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Property Market 2018

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    #3182
    mkdon
    Registered Users Posts: 419 ✭✭mkdon


    The_Conductor wrote: »
    Thankfully they copped the Jan 2006 = 100 and not the peak of the property market- that seems to have eluded the Irish media.
    I'm not buying their hypothesis though- its only one aspect of the market that they are looking at- and they are gilding over or totally ignoring other aspects.
    Time will tell- but the rosy picture they are painting- is not nearly as healthy as they seem to be insistent on suggesting...........

    not that rosy a pic pretty balanced with an emphasis on the uncertain road ahead and the fact we are a small economy susceptible to a crash


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    #3183
    Zenify
    Registered Users Posts: 861 ✭✭✭Zenify


    mkdon wrote: »
    The_Conductor wrote: »
    Time will tell- but the rosy picture they are painting- is not nearly as healthy as they seem to be insistent on suggesting...........

    not that rosy a pic pretty balanced with an emphasis on the uncertain road ahead and the fact we are a small economy susceptible to a crash

    Very positive headline, not very positive article.


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    #3184
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    20181215_EUC028.png

    I’m intrigued by the different ways in which rent prices and property prices have evolved (chart on the right).

    Rents are now 50% above the reference value and property prices are still 10-20% below.

    I guess part of the explanation is that back then, excessive lending was pushing up prices to the roof. But still that’s a major gap and I’m not sure this alone can explain it.


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    #3185
    [Deleted User]
    Posts: 17,728 ✭✭✭✭ [Deleted User]


    As well as first-time buyers in the boom there was a huge amount of trader uppers.....that's not happening now to anywhere near the extent it was.

    The central bank limits are keeping a lid on things nicely pricewise Imo compared to days gone by.

    Rents being high is simply supply and demand...... loads working.... immigration (the googles & facebooks employ loads of folk not from here) .... & of course air b&b has taken thousands of properties away from being let residentially


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    #3186
    Arthur Daley
    Registered Users Posts: 4,459 ✭✭✭Arthur Daley


    Bob24 wrote: »
    I guess part of the explanation is that back then, excessive lending was pushing up prices to the roof. But still that’s a major gap and I’m not sure this alone can explain it.

    I think it's that you might/have to cobble together a few grand for the sky high monthly rent, it is temporarily achievable, albeit the rents are stretching the bounds of reality for a while now.

    But house prices of 300k on average hit a natural barrier with the deposit. It's not that government, and the various interests in the property industry don't want prices to go to the moon. It is just that even in the Irish property market there are some constraints, and if you can barely afford to live, you ain't raising 50 or 60k for a deposit. So that acts like a drag on house prices. It was the same in 2006/2007. What can't continue, won't continue. But it'll be the market putting a stop to it. Not some 'authority' or other.


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    #3187
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    What are we saying then?
    1) that rents are temporarily high and need to crash to join property prices again at their 2006 ratio
    2) or that rents will stay at that level and need property price to start rising faster than rents over time so that the two meet again at the top rather than the bottom
    3) or simply that the 2006 ratio was abnormal and that today’s new ratio is fine as it is? (i.e. the much higher rent/property value ratio we have in 2018 is the new normal and the lower one we used to have in 2006 is to be forgotten about)

    Has to be one of those option (or a combination of them), but I honestly still can’t grasp a clear answer to that question.


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    #3188
    [Deleted User]
    Posts: 17,728 ✭✭✭✭ [Deleted User]


    The 2006 ratio was all wrong to be fair.
    there used to be a rule of thumb that a property should generate 1/15th of it's market value in rental income per annum.

    €1500/month probably rents you a €250k property now but back in 2007 a €250k "investment" would have been rented out for under €1000.

    It should cost more to rent than to buy, we are in that situation now. It doesn't suit some folk but such is life. The fact that longterm renting in Ireland wasn't the done thing for many and that we (as a nation) aren't really set up for it is incredibly unfortunate but I reckon it'll take decades for enough housing to be built to allow folk the option to rent at reasonable cost or to purchase at reasonable cost.

    I can't see rental prices falling low enough to go near the 2006 ratio again. Buy to let folk were buying at prices back then that made zero sense, and folk borrowing to do so were off their tree financially but so many were doing so it became the norm. It was incredibly high risk investing in property that had a gross rental yield of under 5%, total lunacy really when the funding was a mortgage.


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    #3189
    DubCount
    Registered Users Posts: 1,072 ✭✭✭DubCount


    Bob24 wrote: »
    What are we saying then?
    1) that rents are temporarily high and need to crash to join property prices again at their 2006 ratio
    2) or that rents will stay at that level and need property price to start rising faster than rents over time so that the two meet again at the top rather than the bottom
    3) or simply that the 2006 ratio was abnormal and that today’s new ratio is fine as it is? (i.e. the much higher rent/property value ratio we have in 2018 is the new normal and the lower one we used to have in 2006 is to be forgotten about)

    Has to be one of those option (or a combination of them), but I honestly still can’t grasp a clear answer to that question.

    In my opinion, there is an option 4. I believe the ratio of rent to property prices has been altered by Government legislation that has changed the risk element of providing rental accommodation. I think this a structural change which means that (if legislation remains at current position) there is not a major correction coming to either the rental market or the property market.


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    #3190
    LotharIngum
    Registered Users Posts: 210 ✭✭LotharIngum


    The_Conductor wrote: »
    Thankfully they copped the Jan 2006 = 100 and not the peak of the property market- that seems to have eluded the Irish media.
    I'm not buying their hypothesis though- its only one aspect of the market that they are looking at- and they are gilding over or totally ignoring other aspects.
    Time will tell- but the rosy picture they are painting- is not nearly as healthy as they seem to be insistent on suggesting...........


    Not a very well researched article at all. How can you write an article like that without mentioning the effect rent controls is having on the rental market.
    You could bury your head in the sand about the damage caused by rent controls before, but you cant anymore.
    Imagine if someone had of advised the government of the effects of rent controls. oh wait ..


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    #3191
    Villa05
    Registered Users Posts: 4,526 ✭✭✭Villa05


    LotharIngum wrote:
    Imagine if someone had of advised the government of the effects of rent controls. oh wait ..

    Maybe they did take the advise and come to the conclusion that the policies implemented would drive up rent and property prices.

    This appears to be be the outcome of all government policy so perhaps this was the Governments objective all along.

    Homelessness is just collateral damage which they seem to be normalizing


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    #3192
    Bubbaclaus
    Registered Users Posts: 4,461 ✭✭✭Bubbaclaus


    It looks like there's goig to be over 30k planning permission approvals this calendar year. Apartment approvals up 200%. Heading step by step in the right direction.


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    #3193
    UsBus
    Registered Users Posts: 1,390 ✭✭✭UsBus


    Feels like there's a perfect storm gathering pace around the world. US stock market is starting to look like mush. There's hardly any sales going up on daft the last month, I know not much happens at Xmas but you would always see stuff the last few years. Could be a very interesting January with the Brexit mess and the negative sentiment growing and the US China row..

    Definitely a feeling of deja vu with markets recently..


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    #3194
    bri007
    Registered Users Posts: 1,375 ✭✭✭bri007


    I thought that too up until this week when every house we were viewing and bidding on has risen over €30-50k over asking price so far blowing us out of the water.

    It was slow the last few month prior to this month but the last few weeks every house has gone up well ablive asking in the areas they couldn’t even get below asking since the summer?
    UsBus wrote: »
    Feels like there's a perfect storm gathering pace around the world. US stock market is starting to look like mush. There's hardly any sales going up on daft the last month, I know not much happens at Xmas but you would always see stuff the last few years. Could be a very interesting January with the Brexit mess and the negative sentiment growing and the US China row..

    Definitely a feeling of deja vu with markets recently..


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    #3195
    [Deleted User]
    Posts: 17,728 ✭✭✭✭ [Deleted User]


    UsBus wrote: »

    Definitely a feeling of deja vu with markets recently..

    I'm a firm believer that you won't see a serious crash coming. If that's what your Deja Vu feeling is of.


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    #3196
    Zenify
    Registered Users Posts: 861 ✭✭✭Zenify


    bri007 wrote: »
    every house we were viewing and bidding on has risen over €30-50k over asking price so far blowing us out of the water.

    What areas?


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    #3197
    zl1whqvjs75cdy
    Closed Accounts Posts: 4,042 ✭✭✭zl1whqvjs75cdy


    bri007 wrote: »
    I thought that too up until this week when every house we were viewing and bidding on has risen over €30-50k over asking price so far blowing us out of the water.

    It was slow the last few month prior to this month but the last few weeks every house has gone up well ablive asking in the areas they couldn’t even get below asking since the summer?

    Exemptions coming into play now for the first quarter of next year. If you sale agree now realistically it'll be well into Feb by the time you draw down. If you want one of the exemptions you'd want to be sale agreed by end of January latest I'd say. Housing market is unintentionally starting to resemble the new car market.


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    #3198
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    Bob24 wrote: »
    CSO figures for October: https://cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexoctober2018/

    Looking at Dublin historical values since the recovery started for a bit of fun:
    - Oct 2018 107.9
    - Oct 2017 101.5
    - Oct 2016 91
    - Oct 2015 85.8
    - Oct 2014 84
    - Oct 2013 65.7
    - Oct 2012 58

    So in absolute value the 6.4 points increase since last year seems to be in the middle of the bunch - far less that the madness of 2013-2014, much more that the subsequent cool down of 2014-2015 and pretty close to most other years once you leave aside those 2 outliers.

    The index is reset every year so YOY comparisons are not really valid.


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    #3199
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    gaius c wrote: »
    The index is reset every year so YOY comparisons are not really valid.

    Also Jan 2005 = 100. Peak = 134 in Feb 2007
    In a Dublin context- on average, we are now roughly 10% off our previous peak.
    Ironically- regional prices have recovered more strongly than have Dublin prices.


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    #3200
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    gaius c wrote: »
    The index is reset every year so YOY comparisons are not really valid.

    What do you mean reset every year? The CSO are publishing a chart showing the evolution of the index since 2005 so presumably it means that as far as they are concerned values for different years can be compared.

    Am I missing something?


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    #3201
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Bob24 wrote: »
    What do you mean reset every year? The CSO are publishing a chart showing the evolution of the index since 2005 so presumably it means that as far as they are concerned values for different years can be compared.

    Am I missing something?

    They also have a monthly and quarterly comparison with the previous year (which is dubious to say the least- however, its another stat that they publish.......)


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    #3202
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    The_Conductor wrote: »
    They also have a monthly and quarterly comparison with the previous year (which is dubious to say the least- however, its another stat that they publish.......)

    What does “reset every year” mean though?

    As far as I understand bar one change in the calculation method once for which if i remember correctly they were meant to adjust historical data, the way the index is calculated is always the same so values for different times should be comparable. So if at time t the index is 100, at time t+1 year the index is 110, and at time t+2 years the index is 120, it means during those two years the average property price in the country increased be the same amount in absolute value each year. How would that expectation would be wrong?


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    #3203
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Bob24 wrote: »
    What does “reset every year” mean though?

    As far as I understand bar one change in the calculation method once for which if i remember correctly they were meant to adjust historical data, the way the index is calculated is always the same so values for different times should be comparable. So if at time t the index is 100, at time t+1 year the index is 110, and at time t+2 years the index is 120, it means during those two years the average property price in the country increased be the same amount in absolute value each year. How would that expectation would be wrong?

    I imagine the poster means its a rolling 1 year commentary- as opposed to it 'resetting every year'- its a bad description though- and open to interpretation- which is always dangerous.


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    #3204
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    The_Conductor wrote: »
    I imagine the poster means its a rolling 1 year commentary- as opposed to it 'resetting every year'- its a bad description though- and open to interpretation- which is always dangerous.

    Ok, then it is not relevant to what I posted. I simply picked the raw index value in October for each year, which are directly comparable values. I didn’t refer to any commentary or extrapolatations posted on their website.


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    #3205
    elizunia87
    Registered Users Posts: 125 ✭✭elizunia87


    Hi,
    I am only new, looking for some tips with buying " the dream " place. Me and my husband are looking to buy small house soon. We have "given" by bank 189k and we have saved 30k.
    Please be honest, can we get something in the price up to 210k? The houses in Finglas, Tallagh, are they really in a rough area? Are there many people interested to buy there?

    We are also consider to buy to let to Limerick, small house up to 130-150k in Limerick suburbs. The same question: if there many people looking for home

    I will appreciate all tips.

    Thank you
    Eliza


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    #3206
    Mad_maxx
    Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    The_Conductor wrote: »
    Also Jan 2005 = 100. Peak = 134 in Feb 2007
    In a Dublin context- on average, we are now roughly 10% off our previous peak.
    Ironically- regional prices have recovered more strongly than have Dublin prices.

    Bar Cork City and Galway City, how have regional prices recovered, they are not close to the Dublin levels of recovery as far as I can see?


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    #3207
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,951 Mod ✭✭✭✭L1011


    I keep a vague eye on local prices as I've been considering moving closer to the city - household income is significantly higher than it was when I bought in 2012 so the borrowing potential has improved hugely

    As far as I can see, a ceiling price (well, prices for different sizes) has been hit for a second hand house in Maynooth with new having overshot where they were before in relation. I think HTB is causing distortion to a major extent now. The UK HTB system is basically proven to have increased prices sufficiently enough to make it pointless - do we need to do studies here to see if they same has happened here?


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    #3208
    Zenify
    Registered Users Posts: 861 ✭✭✭Zenify


    Not really to sure what sort of assets they are selling off but we could see more of this. Anyone able to elaborate on this?
    468449.jpg


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    #3209
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Its mostly sovereign debt.
    Thankfully- there aren't any shortage of buyers in the market (given the carnage in the equity market).


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    #3210
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    My brother wrote a very easy to read layman's guide to whats happening in the markets at the moment:

    We are in a strange period, where market technicals are driving prices rather than fundamentals, appetite for risk (ie what drives financial asset prices up) is super low because of negative year to date total return across many asset classes. we are at the tail end of an artificially (cheap money from central banks) inflated boom, the world needs to get used to the idea that the cycle of cheap money and high growth needs to end soon (US interest rates are going up, Eurozone Bond buying is ending), political risk is high in part because of Trump and the global growth outlook is deteriorating because of among other issues Trumps trade war and slowing eurozone growth. The Situation with US dollar is also unusual it’s strong because the late cycle fiscal expansion which the US can’t really afford is stimulating US growth, also US interest rates are high versus Europe which props the dollar further, strong dollar is bad for emerging market generally which have issued huge amounts of debt over last 5yrs, and emerging market growth is the big driver of global growth. Also financial market volatility is structurally higher than it was 10years ago because of changes in regulations (higher bank reserve ratio requirements) mean banks don’t offer as much liquidity to financial markets as they did in the past. The oil price move over October / November was a huge shock, oil lost 32% and had its worst month in 10years driven again a lot by trump efforts to push down the price of oil for political gains.

    Basically a lot of people lost a lot of money in stocks bonds, commodities this year and there’s lots of uncertainty because of trump and everyone is sitting on their hands while the market flaps in the wind

    Brexit is a mess, Italian budget deficit it a mess. Lots to worry about.


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    #3211
    Zenify
    Registered Users Posts: 861 ✭✭✭Zenify


    The_Conductor wrote: »
    Its mostly sovereign debt.

    HNA is in aviation and real estate. Dont think they have sovereign debt? They sold 2.2b of assests in Ireland in 2018.


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