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

timmyntc

JimmyVik wrote: »

Tell that to the person who bought 5 or 6 years ago and had a static mortgage in the meantime, while the person next door saw their rent go up and up.

You are not comparing like with like.
An affordable leasehold vs a house bought on open market - rent doesnt come into it.

JimmyVik

timmyntc wrote: »

You are not comparing like with like.
An affordable leasehold vs a house bought on open market - rent doesnt come into it.

Sorry. I was referring to affordable, as in something you can afford to buy, rather than a scheme.

Villa05

Bass Reeves wrote:

I have no real hangups about the government borrowing to build rather than the present leasing structure. However it has a few issues. I presume that much of this will be social and affordable houses. Will these turn into getto's and give us the new Ballymun's, Knocknaheenie's and Moyross's of this generation. In the affordable element of the housing will you be gifting people a 1-200k site. It very hard to police.

Sites stay in state ownership, price of units linked to inflation so they always remain affordable stock. These become the new starter homes/affordable rentals. The majority would be low to middle income workers ie the makup of these estates would be reflective of average society

Bass Reeves wrote:

I do not think it will add to supply either. There is a finite limit on the amount of construction workers in the country. At present we are at full employment and we build 30k houses last year and this year it may only be 16k. Even if workers move from commercial to residential construction will we get to 30k units per year.

There are 30k construction workers on pup. There claiming its black market, I'm not convinced. Possibility that commercial will stall for some time until we have greater visibility on wfh impact

timmyntc

JimmyVik wrote: »

Sorry. I was referring to affordable, as in something you can afford to buy, rather than a scheme.

No worries - the point is that buying a starter home with the view that it will increase in price and help you to buy another property is a fallacy - if the price of your home goes up chances are the home you want next will go up too. The difference will remain the same moreless so you are not any better off.

At least leaseholding proposal has fixed re-selling prices - plenty more of those in the market would make the market a lot saner and less speculative.

section4

PropQueries wrote: »

Another date to be missed? I haven't been proven wrong yet. It's the start of June...

This reminds me of the property crash in London in the late 80s
The developers of Canary Wharf , the reichman brothers,
The biggest commercial owners in New York
Got caught in the crash, when asked how they git caught ,
They said quite simply , we never saw it coming .
And that’s going to happen in Dublin again
Even if you. Can’t see it coming
The housing market is in fairyland again.
And overdue a correction even before COVID

JimmyVik

timmyntc wrote: »

No worries - the point is that buying a starter home with the view that it will increase in price and help you to buy another property is a fallacy - if the price of your home goes up chances are the home you want next will go up too. The difference will remain the same moreless so you are not any better off.

At least leaseholding proposal has fixed re-selling prices - plenty more of those in the market would make the market a lot saner and less speculative.

But thats not true.
You will have built up equity, you will be paying less in mortgage payments than rent. The rent will go up. The mortgage wont. And you can save the difference between the mortgage and what you would have been paying in rent each year. So you will be better off by the time you decide to step up, if indeed you ever feel you even need to.

timmyntc

JimmyVik wrote: »

But thats not true.
You will have built up equity, you will be paying less in mortgage payments than rent. The rent will go up. The mortgage wont. And you can save the difference between the mortgage and what you would have been paying in rent each year. So you will be better off by the time you decide to step up, if indeed you ever feel you even need to.

Again - you arent comparing like with like.
Its affordable housing (leasehold) vs house bought on open market.
I'm not comparing the opportunity cost of rent vs sale

JDD

Ace2007 wrote: »

I’ve said it before but will say it again - the government could build 100,000 houses in green fields out past the airport, but that’s not going to solve the heat in the market. It will give low income families a home and perhaps reduce homelessness.

But is that going to affect the bidding on 500k+ houses going for higher amounts? No it’s not.

Is the government going to build enough
Masses affordable houses in Blackrock? Or in SCD suburbs? What about malahide, portmarnock, clontarf, Drumcondra glasnevin - the list in endless where houses prices are through the roof. There are already areas in dublin where houses are cheap but people say no because of a social attitude associated with such areas.

People think that the amount of houses available is the issue , but it’s more where the houses are located thats the problem - supply not available where people want.

I see where you're coming from here, but I'm not sure that's entirely true.

Of course people who grew up in Blackrock or Terenure or Clontarf might want to live there, but they also see reality and know that they might have to compromise. You might want to live in Sandycove, but will accept that you can only afford a newly built house in Cherrywood, or you might want to live in Malahide, but accept that you can only afford an apartment by the airport. That way you are not too far from family, from grandparents who might childmind etc.

And there is a trickle up effect on prices when you take the pressure off the market for first time buyers and renters.

- Building social housing will take a lot of HAP renters out of the private renting market. That will free up rental properties for lower income earners who don't qualify for HAP. And of course it will relieve the pressure on emergency accommodation which can only be a good thing. But I suppose that's a side benefit when we're exclusively talking about the housing market.
- Affordable homes (if they are actually affordable) should mean that lots of young families stuck in the rental trap can now move on to buy a property. I can tell you now that even if you want to buy a house in Blackrock if you're stuck renting a house at exorbitant rates and you have young kids you will take a new build in Cherrywood or Bray or Baldoyle just for the piece of mind of owning a house.
- An increased amount of properties for rent should put downward pressure on rents. Downward pressure on rent should take some cash buyers (including REITs) out of the market. It may mean that some of the more recent cash buyers might sell their property as it is no longer giving them the return that it once had. That means more supply, even in the high demand areas.
- If you can get a three bed new build in Cherrywood for €350k, then you're not going to buy a second hand 3 bed for €470k in Sallynoggin. So those prices might go down. If you can get a three bed in Sallynoggin for €450k, then you're not going to pay €550k for the same house on the edge of Glenageary, and so on and so forth. It all has a trickle up effect.

Ace2007

CPI over the last 10 years to April 2021 was 5.1%

So if you brought one of these affordable houses that you can’t sell on for anymore than inflation, a 300k house (would that even be affordable by definition?), would now only be worth 315k if you were to sell it.

The same 300k house in the open market environment could be worth near 40/50% more.

So how would you ever get out of the area???

You’ll end up with a new area that folk will feel a stigma to because only those that can’t afford anywhere else will live and with that may come
Social issues.

PS I have no problem with houses built for low incomes etc but it’s not going to take the heat out the market IMO.

yagan

Ace2007 wrote: »

CPI over the last 10 years to April 2021 was 5.1%

So if you brought one of these affordable houses that you can’t sell on for anymore than inflation, a 300k house (would that even be affordable by definition?), would now only be worth 315k if you were to sell it.

The same 300k house in the open market environment could be worth near 40/50% more.

So how would you ever get out of the area???

You’ll end up with a new area that folk will feel a stigma to because only those that can’t afford anywhere else will live and with that may come
Social issues.

PS I have no problem with houses built for low incomes etc but it’s not going to take the heat out the market IMO.

Does that CPI figure exclude property prices?

timmyntc

Ace2007 wrote: »

CPI over the last 10 years to April 2021 was 5.1%

So if you brought one of these affordable houses that you can’t sell on for anymore than inflation, a 300k house (would that even be affordable by definition?), would now only be worth 315k if you were to sell it.

The same 300k house in the open market environment could be worth near 40/50% more.

So how would you ever get out of the area???

You’ll end up with a new area that folk will feel a stigma to because only those that can’t afford anywhere else will live and with that may come
Social issues.

PS I have no problem with houses built for low incomes etc but it’s not going to take the heat out the market IMO.

Firstly - do you even need to get out of the area? If you need to upsize to a larger house there will be affordable houses with more bedrooms, not all 2 beds/3 beds.

Secondly, if you did want to move on - the money you will have saved by having a smaller mortgage can go towards your next house.

Finally, the more affordable houses are built, they will cool the market somewhat and price rises wont be as pronounced. If we had a section of the market with near fixed sale prices, we would not see house prices going up by 50% of their value.

Avon8

The general point here is fair I think. There's any amount of couples in their late 20s and 30s who wouldn't live in Cabra, Jobstown, Ballymun etc if you gave them the house for free. This isn't just Dubs wanting to live in the nice area their parents grew up. The standard well educated culchie route is to take a house in Kilcock or Ashbourne and then complain that you're being priced out of the city you work in and have a long commute.

There's simply not that many 'nice' areas of Dublin and demand for what's there is sky high. The natural gentrification of other areas though seems much slower here than it's been in other major cities. If you threw 100k houses out past the airport, it would have an affect but it'd still take a long time for that trickle to open supply in the 400k range with a postcode acceptable to young professionals

Summer2020

JDD wrote: »

- If you can get a three bed new build in Cherrywood for €350k, then you're not going to buy a second hand 3 bed for €470k in Sallynoggin. So those prices might go down. If you can get a three bed in Sallynoggin for €450k, then you're not going to pay €550k for the same house on the edge of Glenageary, and so on and so forth. It all has a trickle up effect.

Prices for the new 3 beds in cherrywood are starting from €500k. I got the pre launch email last week.

DataDude

Summer2020 wrote: »

Prices for the new 3 beds in cherrywood are starting from €500k. I got the pre launch email last week.

I wonder how long before the clamor starts for the HTB threshold to increase above €500k?
"People can't afford houses"
Fuel demand through subsidies
Increase prices (:eek:)
"People can't afford houses"
Rinse repeat!

JDD

Ace2007 wrote: »

CPI over the last 10 years to April 2021 was 5.1%

So if you brought one of these affordable houses that you can’t sell on for anymore than inflation, a 300k house (would that even be affordable by definition?), would now only be worth 315k if you were to sell it.

The same 300k house in the open market environment could be worth near 40/50% more.

So how would you ever get out of the area???

You’ll end up with a new area that folk will feel a stigma to because only those that can’t afford anywhere else will live and with that may come
Social issues.

PS I have no problem with houses built for low incomes etc but it’s not going to take the heat out the market IMO.

I'll take each one in turn here. You'd have to take €300k as affordable, as it means a couple would need an income of just under €40k each to afford the 3.5 times mortgage and 30k deposit. The average wage in Dublin is €47k.

There won't be any housing estate built that is all social and affordable housing. It'll be at least half private sales, then the remainder a mix of affordable and social. I understand your concern when we look at the Tullyvales and other estates in West Dublin that were knocked up during the boom with no amenities and no transport links. I think the councils have learned their lessons on that one and they are now making sure that there are town centres and schools and parks (transport always being the one lagging behind).

I think we have to accept that for an entire generation of early 30's to early 40's, there is no property ladder. So what they buy now is their forever home, and that may be in an estate that is a couple of suburbs away from their "ideal" area. The good thing about that is that the people that get the affordable houses and most of those that buy the houses sold privately are going to be in these new estates for a long time. That means they have a vested interest in making sure the estate doesn't go downhill. From talking to colleagues at work who have bought in new estates there seems to be much actual families rather than just-marrieds who have moved in and they have very active resident committees.

So those new estates have and will become gentrified. I drove up to a friend's house in Stocking Avenue near Rathfarnham. I imagine its full of families who want to actually live in Rathmines or Terenure, but this was the best they could manage. The houses are modest enough but there was enough new cars and SUVs around to tell me that the people who lived there weren't the types that would allow the estate to become stigmatized for being "the only place they could afford".

JDD

Summer2020 wrote: »

Prices for the new 3 beds in cherrywood are starting from €500k. I got the pre launch email last week.

I don't doubt it. But that's the market value price for a private buyer, and indeed the cost to the local council when they buy X% of the estate for affordable housing. But you would expect/hope that the price for affordable housing candidates would be 70%ish of the market value.

Bass Reeves

timmyntc wrote: »

The state has long moved on from building "ghettos" like Ballymun or Moyross.
It should be mix of social, affordable sale, and cost rental. Gifting people a site? You can sell them a leasehold on the property with the stipulation it cannot be resold above that value + inflation. So no speculation or no "gifting" of an expensive site.

You have a point with our construction capacity - there is definitely a cap there on how much we can build with our current labour availability. You would think commercial space will be in less demand post pandemic and that might free up some more builders. Even 30k+ a year would be a big boost - I think 2019 figure was 21k and 2020 was 20k new completions also.

The 16k is the projected figure for 2021. In late 2020 builders concentrated on completion of builds before year end. Very little new foundations or site preparation was completed in the last 3 months of 2020. This has left us along with the lockdown looking at a 25% drop in completions this year.

Those getto's were of much the same social structure as you referred to when they started. There is still a large portion of decent working people in these area's. However the concentration of delinquent's causes the issue

Ace2007

JDD wrote: »

I'll take each one in turn here. You'd have to take €300k as affordable, as it means a couple would need an income of just under €40k each to afford the 3.5 times mortgage and 30k deposit. The average wage in Dublin is €47k.

There won't be any housing estate built that is all social and affordable housing. It'll be at least half private sales, then the remainder a mix of affordable and social. I understand your concern when we look at the Tullyvales and other estates in West Dublin that were knocked up during the boom with no amenities and no transport links. I think the councils have learned their lessons on that one and they are now making sure that there are town centres and schools and parks (transport always being the one lagging behind).

I think we have to accept that for an entire generation of early 30's to early 40's, there is no property ladder. So what they buy now is their forever home, and that may be in an estate that is a couple of suburbs away from their "ideal" area. The good thing about that is that the people that get the affordable houses and most of those that buy the houses sold privately are going to be in these new estates for a long time. That means they have a vested interest in making sure the estate doesn't go downhill. From talking to colleagues at work who have bought in new estates there seems to be much actual families rather than just-marrieds who have moved in and they have very active resident committees.

So those new estates have and will become gentrified. I drove up to a friend's house in Stocking Avenue near Rathfarnham. I imagine its full of families who want to actually live in Rathmines or Terenure, but this was the best they could manage. The houses are modest enough but there was enough new cars and SUVs around to tell me that the people who lived there weren't the types that would allow the estate to become stigmatized for being "the only place they could afford".

You say it will be half private - but you still need to convince private buyers to buy in the area, If they wont' buy houses in cabra/finglas/ballymun/tallaght etc all of which have transport links and amenitites (and some walking distance to town/on Luas line), there is no guarantee they will buy in this new affortable area. What then, it could end up being 25% private buyers or less??

Regarding councils learning their lesson, only two days ago some SF lad was against the construction of apartments in his constituent because of facilitates issues, (and probably because his voters don't want new apartments and he has to be seen to help them to get re voted)

Yes because someone with aspirations of living in Rathfarnham/Rathmines or Terenure is clearly what we were talking about??? Do you think these people would consider moving out towards the airport and sharing 50% estates with folks whose incomes are much lower than themselves.

Ace2007

JDD wrote: »

I don't doubt it. But that's the market value price for a private buyer, and indeed the cost to the local council when they buy X% of the estate for affordable housing. But you would expect/hope that the price for affordable housing candidates would be 70%ish of the market value.

So would you be proposing that a private buyer would be paying the full market rate of new houses - say 300k, but the affordable housing candidate would be paying approx 210k for the exact same house on the same road?

Ace2007

Avon8 wrote: »

The general point here is fair I think. There's any amount of couples in their late 20s and 30s who wouldn't live in Cabra, Jobstown, Ballymun etc if you gave them the house for free. This isn't just Dubs wanting to live in the nice area their parents grew up. The standard well educated culchie route is to take a house in Kilcock or Ashbourne and then complain that you're being priced out of the city you work in and have a long commute.

There's simply not that many 'nice' areas of Dublin and demand for what's there is sky high. The natural gentrification of other areas though seems much slower here than it's been in other major cities. If you threw 100k houses out past the airport, it would have an affect but it'd still take a long time for that trickle to open supply in the 400k range with a postcode acceptable to young professionals

At least someone else agrees with the point

MacronvFrugals

Varadkar at leaders questions just now referring to the ESRI's report - "it may well be doable"

growleaves

Ace2007 wrote: »

I’ve said it before but will say it again - the government could build 100,000 houses in green fields out past the airport, but that’s not going to solve the heat in the market. It will give low income families a home and perhaps reduce homelessness.

But is that going to affect the bidding on 500k+ houses going for higher amounts? No it’s not.

Is the government going to build enough
Masses affordable houses in Blackrock? Or in SCD suburbs? What about malahide, portmarnock, clontarf, Drumcondra glasnevin - the list in endless where houses prices are through the roof. There are already areas in dublin where houses are cheap but people say no because of a social attitude associated with such areas.

People think that the amount of houses available is the issue , but it’s more where the houses are located thats the problem - supply not available where people want.

This is only partly true imo.

If there is a methadone clinic or drug dealers nearby then its not just about snobbery and attitude.

Only in places that used to be rough or have a bad reputation but are so no longer can you get any sort of huge discount. Because too many potential buyers are going by old or imperfect knowledge.

timmyntc

Bass Reeves wrote: »

The 16k is the projected figure for 2021. In late 2020 builders concentrated on completion of builds before year end. Very little new foundations or site preparation was completed in the last 3 months of 2020. This has left us along with the lockdown looking at a 25% drop in completions this year.

Those getto's were of much the same social structure as you referred to when they started. There is still a large portion of decent working people in these area's. However the concentration of delinquent's causes the issue

I never asked about the 16k - you said that 2020 had around 30k completions. You were wrong.

Ace2007 wrote: »

So would you be proposing that a private buyer would be paying the full market rate of new houses - say 300k, but the affordable housing candidate would be paying approx 210k for the exact same house on the same road?

You mean like private buyers pay full price for the house that social housing gets for "free" on the same road?
Its already happening, and people still buy them. This new proposal wouldnt be any different.

Bass Reeves

timmyntc wrote: »

I never asked about the 16k - you said that 2020 had around 30k completions. You were wrong.



You mean like private buyers pay full price for the house that social housing gets for "free" on the same road?
Its already happening, and people still buy them. This new proposal wouldnt be any different.

I corrected it I hit the wrong number if you check my posting elsewhere I always reference 2020 as 20 k houses.

Private buyers will only buy a houses from a government build scheme of it is sold at a large discount to market rates.

As well if government now build houses will price development be absolved of there duty to provide social and affordable percentages in there developmemts

Ace2007

timmyntc wrote: »

I never asked about the 16k - you said that 2020 had around 30k completions. You were wrong.



You mean like private buyers pay full price for the house that social housing gets for "free" on the same road?
Its already happening, and people still buy them. This new proposal wouldnt be any different.

Is it happening in government built estates currently ? Is the private buyer being told they can’t. Sell for more than impact of inflation?

jill_valentine

Apologies if I missed it, but do we have any ideas yet about the proposals in Housing For All, the Rebuilding Ireland successor plan?

timmyntc

Ace2007 wrote: »

Is it happening in government built estates currently ? Is the private buyer being told they can’t. Sell for more than impact of inflation?

No - whats happening now is that some houses in an estate are given to social tenants for cheap rent whereas others in the estate have to pay full price.
Affordable housing sales in new estates will just continue this trend.

JDD

Ace2007 wrote: »

So would you be proposing that a private buyer would be paying the full market rate of new houses - say 300k, but the affordable housing candidate would be paying approx 210k for the exact same house on the same road?

Yes.

That's *literally* the point of affordable housing.

The State understands that there is a need for certain categories of workers to live within city limits. Gardai, nurses, shop owners, security guards, supermarket workers etc etc. The State essentially subsidises housing for this category. The State has learned its lesson that it can't buy over an entire estate for affordable housing because - as has been argued above - that will stigmatise the estate and lead to issues down the line. So it buys over 20% of each new build estate whether it is in Blackrock or Tallaght. That way you have no idea whether the family that lives in No.32 paid full price or got it through affordable housing.

And so what? Is it fair that your next door neighbour paid 30% less than you? They're probably still paying the same proportion of their take home pay in mortgage payments. And they don't get to sell it at a profit. Will the fact that they earn under the average make them unsociable neighbours? I doubt it.

I mean, if we're going to make everything fair, perhaps no private buyer should be allowed to take a gift from their parents for a deposit. If we brought that in, the housing market in SCD would crash. That would be one way to stop the market overheating. I don't have a chip on my shoulder here, half my deposit came from my parents. I'm just pointing out that the whole system isn't fair, so tipping something in the favour of lower income workers is hardly turning us into a communist state.

Villa05

Jmc25 wrote:

Borrowing to build houses would be a very solid investment in my opinion, I just can't really believe we're at the point where the ESRI is saying it.

We hear alot of public servants letting us down, maybe it's government policy that's getting in the way of getting things done sensibly

Ace2007 wrote:

So you would basically be stuck in the area and would not be able to trade up to an "established area" like you perhaps wanted to.... right would love to see that being sold to people. Your ideas get better and better.

You have security of tenure, affordable purchase/rents, the savings can be spent in the local economy or a better holiday generating increased economic activity, happier families and thriving business

increased supply would cool inflation in established areas.
Increased savings would negate the need for ftb grants, shared ownership which only further inflate established areas.
With regard to mortgage arrears, we can eliminate this issue by having a safety net of affordable housing so that people in trouble with mortgages can move to the non speculative market. This would also cool inflation in established areas and create a fairer market.

Taking all these factors together the gap between non speculative and established markets would be greatly reduced. Should the occupants wish to progress to established areas. They should be able to do so with natural career progression

I'm not so sure they'd want to though we're these areas well managed

Ace2007 wrote:

So would you be proposing that a private buyer would be paying the full market rate of new houses - say 300k, but the affordable housing candidate would be paying approx 210k for the exact same house on the same road?

This is current policy

growleaves wrote:

If there is a methadone clinic or drug dealers nearby then its not just about snobbery and attitude.

Too many unemployed in one area and the grip of drugs gangs are the root cause of deterioration of housing estates.
Focus these estates on workers. Long term unemployment is very low. They should not be gathered together in one location

Ace2007

timmyntc wrote: »

No - whats happening now is that some houses in an estate are given to social tenants for cheap rent whereas others in the estate have to pay full price.
Affordable housing sales in new estates will just continue this trend.

Cheap rent, is different from buying the house cheaply and under market value.

You seem to have no problem that two houses could be sold to two buyers - one an "affordable house candidate", and the other a private buyer - but at vastly different prices.

Your going to end up with a pubic market for houses - which who knows what sort of sh!t show that will end up in, and the private market - the market that will see how prices go up and up as more people will want this type of housing.

I can't think of one project that is publicly funded en mass that you would say has been a success. Dare i say what your proposing is basically what Ballymun was proposed to be when it was first built