Depressing Dublin House prices

moxin

Barely Hedged wrote: »

Sometimes you need to s**t or get off the pot and now i believe is a good time to s**t. Large price drops will not happen again in the areas described by the original poster.

The cash reserves drying up assumption seems to be based on the belief that the cash buyers are Irish based only.

The OP never described the areas he/she was looking at. All we have to go on is "Dublin" with no target price range mentioned either.

You also have the assumption that foreign investors will continue to invest. There will be a point where the rental return will not justify an investment if these price rises continue at such a high rate. Plus other countries can show better returns in such a scenario.

GreeBo

What changes do you think are going to hit the market regarding the banks lending multiplier?

I was offered about 3.5 times my salary 6 months or so ago. Do you think that will have increased if I look to apply again?

jon1981

GreeBo wrote: »

What changes do you think are going to hit the market regarding the banks lending multiplier?

I was offered about 3.5 times my salary 6 months or so ago. Do you think that will have increased if I look to apply again?

Unlikely, two of us in good paying stable jobs and 3.5 was the limit we were given (3 months ago), was still enough to buy in a nice location.

moxin

The Spider wrote: »

Not really, if you can't afford to buy in the more desirable parts of the city (SCD) then that's what you're left with, you may see these areas as places that you should be able to buy, but if your salary isn't up to it or your savings then, you have to look to other areas or outside.

It isn't deflection, I wish people would say what they mean, they say house prices are too expensive in Dublin, not true what they really mean is "I want a house in the most exclusive part of the country but I want it cheap."

The reason it's expensive is because it's exclusive, if it was cheap then you'd have the associated problems that you get with Tallaght etc.

Anyway some of those areas in the sub 150,000 category were considered decent areas in the boom, when everyone was buying way outside Dublin.

You are deflecting again.

SCD is exclusive with prices of 500k upwards at today's prices. The vast majority of people in Dublin do not live in houses valued at 500k+, they live in houses valued up to 300k in my view. That is not exclusive, its the standard.

What you have highlighted are houses in the really dodgiest parts of Dublin. There are plenty of areas which are NOT exclusive and priced in the 150k to 300k range for a prospective buyer and yet they are still too expensive.

jon1981

lima wrote: »

Perhaps some people will come to a realization that south dublin is completely overpriced and they will decide to live elsewhere in Dublin where there is lots of supply.

Everyone wants to live in south Dublin these days, I used to be one of those until I looked at some places on the north side, there are some lovely spots on the northside in which contrary to belief you do not need a bullet proof vest to walk around. Also the prices are rising but not as fast as south Dublin.

Potatoeman

As long as you buy something your happy to live in and willing to make the payments you should be fine. I held off during the boom as prices were rising ridicusly every year. I will have to buy in the next few years if Im going to as Im in my thirties.

Barely Hedged

lima wrote: »

Perhaps some people will come to a realization that south dublin is completely overpriced and they will decide to live elsewhere in Dublin where there is lots of supply.

Also, the people who have been able to get mortgages and who likely have very large deposits of 200+k will have gotten their mortgages and have bought their houses. This will bring down the amount of people looking for mortgages. Very few people in their 20's will have large deposits and will struggle to get finance.

Also, regarding inevitable repossessions and whether they will have an impact on Dublin prices, an entire bank has decided not to offer mortgage products here because of its worry about lack of repossessions. This point to a private company making an informed decision and lends weight to the idea of possible price decreases, despite what journal.ie and irish independent try to push.

Maybe they will or maybe prices in South Dublin will increase between 5% - 10% because people want to live in a desirable location. A lot of South Dublin is mature housing stock where no new building is occurring and will command a premium on other areas. Supply is severely restricted in those areas.

Thats one company/bank. Conversely, a lot of companies have bought apartment blocks in Dublin too as they see value there. Why would a bank dump its non-performing liabilities onto the market all in go that would result in depressing market prices?

GreeBo

jon1981 wrote: »

Everyone wants to live in south Dublin these days, I used to be one of those until I looked at some places on the north side, there are some lovely spots on the northside in which contrary to belief you do not need a bullet proof vest to walk around. Also the prices are rising but not as fast as south Dublin.

I agree with this.
But its hard to give up on that "dream" if thats all that you've ever known and thats where you grew up.

Prices in general might be going down, but, for example, they arent ever going to build more houses in Churchtown. Whats there now is all there will ever be, so if you want to live there you have to pay for it.

jon1981

GreeBo wrote: »

I agree with this.
But its hard to give up on that "dream" if thats all that you've ever known and thats where you grew up.

Prices in general might be going down, but, for example, they arent ever going to build more houses in Churchtown. Whats there now is all there will ever be, so if you want to live there you have to pay for it.

I think that's what alot of people are forgetting, where are all these new builds going to take place? I don't see an abundance of land in Clontarf, raheny, killester, rathmines, ranelagh, clonskeagh, stillorgan, milltown, donnybrook....etc. all the areas ppl want to live in!

Barely Hedged

moxin wrote: »

The OP never described the areas he/she was looking at. All we have to go on is "Dublin" with no target price range mentioned either.

You also have the assumption that foreign investors will continue to invest. There will be a point where the rental return will not justify an investment if these price rises continue at such a high rate. Plus other countries can show better returns in such a scenario.

By implication he has. He was amazed at the house price increases this year and where in the country has that occurred?

There is no capital gains tax for 7 years after buying a property in Ireland. If i was a foreign cash investor, id look at that and think if i bought in bulk (or not), get a good discount (i still consider individual prices cheap) and wait the 7 years for some capital appreciation i could trouser a nice tax free profit?

Thats a pretty tempting offer to foreign investors

Potatoeman

moxin wrote: »

You are deflecting again.

SCD is exclusive with prices of 500k upwards at today's prices. The vast majority of people in Dublin do not live in houses valued at 500k+, they live in houses valued up to 300k in my view. That is not exclusive, its the standard.

What you have highlighted are houses in the really dodgiest parts of Dublin. There are plenty of areas which are NOT exclusive and priced in the 150k to 300k range for a prospective buyer and yet they are still too expensive.

500k is ridicilious,what would you need to be earning to pay that off? What happens when you want to have kids andone person has to stop working?

jon1981

Potatoeman wrote: »

500k is ridicilious,what would you need to be earning to pay that off? What happens when you want to have kids andone person has to stop working?

You either get a higher paid job ....or you plan for that event and buy within budget...unfortunately the laws of economics aren't designed around your family plans.

The Spider

moxin wrote: »

You are deflecting again.

SCD is exclusive with prices of 500k upwards at today's prices. The vast majority of people in Dublin do not live in houses valued at 500k+, they live in houses valued up to 300k in my view. That is not exclusive, its the standard.

What you have highlighted are houses in the really dodgiest parts of Dublin. There are plenty of areas which are NOT exclusive and priced in the 150k to 300k range for a prospective buyer and yet they are still too expensive.

Ok name some of the areas you find too expensive outside of SCD, I posted up a link to illustrate that there were houses sub 150k in Dublin.

Again if you can't afford the price in these areas, you'll maybe have to look elsewhere, I did. You can always rent in these areas if you can't buy.

Look everyone has to make their own decisions I personally can't see prices dropping without some massive external shock. All the mature desirable areas are always going to carry a premium for the simple reason there's nowhere left to build houses in those areas (as has been mentioned)

Potatoeman

jon1981 wrote: »

You either get a higher paid job ....or you plan for that event and buy within budget...unfortunately the laws of economics aren't designed around your family plans.

Im wondering if there are enough people earning enough to pay that. One thing the boom thought us that many couldnt.

Barely Hedged

Potatoeman wrote: »

Im wondering if there are enough people earning enough to pay that. One thing the boom thought us that many couldnt.

I know a lot of people that can, are looking and can comfortably pay it. Im out of college 6 years and work as a professional, like the people im referring to

jon1981

Potatoeman wrote: »

Im wondering if there are enough people earning enough to pay that. One thing the boom thought us that many couldnt.

I imagine though alot of these 500k houses are being snapped up with a high amount of cash and small amount of mortgage to supplement. Will be interesting to see if they hold their value next year when apparently the cash buyers are gone.

If the banks are hard on the 3.5 - 4 times mortgage to salary ratio , and the average couple earn what 100k? There will only be a small buyer group out there... however irrespective of the 100% cash buyer, there are alot of couples out there that have 20%+ of the house purchase price ...

GreeBo

Potatoeman wrote: »

Im wondering if there are enough people earning enough to pay that. One thing the boom thought us that many couldnt.

Potatoeman wrote: »

500k is ridicilious,what would you need to be earning to pay that off? What happens when you want to have kids andone person has to stop working?

There are lots of couples (and individuals for that matter) who can afford that an more.

There are a crap load of accountants, consultants, dentists, doctors out there who would pull in 150k+ a year and have done for a good few years.

The Industrial average might be around 27k (or whatever) but that just means that there are lots of people way, way above that too.

Add in a "successful, professional" couple and you are easily talking 600+

Now they work/life balance of these people might be frightening to some of us, but thats a different conversation.

Barely Hedged

jon1981 wrote: »

I imagine though alot of these 500k houses are being snapped up with a high amount of cash and small amount of mortgage to supplement. Will be interesting to see if they hold their value next year when apparently the cash buyers are gone.

If the banks are hard on the 3.5 - 4 times mortgage to salary ratio , and the average couple earn what 100k? There will only be a small buyer group out there... however irrespective of the 100% cash buyer, there are alot of couples out there that have 20%+ of the house purchase price ...

If you have good deposit, the banks will look favourably on this, even considering the 3.5-4 ratio.

Essentially by paying the deposit, if they need to repossess, a large amount of the equity will already have been paid and they can sell safe in the knowledge they wont get burned

GreeBo

I'm in the market to buy at the moment, on my own, the bank will give me ~3.5 times my salary and I have a large deposit that I can use, my concern is finding something that I wouldnt mind living in for the rest of my days.

At the moment, in SCD that probably means buying an executors sale and doing it up (myself) or buying a temporary house/apartment and seeing what the market (and my personal situation) does over the next couple of years. I'm assuming I'm not alone in this position.

That said, when I went to a few open days around SCD (Ballinteer, Sandyford) there were 10s of couples wandering around, with people offering 381k on a house that needed to be gutted and was next door to a petrol station on a busy road.

I got the feeling of panic buying in the air again, especially for "family" homes in SCD.

moxin

The Spider wrote: »

Ok name some of the areas you find too expensive outside of SCD, I posted up a link to illustrate that there were houses sub 150k in Dublin.

Again if you can't afford the price in these areas, you'll maybe have to look elsewhere, I did. You can always rent in these areas if you can't buy.

Look everyone has to make their own decisions I personally can't see prices dropping without some massive external shock. All the mature desirable areas are always going to carry a premium for the simple reason there's nowhere left to build houses in those areas (as has been mentioned)

Your argument has been that there are cheap houses right now in Dublin without mentioning the fact they are located in seriously dodgy areas. They are proportionally cheap for a reason. And then you say if one doesn't want to live there(instead of "can't afford" which is not the case) then one would have to look outside Dublin while mentioning the falsehood that the purchaser wants an exclusive area to live in!!

As a northsider who has zero desire to live in SCD, there are houses in areas on the northside which are perfectly safe to live in and are NOT exclusive. On a map one can see these areas stretching from Blanchardstown\Castleknock to Finglas East(the Glasnevin wannabes) and then over to Santry, all in the sub 300k range. Further east you have the likes of parts of Raheny, Baldoyle and parts of Sutton as well in the sub 300k range.

And of course further west there are plenty of sub 300k houses in Lucan\Palmerstown\Chapelizod, point being there are safe non-exclusive areas still out of range of the purchaser.

Potatoeman

Barely Hedged wrote: »

I know a lot of people that can, are looking and can comfortably pay it. Im out of college 6 years and work as a professional, like the people im referring to

That's nice but I was hoping for someone that might know the statistics i.e. If it is 500k at 3.5 salary that would need to be a plus 100k salary. I wouldnt think there are too many of those.

Barely Hedged

Potatoeman wrote: »

That's nice but I was hoping for someone that might know the statistics i.e. If it is 500k at 3.5 salary that would need to be a plus 100k salary. I wouldnt think there are too many of those.

I didnt mean it in a patronising tone. I was merely giving anecdotal evidence that there are people who earn the amount you describe. Also you could extrapolate on the out of college 6 years and a professional statement

moxin

jon1981 wrote: »

If the banks are hard on the 3.5 - 4 times mortgage to salary ratio , and the average couple earn what 100k?

On this part, where did you get the 100k earnings for the average couple? Sounds very optimistic.

GreeBo

Potatoeman wrote: »

That's nice but I was hoping for someone that might know the statistics i.e. If it is 500k at 3.5 salary that would need to be a plus 100k salary. I wouldnt think there are too many of those.

I think you'd be surprised.

I know some and obviously they and their friends and extended circle of friends and colleagues would all be in the same market.

Its a bit of a mind-shift alright for the rest of us but still reality.

However, I wouldnt be too sure that the people buying 500k houses (which could be anything from a tiny terrace in Ranelagh to a 5 bed in the suburbs of south Dublin) are impacting the prices for the rest of us. No more than something selling for 2.5M in Dalkey is driving up prices for me.

GreeBo

moxin wrote: »

On this part, where did you get the 100k earnings for the average couple? Sounds very optimistic.

100k for a late 20's/early 30's professional couple would be low in my experience.

average_runner

GreeBo wrote: »

100k for a late 20's/early 30's professional couple would be low in my experience.

I would say 100k would be on average also.

jon1981

moxin wrote: »

On this part, where did you get the 100k earnings for the average couple? Sounds very optimistic.

According to the CSO it's 41k per person, I've assumed alot of couples out there would well be in reach of 100k based on the average.

Potatoeman

Barely Hedged wrote: »

I didnt mean it in a patronising tone. I was merely giving anecdotal evidence that there are people who earn the amount you describe. Also you could extrapolate on the out of college 6 years and a professional statement

Im finding it hard to believe there are enough people earning over 100k to occupy most of the SD market.

jon1981

Potatoeman wrote: »

Im finding it hard to believe there are enough people earning over 100k to occupy most of the SD market.

Maybe it's the nature of the people i grew up with, but most of my friends are in IT, Finance and Law and would be on a combined salary of more than 120k with their partners. Not all over 120k , but definitely over 100k.

GreeBo

Potatoeman wrote: »

Im finding it hard to believe there are enough people earning over 100k to occupy most of the SD market.

Most of that area is very settled remember, people have been living in the same houses there for 30, 40+ years.
There are lots of estates that have a very old population and, for want of a better term, are dying off. Thats why you see random "needs some modernization" houses for sale.

Also, if you bought in SD 25 years ago, you have a chunk of equity and probably mortgage free by now, so you can afford to move around, probably to another SD location without too much financial hardship or requirements.

That said, I believe we will see more and more older SD estates coming on the market as elderly people choose to leave 3/4 bed houses and move into more manageable apartment complexes. Its just a pity that so many of them are miles away. I can see value in investing in more centralized, high end apartments in SD, such as around Ballinteer, Milltown etc as long as you are willing/able to hold on for 5 years.