Property Market 2016

Gandalph

Can someone tell me, if asking prices across the country have risen by 3% in the last quarter and then rise by another 3% this quarter...is it supply & demands/economics or the governments FTB grant's fault?

People need to get a grip, developers are not instantly ramping up the prices with the announcement of this year's budget. The buyers of the product are the general public...so guess what...they set the price.

The_Conductor

Gandalph wrote: »

The buyers of the product are the general public...so guess what...they set the price.

Of course they do- however, as Economics 101 taught all of us- price is determined by supply and demand. The government's actions have created a significant new demand factor without altering supply- overnight- QED- prices rise to meet the new level of demand, until equilibrium once again is restored.

Behind all of this- developers still can't access finance and liquidity to bring projects forward- we started up a new fund to provide liquidity and cheap finance to farmers- but its got a narrow farming remit- and doesn't apply to other sectors.

So- until something is done to deal with supply side issues- prices simply rise to meet a new higher level of demand.

Its all well and good saying- sure developers can make a fortune building these units for First Time Buyers (or indeed any other cohort)- however, if they can't access funding to build them in the first instance- the fact that they can turn an average of a 72k profit on a first time buyer's unit- is moot.

There is an element of- 'create demand and supply will rise to satisfy it' in all of this- without any cognisance of why hasn't supply risen thus far to satisfy what is very obviously pent-up demand?

First time buyers slipped below 35% for the first time in Q2- its entirely foreseeable that they will jump far above their historic norm levels (40-45%) for the foreseeable future- and indeed- it beggars belief that anyone imagines this won't have a reciprochal impact on second hand prices- and prices for other cohorts of prospective purchasers..........

I'm sorry for appearing cynical- only when you get to my age it becomes a game of watching for the government (or any other party) to repeat the mistakes of history. We've a remarkable penchant for not learning from our mistakes in this country.

As for all the prospective purchasers who imagine anyone who is against the scheme simply has sour grapes because they don't qualify for it- its simply not the case. There are numerous reasons those of us on the sidelines aren't cheering on these developments- least of all is the simple fact that if they boost prices like this- we're all going to pay more property tax?

Muff Richardson

Michael D Not Higgins wrote: »

They're doing exactly what you did and narrowing in on the only places they can find that changed price overnight. The response from Sherry Fitz is perfectly rational to be honest. They're saying the remaineder of the houses are the more expensive ones and have just updated their prices accordingly.

I have only been looking myself in North Wicklow, where I was a renting resident for a number of years and am now looking to buy. I check daily, the thorndale "last remaining units" were priced and described as much the day previous for a lot less. These weren't just launched, announced etc.

FYI I am a first time buyer who will easily qualify for the full amount of the grant and I am still completely against it.

Gandalph

The_Conductor wrote: »

Of course they do- however, as Economics 101 taught all of us- price is determined by supply and demand. The government's actions have created a significant new demand factor without altering supply- overnight- QED- prices rise to meet the new level of demand, until equilibrium once again is restored.

Behind all of this- developers still can't access finance and liquidity to bring projects forward- we started up a new fund to provide liquidity and cheap finance to farmers- but its got a narrow farming remit- and doesn't apply to other sectors.

So- until something is done to deal with supply side issues- prices simply rise to meet a new higher level of demand.

Its all well and good saying- sure developers can make a fortune building these units for First Time Buyers (or indeed any other cohort)- however, if they can't access funding to build them in the first instance- the fact that they can turn an average of a 72k profit on a first time buyer's unit- is moot.

There is an element of- 'create demand and supply will rise to satisfy it' in all of this- without any cognisance of why hasn't supply risen thus far to satisfy what is very obviously pent-up demand?

First time buyers slipped below 35% for the first time in Q2- its entirely foreseeable that they will jump far above their historic norm levels (40-45%) for the foreseeable future- and indeed- it beggars belief that anyone imagines this won't have a reciprochal impact on second hand prices- and prices for other cohorts of prospective purchasers..........

I'm sorry for appearing cynical- only when you get to my age it becomes a game of watching for the government (or any other party) to repeat the mistakes of history. We've a remarkable penchant for not learning from our mistakes in this country.

As for all the prospective purchasers who imagine anyone who is against the scheme simply has sour grapes because they don't qualify for it- its simply not the case. There are numerous reasons those of us on the sidelines aren't cheering on these developments- least of all is the simple fact that if they boost prices like this- we're all going to pay more property tax?

All good points and very well said.

All I'm saying is, as someone in the development community, no one has even thought to start raising any prices. People don't seem to understand that developers don't set the price of the properties, they let the likes of Sherry Fitz/Savills do that for them. We'll see in the coming weeks what effects this FTBs grant has on the market because as of today, new stock (apart from Dublin) is not exactly flying out the door.

Michael D Not Higgins

Muff Richardson wrote: »

I have only been looking myself in North Wicklow, where I was a renting resident for a number of years and am now looking to buy. I check daily, the thorndale "last remaining units" were priced and described as much the day previous for a lot less. These weren't just launched, announced etc.

FYI I am a first time buyer who will easily qualify for the full amount of the grant and I am still completely against it.

We're both inferring the intentions of the agents/developers without knowing the full picture. The real test will be an analysis at the end of the scheme (or at a suitable point during it) of prices of new builds and whether any additional building occurred because of it.

I share your concerns about the scheme. The only thing that intervention from the government can do is increase demand and push up prices. I await to hear how they're tackling the supply side.

OfflerCrocGod

The scheme won't be running until January so there are no FTBs with these grants out there right now...

Anyway CSO have released a nice property price tool http://www.cso.ie/en/interactivezone/interactivetools/housepricesbyeircode/# well worth a look.

MentalMario

I guess in theory, this is what could happen.

The new scheme will definitely increase the price of new houses but will also make them a little more attractive to buy. The net cost will be less to the buyer which means more people will be interested in buying a new home.

That'll mean there's less people looking to buy houses that have already been lived in, and in theory should mean less people bidding and lower prices.

Win/win for the buyer.

In reality the above won't happen.

ThisRegard

OfflerCrocGod wrote: »

Anyway CSO have released a nice property price tool http://www.cso.ie/en/interactivezone/interactivetools/housepricesbyeircode/# well worth a look.

It's not great for Dublin though as it's at too high a level, e.g. takes the whole of each post code into account, rather than breaking it down into smaller areas which would give a better indication of property prices in a specific area.

68 lost souls

ThisRegard wrote: »

It's not great for Dublin though as it's at too high a level, e.g. takes the whole of each post code into account, rather than breaking it down into smaller areas which would give a better indication of property prices in a specific area.

I agree. The Dubli postcodes need to be broken down further as there is a huge difference for example in Between white church and Rathfarnham or on between Tallaght,Old Bawn, and Ballycullen.

linpoo

Given that the last rise in house prices was the beginning of the last one....will there be another one on the way soon?

Riva10

yes

riclad

Prices have hardly risen in rural area,s ,the bank s are working under strict lending rules set by the central bank .
I do,nt see a massive crash like we had in 2007.
You buy a house you get a loan for 25 plus years ,if you intend to live there for 10 plus years at least , if house prices fall by 10 per cent tommorow will it really effect you?
No one knows what effect brexit will have apart from a falling pound does
not help irish exports or tourism with the uk.
The last crash happened cos banks were recklessly lending money to anyone,
joe bloggs working in tesco could borrow 10 times his wage to buy a house .with a small deposit.
Lending in the last 10 years in fairly conservative ,you need a 20 per cent deposit to get a loan.
There have,nt been that many houses built in the last ten year s
due to the effects of the previous crash .
Prices are only going up in certain citys or urban area,s due to pent up demand .

Michael D Not Higgins

Mod: Thread merged, stick to the accommodation aspect, this isn't a politics forum

Kaizersoze81

Some anecdotal evidence; a development in Dublin for which I've been at the launch of last 3 phases over the last year , which were quite busy but no queuing. Today's launch due for 2pm and there were at least 10 couples queuing since 5pm yesterday evening, and overnight. Right now there are long queues outside the showhouses. It has had a huge overnight affect on interest in new build houses. Whether that translates to sales I don't know, but I'd imagine it'll get the developers rubbing their hands together and speed up any plans for future new development.
Also, the demographic seems a lot different. Previously is was majority of non Irish and people in mid 40's at launches. Today it's overwhelmingly young Irish couples, first time buyers in other words.

jay0109

Sounds like there'll be a lot of demand immediately for the little available stock out there. People who were taking it easy are now pushed into making the move as they expect the budget to increase the numbers looking for homes in the market. So increase all around in buyers

This scheme will have the same outcome as Alan kelly's 2 year rent increase moratorium last year i.e. a steep rise in prices in the very short term at least

RandomAccess

It's been a busy weekend out there with a few new developments launching.

And while they are 'selling out' its actually the case that people are putting deposits on multiple developments and then deciding which they prefer so I expect there will be much more cancellations from this weekend than has been the norm.

This would appear to be at least partly a consequence of the dilution of the deposit requirements.
Yet again I've noticed that developers have a few oddball house types in their developments which are proving very un-popular with buyers, even in this supply constrained market they remain unsold.

allibastor

MentalMario wrote: »

I guess in theory, this is what could happen.

The new scheme will definitely increase the price of new houses but will also make them a little more attractive to buy. The net cost will be less to the buyer which means more people will be interested in buying a new home.

That'll mean there's less people looking to buy houses that have already been lived in, and in theory should mean less people bidding and lower prices.

Win/win for the buyer.

In reality the above won't happen.

Its not going to be a win for anyone, unless your a developer

willbeuptuesday

I think this new government scheme aimed at first time buyers is a complete joke it's just government lining the developers pockets again! Evidence is emerging of prices of new homes increasing overnight, who benefits ? It's defiantly not the purchaser, we have a clear problem of lack of supply together with stringent deposit rules which together is driving rents up and preventing those who should be purchasing from doing so. The government should have given a tax rebate to renters on the rent they pay to registered landlords. The effect of this would mean that most renters would look to rent from ligit landlords and it would push a lot of non registered landlords into the tax net thus generating enough revenue without having to go back to the exchequer for money to meet this. The revenue could be proactive In this by having a hotline whereby people can report landlords who are not compliant, the knock on effect of such a move would mean a lot of the accidental landlords would opt out and sell up which would increase the supply to the market. Accidental landlords are a product of the Celtic tiger and there are thousands around the country.

Cunning Stunt

RandomAccess wrote: »

It's been a busy weekend out there with a few new developments launching.

And while they are 'selling out' its actually the case that people are putting deposits on multiple developments and then deciding which they prefer so I expect there will be much more cancellations from this weekend than has been the norm.

This would appear to be at least partly a consequence of the dilution of the deposit requirements.
Yet again I've noticed that developers have a few oddball house types in their developments which are proving very un-popular with buyers, even in this supply constrained market they remain unsold.

Would they not lose those deposits if they pull out of the sale?

Bob24

willbeuptuesday wrote: »

I think this new government scheme aimed at first time buyers is a complete joke it's just government lining the developers pockets again!

And dangerously damaging the authority of the central bank. Basically the central bank has acted as it should have - independently and in the interest of the stability of the financial sector and the economy. When the government saw it could not influence the regulator's decisions it started to think of how to work around them to get its way and came up with this scheme.

The logical move from the central bank would be either to refuse to acknowledge the grant as a deposit or to increase the deposit requirement, but of course professional politicians have made it politically impossible for them to do that do that.

And the sad thing is: when eventually this leads to a bubble and a crash (which is likely happen), those same politicians will wash their hands of the situation and tell voters it was the central bank which didn't do its job.

Utah

Cunning Stunt wrote: »

Would they not lose those deposits if they pull out of the sale?

Booking deposit is fully refundable

The_Conductor

willbeuptuesday wrote: »

I think this new government scheme aimed at first time buyers is a complete joke it's just government lining the developers pockets again!

Even if it does simply result in a transfer to Developers- if it results in a noticeable increase in supply, it'll have been a success. The big issue is lack of supply- if developers are given a 20k incentive to build- hopefully off they go and build- but make sure its good quality housing in locations where people want to live.

willbeuptuesday wrote: »

Evidence is emerging of prices of new homes increasing overnight, who benefits ? It's defiantly not the purchaser,

The beneficiary is the Irish taxpayer- as it removes a lot of tradesmen involved in the construction industry from the dole queue. Our banks also benefit- as it moves a lot of the assets on their balance sheet out of negative territory- and indeed, enables them to rid themselves of property related assets- which just might kick start them into lending to other businesses and private individuals on competitive terms. Who knows?

The purchaser is just a cog in the bigger picture- all of the cogs have knock-on effects on one another- and indeed, the health of the Irish economy. Supplyside issues have been the main concern thus far- if this helps- its a success, simple as.

willbeuptuesday wrote: »

we have a clear problem of lack of supply together with stringent deposit rules which together is driving rents up and preventing those who should be purchasing from doing so.

Why should people be purchasing though? Irish people have an irrational attachment to property- that is not mirrored in any other country on the planet. The lack of supply- is across the board- it is not simply the 'starter homes'- its the rental stock, and every other class of housing.

willbeuptuesday wrote: »

The government should have given a tax rebate to renters on the rent they pay to registered landlords. The effect of this would mean that most renters would look to rent from ligit landlords and it would push a lot of non registered landlords into the tax net thus generating enough revenue without having to go back to the exchequer for money to meet this.

If you're going to give a tax rebate to renters- you'll have to give some manner of a commensurate rebate to owner occupiers- and then we have the thorny issue of property tax- which rightly should be paid at the point of service- by the person availing of those services- the same as in any other country.

If you give with one hand- you most certainly will take away with another- it may very well be the case that it turns into an ultimate 'careful what you wish for- you just might get it' type scenario. There is more than a whiff of law of unintended consequences coming into play- with requests like this- contrary to what most people seem to imagine- the government does not have a magic money tree they can give a shake to- to pay for all these rebates and other largess.

willbeuptuesday wrote: »

The revenue could be proactive In this by having a hotline whereby people can report landlords who are not compliant,

Revenue and Social Welfare will quite happily take reports of such suspicions over the phone and chase them. You may be a little surprised though- the days of every second landlord being non-compliant are in the past- sure there are still some cowboys out there- but they are nowhere near as numerous as they once were.

willbeuptuesday wrote: »

the knock on effect of such a move would mean a lot of the accidental landlords would opt out and sell up which would increase the supply to the market. Accidental landlords are a product of the Celtic tiger and there are thousands around the country.

The issue with a large number of 'accidental landlords' is that even now, they continue to be in negative equity- and despite their best efforts, lenders have refused to deal with the negative equity in a manner which enables these accidental landlords to dispose of the properties. However, disposing of the properties- still isn't going to have any effect on our net housing supply- it would simply mean it might go from the rental sector to the private residential sector- it is not an addition to our housing stock..........

bittihuduga

Kaizersoze81 wrote: »

S Today's launch due for 2pm and there were at least 10 couples queuing since 5pm yesterday evening, and overnight. Right now there are long queues outside the showhouses. .

where was this?

Bob24

The_Conductor wrote: »

Even if it does simply result in a transfer to Developers- if it results in a noticeable increase in supply, it'll have been a success. The big issue is lack of supply- if developers are given a 20k incentive to build- hopefully off they go and build- but make sure its good quality housing in locations where people want to live.

I might have misunderstood it (and would be happy to be corrected if it is the case), but my impression is that it is more than just the government gifting 20k to FTBs so that they can pay 20k more to developers.

My understanding is that the amount can be used as a deposit for a mortgage, and the government is therefore bypassing the CBI's macro-prudential policies so that people can get a significantly larger mortgage that they would have been able to in the original spirit of the rules (for many people an extra 20k of deposit means a potential to borrow an additional 80k).

This means the transfer to developers is likely to be over 20K and that a large part of that money will not be the tax refund but additional debt FTBs are allowed to take.

The_Conductor

Bob24 wrote: »

I might have misunderstood it (and would be happy to be corrected if it is the case), but my impression is that it is more than just the government gifting 20k to FTBs so that they can pay 20k more to developers.

My understanding is that the amount can be used as a deposit for a mortgage, and the government is therefore bypassing the CBI's macro-prudential policies so that people can get a significantly larger mortgage that they would have been able to in the original spirit of the rules (for many people an extra 20k of deposit means a potential to borrow an additional 80k).

This means the transfer to developers is likely to be over 20K and that a large part of that money will not be the tax refund but additional debt FTBs are allowed to take.

No- what you're saying is right- it can count towards a deposit- however, as income multiples etc don't change- it doesn't massively change their borrowing capacity (in theory), it simply makes the initial deposit more attainable.

What probably is happening- is it has enabled a large group of prospective first time buyers to all graduate with a deposit en-mass- where normally they'd be drip fed onto the market? So- we will have a large glut of first time buyers right here, right now- lining up with their deposits- whereas as time goes by- it'll be a more orderly cohort getting their deposits together over a protracted period of time?

riclad

IT,ll probably just increase the price of New house,s ,
theres alot of demand for family homes in urban area,s so i don,t think it ,ll make much difference to prices of older houses .
if they wanted to help the supply problem, They could reduce vat cost for builders .

Ms Doubtfire1

it's gone positively mad


https://www.donedeal.ie/tolet-for-sale/rooms-in-gardens-join-the-rental-bonanza/13654866

Michael D Not Higgins

Ms Doubtfire1 wrote: »

it's gone positively mad


https://www.donedeal.ie/tolet-for-sale/rooms-in-gardens-join-the-rental-bonanza/13654866

"No planning necessary."

Wrong. It wouldn't even qualify for rent a room since it's not attached to the house.

Villa05

The_Conductor wrote:

What probably is happening- is it has enabled a large group of prospective first time buyers to all graduate with a deposit en-mass- where normally they'd be drip fed onto the market? So- we will have a large glut of first time buyers right here, right now- lining up with their deposits- whereas as time goes by- it'll be a more orderly cohort getting their deposits together over a protracted period of time?

A bit like the effect the 100% mortgage had in the noughties.

I'd hate to be a ftb right now, scary times ahead. Might be a good Time to sell in some areas

Shedite27

Bob24 wrote: »

I might have misunderstood it (and would be happy to be corrected if it is the case), but my impression is that it is more than just the government gifting 20k to FTBs so that they can pay 20k more to developers.

But it's only FTB, so really the government's logic is that they're giving FTB'ers a €20k gift to let them compete with trader-uppers/downers.

But yes, Developers will be benefiting