Softening house market?

monkeybutter

https://www.boards.ie/discussion/comment/119045244#Comment_119045244

once you buy, the future price of houses becomes of little consequence, other than a gamble on if you won or lost in how much you paid

the chances are high that if you hold onto it for say 10 years, it will go up

You need somewhere to live

in 2000s people said rent, now this isn't even a viable option

HerrKuehn

https://www.boards.ie/discussion/comment/119045257#Comment_119045257

I haven't had much of an opinion on housing for the last 8-9 years to be honest. I was bearish from 2006 until 2012. I started looking in 2012 based on the change in sentiment I was reading on the propertypin. I bought in early 2013 and am nearly finished the mortgage. I think that we are at an inflection point now again.

monkeybutter

https://www.boards.ie/discussion/comment/119045270#Comment_119045270

why do you think that

HerrKuehn

https://www.boards.ie/discussion/comment/119045280#Comment_119045280

Well as I mentioned in another post, interest rates will rise significantly reducing the ability to service a mortgage. High inflation will reduce disposable income and have a knock on effect in the economy.

Bluefoam

https://www.boards.ie/discussion/comment/119045268#Comment_119045268

Increased property value gives more security on the mortgage and equity in the property... Gives owners greater financial stability and access to money...

monkeybutter

https://www.boards.ie/discussion/comment/119045321#Comment_119045321

you mean to refinance? is anyone even doing that?

if not makes little difference

Bluefoam

https://www.boards.ie/discussion/comment/119045327#Comment_119045327

Not necessarily... low risk loans to invest, start businesses etc... allows you to turn your equity into more money if you have that kind of stability.

Wanderer78

https://www.boards.ie/discussion/comment/119045299#Comment_119045299

....and if and when rates are raised, will central banks be forced to stall increases, or maybe even back track, due to this fall out?

JimmyVik

https://www.boards.ie/discussion/comment/119045358#Comment_119045358

I know people doing it and locking the interest rate at 2% for 5, 10 and even more years. With in inflation going up this can be a good option if you have something you want to spend money on now. Certainly better than getting a porsonal loan. But personally i dont like loans at all, so would not ever refinance for more than i owed already on a mortgage.

HerrKuehn

https://www.boards.ie/discussion/comment/119045369#Comment_119045369

Well, the ECB typically lags quite a bit in getting going with interest rate rises and cuts. Once they start in July, we are going to see multiple rises over the next year. Who know what will happen after that.

Wanderer78

https://www.boards.ie/discussion/comment/119045382#Comment_119045382

we could, but with rapidly rising uncertainties, i wont be surprised if theres a stall in rates rising, possible even a back track, interesting, but kinna scary times ahead

monkeybutter

https://www.boards.ie/discussion/comment/119045358#Comment_119045358

re-mortaging to invest, ok we have gone all 2007

Xidu

Recently I have constantly checking daft supply and sales agreed. I honestly don’t see any softening. Some houses are even closed w a shocking price.

in general the world’ supply chain is in shortage and we are only just seeing the beginning of it.

Pussyhands

https://www.boards.ie/discussion/comment/119045190#Comment_119045190

Looking ahead to when you're 70 and assuming the same scenarios that are in play now, will be the same ones in play in 30 years time is short term thinking.

8 years ago rent was relatively cheap.

This is the human psychology thing spoken about before. People think rent is hard now so they think it'll always be the way forever, when things were the opposite 8 years ago.

You see the same thing with climate change. "X species is going to be extinct soon and it's due to climate change" when species have been becoming extinct for millions of years. If humans were around the same time as dinosaurs we'd probably say climate change caused their extinction!

Wanderer78

https://www.boards.ie/discussion/comment/119045399#Comment_119045399

funnily enough, climate change is real, and us humans are creating it, and have done little or nothing about it, so here we are....

JimmyVik

https://www.boards.ie/discussion/comment/119045399#Comment_119045399

So you are predicting that rent will be cheap in another decade or two. The one thing I will 100% predict with confidence is that it wont. :)

Cant predict anything else though.

And I certainly wouldnt want to risk not being able to afford it if i could do something about it now.

timmyntc

https://www.boards.ie/discussion/comment/119045723#Comment_119045723

Money on?

markodaly

https://twitter.com/Schuldensuehner/status/1524367793940049921

Inflation still rising in the US.

8.3% at the moment. This will mean ever further rises in interests rates

If you want to look at what's happening, we have to look at the US first and foremost and especially the Fed.

They want to try and raise interest rates, taming inflation but keep the economy in the green. The Fed has never been able to achieve that though in all its history, as in raising interest rates while inflation is this high without tipping the economy into recession.

Secondly, Ireland is a very open, export-oriented economy. If the world economy is doing well, we do very well. If the world economy is doing badly, we will do very badly. There is a multiplier effect in play.

Now, how this plays out in the Irish housing market is anyone's guess. We could be looking at peak prices around now, then a kind of stagflation for a few years. I don't see a massive crash though.

Tombo2001

https://www.boards.ie/discussion/comment/119043003#Comment_119043003

Ah now - I wouldnt agree with this. Yes, lots of people had trackers. But interest rate rises werent really the reason for the crash. At least not in Europe.

ECB rates never got higher than 4.5%, and they were higher in 2001 than in 2006.

HerrKuehn

https://www.boards.ie/discussion/comment/119046054#Comment_119046054

30 Yr UST are trading above 3%, if rates go much higher it will become attractive for pension funds to buy bonds instead of chasing yields in the property market potentially. Often they are just looking for yields of 4% or so to cover their long term obligations. It is all very uncertain, I think the first time there have been serious clouds on the horizon in quite a long time. Obviously we had covid recently but I think expectation was that as soon as it was over everything would go back to normal.

Gusser09

The market is seriously fragmented across the country though. You can't apply the same rules or market circumstance in Dublin or commuting areas as you would to the Limerick, Galway or Waterford for etc. I actually think any unlikely collapse will affect less of an area this time. After all places like Tullamore and Mullingar are considered as being in the commuter belt now :)

HerrKuehn

https://www.boards.ie/discussion/comment/119046214#Comment_119046214

I don't think there will be a collapse. But I would say during the last bubble Gorey was considered part of the Dublin commuter belt too.

Diemos

https://www.boards.ie/discussion/comment/119045327#Comment_119045327

We've been able to switch mortgages get locked down at a lower interest rates as the equity increase has allowed us to move LTV bands.

JimmyVik

Remember the CB rules are putting the brakes on Dublin at the moment too. Wage inflation will allow banks to lend more.

porkmaster

Ten deliveroo drivers using one work permit will pay off my 3 bedroom mortgage for the next 35 years and it is very reliable.

Tax payer money being used to outcompete taxpayers and keep raising prices is a solid plan for the next 50 years.

Investment firms buying entire developments off plans to fund the cheesemakers union pensions of Ougadougou was always going to be a winner for Ireland.

War. Refugees. Homelessness. Material cost. Impending pension implosion. Inflation. Shrinkflation. Logistics. Lockdowns. Transport. Energy.

The fundamentals are sound. A softening of the market of maximum 3% before September and then back to normal. Feather duvets, 0.5 gravity, lullabies, you won't get any softer of an outcome. Go ahead and bet on it.

HerrKuehn

https://www.boards.ie/discussion/comment/119046673#Comment_119046673

Chapeau! Almost reminds me of Mark Renton's "Choose Life" speech in Trainspotting.

houseyhouse

https://www.boards.ie/discussion/comment/119045200#Comment_119045200

Where are you based if you don’t mind me asking? We’re looking to do a similar extension and go from 3 to 5 beds and we’re being quoted 3k/sq meter before VAT and fees. Would be only delighted to get the job done for 130k!

Gusser09

https://www.boards.ie/discussion/comment/119047016#Comment_119047016

LOL in North Kildare. Crazy stuff really when you think about it.

seamus

I think the whole BER thing is questionable anyway.

It's certainly very, very rough. I remember talking to a certified BER assessor about it, and at the end of the day it involved plugging numbers into an application that then spat out a rating. It was very clear that there were some modifications you could make that had a much bigger effect than others. At the end of the day, a house built pre-2000 could be brought from an F or G to a C2 or C3 with relatively little outlay - certainly stuff you would do even without the BER system like replacing windows and boilers. Above that you have the paradox of increasing costs for diminishing returns. You will virtually never get it above a B2 without a massive structural refits, and the cost of getting from a C2 to B2 you will never recoup even if you live there for a century.

porkmaster

https://www.boards.ie/discussion/comment/119047012#Comment_119047012

Choose the future!

https://ibb.co/S3sSf1b

porkmaster

https://ibb.co/sVsq8gZ

Sharing beds with strangers? Why not?

I want to invest in this long term, fool proof, sustainable housing market. Sign me up for €450,000 and 40 years, quick! Wait, make that €600,000, let's go!

The fundamentals are sound, 2.7% softening guaranteed.

Jonnyc135

https://www.boards.ie/discussion/comment/119045190#Comment_119045190

Have a look at the ERSI rental equivalent model for calculating housing inflation. It is flawed to say the least. I have been trying to get more details of Conor OToole, who is the research model author amd no luck.

This inflation model is used and baked into Irelands overall CPI inflation number, so a wrong downplayed housing inflation number down plays our overall inflation.

 "Furthermore, we show there are considerable differences in the inflation rate if new relative to existing rents are used in the rental equivalence measures with measures based purely on existing rents biasing downwards both the rental equivalence measure and the overall consumer price index. This suggests that considerable care is required for policymakers in using rental equivalence methods in the presence of data gaps" - taken from the Abstract  

More people now than ever entering the new rental market side as they are comming back to the city from WFH, so the weighted constant ratio for long term rental vs new rental used to validate this model to the original housing CPI is now totally off.

Mad_maxx

https://www.boards.ie/discussion/comment/119046214#Comment_119046214

the market is extremely expensive everywhere right now , nowhere is ever comparable to Dublin quite obviously

The upper end of the Dublin market is probably the least over priced , its still at least 15% off 2007 highs , many markets are at or above the 2007 peaks

point being its all relative

Sebastian Dangerfield

https://www.boards.ie/discussion/comment/119045241#Comment_119045241

An end of terrace house, directly across from a school where cars park and drop off morning, noon and afternoon, which hasnt been decorated in about 40 years.

sk8board

https://www.boards.ie/discussion/comment/119047878#Comment_119047878

prices rise in dublin and then ripple out across the country with a 1-2 year lag.

at the moment, there are Dublin houses in the silly levels (€3m+) which are selling at/below list - that market is the tip of the pyramid, so ‘normal’ dublin 3-bed semi’s probably still have a year of rising to go (probably what you were referring to, sorry), and then another 6-12mnths for the same prices to top out in commuter counties, then the remaining cities, then the rural countryside.

it’s worked like that forever, but my point is - at the moment, the houses as the top of the pyramid are struggling to sell for their multi-million asking prices - that’s the canary in the mine for the next few years of house prices

Donald Trump

https://www.boards.ie/discussion/comment/119045268#Comment_119045268

That is somewhat true, but not completely if your horizon is short-medium term. If you buy a property at a relatively high LTV as a starter home with the plan of "upgrading" in a couple of years, and if a crash then leaves you in negative equity, you might find it difficult to make the move.

Mad_maxx

https://www.boards.ie/discussion/comment/119049724#Comment_119049724

like stocks ( though less so overall ) , these things have a cycle , we are ten years into the current cycle with property prices , add to that we are returning to the 2007 peak , that in of itself is an important milestone , regardless of external forces , it would not be surprising to see a pause for a couple of years before we see another leg up ( thats assuming a recession or property correction occurs )

sk8board

https://www.boards.ie/discussion/comment/119049758#Comment_119049758

We can’t forget either that 2007 was 15 years ago - in a normal market, house price inflation moves in line with wage inflation - wages have about 20% inflation in real terms in the past 15years, notwithstanding far higher wages and wage inflation in the multinational industries we’ve grown here in that 15 years.

so in reality prices aren’t back to 2007 levels in terms of affordability, only in terms of absolute price.

One final point - the 2007 price levels were achieved with wreakless lending practices, whereas this time around its being reached within v strict lending rules - which makes it a far more stable price level than the 2007 house of cards.

its a crucial but massive difference.

Pussyhands

https://www.boards.ie/discussion/comment/119047084#Comment_119047084

BER is as you said simply a calculator based on the type of stuff you have in your house.

i.e What type of boiler, whether it has lagging jacket, types of windows, attic insulation, wall insulation etc. Anyone can actually download the software the BER lads use and do it themselves to get an idea. Only BER assessors can give certs.

The software is called dwelling energy assessment procedure

https://www.seai.ie/home-energy/building-energy-rating-ber/support-for-ber-assessors/software/deap/

Mad_maxx

https://www.boards.ie/discussion/comment/119049795#Comment_119049795

agreed but the milestone of 2007 being retaken is not irrelevant , when stock markets correct sharply , they often test previous " important " highs or lows , there may be no rational science to it but they strike a chord none the less , the 2007 peak is commonly spoken of in property reports so regardless of differences in terms of lending practices or wage levels , its a benchmark which is used , for all i know the market will plough through 2007 prices without looking but i would not be surprised if it paused for a while now even we see no global recession , prices are easily up 20% in the past two years and more in many places

tabby aspreme

A total of 850 house's advertised nationwide for rent at the moment, with such a scarcity it will be a while before prices drop

sk8board

https://www.boards.ie/discussion/comment/119050051#Comment_119050051

For sure - the 2007 prices are burned into our minds. A psychological scar :)

Pussyhands

https://www.boards.ie/discussion/comment/119050065#Comment_119050065

If people don't have the money to afford the rent, no one will actually rent it.

sk8board

https://www.boards.ie/discussion/comment/119050203#Comment_119050203

it’s a bit of a moot point though - you assume everyone has equal share of wealth (which is absolute Socialism or absolute communism, depending on your point of view).

Donald Trump

Increase in rates, coupled with inflation plus a slowdown in the global economy (if current tumbling of global markets isn't a blip) might see more availability of people renting out spare rooms.

Not a solution overall, but might suit some.

quokula

https://www.boards.ie/discussion/comment/119049741#Comment_119049741

More than that - you have to actually live in the house you buy. If my budget is X and that can get me 100sqm today but if I hold out and prices drop I could get 130sqm in a better location for the same price in future - that's a massive difference to my quality of life and my children's upbringing over the long term, regardless of if it means I pay off my mortgage a few years later.

That's a massive "if" since we don't know what will happen to prices, but the idea that price changes don't matter if you're not treating the property as a pure investment doesn't make sense to me.

Donald Trump

https://www.boards.ie/discussion/comment/119050260#Comment_119050260

There is a legitimate point that if you are there long term, and have no intention of moving, the current price doesn't affect you. Whether your house doubles or halves, won't really affect you (well unless you consider remortgaging with a better LTV etc). Plenty of people who bought in the madness 15 years ago were left with nominally high mortgages but relatively cheap repayments due to tracker rates (i.e you might have a 20 year mortgage on a tracker for 200k and your repayments might be more than your neighbour with a 20 year 150k non-tracker mortgage)

Pussyhands

https://www.boards.ie/discussion/comment/119050511#Comment_119050511

This idea that prices don't matter even in the case where you won't move will be looked back on in a few years as a sign of the madness of the market.

It's partially a reason why house prices are insane. "Ah sure let's throw another 20k onto our bid to secure the house, sure it doesn't matter anyways"

Sure, if you keep your job, it doesn't matter to you in terms of keeping the house etc. but you'll be looking out at your new neighbours knowing they're paying way less of a mortgage than you are.

It's funny because most people want to buy because mortgages are cheaper than rent so it's a monetary decision yet when it comes to a monetary decision turning out to be awful, it's "doesn't matter".

If rent was cheaper than mortgages, then there'd be a big drop in the number of buyers looking to buy.

awec

https://www.boards.ie/discussion/comment/119050661#Comment_119050661

Nobody is going to be looking at their neighbours wondering what their mortgage is. This is a daft notion.

On the overwhelming majority of streets in Ireland (and indeed, all around the world) neighbours are going to have vastly different mortgages.

Supercell

My wife told me that our neighbours house went sale agreed after being on sale no more than three weeks. So much for softening, the price they had it advertised I thought was optimistic but apparently not too much so.