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Depressing Dublin House prices
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The Irish independent's prediction for 2014....
Property prices to fall
Residential property prices will end the year falling. There's a cash-fuelled bubble inflating in certain Dublin suburbs.
The working through of the pent up demand, coupled with an exhaustible supply of cash buyers will see prices in South Dublin stall after the summer (it'll be a scorcher).
The economic crisis has meant that potential house buyers have been saving for far longer than normal. They have way bigger deposits and need smaller mortgages.
This won't last. The banks will eventually work through the cash rich buyers and when the barrel is empty . . . qualifying for credit will be ridiculously hard. This lack of money for homes will see a fall in prices. Not massive . . . but enough to jog the memory.
Prices in the rest of the country will largely mark time.0 -
The indo has schizophrenia0
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All that you describe above applies equally to everyone.indiewindy wrote: »You failed to answer what spockety wrote. The Government is doing all it can to stop the housing market find its natural level. CGT exemption for buy to lets, virtually no repossessions, Noonan already talking of incentives for builders, allowing legal profession make prosess for attempted repossession extremely expensive thereby benefiting lawyers like new beginnings etc. Foreign owned banks getting out of Ireland as they are not competing on a level playing field. In what other business do you keep an asset if you either wont or cant afford to pay for it.
The "government" aren't specifically targeting residents or wanna be residents of SCD, so why do you maintain that SCD is artificially higher than the market would naturally have it?
There seems to be a problem for some people to accept that there are places in Dublin that they are not going to be able to afford.
Again, if this is all driven by government meddling, why have foxrock, dalkey etc always been historically more expensive than the same house elsewhere?0 -
All that you describe above applies equally to everyone.
The "government" aren't specifically targeting residents or wanna be residents of SCD, so why do you maintain that SCD is artificially higher than the market would naturally have it?
There seems to be a problem for some people to accept that there are places in Dublin that they are not going to be able to afford.
Again, if this is all driven by government meddling, why have foxrock, dalkey etc always been historically more expensive than the same house elsewhere?
Thats a rather smug attitude.
The vast majority or contributors here and in the general public have no desire to live in the uber rich areas.
The problem at the moment is that most areas of Dublin including some "working class" areas are still way overpriced and there is no justification for it, the govt has done all they could to try to prop up the whole thing.0 -
Thats a rather smug attitude.
The vast majority or contributors here and in the general public have no desire to live in the uber rich areas.
The problem at the moment is that most areas of Dublin including some "working class" areas are still way overpriced and there is no justification for it, the govt has done all they could to try to prop up the whole thing.
Smug? Believe me, I have nothing to be smug about...I can't afford to buy there either!
Of course there is justification...the justification is that these are the place that the majority of people who want to live in SCD can afford; ergo the price is higher than it might otherwise be for the same building in a different location.
People who grew up in Rathfarnham for example, but cant afford to buy there will buy nearby, in Knocklyon or Firhouse, thus increasing the cost of those areas compared to further afield or less desirable areas.
I really have a hard time accepting that the government is in the middle of some sneaky plan to artificially keep certain house prices high....to what end? What does the government get out of it and in any case, how exactly are they driving demand in these areas?0 -
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The Irish independent's prediction for 2014....
Property prices to fall
Residential property prices will end the year falling. There's a cash-fuelled bubble inflating in certain Dublin suburbs.
The working through of the pent up demand, coupled with an exhaustible supply of cash buyers will see prices in South Dublin stall after the summer (it'll be a scorcher).
The economic crisis has meant that potential house buyers have been saving for far longer than normal. They have way bigger deposits and need smaller mortgages.
This won't last. The banks will eventually work through the cash rich buyers and when the barrel is empty . . . qualifying for credit will be ridiculously hard. This lack of money for homes will see a fall in prices. Not massive . . . but enough to jog the memory.
Prices in the rest of the country will largely mark time.
When you said indo people stopped reading0 -
The Irish independent's prediction for 2014....
Property prices to fall
Residential property prices will end the year falling. There's a cash-fuelled bubble inflating in certain Dublin suburbs.
The working through of the pent up demand, coupled with an exhaustible supply of cash buyers will see prices in South Dublin stall after the summer (it'll be a scorcher).
The economic crisis has meant that potential house buyers have been saving for far longer than normal. They have way bigger deposits and need smaller mortgages.
This won't last. The banks will eventually work through the cash rich buyers and when the barrel is empty . . . qualifying for credit will be ridiculously hard. This lack of money for homes will see a fall in prices. Not massive . . . but enough to jog the memory.
Prices in the rest of the country will largely mark time.
I imagine then that builders will simply keep the amount of building to a minimum in order to keep the supply and demand price of new houses high.0 -
Join Date:Posts: 30615
senordingdong wrote: »I imagine then that builders will simply keep the amount of building to a minimum in order to keep the supply and demand price of new houses high.
The issue is builders not being able to access credit to complete units (in locations where they have a hope in hell of selling). Most Dublin developed land- is in NAMA- and with their current issues, I imagine, nothing will happen anytime soon there.0 -
The_Conductor wrote: »The issue is builders not being able to access credit to complete units (in locations where they have a hope in hell of selling). Most Dublin developed land- is in NAMA- and with their current issues, I imagine, nothing will happen anytime soon there.
Oh right.
Well is there any fact to the idea I put forward.
My OH and I are in a position where we'll be looking to buy soon (Dublin suburbs) but will not have large amounts of cash to put forward. My concern was the prices would stop falling and the builders/developers would stop building to keep the market terms in their favour.0 -
People who grew up in Rathfarnham for example, but cant afford to buy there will buy nearby, in Knocklyon or Firhouse, thus increasing the cost of those areas compared to further afield or less desirable areas.
Why would people who happen to grow up in one area moving into a nearby area increase the cost of those areas....? Are there studies on this that you can reference, or was it just a throwaway remark? If it's a throwaway remark that's grand, just let me know so I can ignore it.0 -
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It is the same in London, however they saying that interest rates will rise next year and that will be a big problem for many people that have purchased a home within the last couple of years.0
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Join Date:Posts: 30615
Its not in a builders favour to simply sit things out- most builders are barely ticking over as things are- if they were to leave tradesmen on the sidelines, as they have done since 2007- significant numbers of them will vote with their feet and emigrate (as has been happening). Building costs are going up- because once plentiful skills, are a constraint (as anyone with the wherewithall, or without ties- has up sticks and left).
The issue is more that there is a lack of zoned land, and/or incomplete units, in places that people actually want to live in. There are not thousands and thousands of unfinished units in Dublin- which is what we need- and indeed, the single biggest tranche of zoned land is currently overwintering horses out by Ballymun.
There is a proposal to force developers to pay taxes due up front- aka to front load taxes, rather than allow them pay them on completion- to give them an added incentive to complete and get the hell out of there. Measures such as this- may be an added incentive to get things moving- but on a small scale, and from a poor baseline.
We can add to our urban sprawl more and more- or we can accept that apartment living is needed- and apartment dwellers need reasonable facilities and amenities- and as they're paying property tax like everyone else- these should be supplied.
Our whole system is dysfunctional- and there is no will there to change it for the better (which would entail a total remodelling).0 -
that wont really be a problem in Ireland, as anyone who managed to buy within the last 2 years here did so at the bottom of the market, and either purchased with cash, or were stress tested rigorously.0
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Why would people who happen to grow up in one area moving into a nearby area increase the cost of those areas....? Are there studies on this that you can reference, or was it just a throwaway remark? If it's a throwaway remark that's grand, just let me know so I can ignore it.
Because families who grew up in SCD have children who want to also live in the area; I assume we can agree on that?
Typical families in affluent SCD are large, they have 2+ kids.
There is little to no new development in SCD therefore not all of these kids, who are now adults looking to buy cannot find an affordable starter house so they look further afield, to places where there has been new development, Ticknock, Dalriada, Airpark etc.
This pushes up the prices of these houses...demand pushes up prices, again I assume we are agree on that?
Feel free to argue your point btw, without resorting to silly buggers. If you cant convince me with logic, perhaps your point isnt as defendable as you previously thought?0 -
@Moxin, how can you say that most areas of Dublin are way overpriced.
It costs approximately 1300 euro per square metre to build a house. A three bedroom semi detached house of 120 sq mtrs will therefore cost in the region of 156000 irrespective of where you build it. If you can accept that a site in a working class area of Dublin will always command a minimum of 50000, then the lowest possible cost of a house in Dublin is 206,000. This type of house is already for sale in all working class areas of Dublin at this price level and below. In short, houses are now selling at the lowest price level ie the cost of construction and in many cases below the cost of construction. Everybody knows that this is the lowest that any market can go.
The numbers are easy enough to track. If anybody in Dublin wishes to purchase a three bedroom semi, they will need a rock bottom minimum of 200K +. Otherwise they should set their sights at purchasing an apartment or renting, much the same as in all other capital cities of Europe
Credit is a problem for developers now but the main problem for developers is being able to build a project in Dublin at a profit. If this were possible, there is no shortage of European investors interested in Irish property and waiting to get involved with viable construction projects. Some people seem to be wishing that NAMA will come in and dump development land to enable a certain select few to buy cheap houses. This is not going to happen. NAMA has been charged with managing that land in the best interests of the tax payer and the people of Ireland. Its not in the interests of the Irish people to have NAMA artificially collapse the market so that some cute hoors can get access to low priced housing.
Regarding comments about banks not wanting to lend and credit becoming tighter. This doesn't make much sense either. Banks need to lend. Lending is the life blood of a bank. Its how they make profit and stay alive. A bank cant survive long term without lending. The banks have repeatedly said that the main problem with mortgage lending at the moment is lack of demand. Too many buyers sitting on the fence waiting for lower prices. Also the volume of transactions in the market is very low due to lack of supply.
I suspect that 2014 will bring about a much higher demand for mortgages and I have no doubt that the banks will be lending. A couple earning 100K combined should have no difficulty in purchasing a good quality home in Lucan and that is also the situation today.A couple earning 60K (combined) will face difficulties based on affordability.
The latest predictions from this weekend saying that as soon as the cash circulating, runs out, the property market in Dublin will then collapse is absolutely hilarious. This can only happen if there is a general consensus that Ireland and Dublin is doomed and has no future. I think most commentators have not written off Ireland and I suspect that the pent up demand for middle level residential areas of Dublin is enormous. There will be no more crashes.
Supply is the big issue for 2014. Supply will not come in any great numbers from new development. I suspect that most of the supply (up to 10000 units) will come from repossessions and even this level will not be sufficient to satisfy the pent up demand waiting in the wings now. I suspect that the main source of repossessions will be from the "newer" areas of west Dublin and beyond, built between 2002 and 2007. Hopefully much of this stock will come from repossessed buy to let investors.
Finally I would predict that even in a worse case scenario, where credit becomes too tight and cash buyers dry up and foreign investors suddenly get cold feet, the result of this will not be lower prices for all, it will be instead a stagnant market with almost no transactions. Supply will remain tightly restricted until such time as prices increase again. What a lot of contributors dont seem to fully understand is that lower prices will bring less supply, not more. Lower prices are a disincentive to developers to start building again. Lower prices with a trickle of supply is no good to anyone. Its very hard to envisage how lower prices might open the floodgates of supply to satisfy all the bears on this forum0 -
Join Date:Posts: 30615
In short, houses are now selling at the lowest price level ie the cost of construction and in many cases below the cost of construction. Everybody knows that this is the lowest that any market can go.
There is no unwritten law that property has a fundamental level (aka its construction cost) below which it cannot fall. If people are only willing or capable of paying a certain amount- the seller has the option of taking this, or refusing it- and whether or not they accept this price, is probably determined by factors outside of the construction cost altogether (aka with executor sales- its liquidating the asset, for whatever they can get- regardless of what it might cost to build the house).
Liquidity- in the form of cash buyers, are becoming a constraint- which leaves us with traditional mortgagees- who are finding it harder and harder to access funds. This lack of funds- is more an issue than anything else.
Executor sales are going to continue to feature as the predominant sale type for the perceivable future- both because of a lack of new construction, but also because of the lack of people capable of accessing funding. So- there is a shortage of property- but there is an even greater shortage of people with money...........0 -
Because families who grew up in SCD have children who want to also live in the area; I assume we can agree on that?
Typical families in affluent SCD are large, they have 2+ kids.
There is little to no new development in SCD therefore not all of these kids, who are now adults looking to buy cannot find an affordable starter house so they look further afield, to places where there has been new development, Ticknock, Dalriada, Airpark etc.
This pushes up the prices of these houses...demand pushes up prices, again I assume we are agree on that?
Feel free to argue your point btw, without resorting to silly buggers. If you cant convince me with logic, perhaps your point isnt as defendable as you previously thought?
I wasn't making a point.. You were.0 -
Because it increased demand and that's the basis for pricing.Why would people who happen to grow up in one area moving into a nearby area increase the cost of those areas....? Are there studies on this that you can reference, or was it just a throwaway remark? If it's a throwaway remark that's grand, just let me know so I can ignore it.0 -
What you don't seem to understand is that you cant have a situation where prices are less than construction costs in a market where there is currently no excess supply. All current statistics infer that demand is rising now and will rise further in the coming years. The main way of increasing supply is to build more. You cant build more if the market price is less than the construction cost.In this scenario, prices can only increase.In spite of emigration, the population in Ireland is growing. More housing is needed each year. Recent reports say that 25000 new houses are needed each year for the next number of years. If people want lower prices the minimum they can expect to pay is the cost of construction + site cost and that can only happen in a situation where there is enough supply to meet demand. Hoping for anything else doesn't make any sense0
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Don't think the stress testing properly accounted for property tax, USC, water charges, bank fees, health insurance levies ( basically anything the government are involved in or control)that wont really be a problem in Ireland, as anyone who managed to buy within the last 2 years here did so at the bottom of the market, and either purchased with cash, or were stress tested rigorously.0 -
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What you don't seem to understand is that you cant have a situation where prices are less than construction costs in a market where there is currently no excess supply. All current statistics infer that demand is rising now and will rise further in the coming years. The main way of increasing supply is to build more. You cant build more if the market price is less than the construction cost.In this scenario, prices can only increase.In spite of emigration, the population in Ireland is growing. More housing is needed each year. Recent reports say that 25000 new houses are needed each year for the next number of years. If people want lower prices the minimum they can expect to pay is the cost of construction + site cost and that can only happen in a situation where there is enough supply to meet demand. Hoping for anything else doesn't make any sense
If banks will only lend a given multiple of salary, then no matter how high building costs rise, houses will sell for what banks are willing to lend. Sooner or later, the number of cash buyers will drop to negligible levels, and at that point the principal determinant of house prices will be how much the banks are willing to lend.0 -
In response to the query "where do households on normal incomes live?", you suggested D15 and other parts of west Dublin. Now if your notion is that people on "normal" wages can only afford the worst parts of Dublin, where do people who earn less than normal wages live? Like it as not, the good people of SCD need binmen to collect their rubbish for them and expecting them to commute from Navan for the privilege of doing so is more than a little Dickensian.So your argument is that if it wasn't for all the reality going on around us, everyone on "normal"incomes would be able to choose where to live...irrespective of how popular that area is?
Look around, we are where we are. You might as well argue about how things would be different if gravity was just a bit weaker.
Desirable places have and will always be beyond the reach of the vast majority. All have to do is compare house prices from 30 years ago...or was there underground government forces at play then too?
Exactly, if ordinary middle-class folk can only afford working class areas, where do working (or non-working) class folk live?Thats a rather smug attitude.
The vast majority or contributors here and in the general public have no desire to live in the uber rich areas.
The problem at the moment is that most areas of Dublin including some "working class" areas are still way overpriced and there is no justification for it, the govt has done all they could to try to prop up the whole thing.
Was at a safety training course in the CIF recently and one of the lads was giving it large about the "costs" of building a house (pretty similar to your post above) and that it was up to the banks to lend enough that builders could afford to support their high cost base. The other builders in the room smirked, shrugged their shoulders and carried on with their chat, i.e. don't mind mad old John there. Your point is completely nonsensical because not only do other countries build houses for cheaper, the actual selling price is cheaper than your projected build cost too.*snip*
It costs approximately 1300 euro per square metre to build a house. A three bedroom semi detached house of 120 sq mtrs will therefore cost in the region of 156000 irrespective of where you build it. If you can accept that a site in a working class area of Dublin will always command a minimum of 50000, then the lowest possible cost of a house in Dublin is 206,000. This type of house is already for sale in all working class areas of Dublin at this price level and below. In short, houses are now selling at the lowest price level ie the cost of construction and in many cases below the cost of construction. Everybody knows that this is the lowest that any market can go.
*snip*
Here's a fine looking 88 sqm house for only €32,600. That's a build cost of €370 per sqm.
If the cost of building a house is too high for the market to bear, then a lower cost way will be found.0 -
@desertcircus, I fully agree with you that banks will set the lending multiple and as a result of that not everybody will be able to afford a house. Peoples expectations have grown to such an extent in this country that everybody believes that they are entitled to own a house regardless of their income level. This is not sustainable. To purchase a house of 200K you need to have adequate income to repay the loan on it.
In Ireland we have one of the highest income levels per capita in Europe
Our cost of construction is lower than most especially some of the colder countries.
Our current price levels are lower than most.
We have to get in line and get used to the idea that to buy a house you need to be able to afford it.
So back to your question which seems to assume that house prices have to fall to the level of the average income. I dont agree with this assumption. House prices in capital cities were never geared to average income, (apartments ,possibly yes) but not houses. For a stable property market to exist the minimum price level in the worst area can be no lower than the cost of construction) In a situation where there is no credit available and no cash circulating, then my belief is that supply will dry up completely and there will be no transactions, ie nothing to buy. If we are dependant on repossessions as our main source of supply in 2014, the banks will be the main player in deciding the price levels. The banks will not be willing participants in facilitating prices to the ridiculous (below cost) level.0 -
@Gaius
Thanks for posting the link to that lovely cottage. Does it come on wheels ?
I think what you have forgotten to mention is that the price doesnt include
1. Site clearance
2. Foundations
3. Electricals
4. Plumbing
5. Kitchen
6. Heating System
7. Bathroom equipment
Its a bit like me saying that I can get the blocks for that house laid and doors and windows installed and roof put on for 35000, which I could
The "mad john" guy at your meeting was obviously the brains of the operation.
Construction costs elsewhere in Europe are much higher than Ireland on a "like for like" basis.0 -
Exactly! Think this point needs to be reiterated a bit.We have to get in line and get used to the idea that to buy a house you need to be able to afford it.
Most people have a totally unrealistic view of what they should be living in, both in terms of what they need and can afford.0 -
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Don't have any specific examples but I've heard plenty of anecdotes on this site. I just feel sometimes people think an average salary should be middle class areas, and are dissapointed to hear they can't afford anything in a middle class Dublin area.Can you give some examples?
I suppose my own circumstance is a bit of an example - myself and OH have a combined income of €110k, no kids, both 30, by most surveys would be in top 10% earners in the country, but if we were to go around looking at the top 10% of houses we'd be sorely dissapointed.
Fact is I guess that most of the nice/desirable houses in this country aren't for sale. Not that there's anything wrong with that as long as people can afford them.0 -
I think by in large people are confusing average or median incomes with being middle class. The best definition I have seen goes along the lines of
"If you’re not a professional, if you are not part of management, and if you do not run a small business, in workplace terms you’re part of the working class"
Whether we like it or not SCD is a middle class area with middle class incomes. A middle class income in my definition will put someone in the top 15% of earners.0 -
Yeah I'd agree with that, although any household with pretty much any 2 professionals is in the top 15%, wouldn't necessarily need to be management.I think by in large people are confusing average or median incomes with being middle class. The best definition I have seen goes along the lines of
"If you’re not a professional, if you are not part of management, and if you do not run a small business, in workplace terms you’re part of the working class"
Whether we like it or not SCD is a middle class area with middle class incomes. A middle class income in my definition will put someone in the top 15% of earners.
But yeah, you need to be at least in the top 10% of earners to think about buying in SCD (unless majorly assisted by parents/inheritance).0 -
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In response to the query "where do households on normal incomes live?", you suggested D15 and other parts of west Dublin. Now if your notion is that people on "normal" wages can only afford the worst parts of Dublin, where do people who earn less than normal wages live? Like it as not, the good people of SCD need binmen to collect their rubbish for them and expecting them to commute from Navan for the privilege of doing so is more than a little Dickensian.
Exactly, if ordinary middle-class folk can only afford working class areas, where do working (or non-working) class folk live?
Your posts really come across as if you think that you have been wronged by not being able to afford in SCD tbh. The market isnt against you, the market isnt a tangible thing, its other people. It can appear completely non-sensicle from the outside, but if you are one of the 5 people trying to buy the 1 house thats for sale in the area you want, whats sensible is often not really important...to a point.
Working class people live all over SCD? I dont think I stated or even implied that "normal" people can only afford the worst parts?
Like it or not, as the desirable areas are stagnant, buyers will move into nearby areas, thus driving those house prices upwards and probably rendering them unaffordable to the "normal" people you speak of.
Lots of friends of mine who grew up in SCD are now living well outside, Navan , Naas, Drogheda, Lusk/Rush etc...because thats what they could afford when they bought 5-6 years ago. They arent bin "careers". There are also plenty of binmen living in SCD, as was said many times, in any area there are areas that are far more and far less affluent than others, local micro climates in both directions.
Lots of council houses in Nutgrove for example, 2mins away from millionaires road in Churchtown.If the cost of building a house is too high for the market to bear, then a lower cost way will be found.
Not in SCD it wont. There is no desirable land in SCD, hence prices are higher!0
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