Irish Property Market chat II - *read mod note post #1 before posting*

Wanderer78

https://www.boards.ie/discussion/comment/118070198#Comment_118070198

yes we all know this, but again, this is the true problem, and not just here, its a global problem, we ve been pushing our economies back towards a primarily credit fueled one, by not embracing more public debt, as this is how we ve been supplying our economies with money, via credit, baring in mind, our own economy is now currently perfectly primed for another credit fueled property boom.....

Marius34

https://www.boards.ie/discussion/comment/118070463#Comment_118070463

I agree that there is a risk that we could be moving to boom and bust cycle again. But there is as well a good chance that LTI limit will help to stabilize price in near future. Double digit price increase is not healthy or sustainable for longer term.

Wanderer78

https://www.boards.ie/discussion/comment/118070496#Comment_118070496

there will probably be incredible pressure placed upon the central bank to truly kick start building, if they cave, we re screwed, increasing public debt is the only way to try prevent this

LJ12345

Irish times article ‘Ireland has 10th highest rate of vacant homes in the world study finds’ Note that this is a Uk study.... if only our own government could carry out such studies 🤔

“Ireland was deemed to have a homeless population of 5,873 at the time of the analysis, meaning that just 3.2 per cent of its empty homes would be needed to house every homeless person in the country.”

“The Government has mooted the idea of introducing a vacant property tax but said it requires time to collect data on vacancy levels. The vacancy rate of a state’s housing stock is difficult to determine as homes may be temporarily vacant for a number of reasons.”

If they even tried to start closing the net they would make instant progress...

Wanderer78

https://www.boards.ie/discussion/comment/118070745#Comment_118070745

depends where these vaccines are though.....

Bass Reeves

It all comes down to if you want to live in a modern urban high population city you have to be willing to pay for it. Many are unwilling to accept that. They want there cake and to eat it.

Wanderer78

https://www.boards.ie/discussion/comment/118070874#Comment_118070874

its far more than just that, its in the interest of vested interests to maintain the status quo, i.e. rising prices.....

Villa05

https://www.boards.ie/discussion/comment/118070496#Comment_118070496

I think we are firmly in the boom bust cycle.

Bank of Mum and Dad, ftb grants plus shared equity chasing investment funds and ill thought out social housing funding with limitless cash and pay sweet f_all tax.

Looks like mania

We are heading for a brick wall at increasing velocity

https://www.irishexaminer.com/news/arid-40728942.html

Villa05

Anyone thinking that all these global stimulus projects will be put on ice considering the inflation in the associated sectors.

Would it be better to let the inevitable correction happen and then stimulate when prices are more reasnoble

Wanderer78

https://www.boards.ie/discussion/comment/118071411#Comment_118071411

ah guessing game in regards correction or not, stimulus is needed now and big time, but it needs to be used correctly, and not further inflating asset prices

Villa05

How is a stimulus needed when there is such demand worldwide?

Jmc25

https://www.boards.ie/discussion/comment/118070874#Comment_118070874

And if you're not willing to pay for it then go live elsewhere presumably?

That's a point of view that has politically dominated the last forty years in the western world and the current housing market is a byproduct of that. But I'd predict that we've reached the beginning of the end of this type world view.

Long term, these house prices won't be sustained. That's small comfort for anyone who needs to buy now though.

Bass Reeves

https://www.boards.ie/discussion/comment/118071871#Comment_118071871

No that is not my point. There is a demand to live in urban and ultra urban areas. However very few people born in these area's want to work in manual or trade area's. As well they often want to live in the area that they came from. This puts building pressure in these area's. As manual and especially building labour and skills have to be imported into these areas this increases the cost of housing.

There are 5-6 major elements in housing costs. Mainly Labour, materials, land, finance, planning and services.

Managing to partially reduce 1-3 of the costs will not solve the issue. Neither will a crash admin a crash nothing gets build. Some people would want to be careful what they wish for

JimmyVik

https://www.boards.ie/discussion/comment/118069676#Comment_118069676

I got called by work over the weekend and had to work all night Saturday night.

I get to keep less than half of what I earned. The tax man takes the rest.

I was the only idiot who left their phone on so they got me this time. Wont happen again.

Pussyhands

So are house prices just going to grow by 5-10% annually forever now? It's despairing to see my savings eaten away so much.

It really does seem that you lose if you're trying to be financially responsible. Those who stretch themselves to the max ended up winning.

fliball123

https://www.boards.ie/discussion/comment/118073755#Comment_118073755

I think anyone buying is winning, you have to have a look at pre 08 just before the bubble burst is a person better off having bought at the peak or having waited and find the banks no longer lending so they could not get a mortgage in the years after 08. The question is who is in a better position - a renter who's rent will be going up by the rate of inflation or a buyer who will not see their mortgage go up by much (fixed term over 10 years now available) Remember and I have said this till I am blue in the face Ireland do not do family home repossessions so who is in the more secure position someone who has stretched themselves and bought or someone who could be left waiting for a crash that may never come and paying rent in the mean time.

It also begs the question who is being more financially prudent those waiting and renting with inflation increases or those who took the plunge bought and they know the costs for the next 10 years regardless or inflation or interest rate rises and knowing that no one will come knocking on the door if they fall into difficulty to try and kick them out of the house.

I think the person buying is being more financially responsible. But that is just my opinion.

Villa05

https://www.boards.ie/discussion/comment/118073919#Comment_118073919

Your post shows exactly why we are in a bubble. So right yet so wrong

Buy at any cost, regardless of where the money is coming from. The system is so dysfunctional there are no consequences.

The bill will be passed on to our children and we will be grand.

This is the result of systems and policies implemented by people elected to act in the best interests of the country and its citizens.

Wealth fund me h***

Marius34

https://www.boards.ie/discussion/comment/118074071#Comment_118074071

Your post start with to high confidence in things where people constantly fail with their forecast. You literally don't know if we are in a bubble.

fliball123

https://www.boards.ie/discussion/comment/118074071#Comment_118074071

This is the way it has always been for decades you need to talk to people who bought in the 80s/90s at horrendous rates of interest your talking double figures. I knew people who bought in the 80s who had to live on beans and toasts for about year after buying. How are we in bubble average wage in Ireland is 40,283 and the Irish banks are limited to giving borrowings of more than 3.5 your wage. Add up 10% deposit 20k FTB and then 3.5 times this figure = 140990 and the norm for the last 2/3 decades are people buying as a couple so you can double this figure. This means the average couple on the average wage can get a house of 330179 without going over the rules of the central bank. So that's a mortgage of 280k, 20k FTB and 30k deposit. Average house price is currently 287704 even with all the increases over the last 2/3 years.

We do have an issue with supply but to say we are in a bubble when the average couple out there can borrow and buy at 50k less than the average property price would suggest to me we are not in bubble territory yet.

https://www.thejournal.ie/house-prices-increase-ireland-inflation-5558577-Sep2021/#:~:text=The%20Daft%20quarter%203%20house,trend%20hides%20notable%20regional%20differences.

The other comparison here is what people are paying in mortgages vs rent.

iColdFusion

https://www.boards.ie/discussion/comment/118073919#Comment_118073919

If you are paying €100k over the asking price to get a house at all costs then its better to rent IMHO but that depends on location, plenty of terrible stories from the last housing bubble of people basically having to forget about ever having a family because they had been 10 years in 100k of negative equity on their 1 bed apt, cant sell, cant make enough renting it to buy another property and even worse what that did to their mental health.

Plenty of repossessed homes going for auction at the moment also, take a look at Bid X1, the 2008 crash caught a lot of people who handed the keys to their 300k houses back, house sold by bank at auction for 200k and they still had 100k mortgage to pay with no home.

DataDude

We've been sale agreed for a bit now but things are dragging along. Noticing a marked slowdown over the past month or so (I think?), although it's a bit polarized. Properties that would have had multiple offers within hours in March are sitting without offers for weeks now. A couple are still going wild though at €300k+ over asking. Not sure if it's just your usual cold feet with a life changing purchase or if there's really something at play, but we've been toying with the idea of backing out.

IF (big if) there is a significant cooldown happening atm, it's hard to know what the catalyst is? Supply is still incredibly low (13k on myhome) and confidence on wages/jobs must be at all time highs. Anyone else buying/selling at the moment have any real-time views on where things have changed over the past month (if at all)?

fliball123

https://www.boards.ie/discussion/comment/118074218#Comment_118074218

So they handed the keys back I tell you any family who puts up any kind of fight to the bank looking to take back the family home will have a very difficult time getting that family out.

awec

https://www.boards.ie/discussion/comment/118074269#Comment_118074269

On a tangent, did you find a gaff in the area you were looking? Feels like you've been hunting for ages!

C14N

https://www.boards.ie/discussion/comment/118070874#Comment_118070874

But it shouldn't have to be that way. Living in an urban area shouldn't be a privelage for the wealthy. People living in cities is generally economically preferable to them living elsewhere. They can be closer to work, they will have more job opportunities, they are easier to provide things like utilities and public services to, they can make better use of public transit, etc. People in cities tend to generate more value while costing the state less to provide for.

Imo the big difficulty with doing this from a policy standpoint is that we don't invest in the kind of transportation needed to allow high-density living, and then also don't allow building of high-density housing. It's a chicken-and-egg cycle.

https://www.boards.ie/discussion/comment/118073919#Comment_118073919

You can say its financially responsible, but it's also kind of a luxury to be able to make that financially responsible decision in the first place given the current costs of housing relative to many people's salaries.

https://www.boards.ie/discussion/comment/118074218#Comment_118074218

It depends. I think talking relative to asking price is a bad barometer. That's just the estimate of a homeowner or estate agent and not really a precise indicator of real market value. However, if you want to talk about prices that are up substantially from a few years ago, then you're still often not better renting. There's the danger of negative equity on one hand, but on the other there is a very good chance you will be paying more for the rent than you would on the mortgage. The apartment upstairs from mine went on the market a few months ago and if my partner and I bought it even for the price it ended up going for, we'd still be paying a lot less than we are renting, even though the apartments themselves are virtually identical (the main difference being that the upstairs one has nicer interior finishings).

Villa05

There is no affordable alternative to buying

Buying is only affordable to the top 20/30% of households, despite multiple incentives for buyers and developers. These buyers are competing with investment funds who pay no tax and have access to 0% capital. This requires the tapping of Bank of mom and pop for many

Those that are renting are economically neutralised

Average age of ftb in mid 30's and increasing.

Billions of taxpayers money spent subsidising rents and fighting homelessness. People called in on Saturday may be paying less tax had we a fit for purpose housing system. This from a position of surplus housing supply less than 10 years ago.

Price trends imply people are moving further and further away from work to secure housing. This suggests the cities prices are out of reach and price trends in rural towns will now be out of kilter with the local economy pushing workers there further away. All this leads to development away from where its needed and building a new crop of ghost estates at the highest possible price for the next bust.

All very predictable, all symptoms of or re-engineered mechanisms of the last bubble.

Oh, beans on toast in the 80's was a treat for many

MacronvFrugals

https://www.boards.ie/discussion/comment/118074269#Comment_118074269

With the news over the weekend that parents/grandparents have pumped an additional 1 billion quid into the property market over the last year, that most certainly is not sustainable long term!

iColdFusion

https://www.boards.ie/discussion/comment/118074324#Comment_118074324

And the rest of society is still paying the price for people who couldn't pay and wouldn't leave, higher mortgage rates and post 2008 fear of banks to lend meant people couldn't get mortgages leading to prolonged renting and leaving cheap houses to be hoovered up by cash rich landlords.

Handing the keys back is the only right thing to do if you cant pay and wont be able to pay for the foreseeable future.

DataDude

https://www.boards.ie/discussion/comment/118074329#Comment_118074329

Overall we're happy and in the area we wanted roughly. Probably 5 minutes too far away from the Dart, in a house that's slightly too big, on a plot that's slightly too small but that's very much being fussy and given the Burnaby is out of the question, we needed to be realistic.

Was a torturous journey alright, think we struggled to fully commit to anything as in the back of our head we always wanted the new builds on Church Lane, Greystones (Sillan) but every time we rang about them the price went up. From "it might go up as high as €1.1m" in December 2020 to "due to cost inflation and demand, it will be well north of €1.3m" in July 2021 (cheers government for closing construction!). Also worryingly they have indicated that they may not do the usual "first past the post" and may go with private treaty bidding. Not sure if that's likely to trickle down to cheaper new builds, but it's a scary thought!

random_banter

https://www.boards.ie/discussion/comment/118074269#Comment_118074269

In a very similar situation to you. Sale agreed a couple of months now but things are dragging due to some issues on the seller's side. We're willing to wait. The place needs work but we're happy to DIY as much as possible and take our time. We think the current high price of materials has definitely put people off the likes of a fixer-upper like ours.

What we've seen is an even worse slowdown in supply for the areas we're looking for. March-July very intense and quick bidding like you said. A few heartbreaks during that time. August-October a lot quieter - less homes on the market, less bidders around. It's not even that these homes are being listed at asking 100k-200k more than what they would have been a few years back, they're just not going on sale - there is no supply. We have seen a few properties hanging around a while, like yourself. We decided to go for a fixer-upper during that time and we're happy with the decision so far. The contracts are taking a really long time to issue but we're still thinking positively.

I was wondering if it's the case that the desperate bidders have now come and gone, have spent their extra savings?

For us, we can see this weird cool-off/extra scarcity happening BUT it isn't phasing us from our decision - at the end of the day, this home is right in the middle of an area we'd be happy to spend the rest of our lives in. It has room for expansion should we need it. And we need to get on with starting a family. Currently lucky enough to be staying with parents while we try to save enough to keep up with the increased costs of property & materials. So for us, we're willing to push for this one, and eat the baked beans for a year or two when we're in. Fingers crossed we can get a close date soon. 🤞

DataDude

https://www.boards.ie/discussion/comment/118074419#Comment_118074419

But in terms of a bubble bursting type scenario, I'm don't see that as a short term catalyst for anything and can't see it having changed dramitcally in the last month nor in the next. In the short term horizon I thought that a huge flood of supply that was deferred during COVID would be the only remedy, and that hasn't happened (yet anyway).

I agree that long term prices can't stay as historically unaffordable in real terms as they are today. Main reason we're buying is that in an inflationary environment (wages seems to be going insane from I'm seeing), a "crash/correction" in real-terms might look a flatlining/small growth in nominal terms.