Interesting article in Irish Times - ‘fizz’ may be going out of Dublin market

BookBook

Link to article here

***Auction withdrawals suggest ‘fizz’ may be going out of Dublin market as high prices deter buyers ***

Since March the auction rooms in Dublin have seen more action than in the previous five years combined. It’s an encouraging return to this most transparent of selling methods.

However, some recent results from estate agent Lisney, which has led the charge back to the auction room, give pause for thought.

Last week it placed 12 properties for auction in its offices on Earlsfort Terrace, of which just six were sold and the rest withdrawn. Compare this with about 35 properties it had auctioned in the preceding four months, of which over 90 per cent sold.

These recent withdrawals of properties would seem at odds with the urgent reports of shortages of housing stock in key areas of the capital. Lisney auctioneer David Bewley puts it down to an overdue levelling out between supply and demand.

“Viewing numbers have dropped off completely. There may still be queues in some areas of Dublin 6, but viewings further out have halved.”

While stock levels are slowly improving, he also believes some agents may be pushing prices too high, and this in turn is heightening sellers’ expectations and putting off buyers.

“I’m surprised by prices achieved at the moment and I shouldn’t be at this point in my career,” Bewley says, adding that what doesn’t sell immediately should sell gradually over the summer.

Another Dublin-based agent spoke this week about the “fizz” going out of the market, and is advising clients to take any offers on the table within reach of the asking price.

It has always been a balancing act between the price people are prepared to pay, and what sellers are prepared to take, but now more than ever buyers have become very price sensitive, and who can blame them based on recent experience?

riclad

Maybe the amount of people who have cash to buy a house is falling ,
leaving more people in the market who rely on bank loans to buy homes.

seamus

I've said on other threads, that eventually and pretty quickly the volume of cash buyers will dry up, and while there'll be a lot of non-cash buyers left in the market they'll have far less scope to push prices up and will shy away from any properties which they think will escalate out of their price range.

Stories of properties going for €100+ over asking are probably also causing non-cash buyers to just not bother even looking at them. E.g. if a property is up @ €285k and someone is mortgage approved for €300k, they probably won't even go see it as they expect it to sell out of their range.

However, it is also the summer and property sales dip in the summer.

joe_chicken

2 points why this is a bad article.

1.
I'd like to see a breakdown of prices from the houses that were redrawn.

It shows a house in the picture for the article that claims they were looking for 3.5 million.

2.
Throwing in a quote like this:
"Another Dublin-based agent spoke this week about the “fizz” going out of the market ... "

and then using that as a headline.

I'm not agreeing or disagreeing with the sentiment, but come on, a little more solid info and a little less whispers and hearsay.

jay0109

This ties in with a lot of anecdotal reports over on the Pin about the numbers at viewings having dropped way off over the past few months.
But prices are still booming .

Interesting to hear an EA say he's surprised by the current prices being achieved

Muahahaha

seamus wrote: »

I've said on other threads, that eventually and pretty quickly the volume of cash buyers will dry up, and while there'll be a lot of non-cash buyers left in the market they'll have far less scope to push prices up and will shy away from any properties which they think will escalate out of their price range.

Stories of properties going for €100+ over asking are probably also causing non-cash buyers to just not bother even looking at them. E.g. if a property is up @ €285k and someone is mortgage approved for €300k, they probably won't even go see it as they expect it to sell out of their range.

However, it is also the summer and property sales dip in the summer.

Agreed. Add on top of that the ending of the exemption for capital gains tax at the end of this year and it likely means than anyone with cash who wants property will purchase from now till the end of the year. Come January cash buyers and investors will be as rare as hens teeth IMO because they will all have made their move to avail of the exemption. The first 6 months of 2015 should be an interesting time in the property market, cash will no longer have the influence it currently has had for the last three or four years

Sleepy

Annecdotally, I know of a few couples who have just given up on the prospect of being able to afford to buy in a decent area of Dublin and, on that basis, are now widening their search to meath and re-thinking their plans.

If those couples are representative of many more, it could certainly explain the reported drop in viewings?

johnp001

Muahahaha wrote: »

Agreed. Add on top of that the ending of the exemption for capital gains tax at the end of this year and it likely means than anyone with cash who wants property will purchase from now till the end of the year. Come January cash buyers and investors will be as rare as hens teeth IMO because they will all have made their move to avail of the exemption. The first 6 months of 2015 should be an interesting time in the property market, cash will no longer have the influence it currently has had for the last three or four years

Investors will be rare in January (unless the CGT rules are changed in the budget) but would cash buyers who are not investors not be better off waiting until January when they will have less competition for available property?

Theboinkmaster

Sleepy wrote: »

Annecdotally, I know of a few couples who have just given up on the prospect of being able to afford to buy in a decent area of Dublin and, on that basis, are now widening their search to meath and re-thinking their plans.

If those couples are representative of many more, it could certainly explain the reported drop in viewings?

For those couples I'd say don't bother, sit tight and see what's happening in 12 months.

It is entirely possible the houses they thought were out of reach are coming down in price, with lack of cash buyers available to inflate the price.

beauf

My guess (not based on any facts) that its a certain band of houses that selling. Low/Medium family homes when something is seriously overpriced or in a much higher bracket its much slower.

chris85

Theboinkmaster wrote: »

For those couples I'd say don't bother, sit tight and see what's happening in 12 months.

It is entirely possible the houses they thought were out of reach are coming down in price, with lack of cash buyers available to inflate the price.

This is my thinking of it for the moment. I am looking to buy at the moment as a FTB. I am looking around but properties are poor and in bad areas within my budget. I have thought about broadening my locations net but this is not what I want. I am from Dublin and want to live in Dublin for many reasons. I may end up renting and see how it goes towards the end of the year and into next years. Its worth waiting for i think but its all a bit speculative.

It really feels like we have learnt nothing about from the boom times. I know lending is stricter now. But you can see it loosening (recent announcements about government backed 95% mortgage) and people paying over asking for bad properties. I am trying to understand the government backing 95% mortgages when there is an undersupply of housing so this will put more buyers into the market and until housing number increases this will worsen the situation.

Bateman

johnp001 wrote: »

Investors will be rare in January (unless the CGT rules are changed in the budget) but would cash buyers who are not investors not be better off waiting until January when they will have less competition for available property?

I have seen mention of this, can someone give me more info on the CGT change that's happening at the end of the year?

beauf

I think you'd have to look at the cost of buying vs the cost of long term renting.

Also what your long term financial plans are, into retirement, in terms of pension and managing renting/property owning then.

Mr.McLovin

CGT will have little effect just like the abolishment of MIR. The government are committed to raising house prices, Noonan himself has made no secret of this. I think we will see a levelling off as the bottle neck eases but with 95% mortgages and other hair brained schemes in the pipeline as property is drip fed onto the market you wont see any major falls from here on just a bobbling at were we are now, that's my guess anyhow.

Frank Lee Midere

Bateman wrote: »

I have seen mention of this, can someone give me more info on the CGT change that's happening at the end of the year?

People who buy this year and last year will pay no capital gains tax if they sell after 7 years. This is, to my mind, the real reason why cash has rushed into these houses. That and rental increases caused by the removal of bedsits.

We were in recession last year. The growth economy is a bit of a myth.

Frank Lee Midere

Mr.McLovin wrote: »

CGT will have little effect just like the abolishment of MIR. The government are committed to raising house prices, Noonan himself has made no secret of this. I think we will see a levelling off as the bottle neck eases but with 95% mortgages and other hair brained schemes in the pipeline as property is drip fed onto the market you wont see any major falls from here on just a bobbling at were we are now, that's my guess anyhow.

Yeah it will. Would you invest in a tax free investment or a non-tax free investment? As for the 95% mortgages I can't really see that happening. If it does happen and the market bubbles and then collapses we should hold the minsters responsible and jail them.

beardy_brady

ive no vested interest in the dublin property market , i dont even live in leinster and own nothing in the capital but the property pin is full of cranks

i remember around three years ago when they were predicting that the average 1000 sqr ft three bed semi around the likes of beaumont - dublin 9 would eventually drop to 100 k

Frank Lee Midere

beardy_brady wrote: »

ive no vested interest in the dublin property market , i dont even live in leinster and own nothing in the capital but the property pin is full of cranks

i remember around three years ago when they were predicting that the average 1000 sqr ft three bed semi around the likes of beaumont - dublin 9 would eventually drop to 100 k

It would have if it were a free market.

jay0109

beardy_brady wrote: »

ive no vested interest in the dublin property market , i dont even live in leinster and own nothing in the capital but the property pin is full of cranks

i remember around three years ago when they were predicting that the average 1000 sqr ft three bed semi around the likes of beaumont - dublin 9 would eventually drop to 100 k

roughly 3 times the avg industrial wage in D9...sounds reasonable to me

beardy_brady

Frank Lee Midere wrote: »

It would have if it were a free market.

conspiracy theory room that way

jay0109

beardy_brady wrote: »

conspiracy theory room that way

You must think it is a fee market so?

Have you heard of the CGT window for investors of 2013/14
Or of NAMA, 1 of the worlds largest property owners
Or have you noticed the non-event that is repossessions where mortgages have'nt been paid for months, years

beardy_brady

jay0109 wrote: »

roughly 3 times the avg industrial wage in D9...sounds reasonable to me

so you think the average house in dublin ( D9 is about in the middle ) should be valued at a fifth of the average house price in london ?

average house price in london is in excess of half a million euro

Mongfinder General

jay0109 wrote: »

You must think it is a fee market so?

Have you heard of the CGT window for investors of 2013/14
Or of NAMA, 1 of the worlds largest property owners
Or have you noticed the non-event that is repossessions where mortgages have'nt been paid for months, years

You left out rent allowance.:)

makeorbrake

beardy_brady wrote: »

so you think the average house in dublin ( D9 is about in the middle ) should be valued at a fifth of the average house price in london ?

The point is you called 'conspiracy theory' and someone else came back and gave you real tangible evidence that the market is being tampered with - and that the government are actively pursuing a strategy of inflating property prices.

That's no conspiracy - that's solid fact.

woodseb

Frank Lee Midere wrote: »

It would have if it were a free market.

the housing market has never been a free market, almost anywhere in the world there is government interference in the market, the existence of NAMA is patently obvious to any market participant

with that, it is questionable to make a forecast that houses in D9 would be 100k as the market will never be completely free

the prop pin is a very useful forum and has some interesting threads and views but must be read with the proviso that there is a bear bias with alot of posters

for example, there was a thread the other day about empty units in baggot st as evidence that the arse is about to fall out of the market. It was explained that these were part of an expansion of the Merrion hotel:P

gaius c

beardy_brady wrote: »

so you think the average house in dublin ( D9 is about in the middle ) should be valued at a fifth of the average house price in london ?

average house price in london is in excess of half a million euro

Comparisons between London (the largest city in western Europe by quite some distance and the economic engine of the UK) & Dublin are about as useful as a comparison between Dublin & Ballydehob.

Rother

It used to be that renting was cheaper than buying for the first 25 years and the for the rest of your life buying was 100% cheaper than renting.

Now buying is cheaper then renting for the first 25 years even though house prices have gone up too.

We are looking to move closer to Dublin and I think we might just have to give up.

We wanted to sell our house in Ashbourne, which has gone up substantially in value, but the gap to the price of the house we want has got bigger.

If we had of moved 2 years ago we would have been laughing now. Its hard to make a decision to wait it out. Or we might just make a final decision and stay as we are forever.

In any case that story is very badly researched. I have a very good friend who is an estate agent and although things were very bad for him for a while he tells me things are just going stronger and stronger now. And he told me that people are even withdrawing properties from auction because they get more people willing to spend at public viewings now. So if you dont make the price you want at auction, you pull it and do it the old fashioned way. Auctions are just for quick sales. People see now that slowing down the process is doing them no harm at all as prices are not going down.

jay0109

beardy_brady wrote: »

so you think the average house in dublin ( D9 is about in the middle ) should be valued at a fifth of the average house price in london ?

average house price in london is in excess of half a million euro

Have you seen the average house in Beaumont. Breeze block, 70's/80's box shaped semi-d's of 1,300 sq ft max. Beaumont is not red brick heaven with large gardens.
While I think 100k is on the very low side, I would say that these type of houses should'nt be more than 150k....just over 3 times the avg Dublin wage.

Is'nt there a stat from the CSO that only something like 7% of workers in this country earn more than 100k per annum....

Theboinkmaster

jay0109 wrote: »

Is'nt there a stat from the CSO that only something like 7% of workers in this country earn more than 100k per annum....

dont think it'd be that high, maybe 3-4%?

woodseb

Theboinkmaster wrote: »

dont think it'd be that high, maybe 3-4%?

14% of households earn >100k

http://www.thejournal.ie/readme/high-earner-ireland-755580-Jan2013/

who_ru

woodseb wrote: »

14% of households earn >100k

http://www.thejournal.ie/readme/high-earner-ireland-755580-Jan2013/

What's their after tax income like ?

Cuddlesworth

woodseb wrote: »

14% of households earn >100k

http://www.thejournal.ie/readme/high-earner-ireland-755580-Jan2013/

Households means combined income.

gaius c

woodseb wrote: »

14% of households earn >100k

http://www.thejournal.ie/readme/high-earner-ireland-755580-Jan2013/

And as we all know, those households would "aspire" to living in Dundrum 3 bed semi's. Living the Irish dream...

Muahahaha

jay0109 wrote: »

Have you seen the average house in Beaumont. Breeze block, 70's/80's box shaped semi-d's of 1,300 sq ft max. Beaumont is not red brick heaven with large gardens.
While I think 100k is on the very low side, I would say that these type of houses should'nt be more than 150k....just over 3 times the avg Dublin wage.

Is'nt there a stat from the CSO that only something like 7% of workers in this country earn more than 100k per annum....

What you're not taking account for is that house prices these days are premised on a double income household. Asking prices reflect that, in fact I'm sure so e economist somewhere has done a study about how women entering the workforce en masse as they did in Ireland meant that house prices went up- couples had more money to spend so vendors asked for more and got it.

woodseb

Cuddlesworth wrote: »

Households means combined income.

your point being?

most people buying houses are couples, partners, families

if 14% of the population are in households over 100k you can begin to understand the affordability to buy a house, you can also assume that that figure is skewed towards Dublin where a lot more than 14% would be earning over that

Cuddlesworth

woodseb wrote: »

your point being?

most people buying houses are couples, partners, families

if 14% of the population are in households over 100k you can begin to understand the affordability to buy a house, you can also assume that that figure is skewed towards Dublin where a lot more than 14% would be earning over that

Considering I was part of that survey, my house would have had a combined income of 150k at that stage putting us in that 14%. Since 4 working adults lived there, it wouldn't be indicative of the purchasing power of a couple in this country.

woodseb

Cuddlesworth wrote: »

Considering I was part of that survey, my house would have had a combined income of 150k at that stage putting us in that 14%. Since 4 working adults lived there, it wouldn't be indicative of the purchasing power of a couple in this country.

but it would be indicative of the ability of your household to fund the purchase price of the property, no? Assuming you were all paying rent to a landlord who may have been servicing a mortgage

it is after all a statistic based on averages, so stating that your specific circumstances weren't indicative is neither here nor there

Marcusm

beardy_brady wrote: »

so you think the average house in dublin ( D9 is about in the middle ) should be valued at a fifth of the average house price in london ?

average house price in london is in excess of half a million euro

That's a bit of a strawman; the average house price in London is affected by international investment to a much greater extent than the Dublin or Irish property market - the "average" property price is greatly affected by this. Additionally the "averages" quoted are generally arithmetic means (often known as simple average) whereas the median would generally be a better indication of the price for which a typical property sells. (By the bye, I live in London and am selling a 2 bed flat for a multiple of what you quote as the average.)

Absent special factors (such as international investment or a bubble), there must be a link between earnings and property prices in order for stability over the medium term.

Cuddlesworth

woodseb wrote: »

but it would be indicative of the ability of your household to fund the purchase price of the property, no? Assuming you were all paying rent to a landlord who may have been servicing a mortgage

it is after all a statistic based on averages, so stating that your specific circumstances weren't indicative is neither here nor there

I'm not sure my flatmates would have been interested in investing in property with me.

Considering the large numbers of working 18-30 year olds living at home with modest incomes or in house shares with modest incomes, using household income over average wage seems irresponsible when judging the average purchasing power of a couple or single earner.

Theboinkmaster

woodseb wrote: »

14% of households earn >100k

http://www.thejournal.ie/readme/high-earner-ireland-755580-Jan2013/

That's households, joint income. What's the stat for individuals?

woodseb

Theboinkmaster wrote: »

That's households, joint income. What's the stat for individuals?

read the whole article :rolleyes:

gaius c

Interesting that both the IT and Indo have run with articles like this in the last week.
Almost like somebody got the bright idea to reassure people that everything is okay and planted the articles...

Theboinkmaster

woodseb wrote: »

read the whole article :rolleyes:

I did and it doesn't answer my question so instead of the roll eyes why don't you answer the question? That article refers to 78k and 120k...

Either way my initial statement on individuals earning 100k+ would be about right - 3 to 4%, maybe lower

woodseb

Theboinkmaster wrote: »

I did and it doesn't answer my question so instead of the roll eyes why don't you answer the question? That article refers to 78k and 120k...

Either way my initial statement on individuals earning 100k+ would be about right - 3 to 4%, maybe lower

So you're peeved with me for not answering your question by directing you to the article..... and yet you seem to be able to answer the question with a good degree of certainty from that data? (and even more so if you read the paper that the article refers to)

you're right that the number of individuals earning >100k is low but as I said earlier], its not really an informative statistic when assessing house prices

Santa Cruz

Would the fizz be gone because people believed the initial talk about a boom, put their negatived equity homes on the market and didn't get what they were expecting in price and decided to withdraw. Cash buyers have got their bargains and are also pulling back and of course mortgage availability is still a problem.
Having said that I am aware of two apartment development in Dublin 14 which were in mothballs but are now nearly ready to be thrown on to the rental and purchase markets. The more availabililty of properties the better control on prices

Theboinkmaster

woodseb wrote: »

you're right that the number of individuals earning >100k is low but as I said earlier], its not really an informative statistic when assessing house prices

Of course it is - house prices linked with earnings

Rother

Id say this thread will go the way of the famous "Glut of repossessed houses could depress prices ‘by up to 25%’"

It will probably take a year or more as well.

steddyeddy

Well in fairness who would blame people after the last property bubble popped? Dublin prices are at an artificial high and likely to drop again, i.e. they're not worth the current asking price.

seb65

steddyeddy wrote: »

Well in fairness who would blame people after the last property bubble popped? Dublin prices are at an artificial high and likely to drop again, i.e. they're not worth the current asking price.

Agreed. 350,000+ for terraced less than 900 square feet for some? As if.

steddyeddy

seb65 wrote: »

Agreed. 350,000+ for terraced less than 900 square feet for some? As if.

They will rise again and then drop substantially. People have short memories but not that short considering the negative equity nightmare some people are facing.

Rother

I know a lot of people who were in negative equity 3 years ago.
I know very few who are in negative equity now.