Irish House Price Rise 2014

househero

House prices in Dublin are rising.

But economics do not support such a house price rise.

The US economy shrank by 1% in the first three months of 2014. The EU 'Grew' by 0.2% Ireland was in recession again in 2013, unemployment remains very high, wages are stagnant, property and water tax's are new costs of property ownership, interest relief has been phased out...

These fundamental economic changes do NOT make investing in property more financially attractive.

When economics goes against a rise in Price, it is called a bubble.

These are facts.

It is my prediction that the ECB will increase interest rates, increasing borrowing costs and cool this temporary bubble caused by media driven propagander.

murphaph

househero wrote: »

The ECB will increase interest rates very soon, increasing borrowing costs and cool this temporary bubbel caused by media driven propagander.

Can I borrow your crystal ball? I don't know what the ECB will do but I don't see any reason for rates to do anything but fall or stay where they are. Inflation is low across the Eurozone. Growth is low. Why would the ECB be looking to raise interest rates given these FACTS?

dizzymiss

I predict interest rates will in fact fall slightly this week

sonandheir

househero wrote: »

The ECB will increase interest rates very soon, increasing borrowing costs and cool this temporary bubbel caused by media driven propagander.

The ECB are currently worried about deflation, so are highly unlikely to raise rates. What makes you think they will? Your grasp of 'economics' is somewhat flawed.

Why did you start a new thread about Dublin house prices? There are numerous other threads you could have posted in.

househero

sonandheir wrote: »

The ECB are currently worried about deflation, so are highly unlikely to raise rates. What makes you think they will? .

While you have chosen to ignore the above highlighted fundamental restrictions that are contradictory to an Irish house price rise and instead decided to question my prediction that within the next 12 months (probably early 2015) rates will rise. I do appreciate that base rates may next week stay the same or even reduce to 0%! I'm not talking about next week, if you are taking a 25 year mortgage, short term is the next 3 years.

Despite the ECB rates being at a historic low of 0.25% for an extended period, it has without any doubt failed to stimulate growth.

It would appear that some people have mistaken the ECBs announcement of action, as a reduction in rates. Something the FX market has not done. Notice the Euro USD recent low (if you are indeed inclined to monitor macro economics)

Contradictory to economics taught to 12 year olds. Increasing base rates (rather than reducing them) encourages business to invest reserves, which are also at historic highs. The historic low interest rate and the historic high of business cash reserves are directly linked and correlated far stronger than the divergence of gov bonds and stock prices on the back of the feds soon to be withdrawn stimulas measures.

The ECB announced that it would tackle the unemployment problem... It didn't say it would make borrowing cheaper. This may mean region wide recapitalization of banks, euro stimulas, or the unprecedented move to increase the potential for private companies to reverse a trend and reinvest in Europe.

It is you sir, who has a flawed, rather rudimentary understanding of economics.

No matter how much you may want it to, due to vested interest.

THE PERFORMANCE OF THE IRISH ECONOMY DOES NOT SUPPORT THE RECENT HOUSE PRICE RISES.

househero

murphaph wrote: »

Can I borrow your crystal ball?

No.

But you may also get a job analysing macro economic trends whenever you feel up to it.

riclad

I think prices are rising in area ,s
where there,s a small no of houses for sale,
and lots of people want to live there .
IN most parts of ireland , prices are not rising.
This reflects the wider economy.

Most people don,t think in terms of the wider economy,
they think i want to live in area x,
i can get a mortgage ,
i,ll TRY and buy a house.
IF people were thinking 3-4 years ahead,
and being logical and cautious ,
we would not have had the boom, bust in 2008.
ALSO the choice is maybe pay rent or buy a house .
for most working people.

The_Morrigan

Folks words fail me as to the way this thread has gone.

I'm deleting the off topic posts and anyone who strays into personal attacks, snide comments or sniping will receive infractions and/or bans.

Barely Hedged

househero wrote: »

House prices in Dublin are rising.

But economics do not support such a house price rise.

The US economy shrank by 1% in the first three months of 2014. The EU 'Grew' by 0.2% Ireland was in recession again in 2013, unemployment remains very high, wages are stagnant, property and water tax's are new costs of property ownership, interest relief has been phased out...

These fundamental economic changes do NOT make investing in property more financially attractive.

When economics goes against a rise in Price, it is called a bubble.

These are facts.

It is my prediction that the ECB will increase interest rates, increasing borrowing costs and cool this temporary bubble caused by media driven propagander.

House prices in Dublin are increasing because investors are buying high yield rental properties and people have expectations about the market having reached as low as it can go an are finally taking the plunge at what are still affordable levels for them to aquire a mortgage at.

Rental amounts can never be considered a bubble in property market terms as people can only realistically pay what they can afford as the payments rollover each month. If house prices are related to increasing rental yields then the underlying is, in the short to medium term, a finacially sound investment.

Prices dropped 50% on houses, maybe more. House prices have increased 20%? So house prices are still less than 40% cheaper than at the peak. That doesnt sound too bad to me? Obviously i dont believe 20% is sustainable every year for say the next 5 years.

I think those two fundamentals do make it a good investment?

Barely Hedged

househero wrote: »

It is my prediction that the ECB will increase interest rates, increasing borrowing costs and cool this temporary bubble caused by media driven propagander.

househero wrote: »

While you have chosen to ignore the above highlighted fundamental restrictions that are contradictory to an Irish house price rise and instead decided to question my prediction that within the next 12 months (probably early 2015) rates will rise. I do appreciate that base rates may next week stay the same or even reduce to 0%! I'm not talking about next week, if you are taking a 25 year mortgage, short term is the next 3 years.

Temporary is 3 years?

MD cares about a supposed media driven property market in little old Ireland, why?

crackcrack30

Some people need to try to identify (on a map) that certain inner commuter belt areas around the capital city Dublin that have risen or corrected slightly is not Ireland.


We are the Aran islands of Europe and will never influence major European economic issues...other than PIGS related issues

SeanSouth

Yes I think its hillarious that people believe we're in a bubble when in fact we are 40% down on 2007 price levels.

Its very clear to me that what we are now seeing a bounce off the bottom of the market as all the "bottom feeders" try to jump on board.
The curve has turned and the market is now facing steady demand with very restricted supply. As the last poster has already said, it's unlikely to continue at this pace for very long.

househero

SeanSouth wrote: »

Yes I think its hillarious that people believe we're in a bubble when in fact we are 40% down on 2007 price levels.

A bubble exists when fundamental economics do not support an asset price move. Wages have not increased, taxes on property have increased and disposable income has been eroded.

A bubble exists when cheap money artificially inflates an asset. FED/BOJ/ECB unprecedented QE programs since 08/09 have filled the market with cheap money. People are taking advantage of a lower than average cost of borrowing (even 00 to 08 was a lower than average rate of lending and is not 'normal' over the medium term)

A bubble exists when other financial fundamentals diverge (they show an increasingly different outlook to the bubble asset). Stock markets are inflated by FED QE and bond yields have SIGNIFICANTLY diverged. A sign of an impending financial correction.

It is not just a simple case of, its cheaper now, it will go up again. Dont believe me?

Look at the previous highs of the UK/US stock market. It was December 1999. It didnt rise for 14 years!!! In real terms its still lower.

Markets can trade lower than previous highs (Dutch Tulip Boom)

Zamboni

SeanSouth wrote: »

Yes I think its hillarious that people believe we're in a bubble when in fact we are 40% down on 2007 price levels.

2007 price levels are only relevant to history books.
They have no bearing on, well, anything else.

Idbatterim

these posts drive me insane, Op if you believe its a bubble dont buy!

The US economy shrank by 1% in the first three months of 2014. The EU 'Grew' by 0.2% Ireland was in recession again in 2013, unemployment remains very high, wages are stagnant, property and water tax's are new costs of property ownership, interest relief has been phased out...

These fundamental economic changes do NOT make investing in property more financially attractive.

Its seems the "in" thing now to talk about it being a bubble, the way it would have been "in" to only talk up the property market during the boom. People have become a bit more educated on the economy etc, learned a few new terms and think they are Warren Buffet. Basing everything on numbers and figures, well humans arent rational, if they were would they have borrowed close to a million for a standard 3/4 bed semi D in Dublin 14 during the boom, 500,000 for a shoe box apartment and 25 or 40k for a car parking space?!

Things were even worse 1,2,3 and 4 years ago than now, so explain how prices have risen and quite substantially in the past year OP, if the fundamentals you mention are the only ones the effect property prices?

A bubble exists when fundamental economics do not support an asset price move. Wages have not increased, taxes on property have increased and disposable income has been eroded.

yeah but people have got sick of waiting, saved large deposits, population increasing, public servants upon retirement and benefactors of wills getting large sump sums on a daily basis, must run to the tens of thousands a year alone OR getting cash gifts from parents etc.

Barely Hedged

Zamboni wrote: »

2007 price levels are only relevant to history books.
They have no bearing on, well, anything else.

What do we use as a benchmark then?

Id consider a period with full employment, ECB base rate at 4% and then pare maybe 10% - 20% off those prices and use it as a benchmark.

Barely Hedged

Im sorry - but theres a whole load of bluster and soap boxing in this post. Theres a complete lack of interpretation or understanding as to why the Irish (read Dublin) property market has increased from historic lows.

househero wrote: »

A bubble exists when fundamental economics do not support an asset price move. Wages have not increased, taxes on property have increased and disposable income has been eroded.

Dublin house prices have increased because it's an employment centre.

househero wrote: »

A bubble exists when cheap money artificially inflates an asset. FED/BOJ/ECB unprecedented QE programs since 08/09 have filled the market with cheap money. People are taking advantage of a lower than average cost of borrowing (even 00 to 08 was a lower than average rate of lending and is not 'normal' over the medium term)

A bubble exists when other financial fundamentals diverge (they show an increasingly different outlook to the bubble asset). Stock markets are inflated by FED QE and bond yields have SIGNIFICANTLY diverged. A sign of an impending financial correction.

All this cheap money is inflating the price of the underlying asset (property) in Longford.

househero wrote: »

Markets can trade lower than previous highs (Dutch Tulip Boom)

The Dutch tuilips story is an accurate interpretation of the Irish property market?

TwoShedsJackson

househero wrote: »

It is my prediction that the ECB will increase interest rates, increasing borrowing costs and cool this temporary bubble caused by media driven propagander.

Now that the ECB have done the exact opposite, what do you think will happen?

lolosaur

I am intruiged by the response this is going to get.


would the OP but shares in BOI at present?

gaius c

Irish house prices are increasing because supply is restricted. Current turnover rate is 75 years. That can't keep going indefinitely and the only way to increase the transaction rate is for the market to admit buyers currently locked out due to unaffordability, i.e. prices drop and transaction volumes increase.

TwoSheds
The ECB rate is really only of interest to folk on trackers. Current mortgages are on a variable rate, which is a lot higher (and ironically, likely to rise as a result of the ECB rate drop).

lolosaur

gaius c wrote: »

Irish house prices are increasing because supply is restricted. Current turnover rate is 75 years. That can't keep going indefinitely and the only way to increase the transaction rate is for the market to admit buyers currently locked out due to unaffordability, i.e. prices drop and transaction volumes increase.

TwoSheds
The ECB rate is really only of interest to folk on trackers. Current mortgages are on a variable rate, which is a lot higher (and ironically, likely to rise as a result of the ECB rate drop).

You also have to add to that that Ireland contribute just under 1% to the euro zone, so they have no need whatsoever to to look at ireland and think policy must be changed to benefit ireland.

Everyone on boards seems to have a degree in demand and supply.

There is more to economics then price up>Demand Down.

gaius c

Househero
It doesn't look like ECB rates will be changing for a good while yet.

ECB Coeure: We are going to keep rates close to zero for an extremely long period

http://www.reuters.com/article/2014/06/07/us-ecb-coeure-idUSKBN0EI0AC20140607?feedType=RSS&feedName=businessNews

(Reuters) - Euro zone interest rates will diverge from those in the United States and Britain for a number of years, European Central Bank (ECB) Executive Board member Benoit Coeure told France Inter radio on Saturday.

Speaking after the ECB this week cut rates to record lows, Coeure said they would remain around that level for a long time, whereas central banks in the United States and UK would at some point raise rates.

Not that the ECB rate will directly affect house purchasers anyway...

emmetfahy

I have a house for sale in Balbriggan and only one couple went to view it in three weeks. There is no house price bubble in a lot of areas.

ted1

househero wrote: »

House prices in Dublin are rising.

But economics do not support such a house price rise.

Basic economics of supply and demand support it

gaius c

emmetfahy wrote: »

I have a house for sale in Balbriggan and only one couple went to view it in three weeks. There is no house price bubble in a lot of areas.

I don't mean to be rude but is the asking price about par or above/below for the area? Have you checked the PPR to see what similar houses in the area have sold for?

If you're not getting viewers, it could be that the asking price is too high and folks are not bothering to look as they'll assume that the "real price" will be even more. We sold at the start of the year and set the asking nice & low, 10% under other properties in the area. Viewers flocked to ours and it went for over the asking of the other properties.
Just checked. Those other properties are still for sale.