Property Market 2016

slowjoe17

El_Dangeroso wrote: »

I used to agree with you but I've realised that the property market in Ireland is completely rigged against the buyer.

How on earth were people buying a house in 2006 supposed to know we'd have an unprecedented drop in house prices? Were they supposed to watch on as prices continued to escalate as they had for the preceding 14 years? What crystal ball was available to them that would have avoided that situation.

Well, Morgen Kelly was writing in the Irish Times roughly once a quarter that banks and house prices were DOOOMED from May 2005 or so.

Prices had gone up by more than salaries for 14 years - it was clear that the trend wasn't sustainable to anyone with two brain cells to rub together. And when a rising trend in house prices ends, there is a collapse unless there is a lack of supply.

stevedublin

slowjoe17 wrote: »

Well, Morgen Kelly was writing in the Irish Times roughly once a quarter that banks and house prices were DOOOMED from May 2005 or so.

Lots of people wrote articles saying the opposite. How did people know to only listen to what Morgan Kelly said and not anyone else? Also, what is Morgan Kelly now saying about property prices?

slowjoe17 wrote: »

Prices had gone up by more than salaries for 14 years - it was clear that the trend wasn't sustainable to anyone with two brain cells to rub together. And when a rising trend in house prices ends, there is a collapse unless there is a lack of supply.

Property prices have been going up more than salaries for the last few years too, so are they going to continue to go up or go down?

Shedite27

slowjoe17 wrote: »

Prices had gone up by more than salaries for 14 years - it was clear that the trend wasn't sustainable to anyone with two brain cells to rub together.

No it doesnt. That only makes sense if the number of of people wanting to buy houses remains static. If more people want to buy the same amount of houses, prices will rise, doesn't have anything to do with salaries.

Just means people will have to spend more of their income on their mortgage repayments.

slowjoe17

stevedublin wrote: »

Lots of people wrote articles saying the opposite. How did people know to only listen to what Morgan Kelly said and not anyone else? Also, what is Morgan Kelly now saying about property prices?

Kelly was a professor of economics writing editorials for the Irish Times, and everyone disagreeing with him had a vested interest (ie was working for the Central Bank, or a political party, or a Bank etc).

Property prices have been going up more than salaries for the last few years too, so are they going to continue to go up or go down?

The difference is that Ireland stopped building during a crash (ignoring that prices in Dublin rose quite slowly in 2015). There are 10,000 new households created in Dublin each year, and 2,000 homes built. Because of building regulations on size and amenities like underground car parks, it isn't possible to build a home and sell it at a profit.

This is why there is a housing crisis. That crisis will get worse before it gets better.

slowjoe17

Shedite27 wrote: »

No it doesnt. That only makes sense if the number of of people wanting to buy houses remains static. If more people want to buy the same amount of houses, prices will rise, doesn't have anything to do with salaries.

Just means people will have to spend more of their income on their mortgage repayments.

Look, if house prices go up at a higher rate than salaries year after year, eventually it makes it impossible for the average resident to pay the mortgage payment. Each year, the buyer pays more of their income. Eventually, the monthly mortgage payment is greater than monthly take-home.

A balancing issue is that if the house price goes up year-after-year, you get equity which pays you to stretch what you can afford (or borrow). But when prices stop going up, this balancing issue is removed, and prices will drop.

The current situation is different from 2008. Then, we had build plenty (and maybe too much). Since 2010, we've built far too little. This has resulted in a housing crisis, which will continue for at least several years.

stevedublin

slowjoe17 wrote: »

The current situation is different from 2008. Then, we had build plenty (and maybe too much). Since 2010, we've built far too little. This has resulted in a housing crisis, which will continue for at least several years.

So you are saying that house prices will rise for the next few years?

El_Dangeroso

slowjoe17 wrote: »

Well, Morgen Kelly was writing in the Irish Times roughly once a quarter that banks and house prices were DOOOMED from May 2005 or so.

So you are blaming people caught in negative equity for not basing massive financial decisions on an article in the Irish Times? Yes he's a distinguished economist but there were other distinguished economists in the ESRI that did not see the crash coming at all. If they didn't see it, how do you expect the lay person to determine the economist to believe?

slowjoe17

stevedublin wrote: »

So you are saying that house prices will rise for the next few years?

I'm saying that the numbers of homeless will rise. Lack of housing supply, you can rely on. The rest I'm not sure about, because the demand side suggests a fall.

Today, the central bank rule mean that buyers are struggling to meet (Dublin) asking prices. That suggests a fall in prices.

Today, the tax rules mean that many landlords want to sell. That suggests a fall in prices.

This means that there are pressures for both a rise and a fall in house prices.

For rental prices, I see no increase in the number of landlords. Their math suggests they are losing money. But there is continuous increasing demand for rental properties. Look at the current thread in Carlow that suggests the whole county may have less that 5 rental properties. So rents can only rise.

slowjoe17

El_Dangeroso wrote: »

So you are blaming people caught in negative equity for not basing massive financial decisions on an article in the Irish Times? Yes he's a distinguished economist but there were other distinguished economists in the ESRI that did not see the crash coming at all. If they didn't see it, how do you expect the lay person to determine the economist to believe?

It wasn't just Kelly. The central bank was warning about unsustainable growth all the way back to 2002. No-one wanted to listen to them. Almost certainly, politicians leant on them to quiet them down. Kelly certainly was harassed for speaking out.

In any market, there are bulls (people who believe prices will rise) and bears (people who believe prices will fall). The market price is the result of the debate between the two side.

A market is distorted when people have an economic interest on one side of a debate more than another. An example of this would be the cigaratte companies who bought research to suggest that cigarattes were safe.

The housing market suffers from a similar problem. Everyone in bulding, estate agents, solicitors has a direct profit from increasing house prices. Everyone in newspapers has an indirect profit (from advertising) from increasing house prices. Everyone in politics and banking is screwed (as hindsight shows) if prices fall.

So you cannot trust the balance of opinion in these matters. (Likewise, on no account, trust me. You have no idea what my biases might be, and I've been wrong on this forum before).

Timing markets is hard - there is a true-ism that markets can stay irrational longer than you can stay solvent. But it is also a true-ism that the irish housing market was irrational well before the s*** hit the fan in 2008-2009.

I don't expect the lay person to know about this. The average person listens to their smartest friends and follows them. But it is possible to go "j'accuse" on those smart friends. They should have known about the central bank and Kelly, but they fought tooth and nail to deny reality.

El_Dangeroso

slowjoe17 wrote: »

Timing markets is hard - there is a true-ism that markets can stay irrational longer than you can stay solvent. But it is also a true-ism that the irish housing market was irrational well before the s*** hit the fan in 2008-2009.

I don't expect the lay person to know about this. The average person listens to their smartest friends and follows them. But it is possible to go "j'accuse" on those smart friends. They should have known about the central bank and Kelly, but they fought tooth and nail to deny reality.

The housing market should never be allowed to be subject to wild swings in the first place. You should not need to 'time the market' to plan a home.

The fact that the housing market has so much risk associated with it now points to a systemic problem. Not one individual mortgage holders should need to negotiate.

slowjoe17

El_Dangeroso wrote: »

The housing market should never be allowed to be subject to wild swings in the first place. You should not need to 'time the market' to plan a home.

The fact that the housing market has so much risk associated with it now points to a systemic problem. Not one individual mortgage holders should need to negotiate.

I agree with the sentiment of wishing stability, but prices are inherently volatile. Why should one trust in the biggest purchase of a decade if not a lifetime? Look at the incentives. Estate Agent gets paid if you buy. Solicitor gets paid if you buy. Bank gets paid if you buy. The typical buyer has no-one he can speak to that might urge caution.

And the very last thing I would want to do is to rely on politicians to protect me against markets. In the end, the markets win.

What we should do is ask politicians to maintain a sensible economic conditions. This would mean sensible controls to ensure no-one borrows too much, and sensible planning so that supply and demand are roughly in balance. We should ensure that landlords can make a profit so that housing provision for those who cannot buy now is working well.

The borrowing controls were introduced in 2015. They'll take a couple of years to reach equilibrium, if politicians# grubby paws are kept away. The rest doesn't exist. Hot-tip - anyone who proposes restrictions on landlords as a solution to our current crisis should be shunned at Captain Boycott was shunned. They are a disgrace to Ireland.

El_Dangeroso

slowjoe17 wrote: »

I agree with the sentiment of wishing stability, but prices are inherently volatile. Why should one trust in the biggest purchase of a decade if not a lifetime? Look at the incentives. Estate Agent gets paid if you buy. Solicitor gets paid if you buy. Bank gets paid if you buy. The typical buyer has no-one he can speak to that might urge caution.

And the very last thing I would want to do is to rely on politicians to protect me against markets. In the end, the markets win.

What we should do is ask politicians to maintain a sensible economic conditions. This would mean sensible controls to ensure no-one borrows too much, and sensible planning so that supply and demand are roughly in balance. We should ensure that landlords can make a profit so that housing provision for those who cannot buy now is working well.

The borrowing controls were introduced in 2015. They'll take a couple of years to reach equilibrium, if politicians# grubby paws are kept away. The rest doesn't exist. Hot-tip - anyone who proposes restrictions on landlords as a solution to our current crisis should be shunned at Captain Boycott was shunned. They are a disgrace to Ireland.

I also agree with you. There is however a particular love of financialisation of the housing market that is more pronounced in this country than others. The UK suffers a bit from these problems too.

It's just exasperating that these sorts of considerations happening outside of an investor scenario. A owner occupied house should never be an investment nor subject to the same risk. Wishful thinking on my part I know.

Agreed on driving landlords out of the market but if tax incentives were to be brought in, that means Jimmy-Joe down the road with his 100K would see property as the best place to put his money and then we're back on the merrigoround again.

You can see it on this forum, every day there's a post from someone 'I have 120K to spare, should I buy an investment property despite have no experience or idea of how to run a tenancy as a professional business?'

quadrifoglio verde

Anyone who is thinking about buying should ask themselves are they happy living there long term and if they can afford it
If the answer is no to either of them they should continue renting because at least that way they're not going to end up trapped in a home they regret

If you find somewhere that you can afford to buy and its somewhere you are happy to live in for the forseeable future, then of property prices fall massively you still can afford to live there and you're happy with what you've bought.
By the time you're mortgage is paid off in 25 years time, the house will be worth more than what you paid for it anyway.

Or you could rent and in 25 years time you're still renting and I've a house paid for and happy to live in. That being said, I'd rather rent for 25 years than pay a mortgage on a house that I hate in an area that I hate.

handlemaster

http://m.independent.ie/business/personal-finance/property-mortgages/house-prices-in-parts-of-dublin-to-fall-5pc-but-rises-due-in-rural-areas-34372579.html

Drop of 5% in Dublin anyone for 2016?

MayBea

Meanwhile in renting market: Landlords to get tax relief for social tenants
"The new scheme will allow property owners who rent to tenants in receipt of rent supplement or the housing assistance payment (HAP) to claim 100 per cent relief on their mortgage interest, as an expense against rental income."

quadrifoglio verde

MayBea wrote: »

Meanwhile in renting market: Landlords to get tax relief for social tenants
"The new scheme will allow property owners who rent to tenants in receipt of rent supplement or the housing assistance payment (HAP) to claim 100 per cent relief on their mortgage interest, as an expense against rental income."

Can't see it making a blind bit of difference. The rent for ra is just too low compared to the market rate as well as the administration of the scheme.
It's quite difficult to increase ra further because if you do, you price out those at the bottom of the market on low paid jobs who can't get ra

MayBea

handlemaster wrote: »

http://m.independent.ie/business/personal-finance/property-mortgages/house-prices-in-parts-of-dublin-to-fall-5pc-but-rises-due-in-rural-areas-34372579.html

Drop of 5% in Dublin anyone for 2016?

Definitely not in up to €220k segment, a colleague is buying an investment property within this bracket and is reporting fierce bidding wars.
Possibly at the higher end, potentially resulting in constrained supply.

handlemaster

MayBea wrote: »

Definitely not in up to €220k segment, a colleague is buying an investment property within this bracket and is reporting fierce bidding wars.
Possibly at the higher end, potentially resulting in constrained supply.

I suppose its the different areas in Dublin. Tallaght was mentioned.

DublinDilbert

MayBea wrote: »

Definitely not in up to €220k segment, a colleague is buying an investment property within this bracket and is reporting fierce bidding wars.
Possibly at the higher end, potentially resulting in constrained supply.

This is exactly it. A 5% drop on a €600K property is €30K, anyone looking at the market could see this happening last year, below 200K there were some but not many drops. There's lots of different markets, not just one.

Cicilulu

The_Conductor wrote: »

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.

I have been living overseas for 8 years and am considering moving back to Dublin. I was going to buy an apartment with cash to let out. I'm curious where I can find information about changes that have occurred that make it uncomfortable for landlords. Is it a bad idea to have a second property now?

DublinDilbert

Cicilulu wrote: »

I have been living overseas for 8 years and am considering moving back to Dublin. I was going to buy an apartment with cash to let out. I'm curious where I can find information about changes that have occurred that make it uncomfortable for landlords. Is it a bad idea to have a second property now?

http://www.collapso.net/Sale-Property/price-changes.php?county=Dublin&region=dublin+15

Cicilulu

DublinDilbert wrote: »

http://www.collapso.net/Sale-Property/price-changes.php?county=Dublin&region=dublin+15

Thanks for the link. I'm aware of how prices have changed. I'm not that out of the loop! I'm wondering about the tax situation and law changes that The_Conductor says is making it "more uncomfortable" for small landlords.

flintash

quadrifoglio verde wrote:

By the time you're mortgage is paid off in 25 years time, the house will be worth more than what you paid for it anyway.

This is so fundamentally wrong in my head i just cant grasp that. Old house is an old house, like an old car. Its old design, energy inefficient, many materials used coming close to end of life , technologically backwards. Maybe its worth more than plot of the land but that's it. I give exceptions to highly populated places but more than half of population living outside Dublin,isnit?

slowjoe17

MayBea wrote: »

Meanwhile in renting market: Landlords to get tax relief for social tenants
"The new scheme will allow property owners who rent to tenants in receipt of rent supplement or the housing assistance payment (HAP) to claim 100 per cent relief on their mortgage interest, as an expense against rental income."

Right on time, politicians turn up to make the market worse before a General Election.

The correct thing to do is one of:
1. allow relief on all rentals.
2. allow relief on rental in new builds bought off-plan by to maybe 30% of a development (possibly for a limited period).

The Dublin market needs more property. The way to supply it is by making capital available for building.

Option 1 is impossible prior to the election.

The result of the proposal will be to make it harder for working people to find accomodation.

seamus

A lender has entered the Irish market to have another go at the subprime market.



Here we go again...

matrim

seamus wrote: »

A lender has entered the Irish market to have another go at the subprime market.



Here we go again...

I would assume they are still limited by the central bank rules so would have less chance of going really crazy and giving out loads of 100% mortgages

Barely Hedged

seamus wrote: »

A lender has entered the Irish market to have another go at the subprime market.



Here we go again...

So people with a imperfect credit history should never be given mortgages?

handlemaster

Barely Hedged wrote: »

So people with a imperfect credit history should never be given mortgages?

It would save use all from the bleeding heart stories we have had to endure over the last number of years.

Barely Hedged

handlemaster wrote: »

It would save use all from the bleeding heart stories we have had to endure over the last number of years.

Although I don't recall the issues of the last few years being caused by people with imperfect credit histories...

seamus

Barely Hedged wrote: »

So people with a imperfect credit history should never be given mortgages?

Owning property is not a human right. The current criteria are not that difficult to meet - five years clean borrowing history and a proven ability to save. It's not like you're being asked to produce every receipt for every purchase made since you were 18.

I don't see what's shocking about saying that people should only be given long-term debt obligations if they can prove an ability to meet that obligation.

This is especially true where the subject of the debt is a personal residence and therefore the failure to meet that obligation will result in a direct impact on the state and society.

If banks want to provide risky loans for buy to lets, off you go. But providing risky loans for residential mortgages is playing poker with the state's money.

I'd be interested to know what criteria they will be putting down in light of the new rules. Affordability checks are key to the process.