Property Market 2019

beauf · 10-04-2019 4:24pm

beaz2018 wrote: »

I see a property (Glasnevin) on the price register this week that was for sale in late 2017 but was taken down and put up again in late 2018. It has sold for far less than the bidding was at in 2017. Im sure they regret not selling it then as it clearly was the peak of this current boom.

Some of the areas I'm looking at are pretty much the same as the last peak.

Other areas not so much.

q85dw7osi4lebg · 10-04-2019 4:40pm

Drogheda / Meath East prices now at highest since the boom, up about 10% on last year in my area, still approx 20% below 2007 however.

Browney7 · 10-04-2019 6:21pm

beauf wrote: »

The flat earthers are over there --->

https://www.thejournal.ie/rtb-annual-report-4124661-Jul2018/

So of the 330,000 or so tenancies, €1.3 million of rent arrears awarded to LLs? €4 per tenancy?

The Student · 10-04-2019 6:40pm

Browney7 wrote: »

So of the 330,000 or so tenancies, €1.3 million of rent arrears awarded to LLs? €4 per tenancy?

It would appear the average payout for a landlord who won their case was €3400 it is not the average of all landlords in Ireland.

JohnCleary · 10-04-2019 8:28pm

beauf wrote: »

The flat earthers are over there --->

https://www.thejournal.ie/rtb-annual-report-4124661-Jul2018/

Quite possibly idiot landlords who do not get their tenants properly, or using agents (useful as a chocolate teapot).

I was a very involved landlord, dealt direct with tenants. Offered very competitive rents and the rare occasion an issue arose (only thing I can think of was immersion element calfing), fixed next day.

Maybe they were just grateful to have a decent LL

beauf · 10-04-2019 10:50pm

So what your saying that if anything other than an immersion fails. Its is because the landlord is being stupid or using an agent. Because that's your experience you'd expect the exact same thing for every other property and every other tenant.

Cuddlesworth · 11-04-2019 9:27am

The Student wrote: »

It would appear the average payout for a landlord who won their case was €3400 it is not the average of all landlords in Ireland.

Interesting tidbit. In most landlord PRTB cases I have heard about, the landlord must first successfully evict the tenant before seeking the remaining rent arrears and damages. For most problem tenants, they didn't bother trying to recover the arrears.

voluntary · 11-04-2019 11:20am

Residential Property Price Index for February 2019 is out.

February was a fourth conecutive month of price drops both nationally and in Dublin. The price decrease pace deccelerated in February though.
In Dublin the largest decreases were reported in South Dublin. Dublin apartments dropped by 1.2% while Dublin houses increased by 0.2%.
Fingal was the only area in Dublin which recorded house price increases in February (+0.6%).

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexfebruary2019/index.html

Terrlock · 11-04-2019 11:21am

With rents sky rocketing in Dublin and living in Ireland becoming increasingly difficult for the working class should the whole tax scheme around rental properties in Ireland be over hauled.

I understand where there is demand there is an increase in rents.

The majority of the country has been under developped so all the jobs are concentrating around the cities.

However I find that while the rental market demand has increase so has the difficulty of becoming a private landlord - as with the current level of tax and the overall hassell makes it a very unattractive market to get into.

This leads to large corporates taking over the rental market - and by such they can keep increasing all the rents at they see fit- given that they now own the majority of rental accomodations in key areas of the city.

I just feel that the people in Ireland are getting shafted at all ends of the scale - and in fact in the middle.

Should we not reduce the tax levels of renting out a second home and make it worthwhile for the small landlord to re enter the rental market. And not just have a market that only favours the big players.

AlmightyCushion · 11-04-2019 11:29am

Terrlock wrote: »

With rents sky rocketing in Dublin and living in Ireland becoming increasingly difficult for the working class should the whole tax scheme around rental properties in Ireland be over hauled.

I understand where there is demand there is an increase in rents.

The majority of the country has been under developped so all the jobs are concentrating around the cities.

However I find that while the rental market demand has increase so has the difficulty of becoming a private landlord - as with the current level of tax and the overall hassell makes it a very unattractive market to get into.

This leads to large corporates taking over the rental market - and by such they can keep increasing all the rents at they see fit- given that they now own the majority of rental accomodations in key areas of the city.

I just feel that the people in Ireland are getting shafted at all ends of the scale - and in fact in the middle.

Should we not reduce the tax levels of renting out a second home and make it worthwhile for the small landlord to re enter the rental market. And not just have a market that only favours the big players.

Reducing tax levels on rental income won't reduce rent costs though. We should make it a lot easier to evict tenants who either aren't paying their rent or are wrecking the place.

LotharIngum · 11-04-2019 12:26pm

AlmightyCushion wrote: »

Reducing tax levels on rental income won't reduce rent costs though. We should make it a lot easier to evict tenants who either aren't paying their rent or are wrecking the place.

Reducing the tax by at least 50% might be enough to bring some landlords back into the market.
It might even encourage some new blood into the market beside bring back some of those who have left.
Not me though.

I see more red tape and hassle being mooted for landlords again on the journal today. The hits just keep on coming if you are renting out your property.
Best thing I ever did was get out of it.

Bluefoam · 11-04-2019 12:30pm

voluntary wrote: »

Residential Property Price Index for February 2019 is out.

February was a fourth conecutive month of price drops both nationally and in Dublin. The price decrease pace deccelerated in February though.
In Dublin the largest decreases were reported in South Dublin. Dublin apartments dropped by 1.2% while Dublin houses increased by 0.2%.
Fingal was the only area in Dublin which recorded house price increases in February (+0.6%).

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexfebruary2019/index.html

Yep, the decrease continues. March & April will be interesting...

ELM327 · 11-04-2019 12:47pm

What about the country excl dublin, are prices following the same path?

Bluefoam · 11-04-2019 12:58pm

ELM327 wrote: »

What about the country excl dublin, are prices following the same path?

Yes, it's all in the link. Prices over the past four months droping month on month. Year on year its a 4.3% increase nationwie.

Jaster Rogue · 11-04-2019 1:13pm

voluntary wrote: »

Residential Property Price Index for February 2019 is out.

February was a fourth conecutive month of price drops both nationally and in Dublin. The price decrease pace deccelerated in February though.
In Dublin the largest decreases were reported in South Dublin. Dublin apartments dropped by 1.2% while Dublin houses increased by 0.2%.
Fingal was the only area in Dublin which recorded house price increases in February (+0.6%).

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexfebruary2019/index.html

That's interesting about Fingal, I've been noticing a good few houses selling for over asking price in Dublin 15 lately. Thought it was indicative of the overall market picking up in new year but clearly not. There's so many different segments of the market (apartment vs house, sub 500k vs over 500k, Dublin vs rural, etc) behaving in very different ways which can make an overall nationwide market % value very misleading.

Bluefoam · 11-04-2019 1:26pm

Jaster Rogue wrote: »

That's interesting about Fingal, I've been noticing a good few houses selling for over asking price in Dublin 15 lately. Thought it was indicative of the overall market picking up in new year but clearly not. There's so many different segments of the market (apartment vs house, sub 500k vs over 500k, Dublin vs rural, etc) behaving in very different ways which can make an overall nationwide market % value very misleading.

Asking prices are not a good indicator... only selling prices. If you are aware of the selling data, you can manage how to deal with asking prices in a more informed way.

Having said that, sometimes a house is worth more to you, just because you want it.

LotharIngum · 11-04-2019 2:01pm

What we are seeing now is the zipping up and squeezing together of the different types of property prices.

For example you will see the central bank rules effecting a certain price band. Then the price band immediately below that will get squeezed closer to it as the people in the higher band move to the lower band as they are all moving up.

You might have an effect like the properties over €450k are having to reduce their prices by €25k to get a buyer.
Meanwhile more buyers cant get about the cap they will start buying in the €350 - €450k bank increasing prices in that band and then sucking apartments and so on in the band below into it.

Eventually you'll have apartments costing €350k and 3 bed semis costing €450k and everything in between at the different levels.
Whereas now you have apartments for €200k and houses for €450k with everything in between widened out.

Just sample figures, but we need property prices to take into account the different types of property and the areas that they are in.
Without that once a cap is introduced the current method is meaningless.

It needs to be more granular or it loses its meaning.

voluntary · 11-04-2019 2:03pm

Jaster Rogue wrote: »

That's interesting about Fingal, I've been noticing a good few houses selling for over asking price in Dublin 15 lately. Thought it was indicative of the overall market picking up in new year but clearly not. There's so many different segments of the market (apartment vs house, sub 500k vs over 500k, Dublin vs rural, etc) behaving in very different ways which can make an overall nationwide market % value very misleading.

Fingal is rather on the lower side of prices in the market. Also the majority of new builds around Dublin are in Fingal. New house sales move the average price up a bit as new homes in Fingal are generally more expensive than the older stock.

ELM327 · 11-04-2019 2:10pm

Bluefoam wrote: »

Yes, it's all in the link. Prices over the past four months droping month on month. Year on year its a 4.3% increase nationwie.

Interesting, nationally we see a YoY increase of 4.3%
Currently at 104% of the 2005 prices.

yet because of a couple of downward months there's a downward trend??

beauf · 11-04-2019 2:22pm

Jaster Rogue wrote: »

That's interesting about Fingal, I've been noticing a good few houses selling for over asking price in Dublin 15 lately. Thought it was indicative of the overall market picking up in new year but clearly not. There's so many different segments of the market (apartment vs house, sub 500k vs over 500k, Dublin vs rural, etc) behaving in very different ways which can make an overall nationwide market % value very misleading.

Fingal/Dublin 15 has a wide diversity from millionaire houses to some very poor areas often not that far apart. So desirability varies enormously. Also some new builds are in the middle of nowhere with no services, other parts are beside train lines, lots of schools etc.

beauf · 11-04-2019 2:23pm

LotharIngum wrote: »

What we are seeing now is the zipping up and squeezing together of the different types of property prices....

Affordability comes into it. What is affordable for different types of buyers. Is it a starter apartment, or young family.

seamus · 11-04-2019 2:27pm

voluntary wrote: »

Am I the 'doom and gloom merchant' you're referring to? Why? I posted pure, unedited statistics ont the last three months transactions data available. Moreover reported by the CSO. With no personal comment. It's you who created the whole 'doom and gloom' areola around that.

There's something going on.

In addition to the 3 months of negative house price growth, the only two publically-traded construction companies - Cairn and Glenveagh - saw their share prices dip badly in the second half of last year, recovered a bit before dropping this week. The owners of Cairns engaged in a substantial sell-off of shares this week.

I have also heard anecdotally of a number of large financial transactions in construction that have been put on hold (flotations & acquisitions), as well as brand new estates that have sold off 50% or more of the properties to the state because of poor sales.

Maybe Brexit, maybe global conditions, maybe lending rules . Hopefully the latter, but there's something going on.

ELM327 · 11-04-2019 2:33pm

As an analyst there are a number of risk factors which leads me to believe a recession (much smaller scale than 2008/9) is imminent within 18-24 months. Brexit is one, yield inversion curves are a good indication of this.

Central bank rules are good, not bad, and will ensure less exposure if there is another recession compared to last time.

GingerLily · 11-04-2019 2:38pm

ELM327 wrote: »

As an analyst there are a number of risk factors which leads me to believe a recession (much smaller scale than 2008/9) is imminent within 18-24 months. Brexit is one, yield inversion curves are a good indication of this.

Central bank rules are good, not bad, and will ensure less exposure if there is another recession compared to last time.

I'm sure your not the only analyst here, plenty of analysts and economists predict things every day, some happen, some don't.

Probably best for all the speculation for another thread

Woshy · 11-04-2019 2:39pm

Frank Castle wrote: »

Yes, but I think woshy believes they can put in a smaller deposit by getting an exemption from the 3.5 rule?
Just commenting to make sure they don't pursue something that will not work for them.

What they would be looking for is an exemption to the LTV in order to put down a smaller deposit?

In my post I said I wanted to apply for an LTV exemption. I didn't say anything about wanting an LTI exemption - i.e. the 3.5 rule.

The mortgage we need is a good bit less than 3.5 times our combined salary. I do want to pay less of a deposit if we can though. It is my understanding from my research that that is something we can apply for.

Terrlock · 11-04-2019 2:54pm

I think it's bad for Ireland that big investors are being allowed to take over the market.

It's these that should be taxed heavily - What benefits does this have for the people of Ireland.

These are the real controllers of the rent prices and even the availability of property.

I wouldn't be surprised to find some of our government ministers and previous ministers heavily invested in them.

ELM327 · 11-04-2019 3:06pm

GingerLily wrote: »

I'm sure your not the only analyst here, plenty of analysts and economists predict things every day, some happen, some don't.

Probably best for all the speculation for another thread

I'm not speculating on anything, it would of course be in all of our interests if there isnt a recession.

But this is related to property prices and mortgage applications etc so is completely relevant here.

Jaster Rogue · 11-04-2019 3:09pm

LotharIngum wrote: »

Eventually you'll have apartments costing €350k and 3 bed semis costing €450k and everything in between at the different levels.

That would happen if everyone earned the average industrial salary. There will always be groups of skilled professionals (medicine, law, IT, financial services, management etc) who eventually earn 2-3 times the average and who prefer to live in more affluent areas. If a 3 bed semi costs the same in Ballymun and Clontarf, which area would you select?

I think the upper limit in desirable areas will be a lot higher than €450k. For a married couple who are both experienced professionals, €200k household income is not uncommon. They could easily afford properties €700k+. That's what 3 beds cost in areas like Rathgar and Mount Merrion.

There's also a lot of inherited wealth in this country. We're mistakenly assuming the only means people have to purchase property is their salary from work.

givyjoe · 11-04-2019 3:16pm

ELM327 wrote: »

As an analyst there are a number of risk factors which leads me to believe a recession (much smaller scale than 2008/9) is imminent within 18-24 months. Brexit is one, yield inversion curves are a good indication of this.

Central bank rules are good, not bad, and will ensure less exposure if there is another recession compared to last time.

ELM327 wrote: »

I'm not speculating on anything, it would of course be in all of our interests if there isnt a recession.

But this is related to property prices and mortgage applications etc so is completely relevant here.

Sorry, but speculation is exactly how the above reads. You cannot speak with any certainty that a recession is imminent. Anyway, isn't a recession a sustained period of negative growth, 2 successive quarters? Isn't it more likely that what we will see is a slowdown in growth, rather than an actual recession.?

ELM327 · 11-04-2019 3:20pm

givyjoe wrote: »

Sorry, but speculation is exactly how the above reads. You cannot speak with any certainty that a recession is imminent. Anyway, isn't a recession a sustained period of negative growth, 2 successive quarters? Isn't it more likely that what we will see is a slowdown in growth, rather than an actual recession.?

That is exactly the definition of a recession.
I am not the only one, research yield curve inversion and how it is one of the first precursors of recession. Service industry decline(another initial precursor) is anecdotally happening since Q1 2019 too, although some attribute this to the VAT changes.

A house I was watching had its price dropped today, I went to view it 2 months ago and there were no takers. A change from the queues I experienced at viewings 12-24 months ago. The market is changing, and it is not positive change we are seeing. I don't think we will see a recession like the sub prime mortgage one of 10 years ago, the same factors are not there, but it is shown in the data that we will see a slowdown, and perhaps a recession globally. 18-24 months, possibly sooner depending on what the brits do.

Woshy wrote: »

In my post I said I wanted to apply for an LTV exemption. I didn't say anything about wanting an LTI exemption - i.e. the 3.5 rule.

The mortgage we need is a good bit less than 3.5 times our combined salary. I do want to pay less of a deposit if we can though. It is my understanding from my research that that is something we can apply for.

Yes it is, you can apply for the ltv exemption, and given you are borrowing less than 3.5 may be more likely to get it !

aloooof · 11-04-2019 3:26pm

Jaster Rogue wrote: »

For a married couple who are both experienced professionals, €200k household income is not uncommon.

I agree with a lot of your post, but I disagree with this. It's far more than not uncommon. I'd wager it's very much the exception.

voluntary · 11-04-2019 3:39pm

Come back to earth lads.
The average gross weekly household income for the State in 2015-2016 was 1,099.70. That's from the last CSO household budget surevy's.

11-04-2019 3:41pm

aloooof wrote: »

I agree with a lot of your post, but I disagree with this. It's far more than not uncommon. I'd wager it's very much the exception.

I'd say you'd be in the top 95% of households at least on 200k, and probably higher. It's not common at all.

In fact you enter the 10th decile on around 125k household income per year. So top 95% is conservative. Data source as the post above.

LotharIngum · 11-04-2019 3:46pm

Jaster Rogue wrote: »

That would happen if everyone earned the average industrial salary. There will always be groups of skilled professionals (medicine, law, IT, financial services, management etc) who eventually earn 2-3 times the average and who prefer to live in more affluent areas. If a 3 bed semi costs the same in Ballymun and Clontarf, which area would you select?

I think the upper limit in desirable areas will be a lot higher than €450k. For a married couple who are both experienced professionals, €200k household income is not uncommon. They could easily afford properties €700k+. That's what 3 beds cost in areas like Rathgar and Mount Merrion.

There's also a lot of inherited wealth in this country. We're mistakenly assuming the only means people have to purchase property is their salary from work.

Everyone cannot afford a house.
There is also a floor that people wont sell at and that builders wont build at.
Properties will rarely sell below that.
The central bank cap is definitely having effect at a particular price point. This will ripple and compress the range.

Salary from work is the most common indicator of affordability.
Everything else is an outlier.

voluntary · 12-04-2019 7:08am

I would go further and say not a salary, but disposable income. Meaning salary after tax MINUS the non housing costs of living expenses.

voluntary · 12-04-2019 7:27am

LotharIngum wrote: »

...
There is also a floor that people wont sell at ...

Just taking one part of your quote.
No, there's no floor that people wont sell at.

There will be always these who must sell, or want to sell irregardless of the current market price. There's nearly zero chance the market can stall and stop trading because of too low prices. We've investment funds who buy mortgages for 20-30% of their face value. They could sell much cheaper than others without even writing a loss. They will also take losses much easier than private owners. When investors/stakeholders request funds withdrawal from such funds they MUST SELL (or declare temporary non liquidity, which already happened before). In bad times it will be the investment funds setting up market pricing. And this will be the new reality for years. Private owners will simply accept the new reality after a while, the same way as they accepted the current market.

beauf · 12-04-2019 7:48am

Bit premature to be talking about the bottom of the market. But when it's too low some might be forced to sell but many will wait. Often by renting. Until they get a return on investment or back on positive or close equity. I know a good few people who held on to properties like that for 10yrs or more.

voluntary · 12-04-2019 8:11am

I'm just saying what would happen in a recessionary scenario, not when or if this is going to happen. Generalizing. That's very true, most people won't trade in bad times, but this is also true in the good times - most people don't buy and sell their homes

This fact changes nothing though, as these who will decide do buy or sell will do this at lower prices.

Recession may be also the best time to sell your house if you plan to upgrade. You get less money for your property but you can buy a better house also much cheaper. You may save huge amount of money upgrading in bad times VS upgrading in good times. Plus, you may avoid the Capital Gains tax swapping homes in recession. So yeah, people will sell homes in bad times.

.

voluntary · 12-04-2019 8:21am

I can give you an example of saving one could make by selling during the last crash.

Let's assume you had a terraced house worth 300k, but your dream house was a 5-bed detached in the affluent area beside the sea, worth 1M.
If you sold on the peak, you needed to top up by 700k to buy the sea side mansion.

Now, a crisis came, property prices dropped by 50%.
You sold your house for 300*50%=150k and bought the sea side mansion for 1M*50% = 500k.

It then only cost you 500-150=350k to upgrade and not 700k which you would had to pay before the crash.
It really makes a lot of sens to sell in bad times if you wish to upgrade. Best time to upgrade is in bad times.

You sell, somebody else buys. That's how it works. The market doesn't stall or die just because prices went massively down. The construction stops, but that's not a big deal then, as the unemployment is low so people emigrate and free up housing stock.

.

q85dw7osi4lebg · 12-04-2019 8:25am

Where do you get 350k in the down turn + what is your equity in the original house? You are assuming this person has a 50% LTV.

We'll start with that one.

aloooof · 12-04-2019 8:26am

voluntary wrote: »

I can give you an example of saving one could make by selling during the last crash.

Let's assume you had a terraced house worth 300k, but your dream house was a 5-bed detached in the affluent area beside the sea, worth 1M.
If you sold on the peak, you needed to top up by 700k to buy the sea side mansion.

Now, a crisis came, property prices dropped by 50%.
You sold your house for 300*50%=150k and bought the sea side mansion for 1M*50% = 500k.

It then only cost you 500-150=350k to upgrade and not 700k which you would had to pay before the crash.
It really makes a lot of sens to sell in bad times if you wish to upgrade. Best time to upgrade is in bad times.

You sell, somebody else buys. That's how it works. The market doesn't stall or die just because prices went massively down. The construction stops, but that's not a big deal then, as the unemployment is low so people emigrate and free up housing stock.

.

All of this is what the major caveat of "if you can get a mortgage for that amount".

Cuddlesworth · 12-04-2019 8:30am

voluntary wrote: »

I can give you an example of saving one could make by selling during the last crash.

Let's assume you had a terraced house worth 300k, but your dream house was a 5-bed detached in the affluent area beside the sea, worth 1M.
If you sold on the peak, you needed to top up by 700k to buy the sea side mansion.

Now, a crisis came, property prices dropped by 50%.
You sold your house for 300*50%=150k and bought the sea side mansion for 1M*50% = 500k.

It then only cost you 500-150=350k to upgrade and not 700k which you would had to pay before the crash.
It really makes a lot of sens to sell in bad times if you wish to upgrade. Best time to upgrade is in bad times.

Sounds good....
Except the value lost in the house is your equity first. So if you owned 50% of the first house, you now own 0% of it when trying to sell.
That getting the mortgage on the mansion is more difficult. You have to be rock solid financially with a huge deposit to get one, the bank don't want further losses.
That you will be up against cash buyers, there are people with money and they swarm the market during these downturns.
And that because of the above, house prices in the top spec most desirable homes don't really drop that much. There is always a market there for them because they are not reliant on the banks for customers.

voluntary · 12-04-2019 8:38am

Sure, you need to be cash rich to make money in recession. Going into a recession with debt is never good.

voluntary · 12-04-2019 8:40am

aloooof wrote: »

All of this is what the major caveat of "if you can get a mortgage for that amount".

Yes, many won't get loans. Some will. Some have savings. Not everyone with a house has a mortgage on it.

Colonel Claptrap · 12-04-2019 8:43am

voluntary wrote: »

We've investment funds who buy mortgages for 20-30% of their face value. They could sell much cheaper than others without even writing a loss. They will also take losses much easier than private owners. When investors/stakeholders request funds withdrawal from such funds they MUST SELL (or declare temporary non liquidity, which already happened before). In bad times it will be the investment funds setting up market pricing. And this will be the new reality for years.

An investment fund buys the debt, not the equity. This is an important distinction. While they might own the mortgage, they cannot easily force the homeowner to sell and recoup the collateral. Bad mortgage debt as an investment product is incredibly illiquid. Open ended funds rarely if ever buy bad mortgage debt. Investor redemptions cannot force the fund to force the mortgage holder to sell the property in a short amount of time.

JJJackal · 12-04-2019 8:45am

voluntary wrote: »

I can give you an example of saving one could make by selling during the last crash.

Let's assume you had a terraced house worth 300k, but your dream house was a 5-bed detached in the affluent area beside the sea, worth 1M.
If you sold on the peak, you needed to top up by 700k to buy the sea side mansion.

Now, a crisis came, property prices dropped by 50%.
You sold your house for 300*50%=150k and bought the sea side mansion for 1M*50% = 500k.

It then only cost you 500-150=350k to upgrade and not 700k which you would had to pay before the crash.
It really makes a lot of sens to sell in bad times if you wish to upgrade. Best time to upgrade is in bad times.

You sell, somebody else buys. That's how it works. The market doesn't stall or die just because prices went massively down. The construction stops, but that's not a big deal then, as the unemployment is low so people emigrate and free up housing stock.

.

All based on you owning the 150k terraced house that you may have bought at a peak price and now want to sell for 150k less. If you borrowed to buy the 300k house (300k -10% is 270k) this suggests you are earning about 80k (assuming you borrowed close to max).

Now in a recession with a 50% reduction in house prices you need a 20% deposit (almost the full value of the first house that you are selling) and to borrow 4.5times your salary (its more probable that your salary will fall than rise if 50% of the value of homes has been wiped away - so lets say your salary has stayed the same for ease)

So you still cant buy the 500k house

Edit: the person in the 150 or 300k house will find it difficult to upgrade to the 500 k or 1 million house unless they have a massive change in circumstances. Potentially a more realistic example would be upgrading to a 250k (recession price) or 500k (boom price) house

voluntary · 12-04-2019 9:22am

Colonel Claptrap wrote: »

An investment fund buys the debt, not the equity. This is an important distinction. While they might own the mortgage, they cannot easily force the homeowner to sell and recoup the collateral. Bad mortgage debt as an investment product is incredibly illiquid. Open ended funds rarely if ever buy bad mortgage debt. Investor redemptions cannot force the fund to force the mortgage holder to sell the property in a short amount of time.

While that's true that there will likely be no rapid reposession numbers increase, it's also true that there will be some reposessions so some properties will end up on the market.

There are also funds (including pension funds) which invest in properties. Guess what happens when members get scared and request withdrawals from property funds? The same as what happens with stock market as the funds are forced to sell to allow withdrawals. You have a scenario where it doesn't matter what a fund's management/analyst believe, they have to sell because their clients want their money back.
In the last crash many of big property funds halted withdrawals causing fury across investors. This might happen when a large fund owning thousands of houses simply cannot offload their stock fast enough to meet the investors withdrawal requests on time. Big funds would often have clauses saying that this might happen, therefore smart investors start withdrawing from property funds before the crash (and actually fuelling/accelerating the crash) and not during the crash.

voluntary · 12-04-2019 9:28am

JJJackal wrote: »

All based on you owning the 150k terraced house that you may have bought at a peak price and now want to sell for 150k less. If you borrowed to buy the 300k house (300k -10% is 270k) this suggests you are earning about 80k (assuming you borrowed close to max).

Now in a recession with a 50% reduction in house prices you need a 20% deposit (almost the full value of the first house that you are selling) and to borrow 4.5times your salary (its more probable that your salary will fall than rise if 50% of the value of homes has been wiped away - so lets say your salary has stayed the same for ease)

So you still cant buy the 500k house

Edit: the person in the 150 or 300k house will find it difficult to upgrade to the 500 k or 1 million house unless they have a massive change in circumstances. Potentially a more realistic example would be upgrading to a 250k (recession price) or 500k (boom price) house

Yeap, only few cash rich people make money in recessions. Don't also assume that people ALWAYS stretch their affordability and buy the most expensive house they can get mortgage on.

q85dw7osi4lebg · 12-04-2019 10:15am

Is it just a coincidence that Voluntary set their account up a day or two after Pussyhands got banned?

ionapaul · 12-04-2019 10:18am

Noah Scruffy Kale wrote: »

I'd say you'd be in the top 95% of households at least on 200k, and probably higher. It's not common at all.

In fact you enter the 10th decile on around 125k household income per year. So top 95% is conservative. Data source as the post above.

I think maybe 'a €200k household income is not uncommon' wasn't the right words to use, the poster maybe should have said 'there are enough households on €200k annual income to currently sustain the prices seen in Rathgar, Blackrock, etc...' That would be a bit more accurate. As someone else pointed out, households on €200k+/annum probably represent less than 5% of total households, but that being the case that probably means a big enough segment of potential buyers to maintain higher prices in the most desirable neighbourhoods. Prices set on the margins and so on, it's not like 1,000 houses a year are bought/sold in some of these areas, 20 households fighting over 15 available houses would be enough to drive up prices.

Would be interesting to find out how many €200k+/annum households exist in Dublin, and then try to extrapolate the number of them that might be looking for housing in any given year. I'd also give more weight to the person above that pointed out that existing wealth needs to be considered when it comes to its impact on house prices; you'd think that people who end up becoming the types of professionals that earn over €100k/annum each might be professionals like accountants, solicitors, etc... and that upper-middle class folk often spring from upper-middle class stock, with big inheritances coming their way at some stage in life, help from the bank of Mum and Dad, or just big savings built up from years of earning chunky salaries ahead of buying a home.

The above is just musings on how and why high prices are sustained in the very small areas of universal desirability in any housing market! The same supports just don't exist in most areas, though prices are still set on the margin of course.

Property Market 2019

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