Media: House Prices in Dublin falling by EUR1,000 per month

The_Conductor

Interesting article in today's Indo

Essentially- they are blaming both the construction of new houses- and the fact the lenders are not granting their full complements of lending exemptions which means loan ceilings are putting a brake on what people can afford to pay- meanwhile, new developments are actively devaluing other property in their vicinity as buyers have a preference for the new properties.

The article is based on 'achieved' prices (as per a poll of REA estate agents- and *not* the property price register). This corresponds however with the narrative we are all being fed. They are also at pains to point out that its achieved prices and not asking prices that are falling. Indexes such as the DAFT index- focus on asking prices (both for rental properties and also for sale properties)- rather than achieved prices.

Finally- they suggest that these consistent falls are confined to the greater Dublin area (thus far)- but that rates of increase nationally have moderated markedly- but are not falling *yet*.

The length of time to sell a property is also increasing- is now averages 9 weeks in Dublin- and 14 weeks in Cork.

The other interesting observation is that the percentage of 'cash buyers' continues to fall. Cashbuyers now represent 17% of the market, this is a reduction of 2% on their slice of the pie up to the end of 2018.

Its an interesting state of play- and possibly worrying in a few different contexts, not least of all the fact that there is a reappraisal of property values for the purpose of recalculating LPT nationally currently underway. It looks like we may get locked into higher property valuations in a falling market. This is particularly the case in Dublin and Galway cities. Either way, property prices in both look to have increased 80-90% in value in some cases, since the magic date on which LPT is based (values as of 1st April 2013).

Its an interesting picture. When its married with the RTB statistical figures (due out in mid July)- it will paint a better overall picture of where we currently are in both the rental and for sale sectors.

Diceicle

The_Conductor wrote: »

Interesting article in today's Indo
.......
The article is based on 'achieved' prices (as per a poll of REA estate agents- and *not* the property price register). .......

The PPR isn't the price that the home went for?

The_Conductor

Diceicle wrote: »

The PPR isn't the price that the home went for?

Yes- however, it can be up to 6 months in arrears (there is a large lag in PPR figures behind what is actually happening on the ground, partially as a result of the glacial speed some solicitors seem to ascribe to property related paperwork).

tvjunki

The biggest thing is banks are mainly giving mortgages to new builds to get their money back from the builders they have financed.
Many buying second hand houses have large deposits and small mortgages. I know 3people all applying for mortgages and all took 8months for the bank to decide to give the mortgages. They are dragging their heels releasing the money and finally approving the mortgage. One already had a mortgage and were selling up to buy a bigger property and the new mortgage was smaller than the first.
Spoke to an auctioneer recently and he said sales of second hand houses has stalled. He believed it was down to the banks.

The_Conductor

tvjunki wrote: »

The biggest thing is banks are mainly giving mortgages to new builds to get their money back from the builders they have financed.
Many buying second hand houses have large deposits and small mortgages. I know 3people all applying for mortgages and all took 8months for the bank to decide to give the mortgages. They are dragging their heels releasing the money and finally approving the mortgage. One already had a mortgage and were selling up to buy a bigger property and the new mortgage was smaller than the first.
Spoke to an auctioneer recently and he said sales of second hand houses has stalled. He believed it was down to the banks.

Doesn't actually hold up though. The percentage of cashbuyers (which presumably includes those trading down etc) is falling. The percentage of mortgaged properties and the percentage of mortgaged equity is increasing. Banks are giving mortgages for increasing numbers of secondhand properties. First-time buyers are buying an increasing proportion of secondhand property (as its sold at a discount to the prevailing price for new builds, plus it tends to be in mature estates with decent gardens etc- which very often is not the case with new builds).

Yes, lenders are taking longer to approve loans. Is this a bad thing though? If lenders are showing prudence, then buyers are less likely to spend money they don't have on something they may not necessarily need.

Prudence is to be applauded, however, the numbers of properties sold tell a story of a rapidly 'normalising' house market with volume sales of both new and secondhand property. This is a situation we haven't had since 2008- and it is good to see that progression happening.

Captcha

Would be great to see homes fall drastically in price... People cannot afford to rent or live in this stupid place (Dublin)

JJJackal

Captcha wrote: »

Would be great to see homes fall drastically in price... People cannot afford to rent or live in this stupid place (Dublin)

This has been discussed before

In theory falling house prices is a good thing

In practice like in 2007-2013 it is typically driven by something worse

Larbre34

Captcha wrote: »

Would be great to see homes fall drastically in price... People cannot afford to rent or live in this stupid place (Dublin)

Ah yeah, mass negative equity is super for people and the economy as we have seen.

Theres no doubt prices are softening in the established suburbs, I have a particular interest in a few areas myself and I would say 7 to 10% fall off in the prices achieved in the last 2 years. If we can finally shock absorb the wild swings of the last 20 years it will be to the long term benefit of all.

TheShow

tvjunki wrote: »

The biggest thing is banks are mainly giving mortgages to new builds to get their money back from the builders they have financed.
Many buying second hand houses have large deposits and small mortgages. I know 3people all applying for mortgages and all took 8months for the bank to decide to give the mortgages. They are dragging their heels releasing the money and finally approving the mortgage. One already had a mortgage and were selling up to buy a bigger property and the new mortgage was smaller than the first.
Spoke to an auctioneer recently and he said sales of second hand houses has stalled. He believed it was down to the banks.

You have evidence to support all of these claims?
This is a load of Hokum.

alwald

The CBI limits must remain to avoid a huge crash and similar situation to 2008. In the other hand, I don't agree with the indo blaming the banks, they have a risk model and a risk appetite and thus they lend based on that not the exemptions of the CBI.

It was said before but the main issue is a lack of affordable housing and the builders are to be blamed as they were greedy and kept increasing their prices for every new phase since 2017.

JJJackal

alwald wrote: »

The CBI limits must remain to avoid a huge crash and similar situation to 2008. In the other hand, I don't agree with the indo blaming the banks, they have a risk model and a risk appetite and thus they lend based on that not the exemptions of the CBI.

It was said before but the main issue is a lack of affordable housing and the builders are to be blamed as they were greedy and kept increasing their prices for every new phase since 2017.

I think 3.5 times gross salary is the wrong metric to use for CBI limits

X times net salary or mortgage payment as Y% of net monthly income

Dont increase the amount people can borrow (some fancy calculations can translate 3.5 times gross into something similar in net or % salary) but use a value that better reflects ability to pay back

JohnnyChimpo

8 months to get mortgage approval? Doubt.

Why does 'blame' need to be apportioned here exactly? Surely a modest and steady reduction in Dublin prices isn't a terrible thing?

JeffKenna

This is actually very good news, finally the soft landing will come!!

The_Conductor

JeffKenna wrote: »

This is actually very good news, finally the soft landing will come!!

Thats what everyone said in 2009........

Franz Von Peppercorn II

The_Conductor wrote: »

Thats what everyone said in 2009........

Well a soft landing is more likely this time. There’s some leeway for the banks and government to stop prices tumbling and in the abscence of a recession they won’t tumble that much. House construction is nowhere near as important a factor in the economy as it was, and it’s unlikely to drop off to effectively 0% either. If it did house prices would soar again.

The_Conductor

I don't think we're going to get the massive crash of 2008-2009 again- however, I do believe that at least in the short term, falls of >10% are entirely plausible (however, I'd imagine they would be sector specific- with the more expensive properties falling by the highest percentages).

Samuel T. Cogley

JJJackal wrote: »

I think 3.5 times gross salary is the wrong metric to use for CBI limits

X times net salary or mortgage payment as Y% of net monthly income

Dont increase the amount people can borrow (some fancy calculations can translate 3.5 times gross into something similar in net or % salary) but use a value that better reflects ability to pay back

Stress tested (against interest rate increases)affordability is already part of the risk assessment done by banks. 3.5 is just a ceiling to prevent the madness of the last credit bubble which was loosely based on affordability alone.

Macha

Lower prices are essential. As a fundamental input into the economy, property prices are driving up the costs of everything else, not to mention creating the human misery of the current housing crisis.

arctictree

Comparing daft 'sale' prices to the actual PPR in a new estate near me, the PPR price is generally about 10% lower. So it looks like people are not paying the crazy asking prices.

I wonder is the daft sale price just the actual asking price when it was sold? Seems to be very misleading.

Assetbacked

Macha wrote: »

Lower prices are essential. As a fundamental input into the economy, property prices are driving up the costs of everything else, not to mention creating the human misery of the current housing crisis.

Property and land is dead money. Drastic reductions in the money funnelled into that black hole is essential.

seamus

In general this is good news for the housing crisis.

The same lending conditions aren't in place that existed in 2007. We're not seeing banks and pension funds massively overleveraged. We have pension funds acting as REITs, but that's very different to having their investment funds in property portfolios.

We are not building 70,000 houses a year when the non-speculatory demand is 25,000.

This seems to me to be the start of the expected point where demand and supply begin to meet. Many bodies, including the government themselves, had forecast that demand would outstrip supply until 2020, so we're bang on target here really.

As unpopular as it is for many, it's an indicator that the government's "stay out of it" approach may have been the correct one. Time will tell of course, and that's not to say that they've played this perfectly, far from it. But many have been very upset that the Government have refused to tinker with the market, despite such tinkering always making things worse. If we see prices pull back a bit to more affordable levels, we see more housing completions and less speculation, dropping rents, then we will see the end of the housing crisis.

Problem now is that you've got the media, landlords and whoever else that will start trying to say that falling property prices are the first harbinger of doom and the government must intervene. And if they do a Charlie McGreevy on it and start adding incentives and tax breaks, then we're screwed. Hopefully they won't. Economically we're quite well set for this. Unemployment in a trough, personal debt is low, personal savings are high, disposable income is high, eurozone interest rates are going nowhere.

A drop in property prices of about 10-15% at this point will set us up for a much more stable and affordable market long term. Even 10-15% is probably overegging it. Demand is still high.

cgcsb

A functional social housing system that doesn't depend on private landlords, hotels or the state buying housing stock from the private market and driving up prices would be most welcome at this point.

Hoping to see some significant centrally located developments get off the ground. The Glass Bottle Site, The Player Mills site, O'Deavany gardens etc.

Lumen

seamus wrote: »

As unpopular as it is for many, it's an indicator that the government's "stay out of it" approach may have been the correct one. Time will tell of course, and that's not to say that they've played this perfectly, far from it. But many have been very upset that the Government have refused to tinker with the market, despite such tinkering always making things worse. If we see prices pull back a bit to more affordable levels, we see more housing completions and less speculation, dropping rents, then we will see the end of the housing crisis.

Problem now is that you've got the media, landlords and whoever else that will start trying to say that falling property prices are the first harbinger of doom and the government must intervene. And if they do a Charlie McGreevy on it and start adding incentives and tax breaks, then we're screwed. Hopefully they won't.

The 2012 CGT exemption and the Help To Buy scheme are exactly the kind of tax break market tinkering you're saying they haven't done.

The_Conductor

The 'stay out of it' approach has not worked for the rental sector though (wholly aside from the irrefutatble fact that they did anything but stay out of it). Absolute numbers of rental properties are falling- and numbers of landlords are falling off a cliff. The 2018 RTB annual report is due in the next 2-3 weeks, and is going to make very painful reading for many of our politicians.

Spanish Eyes

Overall I am happy to see things begin to stabilise somewhat. It helps everyone in the long run.

Well except me! As executor of an estate where the house was rented and is directed to be sold, I have had to open a dispute with RTB for overholding and apparently it can take a long time to resolve.

Meantime, the beneficiaries will lose out by falling prices. But that's life I suppose.

It is not right though regarding the length of time it takes to get an overholding tenant out in any circumstances.

Just my 10c.

Browney7

The share prices for Cairn and Glenveagh make interesting viewing. They've paid big money for land and so are exposed to the prices attained.

I'd expect extensive lobbying will take place to continue the "help the developer/help to buy" scheme to further support property prices. Perhaps government will even allow people to access pension money to be used towards house purchase on the basis hat it has to be paid back to their fund which is a kite that was flown a number of months back.

4ensic15

Rents are also beginning to stabilise as prices peak. It won't be clear until the autumn rush what the position of the rental market is. Resistance to proposed price points is occurring which is a sign of a slowing market.

BarryD2

The_Conductor wrote: »

Thats what everyone said in 2009........

But would it a make much of a difference at the end of the day. If there were repossessions when people got in unwisely over their heads, that'd be one thing. But in reality, the rest of society will pick up the tab to avoid all but the most reckless borrowers facing the ultimate consequence. Anyway a reversal of property inflation would be welcome for many in society.

PhoenixParker

arctictree wrote: »

Comparing daft 'sale' prices to the actual PPR in a new estate near me, the PPR price is generally about 10% lower. So it looks like people are not paying the crazy asking prices.

I wonder is the daft sale price just the actual asking price when it was sold? Seems to be very misleading.

For new builds the ppr price is 13% lower then what was paid. This is due to VAT

tvjunki

JohnnyChimpo wrote: »

8 months to get mortgage approval? Doubt.

This are real cases. One couple used a broker and they were asked for all sorts of information. Then was asked again for the same information but updated.

Another couple where selling a Htb home and had sale agreed on first home. The bank asked for more information on income for the second mortgage. I was dealing with one employee that needed formed signed stamped and tenants he renewed form a few months in to the process. Submitted forms 3times.

My husbands niece had the same thing with her partner.

LuckyLloyd

The Central Bank limits are doing exactly what they were supposed to do. This is a great thing.

hmmm

seamus wrote: »

The same lending conditions aren't in place that existed in 2007. We're not seeing banks and pension funds massively overleveraged. We have pension funds acting as REITs, but that's very different to having their investment funds in property portfolios.

We are not building 70,000 houses a year when the non-speculatory demand is 25,000.

I agree with all this. Now that prices have stabilised, we need to work on either reducing rents, or making it easier for renters to buy (within the CBI limits).

TheShow

arctictree wrote: »

Comparing daft 'sale' prices to the actual PPR in a new estate near me, the PPR price is generally about 10% lower. So it looks like people are not paying the crazy asking prices.

I wonder is the daft sale price just the actual asking price when it was sold? Seems to be very misleading.

PPR on a new house will not reflect what the cost of the house actually is, as the cost of a new house includes VAT & also the cost of the site that the house sits on.

LuckyLloyd

LuckyLloyd wrote: »

The Central Bank limits are doing exactly what they were supposed to do. This is a great thing.

Could they just lift them until I sell my house for €700,000 profit? You can put them back on again when I want to buy. Pretty please?

As that impartial observer, Mark Fitzgerald, observed in the past week, we need to release the 'genius of capitalism':


Time to ‘shout stop’ on mortgage caps, Sherry FitzGerald chair says. Mark FitzGerald says ‘genius of capitalism’ should be released

Eric Cartman

Deleted User wrote: »

Could they just lift them until I sell my house for €700,000 profit? You can put them back on again when I want to buy. Pretty please?

As that impartial observer, Mark Fitzgerald, observed in the past week, we need to release the 'genius of capitalism':


Time to ‘shout stop’ on mortgage caps, Sherry FitzGerald chair says. Mark FitzGerald says ‘genius of capitalism’ should be released

The only people who want those caps removed either cannot afford the house theyre trying to loophole themselves into buying, are estate agents or are the people still in negative equity that should just swallow that debt like any other investor and shut up.

alwald

hmmm wrote: »

I agree with all this. Now that prices have stabilised, we need to work on either reducing rents, or making it easier for renters to buy (within the CBI limits).

You can't reduce rents as the landlord will lose on money which isn't fair unless you have other solutions and making it any easier for anybody to buy will do just the opposite of what was achieved.

The rules as they are work fine it's a matter of building more affordable housing and improving the commute network.

alwald

Eric Cartman wrote: »

The only people who want those caps removed either cannot afford the house theyre trying to loophole themselves into buying, are estate agents or are the people still in negative equity that should just swallow that debt like any other investor and shut up.

I feel sorry for all those who bought their first home during the boom and are in negative equity. They had noway to know what was gonna happen.

Eric Cartman

alwald wrote: »

I feel sorry for all those who bought their first home during the boom and are in negative equity. They had noway to know what was gonna happen.

Every person with a basic grasp of economics could have told anyone that just because a bank is offering you 10x your sallary in a mortgage, doesnt mean you should take it. Equally so anyone with any sense could have told you that a 3 bed duplex in portlaoise was never going to be worth 350k

People are all too ready to blame the corner shop because the alco has pissed himself into debt when you talk about the last boom here.

awec

arctictree wrote: »

Comparing daft 'sale' prices to the actual PPR in a new estate near me, the PPR price is generally about 10% lower. So it looks like people are not paying the crazy asking prices.

I wonder is the daft sale price just the actual asking price when it was sold? Seems to be very misleading.

When it comes to new builds there is generally no wiggle room. Unless they are really struggling to sell lots of houses for very long periods they'll just hold out.

So if prices are at their peak now and falling? When do you think it will be a good time to buy, maybe 2021, 2022?

dubrov

Hindsight is great. Most of the economists at the time were suggesting everything was going up further. If lending had gone to 20x salary prices would've doubled again.

At the end of the day, a few decisions in the ECB decide what money is worth.

arctictree

arctictree wrote: »

Comparing daft 'sale' prices to the actual PPR in a new estate near me, the PPR price is generally about 10% lower. So it looks like people are not paying the crazy asking prices.

I wonder is the daft sale price just the actual asking price when it was sold? Seems to be very misleading.

TheShow wrote: »

PPR on a new house will not reflect what the cost of the house actually is, as the cost of a new house includes VAT & also the cost of the site that the house sits on.

Why on earth is the PPR not waiting until the final paid price is in before putting any figure on their website? I always assumed that the PPR was the final price paid, and the records for sold houses on DAFT were taken from the PPR.

awec

Deleted User wrote: »

Why on earth is the PPR not waiting until the final paid price is in before putting any figure on their website? I always assumed that the PPR was the final price paid, and the records for sold houses on DAFT were taken from the PPR.

Because you don't pay VAT on second hand homes but you do on new houses, so the PPR has to take this into account and deduct the VAT from new builds to give a normalised price.

Sunrise_Sunset

Mariam Gigantic Tummy wrote: »

So if prices are at their peak now and falling? When do you think it will be a good time to buy, maybe 2021, 2022?

It really depends on your situation.
For my situation now is as good a time as any to buy. I am a second time buyer, property I am selling is still in negative equity after 13 years. If I wait for prices to reduce on the property I want to buy, it will also mean prices will reduce even further on the property I currently own. As it is I have to pay the bank what I owe in negative equity on top of my deposit. I have to make peace with the fact that I may as well buy now.

awec

awec wrote: »

Because you don't pay VAT on second hand homes but you do on new houses, so the PPR has to take this into account and deduct the VAT from new builds to give a normalised price.

But you pay Stamp Duty on a second-hand house and they have to deduct this in a similar way to VAT on a new house surely?

awec

Deleted User wrote: »

But you pay Stamp Duty on a second-hand house and they have to deduct this in a similar way to VAT on a new house surely?

Stamp duty wouldn't be included for either new builds or second hand on the PPR I would have thought. It's not really considered part of the price of the house?

You pay stamp duty on new builds too btw.

LuckyLloyd

We're now 12 years on from the height of the property bubble. How long would people want it to inform policy / politics? Eventually those mortgages start reaching their term. They were bad investments, it's more than okay at this stage for them to never come good. And they are exactly why the pressure on the Central Bank needs to be resisted, lest we fire up another batch of them.

SirGerryAdams

alwald wrote: »

I feel sorry for all those who bought their first home during the boom and are in negative equity. They had noway to know what was gonna happen.

Negative equity only matters if you plan on selling.

hmmm

awec wrote: »

When it comes to new builds there is generally no wiggle room. Unless they are really struggling to sell lots of houses for very long periods they'll just hold out.

Builders aren't going to build if they can't make a profit. The market seems to have found an equilibrium, but we'll very quickly see new build supply fall away if prices take a fall.

coolshannagh28

hmmm wrote: »

Builders aren't going to build if they can't make a profit. The market seems to have found an equilibrium, but we'll very quickly see new build supply fall away if prices take a fall.

As build costs escalate , supply will rapidly diminish if prices even stagnate.