in regards to property is speculation that has never seemed to transpire from what I have googled. I returned to pieces I have read and I guess my perception of this commentary was that the bounce was the norm but nowhere could I find any evidence of such a property bounce, only suggestions that rises after a crash may be in fact a bounce but which either have not materialised as being a bounce or have not yet been proven to be. So if there where such a bounce in Ireland, it would in fact be truly ‘different’.

My apologies steve, I may stick to topics and forums where I know what I am talking about in future and when reading opinion not to take it as fact!

Atlantic Dawn

The "boom" would be back in the morning if there was access to any and all to easy cash that they can never realistically pay back, this however will never happen, ever

riclad

its simple IN some area,s where there,s a shortgage of houses ,for sale ,
and rents are high ,prices are going up.
Mainly 3bed houses, in dublin, where couples, familys want to live.
in germany theres a good rental market, and there,s rules on how much a bank can lend
to someone to buy a house.
Based on their salary.

gaius c

Stock turnover time in the Irish property market currently stands at around 100 years.
It's obviously ridiculous and can't continue indefinitely.
Right now, the property market is a "game" for people who have money on tap fighting for a very very limited supply of houses on a puny transaction level. Some day, it will have to come around to addressing the people who don't have money on tap.
Simples.

murphaph

gaius c wrote: »

Some day, it will have to come around to addressing the people who don't have money on tap.

Why? It might (probably should) come around to addressing people who have substantial deposits and fairly secure jobs, but it should never come around to addressing the "problem" for people who simply can't afford home ownership. It's time to recognise that home ownership is not affordable for all, and never really was.

moxin

murphaph wrote: »

Why? It might (probably should) come around to addressing people who have substantial deposits and fairly secure jobs, but it should never come around to addressing the "problem" for people who simply can't afford home ownership. It's time to recognise that home ownership is not affordable for all, and never really was.

I don't think your average buyer has six figure sums in cash ready to spend on a house. Thats what the sums are like in the cash buyer dominated market, it was never like that.

murphaph

moxin wrote: »

I don't think your average buyer has six figure sums in cash ready to spend on a house. Thats what the sums are like in the cash buyer dominated market, it was never like that.

I accept that, but it may (probably should) never return to a situation where almost anybody could get a mortgage and buy a home. So my point is that whilst the current market may be considered distorted, people need to realise that the numbers of transactions will not be returning to boom levels and so we need to decide what is a normally functioning market in the future. As I said, in Germany it's considered to be functioning normally when relatively few transactions take place and prices remain relatively high. That may be he new normal in Ireland as well.

Personally I don't believe this is a dead cat bounce. I just think property ownership will be out of reach of many who would have expected to be able to "get on the ladder" 10 years ago.

riclad

i would have thought a normal market ,is Where someone on an average wage ,in a permanent job, ,could get a mortgage, to buy a house,
or at least a couple who are working could buy a house.
I think the other extreme is southern uk, london ,
where even people on high wages may always have to rent ,as houses prices are rising so fast.
And theres not many new houses being built ,
so demand exceeds the supply.
10 years ago it was probably alot easier to get a mortgage.

ballyharpat

Well from reading this article, I think that Dublin may be a dead cat bounce, prices are rising because of a lack of family homes due to restricted planning permission, the requirements may be eased in the near future, and while I don't see prices dropping when they are eased, I do think that the rise/bubble will be deflated a bit. http://www.newgeography.com/content/004058-urban-containment-and-housing-bubble-ireland

I have been watching the market in Killarney (tourist town, steady rents), family houses are not rising, but they are scarce as well. Income properties-apartments/fixer uppers- have been put on the market at high prices for the most part, and have generally been sitting there at the same price for the last 3/4 years, the properties are beginning to move at those prices now though. In other towns-Tralee/Killorglin etc the market is full of all kinds of properties at low prices, rent is low also and prices can drop further, I believe.
The above are my non-professional views and opinions.

gaius c

murphaph wrote: »

Why? It might (probably should) come around to addressing people who have substantial deposits and fairly secure jobs, but it should never come around to addressing the "problem" for people who simply can't afford home ownership. It's time to recognise that home ownership is not affordable for all, and never really was.

You're that guy who selectively quotes peoples' posts out of context to suit his own narrative, aren't you?
Where's that ignore button...

El_Dangeroso

murphaph wrote: »

I don't know. People talk of a dysfunctional market because so few transactions are taking place, because most of those that are appear to be cash rich and very few first time buyers with large mortgages. To me this describes the German property market to a T. In Germany the property market moves at a snail's pace. No bidding wars. Relatively few sales (people tend to buy where they die) and generally big fat deposits required. Basically most people don't expect to be home owners, though it's a nice dream many have. Is that dysfunctional? Maybe what is really dysfunctional is a market where people flip properties every few years to "climb the ladder" costing themselves thousands in transaction fees (solicitors, valuers and estate agents all make money from these transactions and that comes from somewhere) each time they "move up a rung". Perhaps that's dysfunctional.

My parents bought the house I grew up in in 1972. My mother still lives there. That was the way we used to do it in Ireland as well, until this "property ladder" came along. Perhaps a return to a slower market is no bad thing.

There's a theme on this forum that lauds everything the Germans do as the totally undisputed and only right way to do things.

The Germans also have a severely declining birth rate, only saved by the immigrant population raising the average. We don't have that, we have robust population growth, and we need a property market that can accommodate the changing accomodation needs that people experience in their lifetimes.

What is wrong about needing to change the size of your house over the course of different stages of your life?

Ray Palmer

ballyharpat wrote: »

Well from reading this article, I think that Dublin may be a dead cat bounce, prices are rising because of a lack of family homes due to restricted planning permission, the requirements may be eased in the near future, and while I don't see prices dropping when they are eased, I do think that the rise/bubble will be deflated a bit. http://www.newgeography.com/content/004058-urban-containment-and-housing-bubble-ireland

I have been watching the market in Killarney (tourist town, steady rents), family houses are not rising, but they are scarce as well. Income properties-apartments/fixer uppers- have been put on the market at high prices for the most part, and have generally been sitting there at the same price for the last 3/4 years, the properties are beginning to move at those prices now though. In other towns-Tralee/Killorglin etc the market is full of all kinds of properties at low prices, rent is low also and prices can drop further, I believe.
The above are my non-professional views and opinions.

Planning isn't particularly restrictive in Dublin. The property stock is used very badly. A lot of Dublin suburbs are full of family homes but with only one or two people living in them. Many retired people should be encouraged to get smaller places. Incentives for pensions would be a good way to do this. It is crazy to have people commuting to work past houses where people don't have to go anywhere during rush hour.
There are massive areas of Dublin like this.

MouseTail

In theorey the property tax should be enough of an incentive for older people who are over accommodated to trade down. However, it doesn't seem to be. Older people tend to be more conservative, dislike change, and of course they have built up support networks over decades where they currently live.

The_Conductor

You could argue that the Dublin market is experiencing a dead-cat-bounce. How can a 16-18% increase in prices in the past 9 months be sustainable? Of course its driven purely by lack of supply- but still- the price rises should have alarm bells ringing for all they're worth.

Ray Palmer

The_Conductor wrote: »

You could argue that the Dublin market is experiencing a dead-cat-bounce. How can a 16-18% increase in prices in the past 9 months be sustainable? Of course its driven purely by lack of supply- but still- the price rises should have alarm bells ringing for all they're worth.

Isn't the point that a "dead cat bounce" is not standard or always applicable. The suggest is it doesn't even exist with property market and is a term borrowed from stock market discussions.
Lack of supply is a normal market is causing a normal reaction of higher prices. The prices in Dublin could easily be said to have contracted too much as a result of the bust and are now springing back to an appropriate level.
The assumption seems to be that the increases will continue. They could easily just stop.
The bust stopped a lot of people buying so there is a massive pent up demand. Does that mean this is just a blip of a stabilisation of prices for true demand with a limit supply. The fact it is for houses could be a reaction to apartment price drops and lack of value retention. It probably has to do with people who are already in apartments too.

Worth watching but it doesn't mean it is something to worry about either.

hfallada

MouseTail wrote: »

In theorey the property tax should be enough of an incentive for older people who are over accommodated to trade down. However, it doesn't seem to be. Older people tend to be more conservative, dislike change, and of course they have built up support networks over decades where they currently live.

How would paying .18% of your houses value be an inventive to trade down? It's a tiny sum of money compared to most property taxes.

The_Conductor

hfallada wrote: »

How would paying .18% of your houses value be an inventive to trade down? It's a tiny sum of money compared to most property taxes.

However older people may be asset rich, but cash poor- a larger family home, needs a hell of a lot more annual upkeep than an apartment may need. If Revenue allowed the gain be treated in a favourable manner from a tax perspective- it might be a sufficient incentive to people to move.

Ray Palmer

The_Conductor wrote: »

However older people may be asset rich, but cash poor- a larger family home, needs a hell of a lot more annual upkeep than an apartment may need. If Revenue allowed the gain be treated in a favourable manner from a tax perspective- it might be a sufficient incentive to people to move.

Property tax should never be punitive or used as a tool to get people to move. It is meant to be a nothing more than a charge to pay for local services.

It should therefore never be enough to make people want to move to save money.

It is such a minimal amount it will never be a incentive to move.

A proper incentive scheme should be designed with specialist property being built for ageing residents. That would include proper sound proofed property, disability toilets and showers in each property, allowance for pets, nurse on call etc...

It would pay for itself very quickly.

There could be schemes to incentivise families taking over oap property to make sure property doesn't just hit the market and get taken up by investors.

People should not be forced out of their property

Pawwed Rig

Ray Palmer wrote: »

A proper incentive scheme should be designed with specialist property being built for ageing residents. That would include proper sound proofed property, disability toilets and showers in each property, allowance for pets, nurse on call etc...

This is a great idea but I fear by the time the HSE and HIQA have implemented the regulations for such a venture it would end up being prohibitively expensive for anyone that actually wants to live there.

Ray Palmer

Pawwed Rig wrote: »

This is a great idea but I fear by the time the HSE and HIQA have implemented the regulations for such a venture it would end up being prohibitively expensive for anyone that actually wants to live there.

Agreed but this is actually where private/public partnerships can work. A simple tax incentive scheme has worked for student accommodation so it could actually work. It really isn't out of the realms of possibilities .

On the road I grew up on there are roughly 80 houses ideal for families. They are mostly occupied by widows and retired couples. May 5 families on the road. The houses are all at least 3 beds with many being extended having 5 beds. The area is well serviced for shops and schools.

If their is no incentive designed these houses will end up as rental properties and split up. you can get more rent for two properties than trying to rent out a 5 bed.

If we don't do something we will end up with a very bad use of existing resources and services.

Boom__Boom

The recent rise in prices has been driven by a situation where at times close to half the sales were cash sales.

What happens when this cash dries up?

Does anyone think that the banks are suddenly going to start giving out enough extra mortgages to replace this element on the demand side?

murphaph

Boom__Boom wrote: »

The recent rise in prices has been driven by a situation where at times close to half the sales were cash sales.

What happens when this cash dries up?

Does anyone think that the banks are suddenly going to start giving out enough extra mortgages to replace this element on the demand side?

Property can be expensive even if credit for it is not easily available.

Scortho

Ray Palmer wrote: »

Agreed but this is actually where private/public partnerships can work. A simple tax incentive scheme has worked for student accommodation so it could actually work. It really isn't out of the realms of possibilities .

On the road I grew up on there are roughly 80 houses ideal for families. They are mostly occupied by widows and retired couples. May 5 families on the road. The houses are all at least 3 beds with many being extended having 5 beds. The area is well serviced for shops and schools.

If their is no incentive designed these houses will end up as rental properties and split up. you can get more rent for two properties than trying to rent out a 5 bed.

If we don't do something we will end up with a very bad use of existing resources and services.

Its a good idea, provided that its entirely voluntary by the current owner.
Yes to incentivise them to move, but no to forcing them to move.

moxin

murphaph wrote: »

Property can be expensive even if credit for it is not easily available.

Not as simple as that. Assuming there is no dramatic increase in mortgage lending to fill the void of the cash running out, the money has to come from somewhere else(unlikely) or the price has to be reduced.

If the demand cannot afford the prices asked, its really down to the sellers if they really wanted to sell the asset or not. They will have to reduce the price to meet the mortgage level of the purchaser if the seller wants that asset sold otherwise they will have to wait until the big cash element of sales emerges again.

Boom__Boom

murphaph wrote: »

Property can be expensive even if credit for it is not easily available.

Obviously it can be - but this year a huge chunk of the transactions completed were done so with cash.

In Q1 of this year there were 4,792 properties purchased.

The Irish Banking Federation reports that 2,068 residential mortgages were issued for the same period.

So in this period there were 2,724 purchases for cash of 57%.

Now what happens if the cash dries up and there is only 1,000 cash purchases in Q1 2014?

Even in terms of those who got mortgages recently I would imagine that there is a certain amount of cherry-picking going on by the banks. I would say a lot of the people getting mortgage approvals recently have been candidates who have been saving for 4/5/6 years and are in secure decent jobs. I would imagine that a serious chunk has been taken out of this pool of people with 4/5/6 years of serious saving behind them and that next year and the year after the pool of borrowers will be reduced in quality somewhat, especially in terms of those with a number of years of serious savings built up.

EricPraline

The_Conductor wrote: »

However older people may be asset rich, but cash poor- a larger family home, needs a hell of a lot more annual upkeep than an apartment may need. If Revenue allowed the gain be treated in a favourable manner from a tax perspective- it might be a sufficient incentive to people to move.

Agree regarding the asset issue. But the maintenance issue is not as clear-cut as you imply. I have an elderly relative who is trading down and looking for a quiet apartment in Dublin. However, they have been put off in a number of cases by the unjustifiably high management charges, in the region of €2k+ per year (which will inevitably rise as the apartment block ages). This cost is likely to be higher than the cost of the annual upkeep on a well-built semi-d.

Also, as others have mentioned, it's not straightforward for an elderly person to move away from their relatives and support network, no matter what the incentive (or punishment as some have proposed). If they're living in a quiet suburban part of Dublin, their options for apartments are likely to be quite limited. Moving vast swathes of elderly people to isolated developments in Sandyford or Belmayne isn't exactly going to be a socially equitable solution.

Scortho

My aunt in uncle recently moved from a nice big house in Chicago out to a retirement village in the suburbs.
If a similar set up was done in Ireland then they would definitely be suitable.
It has a primary care centre set up, a supermarket, a leisure centre, a pub and is beside a golf course
As opposed to having a 3 storey house, they now have a very large 2 bedroom bungalow, that is disability friendly etc.

If the same was to be done in Ireland, it'd need decent services and be totally voluntary. No point shipping people out of their own homes because they're retired.