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

fliball123

https://www.boards.ie/discussion/comment/118087149#Comment_118087149

https://www.boards.ie/discussion/comment/118087149#Comment_118087149

Well we have more mortgage draw downs in the first 2 quarters of 2021 than in 2020. Already about 18.5k mortgage draw downs so if we keep on at that pace mortgage draw downs will be 37k for 2021. Also there is not a lot of selection out there will be some people holding off till the right property comes along and this can be seen by the amount of mortgage approvals. Just to put that in context in the same 2 quarters only 8250 houses have been completed meaning current building is not even keeping up with half the demand for buying property.

https://www.cso.ie/en/statistics/construction/newdwellingcompletions/

Welcome back by the way I hadnt seen you post on here for some time

Marius34

https://www.boards.ie/discussion/comment/118087131#Comment_118087131

If they start to build much larger volumes there maybe drop in the price to balance demand/supply. But currently it's still along way to go, and currently there are demands in all sectors, not only FTB and STB, but social/council, Rental market.

Marius34

https://www.boards.ie/discussion/comment/118087202#Comment_118087202

there is data for Q3 2021. It will be over 42K drawdowns in 2021, and over 22K FTB drawdowns alone.

https://bpfi.ie/publications/bpfi-mortgage-drawdowns-q3-2021/

hometruths

https://www.boards.ie/discussion/comment/118087207#Comment_118087207

Sure that takes us back to the social/council propping up the market point as the marginal buyer point. Hopefully that is showing signs of change finally. I read somewhere over the last few days, (maybe in this thread), that councils have already pulled up the drawbridge on leasing.

In any market, once the marginal buyer realises they're being taken for a mug, and steps back or bids less, prices fall.

That's a slightly different discussion though, my point was I don't think the stats show a massive pent up demand for FTBs and 300k houses.

If they are out there, where are they currently living? threshold's latest survey suggests they're not currently in private rented accommodation. That's the only point I was making.

Ozark707

https://www.boards.ie/discussion/comment/118087017#Comment_118087017

Councils/charities are going to hoover up many places coming on stream.

fliball123

https://www.boards.ie/discussion/comment/118087242#Comment_118087242

I think going forward we are going to need a lot more social houses and council houses.

hometruths

https://www.boards.ie/discussion/comment/118087202#Comment_118087202

I just found the various threshold posts and realised we had pretty much exactly the same argument back in July! I said "Look at the PRS figures, if only 6% of people living in PRS earn over 45k, it doesn't seem like a lot of private renters are forming this anticipated demand", you (and others) said "Nonsense, look at the drawdown figures".

We'll leave it there so!

Welcome back by the way I hadnt seen you post on here for some time

Cheers, my interest was waning a little, then found the new site a bit clunky and annoying. Been lurking nonetheless.

DataDude

On the supply side. 21.5k new commencements in the last 6 months alone. Astonishing numbers. Interesting to see if it can be sustained, would have us blowing by all government/CBI targets by 2023 if it does!

https://www.gov.ie/en/publication/a5cb1-construction-activity-starts/

https://www.boards.ie/discussion/comment/118086502#Comment_118086502

It won’t bite straight away given the proportion of people on fixed rates. I’ve only a couple of months short of 5 years before I feel the direct impact on interest rates on my mortgage payment.

Zenify

https://www.boards.ie/discussion/comment/118084661#Comment_118084661

Bubbles are caused by FOMO! Tulips, .com, 07 property, and bitcoin. It wouldn't be a bubble from supply and demand. Then it would be normal justified market forces that would sustain. The reason why bubbles burst is people no longer have FOMO and the normal supply and demand are out of kilter.

https://www.boards.ie/discussion/comment/118088202#Comment_118088202

And what does FOMO come from other than an imbalance in supply and demand? FOMO is the manifestation of scarcity

Villa05

https://www.boards.ie/discussion/comment/118085462#Comment_118085462

The link to the 2016 figures states that two thirds of households earn less than 63k, while in the podcast broadcast last week and posted here yesterday, the chief exec of the land development agency said the middle third earned between 45 and 80k.

The LDA must have the most up to date figures as this is the demographic they have been tasked with providing housing solutions for.

The typical 2person average salary couple appear to be in the top 20% of household income earners

Villa05

https://www.boards.ie/discussion/comment/118088202#Comment_118088202

Do you think the fear of being stuck in the Irish rental market is greater than the fear of missing out.

For the vast majority of Irish people housing is a home not an investment opportunity.

The stick is a far greater weapon than the carrot when influencing human behaviour and super charging bubbles.

Zenify

https://www.boards.ie/discussion/comment/118088810#Comment_118088810

Yeah, I agree. I would include your example in FOMO. Fear Of Missing Out of both investment and getting a home etc.

Timing belt

https://www.boards.ie/discussion/comment/118088061#Comment_118088061

I wonder how many of the commencements are a over spill of projects that were delayed during the lockdowns when builders concentrated on finishing projects rather than starting new ones.

Timing belt

https://www.boards.ie/discussion/comment/118088138#Comment_118088138

Banks stress test for ability to repay if rates rise so there should be a buffer.

The real risk is when fixed rates expire if your in a rising rates environment for 5 years as the new rate could be significantly higher at the end of the five years. (E.g. five years of rate rises in one go)

DataDude

https://www.boards.ie/discussion/comment/118089401#Comment_118089401

Yeah difficult to know, will take a year or so before it all shakes out I guess. Interestingly, Davy seem to be getting increasingly bullish on a monthly basis now around building activity. Time will tell.

Number of housing starts passes 30,000 as construction hits its fastest pace since 2008 - Independent.ie

hometruths

https://www.boards.ie/discussion/comment/118089495#Comment_118089495

In all our previous exchanges re inflation and potential of higher rates you've been adamant I was wrong to predict inflation would be a concern; you were of the view any inflation would not be meaningful or longlasting - i.e transitory.

Is this still your view? Not asking to score points, genuinely interested, as plenty of others had that view, just wondering if they're reassessing things now.

rocjohn

Large building site for residential 3 and 4 bedroomed houses in Dublin closed since Thursday evening of last week. Its hardly due to a Covid outbreak or extended Halloween break.?

I do not know the reason but am wondering if this could be a consequence of supply problems. The builder has an excellent reputation for quality builds and running a well organised site.

I wont identify the building site .

Timing belt

https://www.boards.ie/discussion/comment/118090285#Comment_118090285

I still think that the inflation won’t be long lasting unless we see wage inflation as people won’t be able to pay.

A lot of the inflation we have seen have been for specific items that are in short supply e.g. second hand cars etc. or have been energy related as oil prices returned to pre covid prices.

The one area that does concern me is the blackouts in China as that is where most of the manufacturing of products take place and if they are producing less prices will rise across the board. If they try to devalue the currency to combat it they run into issues with debt in foreign currencies.

I also think we will hear a lot in coming months that raising rates won’t dampen inflation as people still need oil and gas for transport and heating.

Saying all that I will say that The longer we see inflation the more likely it will grab hold as there will be an expectation of inflation and business will raise prices wherever they can.

Timing belt

https://www.boards.ie/discussion/comment/118089864#Comment_118089864

There is definitely an increase even allowing for the spillover from lockdowns.

hometruths

https://www.boards.ie/discussion/comment/118091750#Comment_118091750

I think wage inflation has kicked off already. Once the inflation ball gets rolling it will be difficult to stop, it looks to me to be already rolling, and will gather speed whilst CBs dither about raising rates.

ittakestwo

https://www.boards.ie/discussion/comment/118091833#Comment_118091833

But by Masstrict the ECB have to keep it below 2% long term. Today's figures show it is over 4%. I think if it were any other time the ECB would be raising rates. It wont be long before the Germans are demanding rates be raised. We could see it sooner rather than later given today's figures. The ECB have been saying they only believe it to be temporary but core inflation which excludes volatile inputs like Energy has also risen above the ECB's target.

Timing belt

https://www.boards.ie/discussion/comment/118092146#Comment_118092146

If you take out the base effect we have only seen 2.6% inflation over the previous 2 year period.

J_1980

https://www.boards.ie/discussion/comment/118092146#Comment_118092146

unlike the Fed and BoE, the ECB can’t afford to raise rates because of the massive indebtedness of some member states.

The Euro will have its 20th birthday soon, I would guess it wont make it to 30. I only have USD/GBP/CHF savings accounts now and will transfer back if needed.

https://www.boards.ie/discussion/comment/118093006#Comment_118093006

Someone needs to start making a list of the outlandish predictions on this thread

Bass Reeves

https://www.boards.ie/discussion/comment/118093006#Comment_118093006

The US and the UK have have debt issues as well. Inflation is a lot better than deflation. Be careful what you wish for regarding the euro. I think you totally off the ball regarding the euro. It is now a solid currency. There is danger you may see a few countries leave the EU however after the UK that gra seems to be gone.

On inflation it is the friend if the property owner and buyer. Inflation will increase wages. Most buyers are going for 5 year fixed at minimum. A 5 year fixed on a 300k loan is around 1100-1150/ month at present. If at the end of the 5 years if fixed rates rose to 4% the repayments would be about 1340/ month.

For that to happen you need a continuous inflation rate of 3% wages would rise by 10% at least if that happens. That 8k in extra pre tax income for a couple on 80k and that is not allowing for any wage rise due to either increment in the PS or natural wage rises that may happen anyway by modern job movement in the private sector.

Villa05

German inflation is over 5% with industrial unrest threatened.

I'm making assumptions here, but Germany would not be in favour of EU monetary policy over the last decade. They probably kept there disapproval under wraps while inflation was kept in check.

This will be an issue in the future I suspect

dashcamdanny

Hi. Im after opinion on my strategy

I will be putting my home which I bought in 2007 up for sale in the next couple of weeks.

I want to move the family west or the midlands where I can have a big home and maybe a bit of land for my children to possibly build on in the future. And a very small mortgage.

With my long overdue equity build up, and the the current house prices in the east, I should walk away from the sale with 150k in my pocket.

But without a property.

We intend to rent in the midlands and continue to work in Dublin, and wait out the current high price boom.

We have all seen collapse in the recent past. Albeit with different economic reasons . But it cant really continue like this forever.

Im looking at 1.5 to 2 hour commute daily and child care till an alternative is found in my new setting.

We are trying to look at the bigger picture of what we want to achieve in our life. And I am witnessing alot of landlords sell up now in an attempt to catch the tip of the wave.

Big question is, When do you predict a fall in property prices.. Should I buy now? Or rent and wait.

Marius34

https://www.boards.ie/discussion/comment/118093878#Comment_118093878

What you expect from the fall? When the fall happens it may still be above current price in its nominal value. My advice don't bet on predicting which way property price goes, if its your primary home.