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

herbalplants

https://www.boards.ie/discussion/comment/121897113#Comment_121897113

Nobody said property prices should crash so you are blowing this out proportion. What is been said is property prices currently are too high for a lot of average people. That is completely different than a property crash.

As an example, I seen a property for sale in October for X, the sale fell through then agent advertised it again for X+50k!!! That is since October. I doubt anyone made 50k more in their salary from October. That is just few short months agent hiked price by 50k plus obviously wants more than asking, he is playing the bidding game.

This is an issue with lack of transparency and hardly advocating a property crash.

PeadarCo

https://www.boards.ie/discussion/comment/121897946#Comment_121897946

Anyone arguing that house prices should average 300k is calling for a housing price crash. A drop of 30%(assuming current average is 430k) is big. We had at least one political party arguing that. And that's before you factor in inflation with is relatively high making the real price decrease even bigger than the nominal would suggest.

A drop of that magnitude would make the housing crisis worse as it would become uneconomic for anyone to build new houses. Remember after the crash at the end of 00's house building nearly stopped because second hand homes where cheaper than new builds. It's one of the reasons we have a housing crisis. A lot of houses that were needed long term didn't get built and the capacity of the construction sector dropped(abet from arguably an unsustainable level) as construction workers either emigrated, found alternative employment or just retired and not enough new people were trained during this period. When the economy and banking system recovered there hadn't been the capacity in the industry to keep up with demand.

Central bank rules impose strict limits on how much people can borrow and effectively put a ceiling on house prices. The issue with the housing situation in Ireland is that there are not enough houses due to a whole range of different issues. Housing is affordable in Ireland, Irish Central bank and ECB rules basically force banks to be conservative when lending. The problem is there is no where near enough affordable housing. Anything that would cause average nominal house prices to drop to 300k or drop in general in a period of relatively high inflation is going to have a big knock on impact on the economy in general.

Remember back in 2009,2010 house prices were low but not very affordable because of how difficult it was for a lot of people to get mortgages to buy.

Montys return

What I'm curious about is the idea that in order for supply to increase house prices have to appreciate.

What is the rationale behind that if somebody could explain? I am open to the idea if somebody can break down the mechanics of it just not sure how it would have to be the case?

If the builders are making a profit on current output, surely scaling up the output means more absolute profit even if still the same as a percentage of costs? Or is it because of inflation, that we expect input costs to rise so house prices must rise by the same in theory? But say for example if we found a way to import cheaper labour, or maybe alternative sources of materials that are cheaper are we open to the idea that costs could actually decrease even if supply increased?

Admittedly, not sure how practical it is but I just see people make such ardent arguments that prices and supply have to move in the same direction...I'm not sure if product pricing or indeed asset pricing typically works that way so I'm just curious on the theory behind it.

timmyntc

https://www.boards.ie/discussion/comment/121898567#Comment_121898567

It may have been true a decade ago, it no longer holds true. We have long since passed the point of profitability for new build housing in terms of build costs, soft costs and availability of finance is another story. But it will not be solved by higher prices either

herbalplants

It is clear which country is the most delusional one when it comes to property prices.

https://www.irishtimes.com/property/residential/2024/03/15/what-will-295000-buy-in-france-romania-sweden-spain-and-wexford/

beggars_bush

https://www.boards.ie/discussion/comment/121900161#Comment_121900161

Never understood the obsession with comparing property here with other countries

Villa05

https://www.boards.ie/discussion/comment/121893867#Comment_121893867

Again, I'm bemused that such a financially literate person as yourself thinks you, or other literates, will be unaffected by the economic conditions which would lead to such a drop, and that suddenly buying houses will become easier. Was it easier in 2009 for the average earner to buy a house because property prices plummeted? Lord knows there were plenty of houses to buy

Its puzzling that posters believe that price falls would lead to such catastrophe, if prices were rising at rates we'll above general inflation, price falls would be a corrective process that help prevent a more serious crash in the future.

As for banks: mortgages have been paid down faster than new ones can be issued. This would suggest that banks would be in a far better position than 08 while also suggesting that individual homeowners have learned the lessons of the crash. When will the political, financial and developer sectors start learning?

Maybe it's a function of who carries the cost of higher house prices while the minority that benefit most are bailed out and unaccountable when disaster hits

This is why 60%+ of homeowners would like to see a correction in house prices

Dav010

https://www.boards.ie/discussion/comment/121901184#Comment_121901184

It shouldn’t be puzzling to you.

You just have it consider what type of catastrophic event has to occur for prices to fall from 440k to 300k and ask yourself how those events could not impact the ability to buy a home.

If you don’t want to consider it, just look back to the last recession, there were a lot of houses for sale, how come everyone wasn’t able to buy a home when there was oversupply?

What is the correct price for a home? I have never seen a definitive answer to that as the price of a home is so dependent on how many people want it, and what they are willing to pay.

Donald Trump

https://www.boards.ie/discussion/comment/121900194#Comment_121900194

The generic refrain from plenty (on here and elsewhere) is that houses here have to be whatever price they are now (plus a bit more) because it is strictly impossible to build them for cheaper. So it is helpful to see that plenty of other countries can set up their systems so that it's not impossible for them.................

In reality, what you are paying 300k for with the Wexford house is just the ability to build a house (albeit with the constraint of having to incorporate the existing structure). The fact that it can be "worth" it to pay that amount points to severe structural dysfunction.

timmyntc

https://www.businesspost.ie/news/exclusive-government-finally-admits-housing-targets-significantly-below-demand/

Dept of finance has all sorts of red flags going due to state intervention in property market at all time highs.

As dept of housing is likely to increase its targets from 33k to 50k, dept of finance advising that homebuilding is already over depending on state financing, and any increase to 50k will likely mean more state funding needed.

The current situation in which the state is already heavily supporting the construction of high-density housing, coupled with a likely increase in the target for such housing by c 60 per cent, illustrates the critical need for long-term institutional capital. Investment of this sort is highly dependent on viability, which is currently significantly constrained,” the memo said.

Thargor

My God Im so glad I bought last year, literally no matter how sh1t a day its been at work the house makes it all better.

Jmc25

What if prices were to stay steady for a few years and wages continue to increase? Houses prices decline in real terms but no one goes into negative equity.

An extremely difficult balancing act no doubt that would need to come into being by luck more so than policy.

If were possible - people who want prices to drop so you can buy a house, would you be happy?

People who argue that house price drops would be a bad thing, would you be happy?

Nermal

https://www.boards.ie/discussion/comment/121898461#Comment_121898461

A price crash doesn't have to lead to a collapse in building. Loosen planning & building regs and/or import cheap labour and it will become profitable to construct and sell for 300K or less. We create scarcity and high prices through legislation, we can correct them through legislation. It just suits the most powerful of us to pretend it's impossible.

CorkRed93

https://www.irishexaminer.com/news/arid-41354632.html?utm_source=dlvr.it&utm_medium=twitter

dont threaten us with a good time

DataDude

https://www.boards.ie/discussion/comment/121904992#Comment_121904992

I suspect this is the Goldilocks outcome for the Government and most non-extreme individuals.

It looked to be heading that way late in 2022 and into early 2023 with wages outpacing house prices by between 2-5%, but it seems that unfortunately house prices are taking off again.

PeadarCo

https://www.boards.ie/discussion/comment/121905019#Comment_121905019

Lossen housing regulations? That's just repeating the mistakes of the past. There are issues with a lot of late Celtic Tiger developments because of a lack of regulation and enforcement.

The point about planning is fair but sorting out the planning situation is complicated by lack of resources and dealing with NIMBYs and associated politicians. The government has tried to fast track planning but that hasn't worked due to court cases. It's complicated and you can't just legislate certain problems away.

https://www.irishtimes.com/business/economy/2024/03/17/governments-fast-track-housing-plan-comes-unstuck-in-the-courts/

But I'd disagree that a huge increase in building will cause a housing crash for the simple reason it makes time for houses to be built. You are talking about years to get even a small house built when you factor in the time for planning, financing, building etc.

An increase in house building is required but that would moderate any price increases. A big increase in houses won't cause prices to decrease to 300k. That's just fantasy as the amount of houses required (at least of any remotely adequate standard) cannot be magiced into existence.

It's important to also understand the difference between nominal house prices and real/inflation adjusted house prices. If house price increases lags behind wages increases housing may become more affordable even if in nominal terms house prices rise.

PommieBast

https://www.boards.ie/discussion/comment/121905073#Comment_121905073

My understanding was that STLs already needed planning permission, or that just a Dublin thing?

herbalplants

https://www.boards.ie/discussion/comment/121904992#Comment_121904992

I doubt wages will continue to raise. Good few companies are opening branches in cheaper locations. I know of couple of places where employees received a memo about salary freeze (one of these companies is in real estate valuations).

I could be wrong of course.

combat14

only thing keeping property prices up here now are vulture funds and the bank of mam and dad - renters finding it impossible to save deposits with nose bleed extortionate rents here

Dav010

https://www.boards.ie/discussion/comment/121906073#Comment_121906073

You don’t think the number of high paying jobs, population increase, cash buyers and lack of supply etc are playing a part?

herbalplants

https://www.boards.ie/discussion/comment/121906356#Comment_121906356

What is the percentage of full cash buyers at the moment?

DataDude

https://www.boards.ie/discussion/comment/121905904#Comment_121905904

You would be in the extreme minority with a prediction like that.

Unemployment continuing at record lows, absurd levels of government surpluses, significant cohort of the population locking in 4% p.a. rise for next 2.5 years with PS pay deal.

The question really isn’t if wages continue to rise. It’s, will they rise by 3%, 5% or more? This year will almost certainly be at least 4% for most. 2025 and 2026 - harder to say.

https://archive.ph/c9BUo

J_1980

https://www.boards.ie/discussion/comment/121906492#Comment_121906492

https://www.owenreilly.ie/marketintelligence/dublin-4-residential-market-update-2024/

dublin4 report

• 33% of buyers required no mortgage funding.

https://www.owenreilly.ie/marketintelligence/the-owen-reilly-report-2024/

42% no mortgage across all sales. OwenReilly is pretty big in central Dublin and probably representative.

selling my d4 apartment, all interested buyers were cash

timmyntc

https://www.boards.ie/discussion/comment/121906625#Comment_121906625

Strictly speaking, no mortgage required is not the same as a cash buyer. No mortgage required includes those in a chain (selling & buying). Many people take cash buyer to exclude chains

PommieBast

https://www.boards.ie/discussion/comment/121906700#Comment_121906700

Good point - in some ways having a chain is a bigger turn-off than being a mortgage buyer.

combat14

https://www.boards.ie/discussion/comment/121906356#Comment_121906356

a huge chunk of all dublin apartments are being gobbled up by investors and the state

herbalplants

https://www.boards.ie/discussion/comment/121907113#Comment_121907113

So there is the correct answer. There may be 42% of non mortgage buyers but they are investors and the State.

Blut2

https://www.boards.ie/discussion/comment/121907113#Comment_121907113

94%+ of apartments, to be specific.

"Homebuyers account for less than 6 per cent of apartment purchases in Dublin

Homebuyers only purchased just 523 of the 9,100 apartments built in Dublin last year, a new analysis has shown."

https://www.businesspost.ie/news/homebuyers-account-for-less-than-6-per-cent-of-apartment-purchases-in-dublin-report/

Which is a pretty awful figure.

J_1980

99% of irish people don’t want to buy apartments, even at “construction costs” only.

timmyntc

https://www.boards.ie/discussion/comment/121908916#Comment_121908916

Source?

Or did you just 'reckon' it was the case because your views are representative of the man on the street