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

manniot2

I bought my first house aged 30. I work in finance yet was completely green to interest rates and the true cost of mortgage etc. I would say many people are. As an estate agent said to me recently, first time buyers will care more about the type of throws you have on the couch, haha.

fliball123

https://www.boards.ie/discussion/comment/120178135#Comment_120178135

True and there will be micro conditions such as kids, closeness to school or work, etc that will probably have more of a sway on the decision to buy or not to buy. However on the flip side we can also agree that costs in the day to day spend have impacted on all 200 in the test groups wallets and the cost of buying the house has gotten a lot more expensive over the last 18/24 months for each and every one of them as well. So it will come out in the wash over the next 2/3/4 quarters if the costs of Ireland Inc has quelled demand via affordability.

Donald Trump

https://www.boards.ie/discussion/comment/120178135#Comment_120178135

You have to account for sentiment too.

Mr Hindley

https://www.boards.ie/discussion/comment/120178135#Comment_120178135

Mind you, it's not just a binary choice - buy / don't buy. It might be, 'we'll still buy, but we're going to spend less - which might mean a smaller house, house further out etc.' So demand at the upper end starts to drop off, demand at the lower end stays the same/intensifies, but with an upper limit on what people will pay. So if the heat comes out of the market at the upper end, average prices overall come down just due to reduced volumes of the more expensive houses, even if at the lower end, people are still facing lots of competition over a limited pool of housing?

byrne249

https://www.boards.ie/discussion/comment/120177944#Comment_120177944

I was talking to the AIB about a mortgage application last week and asked what their stress tests are. 5.15% currently. What the stress test was before they raised rates I do not know. But seems the banks are accounting for a 2% increase

Timing belt

Rising rates will more than likely result in less property transactions in the 2nd market but not necessarily a reduction in price due to the fact that people won’t sell if (unless the have to) they think their property is worth more than the market will pay. Without a catalyst that forces people to sell all that will happen is a reduced supply. And before anyone says what if they can’t afford their mortgage well in that situation it would be unlikely that they would be able to rent as it’s more expensive again. All that happens is the market freezes till something changes such as

1)new houses being cheaper (not going to happen with inflationary pressures) which changes the sellers mind on what his property is worth.

2) The buyer has more disposable income (not happening at present with inflation)

3) a couple get divorced and have to sell

4) a major increase in supply of new properties

5) a fall in population( don’t see this happening when 35k work permits issued last year and 90k+ people seeking asylum)

6) rent becomes cheaper than mortgage repayment and as a result a drop in demand.

The fact that LTI limits have increased and people are getting wage increases (they are not in line with inflation) which means that they can borrow more than they could a year ago will put upward pressure on prices

fliball123

https://www.boards.ie/discussion/comment/120178622#Comment_120178622

Over half the working population did not get a payrise in 2022. Companies are finding it hard to keep up with the existing cost pain that has been inflicted on them in 2022 and paying their employees more is more likely to send them into liquidation than to profitability. So the pay rises you envisage will be only happening mainly in the public sector and some other specialty sectors in the private sector like banking.IT is shedding jobs so pay rises may not be as forthcoming as they once where. Rising interest rates will quell demand via affordability this is as plain as day and if people want to or have to sell they will have to drop their price, they will also be gaining a hefty profit from the increases in prices over the last 7/8 years. LTI limits wont mean a damn thing if the person cant afford the repayments on top of every other facet of living spiraling hugely upwards or they fail the banks stress tests. Also supply will uptick as the modular homes come on board. FTB mortgages are also down which in Q3 2022 which would suggest that the interest rates going up are having an impact on demand.

https://bpfi.ie/publications/bpfi-mortgage-drawdowns-q3-2022/

CorkRed93

https://www.irishexaminer.com/news/munster/arid-41060012.html?fbclid=IwAR1I_nAqvJK6wfkOVPYhEZpJO09AAr1HqJXS_B5XL8nIttYETIayy2l3Q6s

nimbys gonna nimby

https://twitter.com/KarlDiskin/status/1620061947692732418

FedoraTheAura

https://www.boards.ie/discussion/comment/120178693#Comment_120178693

The ‘pull up the drawbridge behind you’ brigade.

So shortsighted that they don’t connect blocking any particular type of housing being built and having to raid their own life savings to help their darlings get on the ladder. Probably on the other side of the county. If they even can buy!

Timing belt

https://www.boards.ie/discussion/comment/120178682#Comment_120178682

Have you shared in a company that produces modular homes…your the only I ever hear banging on about them.

fliball123

https://www.boards.ie/discussion/comment/120178817#Comment_120178817

I don't but the news stories are starting to ramp up with regards to them being delivered.

Bass Reeves

https://www.boards.ie/discussion/comment/120178682#Comment_120178682

Just on the public service. The average public servant is going to see a 5% pay increase in 3-4 months with another 1.5% next October. The first part backdated to Feb 22 was 3% paid in Nov/Dec 22 and the next part is 2% in February. Add in a couple of increments and you probably have a probably a 9-10% pay rise from mid 2022 to end of 2023.

On modular housing the only suppliers around at present are the log cabin suppliers or the steel frame shed suppliers.

Unless the LA decide to use it to put up quick and easy supply I cannot see main stream builders doing it.

I have seen some of these modular houses and after 40 years they tend to be very shabby for one reason or another.

The only way they tend to be cheap is if you can plonk one on your own site. I have seen them used in farm situations where an inheritor uses them as a solution while there parents need the main house or visa versa.

J_1980

two biggest jokes of re-sales:

https://www.myhome.ie/residential/brochure/14-sandyford-green-sandyford-dublin-18/4675995

bought 950k early 2022

https://propertypriceregisterireland.com/details/14_sandyford_green_sandyford_village_dublin_18_co_dublin_ireland-544984/

https://www.daft.ie/for-sale/terraced-house-10-ard-na-greine-eaton-brae-orwell-road-rathgar-dublin-6/4592706

Bought 775k last August and cut the tiny garden in half with that glasshouse extension.

https://propertypriceregisterireland.com/details/10_ard_na_greinne_eaton_brae_orwell_road_co_dublin_ireland-575678/

rob316

https://www.boards.ie/discussion/comment/120178693#Comment_120178693

I see their point to be fair, adding 44 units of social housing to a long settled estate isn't good for them.

wassie

https://www.boards.ie/discussion/comment/120160112#Comment_120160112

Drove past these the other day. Still unsold......From €599!

https://www.daft.ie/new-home-for-sale/craughwell-village-craughwell-co-galway/4079522

Villa05

https://www.boards.ie/discussion/comment/120178948#Comment_120178948

Irish guy heavily involved in the UK and US in prefab factories, must dig it out

On the topic of shares, its in all our interests to find an alternative to concrete given the price rise rumors and energy consumption not to mention the tyre burning facility neighbouring 3 large schools and park down the road from me at the cement factory

Bass Reeves

https://www.boards.ie/discussion/comment/120179329#Comment_120179329

I have seen a few small builders that are sitting on small developments of 2-6 houses. In most cases they have little or no borrowings. Because of the cost of building and sites they figure there is no margin going building again and are maximising the profit on existing stock.

One lad closed out a deal locally twelve months ago the LA took them on a 15 year lease. These were small two bed houses in a village. Another is sitting on five 3&4 bed houses virtually finished for the last 36 months. He has them with an auctioneer but no price visible on them.

Saw a small builder that had two bungalows build in 2008/9 he held them until about three years ago.

If he has not sold them by now he obviously can afford to sit on them

Donald Trump

https://www.boards.ie/discussion/comment/120179407#Comment_120179407

Timber framed houses are quite common in the US. They can put them up fairly quickly as they can come somewhat pre-fabricated in sections.The actual "shell" can be put up in a few days.

Some actually have a preference over there for building a house that isn't meant to last as long because there can be a preference for new builds anyway.

I was surprised when I saw it first over there myself, but if it is good enough for them there, then why not here? Timber might be still relatively expensive on global markets but that will come down over time. There might be reluctance on owners to build a timber frame house for themselves, but the Councils and Local Authorities should be definitely considering it.

Bass Reeves

https://www.boards.ie/discussion/comment/120179407#Comment_120179407

Problem is Irish weather is very unforgiving. The moisture droplet is very small. As I often point out show me the oldest timber frame building in Ireland. There is timber houses standing in England since the 1500's or before.

I was listening to a Pat Kenny radio show one morning. He had a discussion on about building costs in general. I think there is a government body that tests and approved new building technology. There was this technology specialist on from them. He explained that technology transfer was not as easy as many imagined. Wood framed windows work very well in Sweden and Scandinavian countries in general, the same frames wrap in an Irish setting. Heat exchangers that are tested for Germany will not last in the west of Ireland because of the salt in the air.

That evening on RTE radio we had this lad prattling on about a cousin of his that had not used concrete blocks in houses he build in 30+ years. He was waffling away until he was asked where in Ireland he was operating........ oops he was in Germany.

There is no easy solutions. The thing about modular is that these houses will need to be maintained on the outside to get a decent lifespan in Ireland. Many of the cladding used will not stand up to a lad belting a sliotar or any ball off them. Timber frame will need to be treated every 3-4 years.

That is the cement factory in Limerick you are talking about it will still be there in thirty years. Incinerator's have much lower emissions than previously as well scrubbers put in the flues reduce emissions to a very low level. In reality you are probably getting greater harm off the lad burning coal or rubbish in his open fire or stove near you

Former Coach

https://www.boards.ie/discussion/comment/120178510#Comment_120178510

Banks have been stress-testing mortgage repayments for a number of years now, usually by 2%. It doesn’t mean that they expect rates to rise by that much- they just want to protect themselves in case of significant rises.

Bass Reeves

https://www.boards.ie/discussion/comment/120179606#Comment_120179606

People forget that you can stress test over any mortgage length. Unless you are limited on possible duration you can probably stress test to 35 years.

Banks seem to concentrate on the 4X LTI, that you have a 10% deposit and also sem to want to see you can repay such a loan ( saving the amount of the repayment for 6 months or saving and rent combined) if you can manage these generally it's the 4LTI is the actual limit

Villa05

https://www.boards.ie/discussion/comment/120179555#Comment_120179555

https://g.co/kgs/ZE1vWK

I believe these are timber frame close to cliff walk in Kilkee, must be at least 30 years old now, appear to have weathered ok

hometruths

https://www.boards.ie/discussion/comment/120178030#Comment_120178030

I think this logic is sound in theory, but there are some indicators that in practice the stock of 100K per annum FTBers is as tight as current houses for sale!

Presumably the bulk of these buyers are currently in the private rented sector. But RTB and Threshold surveys of private renters suggest there are very few currently with the earning capacity and age profile to comfortably afford to buy.

There might be enough 18 - 24 year olds earning more as they feed into the 25 - 34 year old brackets to maintain the current excess of demand over supply, but it wouldn't take much of a change in sentiment to knock that excess on the head.

Even before any interest rate rises, the private rental data suggests that if we do manage to build 30/40/50k a year, or even 70k a year as some were saying last week, as much as people might want to buy them, there is nowhere near enough demand to actually complete the purchases at current prices.

DataDude

https://www.boards.ie/discussion/comment/120179833#Comment_120179833

Mortgage lending data shows number of FTBers is at highest levels since Celtic Tiger. Average household income of dublin FTB is always in and around 100k. For non FTB, average income is 125k.

Could never quite square it off with the CSO data on household incomes, but that is the reality of the lending data.

https://bpfi.ie/wp-content/uploads/2022/11/Mortgage-Market-Profile-Report-H1-2022.pdf

hometruths

https://www.boards.ie/discussion/comment/120179903#Comment_120179903

I'm definitely not disputing the lending data, that they are buying currently, nor that their average income is 100k. I am just querying the depth of that demand.

Annoyingly I can't find link for latest Threshold survey, but here is a post I made ages ago on it based on the 2021 survey:

As per the threshold survey:

Only 48% of renters are in full time work.

Just over half, 54% of respondents were over the age of 34. Largest cohort at 36% were 35-44.

The majority - 58% - earn between €20,001 and €35,000. Only 6% earn above 45,000.

And when I made that post above, somebody also pointed out the latest drawdown figures painted a different picture, which I also considered:

Just over 9000 new mortgages drawn down in first quarter, 52% of them FTBs, approx 4,500, which are presumably the ones coming from the rental sector.

Lets say that is currently 18,000 per annum

Just shy of 300,000 tenancies in the private rental sector, and if Threshold survey is representative only a very small number of those can afford current prices.

18,000 out of 300,000 is 6%.

Interestingly only 6% of renters earn above 45,000

Even allowing for coupling up, the vast majority of FTBs coming out of the private rented sector are coming from that 6%. As long as there are young renters moving into that 6% cohort to replace the FTBers who become homeowners, then all other things being equal, things will carry on as they are.

This is obviously very back of the envelope stuff, but its merely to illustrate my point that it wouldn't take much if any other of those things became less equal to expose the lack of depth in this demand.

Bass Reeves

https://www.boards.ie/discussion/comment/120179993#Comment_120179993

This would suggest that portion of these renting are renting through HAP. They are dependent on social or affordable housing becoming available rather than going the purchase route

Timing belt

https://www.boards.ie/discussion/comment/120179993#Comment_120179993

Source

https://threshold.ie/wp-content/uploads/2022/09/we_are_generation_rent_threshold_2022_survey.pdf

10% earn over 45k

doesn’t include people living at home

1 in 5 was did not disclose earnings

hometruths

https://www.boards.ie/discussion/comment/120180152#Comment_120180152

FOr sure, I think it would suggest a very sizeable portion are renting through HAP, we know that as well from the sheer size of the HAP bill!

Timing belt

https://www.boards.ie/discussion/comment/120179903#Comment_120179903

CSO data can be heavily skewed by people that don’t work full time

Bass Reeves

https://www.boards.ie/discussion/comment/120180154#Comment_120180154

Often surveys like this can seriously underestimate earning. Some people give net earnings after tax as opposed to gross earnings. As well those on not disclosing there earning will be on higher incomes.

Average industrial earnings are nearly 50k now. Students working going to college skew the lower figures. Most will be working part time and on minimum hourly rate or a little with it.