Property Market 2017

Samuel T. Cogley

The deposit move was a sensible one given the rising market and difficulty raising deposits due to rents. The 'deposit' was coming from somewhere - probably a loan from the bank of mum and dad; not ideal.

When the market was less robust a 20% requirement was sensible, not in an attempt to stem prices, but that if prices took a dip negative equity wasn't an issue. In this market there is not the same concern in the short term. I'd be very surprised if they go to 4.5 - and I sincerely hope they don't. The pent up demand and supply issue will eventually be resolved - borrowing is not the answer.

Didn't the CB send a shot across the governments bow on this a week or so ago? Something along the lines off sort out supply or we'll tigten things even further. (Presumably meaning they'll stop exemptions).

AsianDub

We'll see. All im seeing at the moment is more demand less supply and thats translating to higher prices than before the rules were changed.

Samuel T. Cogley

AsianDub wrote: »

We'll see. All im seeing at the moment is more demand less supply and thats translating to higher prices than before the rules were changed.

Prices aren't really an issue for the CB unless they expect a crash taking away equity in loans. Now the crash is a coming at some point (perhaps just a correction) but as long as they keep loans sensible things shouldn't be as bad as the credit crunch.

People aren't (in the main) buying 600K houses on 170K household incomes - they're doing it with significant equity. As long as it's the equity that's hit the CB has done it's job.

AsianDub

Funny you should say that. Now ive no proof of this so take it with a pinch of salt if you wish but the wife's friend with her husband got approval for 5 times their income and went sale agreed on a 660k house as FTBs. Their income doesnt come near to sustaining this and their deposit wasnt huge either. As i said though ive no proof but thats what she told my wife. Anyway i hope thats not the case. Im just bitter. I had the chance to buy when the 20% rule was in and there was less competition but didnt. Sure it's my own fault!

Samuel T. Cogley

The exemptions need tightening for sure. It seems to be open season for for the first few months of the year.

AsianDub

Unfortunately (for some) those exemptions raise the bar each time.

jamesthepeach

Lower capital gains tax and watch supply increase.
There are a lot of investors who are at tipping point to.sell because of the treatment of them by the government. If you lower capital gains tax to what it used to be it will tip them into selling.

The_Conductor

AsianDub wrote: »

We'll see. All im seeing at the moment is more demand less supply and thats translating to higher prices than before the rules were changed.

The supply in the secondhand market tightened, considerably, and unexpectedly, in Q1 2017- in all Dublin local authority areas, North Kildare and commuter towns as you head North. Elsewhere in the country- supply in the secondhand market continued to grow (albeit not at a fast pace). There was a presumption that first time buyers would be exclusively looking at new properties- for tax reasons- however, the price increases on new properties, have wholly offset the potential incentives for any areas that people actually want to live in- forcing people to think outside the box (which is no bad thing in itself).

Call it the law of unintended consequences- however, the tightening of supply- is being driven by government policy. The market, as a whole, can only be viewed as rational in nature. Alongside the tightening of supply- you had vendors hike up second hand prices- to cash in on their new enhanced scarscity factor. In a lot of cases- those price hikes, particularly in lesser desireable estates in the Dublin area- are being unwound- as they were uncalled for- and unjustified. Check out the price drop page on Daft.ie (note- these are 'asking' rather than 'selling' prices- i.e. sellers are copping they have to drop their unreasonable/unrealistic asking prices- however, supply is the bigger issue.......... I.e. Up to now it was a two part equation- between supply and demand- now there is a third element exerting force on the equation- namely 'affordability'.

If affordability does not continue to moderate- and its not a simple income multiplier equation- then- the Central Bank will, and its without question, they will, step in. The three tools at their disposal are- 1. Exemptions, 2. Income multiplier rules and 3. deposit requirements. They relaxed deposit rules for first time buyers- following political pressure- and against their better judgement- and still the government poured fuel into the market, independent of the Central Bank. It would appear logical that exemptions and income multiplier rules- would be the next weapons in their rather limited arsenal, that they will deploy.

One way or the other- the actions of the government- in support of the construction industry (couched in terms of helping first time buyers)- have pushed the market as a whole even further out of equilibrium- while it may be encouraging construction- it is pushing the risk associated with unreasonable and unrealistic pricing- on a new generation- who may not be as cynical as their older sibling and/or parents- many of whom have seen this come around more than once (coincidentally- its also not the first time we had to bail out AIB).

Glen_Quagmire

Have current house prices in Dublin and Dublin commuter towns reached the highs of the last property bubble or have we still some way to go yet?

PokeHerKing

Glen_Quagmire wrote:

Have current house prices in Dublin and Dublin commuter towns reached the highs of the last property bubble or have we still some way to go yet?

Still 30% to go according to the radio a few weeks ago!

Good to have targets!

The_Conductor

PokeHerKing wrote: »

Still 30% to go according to the radio a few weeks ago!

Good to have targets!

House prices 22% to go, apartments 38% to go- rents have now hit Q3 2007 peaks.

(According to DAFT- and its 'asking prices' as opposed to achieved prices)

Glen_Quagmire

Glen_Quagmire wrote: »

Have current house prices in Dublin and Dublin commuter towns reached the highs of the last property bubble or have we still some way to go yet?

The_Conductor wrote: »

House prices 22% to go, apartments 38% to go- rents have now hit Q3 2007 peaks.

(According to DAFT- and its 'asking prices' as opposed to achieved prices)

My neighbour bought in 2006 and that 38% figure is more or less exactly correct to their figures afaik.

Hollister11

My parents house had about 27% to go.

Taylor365

I'd say 21-22% too.

2007 - €480,000
2010 - €280,000
2017 - €395,000

Glen_Quagmire

And is the expectation that they will reach 2007 peak prices or even surpass them?

Samuel T. Cogley

Glen_Quagmire wrote: »

And is the expectation that they will reach 2007 peak prices or even surpass them?

It all depends on whether supply comes on board. There is also the matter of inflation. Okay it's only about 3% but it's still a factor.

One of the things that I get the impression most people forget is the crash at the height of the boom wasn't an Irish thing, it was a global credit crunch, now Ireland had certainly been as bad, if not worse than many other places but it wasn't a local phenomenon. We don't have these lending practices this time around and maybe Brexit will be the trigger this time, or some other issue but the property market itself doesn't implode without external factors.

The_Conductor

Samuel T. Cogley wrote: »

It all depends on whether supply comes on board. There is also the matter of inflation. Okay it's only about 3% but it's still a factor.

One of the things that I get the impression most people forget is the crash at the height of the boom wasn't an Irish thing, it was a global credit crunch, now Ireland had certainly been as bad, if not worse than many other places but it wasn't a local phenomenon. We don't have these lending practices this time around and maybe Brexit will be the trigger this time, or some other issue but the property market itself doesn't implode without external factors.

It was a global phenonmenon- however, the Irish leg of the property crash- was the worst in the world- we even gave places like Detroit- a reasonable glimmer of hope, things were so bad here.........

Pretty much every other location- managed to launder their banking systems and got their bad debts, unperforming mortgages and overhangs- out of the system- Ireland did not.

Thus- fully 10 years later- we still have an overhang from the crash weighing on the system- and politically, thats not going to change.........

Will prices meet or surpass their 2007 peaks- probably- eventually, when- your guess is as good as mine.

The fact of the matter is- we have an annual demand for between 25,000 and 30,000 new housing units (wholly aside from the pent-up demand). We also, at 61.8% ownership levels, have a historcally low level of home ownership (in an Irish context- using 1960 for baseline figures).

Scarcity alone- will continue to grow prices- however, even in our major city of Dublin- increases are moderating- based on affordability- so its a bit of a how long is a piece of string question..........

I'd chance my arm and suggest 2-3 years to reach 2007 peak prices- providing there is no shock to the economy- and of course we have Brexit, German elections and a raft of other one-off events on the horizon..........

Bob24

PokeHerKing wrote: »

Still 30% to go according to the radio a few weeks ago!

Good to have targets!

Adding to this: keep in mind mortgages people are getting today are not as cheap as the older tracker mortgages from back then. Taking that into account people who contract large mortgages for long periods today are possibly not that much better off than people who paid higher prices back then but have lower interest rates than people buying today.

Bob24

I don't know how accurate an idea it gives of the price for upcoming new-builds around town, but this one near Pearse Street almost instantly sold-out with 2 beds apartments priced 575k (!) : http://www.irishtimes.com/business/economy/near-sell-out-for-silicon-docks-apartment-launch-1.3075380

Glen_Quagmire

Bob24 wrote:

I don't know how accurate an idea it gives of the price for upcoming new-builds around town, but this one near Pearse Street almost instantly sold-out with 2 beds apartments priced 575k (!) :

I think I'll buy 3!

What square meter are the 2 beds?

rsynnott

Bob24 wrote: »

I don't know how accurate an idea it gives of the price for upcoming new-builds around town, but this one near Pearse Street almost instantly sold-out with 2 beds apartments priced 575k (!) : http://www.irishtimes.com/business/economy/near-sell-out-for-silicon-docks-apartment-launch-1.3075380

It'll be a bit of an outlier. GCD is bonkers.

Samuel T. Cogley

rsynnott wrote: »

It'll be a bit of an outlier. GCD is bonkers.

Until Poolbeg comes along then it's just be normal for D4.

D4 and D1's regeneration was never going to come cheap.

quadrifoglio verde

Somehow I've managed to refind this article.
It's for 2008 and talking about the previous 20 years from 1988 to 2008.
https://www.irishtimes.com/life-and-style/homes-and-property/twenty-years-a-viewing-the-ups-and-downs-of-the-property-pages-1.939457?mode=amp

Ten years since the heady days of 2007, I'm hearing something that I don't like hearing.

This time it's different. This time it's different sends shivers down my spine.

Spoke to a family friend today who's selling a development site in Dublin 7. It's already 60% above its asking price.

jamesthepeach

My sister bought her house in 2007 and went on a tracker.
She is half way through the mortgage now and recently our cousin bought the exact same house across the road.
Our cousin's house was a lot cheaper to buy, she told us the details when saying she feels sorry for my sister who bought her house at the peak.

But it turns out her payments are over €250 pm higher than my sisters and my cousin will still be paying hers 15 years after my sister has finished paying her mortgage off. Plus cous has been paying rent for the last 10 years too where sis hasn't.

I didn't have the heart to explain this to dear cous. She's happy she got the best deal.

My sister is considering​ overpaying now by around €500 pm as she is in a good position to pay it off in half the time too.

It's all about luck rather than timing or price.

Bob24

rsynnott wrote: »

Bob24 wrote: »

I don't know how accurate an idea it gives of the price for upcoming new-builds around town, but this one near Pearse Street almost instantly sold-out with 2 beds apartments priced 575k (!) : http://www.irishtimes.com/business/economy/near-sell-out-for-silicon-docks-apartment-launch-1.3075380

It'll be a bit of an outlier. GCD is bonkers.

Keep in mind they call it GCD / silicon dock on the marketing documents to make it sound attractive but the actual location is more next to the Eurospar on Townsend Street, a bit off GCD and fairly dodgy at times.

jamesthepeach

I'm thinking of selling am apartment in North Dublin so got a few estate agents out to it yesterday to do valuations. The last email just came in this morning.
Apartments must be going up fast because I got, I have to say a pleasant, shock when I looked at the valuation they each gave me.
I thought they were much lower than they actually are. One of them told me apartments have taken off in the last few months. Must speak to the others today.
I think at this price I will definitely put one on the market.
I also have another in Dublin city center that I have to move into for a little while, but I think again at those prices might sell it rather than rent it out again.
I have a terrible feeling they is another economic catastrophe just around the corner which will in turn affect Ireland and then the property market.
Maybe a bird in the hand is the way to go.

Villa05

jamesthepeach wrote:

My sister is considering​ overpaying now by around €500 pm as she is in a good position to pay it off in half the time too.

She might be better off putting the 500 elsewhere if she is on a tracker

jamesthepeach

Villa05 wrote: »

She might be better off putting the 500 elsewhere if she is on a tracker

That's exactly what I advised her to do. I think she just wants the mortgage gone now that she is so close.

Sleepy

Tell her to invest it somewhere it grows faster than the mortgage interest to use as a baloon payment.

karenalot

jamesthepeach wrote: »

My sister bought her house in 2007 and went on a tracker.
She is half way through the mortgage now and recently our cousin bought the exact same house across the road.
Our cousin's house was a lot cheaper to buy, she told us the details when saying she feels sorry for my sister who bought her house at the peak.

But it turns out her payments are over €250 pm higher than my sisters and my cousin will still be paying hers 15 years after my sister has finished paying her mortgage off. Plus cous has been paying rent for the last 10 years too where sis hasn't.

Yes its not all bad for everyone who purchased during the boom. Mine was a 3 bed semi in North Kildare in 2006 with a tracker mortgage which is now €800 per month. To buy an identical house at todays interest rates with the same years left on the mortgage it would cost €1400 per month. To rent my house it would cost €1600 a month.

While I'd hardly count myself lucky for buying at the top it turns out it hasn't been the worst thing in the world either. FTB friends of mine who are looking to buy now in 2017 are finding themselves struggling with high rents and a lack of supply driving prices up beyond their budgets.