Property Market 2016

castle2012

So any thoughts? With the country's unemployment levels getting lower. Demand is sure to increase. People that would have bought this year but the CB deposit ratio held them back may now well have their deposit.

The_Conductor

The CSO stats for November 2015 are only just out- and show annual price increases rises of 6.5%- which is very reasonable- however, its been on a downward trajectory. I predict the downward trajectory will continue until it reaches 1-2% which is probably sustainable- and that it will bounce along at a little under 2% with downside rather than upside potential thereafter......

I also predict that Dublin prices will continue to bear the brunt of the downside to national prices.

The big issue I see- is we're still not going to have any meaningful volumes of property transactions- so even small numbers will have undue influence on the overall picture.

I'd also suggest more landlords are going to exit the market- its already been made very uncomfortable for small landlords from a tax perspective- now the regulatory regime is turning even more unfavourably against landlords. An increasing proportion of property on the market- will be BTL properties- not necessarily distressed mortgage holders- rather landlords who just don't see the point any longer.

Planning permissions will be predominantly for high density smaller unit- a la the new guidelines. A continuing drought of family homes will worsen.

I also suggest we'll have more pronouncements from our multinationals lambasting the lack of accommodation which is hindering their ability to grow their businesses in Ireland.

Certain locations- such as West Cork, Kerry, Limerick/Clare, Sligo and the Waterford area- may see very welcome bumps in employment locally- however, its not a trend that is going national- the border areas are going to get worse before they get better (with a few exceptions- like Cavan- which may have bottomed out- and see new opportunities- probably from domestic companies- in the coming 12 months). Some booming regional cities- like Galway- may be falling stars- they've simply priced themselves out of the market for most companies (what the hell is the story with property prices in Galway anyway- they're nuts)

Its always dangerous looking into a crystal ball- and trying to predict the future- there are so many unknowns- particularly for a small open economy such as ours. The US have started to increase interest rates- which is assisting the Euro/dollar exchange rate- however- it may dampen demand in some of our markets. Oil- is actually increasing dramatically in the last few days- on the back of surprisingly low stock levels in the US and EU. An increase in oil prices- could be a shock for many economies. We've just agreed to quite incredible carbon cuts- which are going to be very difficult to deliver on (there was an argument made to exclude agriculture-however we got laughed out of the shop for suggesting it). The UK could throw a spanner in the works with the European referendum. Scotland has new powers devolved to it- as do Northern Ireland- both of whom have indicated they intend to ape the Republic's corporation tax regime.

The refugee crisis could take a dramatic turn- with Russia now lobbing missiles around the place in Syria. Turkey are in the middle of trying to negotiate new working permits for their citizens in Europe- and are being listened to more clearly than ever before- because of their role in trying to manage the refugee crisis. Libya- looks like it may manage to get a national government together at long last- and actually try to control its territory- however that could be wishful thinking.......

There are many clouds on our horizons- however, there are also many opportunities. How they will play out- who knows. There are so many different macro events happening- and we have such a small part and very little influence on them- but they have an outsized effect on our economy.

The Irish Economy- is growing- but not as strongly as many imagine (relying on soaring corporation tax- is akin to relying on soaring stamp duty in my eyes- it could be gone in a year or two- its dangerous to imagine its going to last).

2016 is going to be a difficult year for many- but a year of vast opportunities for others.

Calahonda52

The_Conductor wrote: »

..... We've just agreed to quite incredible carbon cuts- which are going to be very difficult to deliver on (there was an argument made to exclude agriculture-however we got laughed out of the shop for suggesting it). .......

Interesting and informative post, as usual::)

just wonder if the local implementation of the above will allow agri to be excluded and therefore heap it up on the end consumer via higher domestic energy and fuel bills and carbon tax on coal peat etc

The_Conductor

Calahonda52 wrote: »

Interesting and informative post, as usual::)

just wonder if the local implementation of the above will allow agri to be excluded and therefore heap it up on the end consumer via higher domestic energy and fuel bills and carbon tax on coal peat etc

Its a global decrease in national levels- there is nothing to stop the government (or a future government) from sheltering one sector and sacrificing another. Lord knows- its happened often enough in the past..........

johnnyskeleton

Considering that there are dreamers like this wanting €1.2m for a squished up semi in *notionally* Blackrock to be purchased prior to completion (i.e. if you don't pay upfront they won't be built), I don't have much hope that 2016 will be the year that sanity returned to the Dublin housing market.

Or the idea that a completely destroyed city centre residence (worse than a brownfield plot) is worth €200k:

http://www.daft.ie/11152132

Santy2015

So what do people think what will happen in the first few months of the year especially in cork county.?

The_Conductor

Santy2015 wrote: »

So what do people think what will happen in the first few months of the year especially in cork county.?

Short term- lenders will probably offer more mortgages- while they have fresh allocations of loans to offer outside of the deposit requirements- once they've exhausted this supply- loans will slow down.......

Medium term to longer term- still no meaningful construction occuring- particularly given the demand in the area- so lack of supply will keep a base on how low prices can go.

Some of the local rental supply will be offered on the main market for sale- which may help with liquidity- however, those renting are still going to need to live somewhere.......

Its a mess is the short and simple- I'd suggest short term there may be price rises- medium to longer term- a shortage in supply will be the only factor maintaining prices- and even then- this means nothing- if borrowers can't access funds- how long before the small supply of deposit exemptions runs out- your guess is as good as mine.........

El_Dangeroso

One factor that I think will come into play this year is the reduction in CGT from 30% to 20% for the sale of a business. I think this could encourage some landlords that rented their properties through an LLC to sell up too.

I expect a further tightening of rental stock as a consequence of this.

Other than that, a modest to flat increase in property prices in the range of 1-4% nationally is probably the most likely outcome this year.

castle2012

Yes I heard recently some banks got there customer s to hold till the new year to complete there purchase , this was because the bank lend to much outside the cap in 2015 and had to wait till the new year

OfflerCrocGod

Round up of the market in 2015 http://www.rte.ie/news/business/2016/0104/757587-daft-report/ looks like everywhere but Dublin had strong price growth. I'd say the other cities will all decelerate this year and we should be looking at lower price growth ~5%.

handlemaster

OfflerCrocGod wrote: »

Round up of the market in 2015 http://www.rte.ie/news/business/2016/0104/757587-daft-report/ looks like everywhere but Dublin had strong price growth. I'd say the other cities will all decelerate this year and we should be looking at lower price growth ~5%.

Could that be a minus also

gaius c

Dublin 2015 was down. Make no mistake. The CSO and PPR stats lag. Prices went beyond the market's ability to pay in 2014. Volumes are slowing. Rest of the country was up so the overall figures were slightly up.

2016 is likely to see something of a stagnation and standoff as folks are slow to realise that the 2014 rises are not coming back. Smart sellers sold back then. Smart buyers are building up their cash. Volumes are very low so there's likely to be some volatility.

I Am The Law

"The housing shortages persist: just 25,000 homes were on the market on December 1st this year, the lowest for this time of year since 2006. Nonetheless, the outlook for the housing market looks much healthier now than it did in 2014. Perhaps most importantly, the mortgage rules mean that whatever else happens, house prices cannot engage in the destructive upward spiral that took place in the decade to 2006."

Interesting that the Daft Q4 Report doesn't foresee any change to CB rules despite housing shortage, increased rents or upcoming elections.

handlemaster

I Am The Law wrote: »

"The housing shortages persist: just 25,000 homes were on the market on December 1st this year, the lowest for this time of year since 2006. Nonetheless, the outlook for the housing market looks much healthier now than it did in 2014. Perhaps most importantly, the mortgage rules mean that whatever else happens, house prices cannot engage in the destructive upward spiral that took place in the decade to 2006."

Interesting that the Daft Q4 Report doesn't foresee any change to CB rules despite housing shortage, increased rents or upcoming elections.

That would be just pure speculation on personal opinion

Santy2015

Supply is only going on a downward spiral. Me and my OH are saving heavily to gather up our deposit and other expenses as quick as possible. Once the cities dry up its out the country they'll go. The north cork region will see price increases as I reckon people will commute to cork/limerick. It hasn't happened yet but will. Rumours going around that a developer in my area is going to suspend the selling of houses he has left in the estate he owns, once he sees that there's sufficient demand he'll up the price. Like 130k for a 4 bed detached only 45 mins from cork or limerick that's a bargain

MarkAnthony

Plenty of localised ups and downs but Dublin will be stagnant (+/- 2%). Maybe a 7% rise down the country. Apartments - volume picking up perhaps.

digiman

gaius c wrote: »

Dublin 2015 was down. Make no mistake. The CSO and PPR stats lag. Prices went beyond the market's ability to pay in 2014. Volumes are slowing. Rest of the country was up so the overall figures were slightly up.

2016 is likely to see something of a stagnation and standoff as folks are slow to realise that the 2014 rises are not coming back. Smart sellers sold back then. Smart buyers are building up their cash. Volumes are very low so there's likely to be some volatility.

I would like to be a smart buyer but not sure anymore if I would be if I buy this year. I currently have a booking deposit down on a new 4bed semi-d house in Dublin but I am afraid that I may be buying at top of the current market cycle prices. I've got my 20% deposit already saved and the mortgage payments are the same as my rent but I am still concerned that I am buying at the wrong time. While the house is somewhere I intend to live for the next 10 years, (I'm 31 by the way) I still don't want to buy and possibly be in negative equity over the next couple of years.

I could hold off until next year and rent during that time but I would spend around E19,000 in rent which is about 4% of the house value. I could also probably save E25,000 during that time also. I'm ready to sign contracts at the moment but maybe this is just first time buyer nerves. Any thoughts?

El_Dangeroso

digiman wrote: »

I would like to be a smart buyer but not sure anymore if I would be if I buy this year. I currently have a booking deposit down on a new 4bed semi-d house in Dublin but I am afraid that I may be buying at top of the current market cycle prices. I've got my 20% deposit already saved and the mortgage payments are the same as my rent but I am still concerned that I am buying at the wrong time. While the house is somewhere I intend to live for the next 10 years, (I'm 31 by the way) I still don't want to buy and possibly be in negative equity over the next couple of years.

I could hold off until next year and rent during that time but I would spend around E19,000 in rent which is about 4% of the house value. I could also probably save E25,000 during that time also. I'm ready to sign contracts at the moment but maybe this is just first time buyer nerves. Any thoughts?

Warren Buffet, widely acknowledged to be one of the greatest investors of our time, once said:
"Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important."

So if you:

a) REALLY like this house (and are not just settling)
b) Can afford the house (even with a significant loss of income or 3% rise in interest rates)
c) Have no reason to believe your needs will not be met by this house for the next 10 years

Go for it. Get off the speculation merrigoround and get on with more important things in life.

You are buying a home to live in, not an investment.

My 2c

OfflerCrocGod

Don't expect significant house price drops (unless the global economy tanks), in Dublin their will probably be stagnation, my guess is that growth will come from the rest of the country.

alastair

gaius c wrote: »

Dublin 2015 was down. Make no mistake. The CSO and PPR stats lag. Prices went beyond the market's ability to pay in 2014. Volumes are slowing. Rest of the country was up so the overall figures were slightly up.

2016 is likely to see something of a stagnation and standoff as folks are slow to realise that the 2014 rises are not coming back. Smart sellers sold back then. Smart buyers are building up their cash. Volumes are very low so there's likely to be some volatility.

Quite a lot factually wrong here. Dublin prices are up for 2015. The CSO stats and Daft report are in agreement on that. Entire country was up, and at a higher level than Dublin, but Dublin in isolation was also up.

2014 style rises may or may not be coming back (probably not in the short or mid term, which is a good thing), but 2014 prices are below 2015 prices.

Barely Hedged

gaius c wrote: »

Dublin 2015 was down. Make no mistake. The CSO and PPR stats lag. Prices went beyond the market's ability to pay in 2014. Volumes are slowing. Rest of the country was up so the overall figures were slightly up.

In summary - this post disagrees with independent, objective price verification of the market which is accepted as such by the government, all financial institutions and investors.

This is not the x-files or conspiracy theories forum

The_Conductor

Barely Hedged wrote: »

In summary - this post disagrees with independent, objective price verification of the market which is accepted as such by the government, all financial institutions and investors.

This is not the x-files or conspiracy theories forum

I needed a laugh- thanks for the comment about x-files/conspiracy theories.........

In my opinion- its a close run thing whether or not Dublin ended up in negative territory- however, it'll be March/April before it can be definitively called, one way or the other........

Of particular note- sellers asking prices and actual achieved prices- seem to have converged- with less than a 1% deviance in the Dublin area.

What a mess the market is in- and its not going to 'normalise' at this rate- for at least another decade.........

gaius c

digiman wrote: »

I would like to be a smart buyer but not sure anymore if I would be if I buy this year. I currently have a booking deposit down on a new 4bed semi-d house in Dublin but I am afraid that I may be buying at top of the current market cycle prices. I've got my 20% deposit already saved and the mortgage payments are the same as my rent but I am still concerned that I am buying at the wrong time. While the house is somewhere I intend to live for the next 10 years, (I'm 31 by the way) I still don't want to buy and possibly be in negative equity over the next couple of years.

I could hold off until next year and rent during that time but I would spend around E19,000 in rent which is about 4% of the house value. I could also probably save E25,000 during that time also. I'm ready to sign contracts at the moment but maybe this is just first time buyer nerves. Any thoughts?

See El D's post. If you're happy with a deal in front of you and it's within your budget, go for it. It's the folk stretching for places they are not happy with that really should be asking the hard questions.

Re the other posts, in the rush to shout down differing opinions, you're missing an important part of my post:
Make no mistake. The CSO and PPR stats lag.

Anyway
There was a noticeable growth slowdown in the 2nd half of the year with October 2015 volume in particular being 9% behind October 2014. Q3 2015 was the first quarter to show less than double digit YOY growth since 2012.
Q4 2015 needs to basically double to exceed Q4 2014 and at this stage, I'd say that's unlikely. It'll be the first YOY quarterly drop since 2011, with two consecutive quarters showing wobbles and that's fairly significant.

2015 needs about 100 more transactions to beat 2014 so it will probably get that but it's all a far cry from the years of 38%, 18%, 45% YOY annual transaction volume growth.
And when you have topped out at under 2% stock turnover, that's not a sign of a healthy market. The patient has been pumped with "uppers" and is still a long way short of full health plus can't be given any more medication now.

I'm looking forward to more PPR data to see how Dec 15 compares to Dec 14. It's the first year we haven't had "octane" added to the market to affect end of year results and could give some clues as to what is in store for 2016.

Edit: in other news, it looks like my little excel sheet is finally giving up at the barrage of data being chucked at it.

lcwill

I suspect the market is just taking a pause while people save up bigger deposits to meet new requirements.

It will probably start increasing faster again later in the year. It won't increase as fast as 2013/2014 but it will be slow and steady. Decline is very unlikely given lack of supply and high rental yields which are still attracting cash buyers and putting a floor under the prices. There would only be a decline if property taxes increase or there is some new legislation which makes buy-to-let even less attractive.

Many potential sellers will start to get nervous now though so it is probably still a good time to buy, especially if for the long term.

In the next election cycle I expect pressure to come on to relax the restrictive mortgage lending restrictions - maybe to reduce deposit requirements to 10% and give up to 4 to 4.5 times joint income, depending on how interest rates evolve. Once that happens prices will jump up again as people get access to more money.

In sum, limited downside, significant potential upside over the longer term, for better or worse.

Cuddlesworth

lcwill wrote: »

In the next election cycle I expect pressure to come on to relax the restrictive mortgage lending restrictions - maybe to reduce deposit requirements to 10% and give up to 4 to 4.5 times joint income, depending on how interest rates evolve. Once that happens prices will jump up again as people get access to more money.

Outside of fringe groups with no hope of power, I doubt it. The government allegedly have no real control over the Central Bank and the restrictions they place on lending institutions.

Only things the government can do is the introduction of tax breaks or benefits to house buyers to try bump things up.

newacc2015

lcwill wrote: »

In the next election cycle I expect pressure to come on to relax the restrictive mortgage lending restrictions - maybe to reduce deposit requirements to 10% and give up to 4 to 4.5 times joint income, depending on how interest rates evolve. Once that happens prices will jump up again as people get access to more money.

In sum, limited downside, significant potential upside over the longer term, for better or worse.

The Central Bank is independent of the Government. The Government cant tell the central Bank to relax its rules. It defeats the purpose of the CB being an independent body. The CB Governor is now an academic rather than the typical civil servant, so I imagine they even less likely to listen to the Government. These rules are important to prevent another housing bubble. Easing the rules will just create another credit fuelled bubble like 2003 all over again.

It will be interesting to see how the upper middle market plays out in 2016 ie the homes that are between €750k to €1.2million in Dublin. I imagine these buyers will be quite hit with the mortgage rules, but generally the upper end of the market will be more asset rich

handlemaster

As ICWILL said people are savings for the larger deposits because they have to. This should come into play and keep prices steady.

The_Conductor

handlemaster wrote: »

As ICWILL said people are savings for the larger deposits because they have to. This should come into play and keep prices steady.

Are people actively saving for larger deposits though?
Consumption levels are shooting up- as measured by VAT receipts.
Aka- a significant cohort of the population, who hitherto were saving/paying down debt- are now spending instead........?
I don't think its as simple as pointing and saying- look, people are growing their savings to pay enhanced deposit levels. A significant cohort are splurging on spending instead........

By all accounts people are being creative about how precisely they are getting their deposits together...........

MarkAnthony

The_Conductor wrote: »

Are people actively saving for larger deposits though?
Consumption levels are shooting up- as measured by VAT receipts.
Aka- a significant cohort of the population, who hitherto were saving/paying down debt- are now spending instead........?
I don't think its as simple as pointing and saying- look, people are growing their savings to pay enhanced deposit levels. A significant cohort are splurging on spending instead........

By all accounts people are being creative about how precisely they are getting their deposits together...........

I remember watching something about the sub-prime mortgage market (e.g. people what should not 'ave been given one in the first place.) The commentator - some financial head - said he had never seen the scenario where people were servicing credit cards so they could keep spending but not servicing the mortgage. He said that no one expected that, as previously every other line of credit would be used, abused and cut off before the mortgage would go unpaid.

While there is a lot of blame to go around in relation to the credit crisis some of it does fall to the individual mortgage holders. It seems that more and more the good times mean better cars, TVs and other consumables rather than getting into a position of security and getting the house secured.

People's stupidity when it comes to lines of credit never cease to amaze me.

lcwill

lcwill wrote: »

............. There would only be a decline if property taxes increase or there is some new legislation which makes buy-to-let even less attractive................

The removal of the CGT exemption on investment properties has made BTLs less attractive than last year imo.

That was a decent enough incentive for folks that has the bulk of the money for the purchase. For those who intend going the BTL investment option by borrowing as much as possible, all considered property still could be argued to be a decent enough option but the last 10 years has quite likely taken the wind out of much of the aspiring one property landlord's sails.

Villa05

OfflerCrocGod wrote:

looks like everywhere but Dublin had strong price growth. I'd say the other cities will all decelerate this year and we should be looking at lower price growth ~5%.

From that report, prices stalled in the final quarter everywhere. Going to be an interesting 2016