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

wassie · 20-06-2022 08:52AM

Whilst that article is anectodel, there are a number of other signs discussed here that we may be finally witnessing a change in sentiment in the housing market from fear of missing out to fear of the economy.

Whilst this will most likely put a brake on price growth, whether this translates into price drops or not will be interesting to watch.

Villa05 · 20-06-2022 09:00AM

https://www.boards.ie/discussion/comment/119225595#Comment_119225595

A rather ominous declaration from one of the better world economists.

The end of the everything bubble

https://fortune.com/2022/06/17/economist-mohamed-el-erian-inflation-bubble-fed-paradigm-shift/

seenn00J · 20-06-2022 11:31AM

https://www.boards.ie/discussion/comment/119225265#Comment_119225265

If I was a FTB or currently renting, the last thing in the world I would be doing is pulling out of deals right now. Once you mortgage a property in this country, it's almost impossible to be evicted. It would take the guts of a decade of non-payment + non-engagement with the bank to actually enforce an eviction. (Hence our higher than EU average mortgage interest rates). If or when the sh1t hits the fan over the coming years, it will be the folks renting or who don't own property who will likely face the worst consequences. Even if house prices fall drastically, it will be much harder to actually buy one (if the last recession is anything to go by). As the rest of the economy will be down the toilet.

Cantstandsya · 20-06-2022 11:56AM

What is the average fixed term in Ireland? Is it 5 years? I wonder what will happen if interest rates fly up as people who mortgage to their limit in 2017/2018 come to the end of their fixed rate terms.

A lot of talk in the US is that people are safe from rising rates as they are locked in for 30 years. It will be interesting to see how things play out in Europe where this isn't the case.

MacronvFrugals · 20-06-2022 11:57AM

Irish house prices running 40% above long-term link to income

The Central Bank said in a report last week that “higher positive deviations from long-run averages of price-to-income ratios have historically been associated with higher probabilities of house price declines in the future, especially when shocks occur”.

The semi-annual Financial Stability Report (FSR) highlighted “evidence of emerging cyclical vulnerabilities in the housing market against a backdrop of expected increased interest rates internationally”.

The average Irish home price of €318,000 in the fourth quarter of last year equated to about 4.8 times average household disposable income of €66,600, according to data subsequently provided by a spokeswoman for the Central Bank in response to questions from The Irish Times. This is about 40 per cent above the average ratio of about 3.4 per cent since 2018, she said.

The last time the gap was so wide was in early 2008, while the all-time peak was at the end of 2006, when the ratio reached 5.5 times.

https://www.irishtimes.com/business/economy/2022/06/20/irish-house-prices-running-40-above-long-term-link-to-income/

timmyntc · 20-06-2022 12:06PM

https://www.boards.ie/discussion/comment/119226250#Comment_119226250

Banks here stress test mortgages before deciding on how much they will lend. Part of this "stress testing" is checking that you could still meet repayments on your current income in case of rate rises, or a drop in your income, or some other situations.

Thankfully we are a long way away from the days of 100% mortgages to all and sundry. While there will always be some who will struggle with higher rates, it wont be any kind of mass defaulting on payments, not close to 08 either.

Central Bank regulations on lending is one of the few regulations done very well in this country, protecting us from ourselves. We will be very glad of those rules in the years to come.

PommieBast · 20-06-2022 12:49PM

https://www.boards.ie/discussion/comment/119226161#Comment_119226161

Based on past form if house prices fell the government will do what it can to reinflate them.

combat14 · 20-06-2022 12:50PM

the alarm bells on the housing dashboard increase again:

Irish house prices running 40% above long-term link to income

this level was last seen at the start of the last housing crash

Mic 1972 · 20-06-2022 01:06PM

The Daft report saw a sharp increase in asking prices in Q1 2022

It doesn't look like the market is slowing down anytime soon

keoclassic · 20-06-2022 01:12PM

https://www.boards.ie/discussion/comment/119226488#Comment_119226488

Asking prices yes, but will they get them from now on?

enricoh · 20-06-2022 01:26PM

https://www.boards.ie/discussion/comment/119226437#Comment_119226437

There was a report out recently that showed that 54% of all rentals were subsidized by the state. Iirc half of all new builds in estates, not one offs are bought with government money.

Totally unsustainable yet some minister was on recently bemoaning that EU fiscal rules prevented them from further increasing housing spending!

Mic 1972 · 20-06-2022 01:36PM

https://www.boards.ie/discussion/comment/119226508#Comment_119226508

If the market was slowing down, then the asking prices would slow down too. Instead they went up even harder in Q1.

I bought in Q4 2021 at asking price, demand was low. You could get a viewing whenever you wanted. Same properties in the same estate are now going for higher. There must be an increase in demand.

Then again it's almost end of Q2 so we will know soon if the trend has changed

Mr Hindley · 20-06-2022 01:39PM

I'd say Q1 2022 is almost a lifetime ago now, in terms of market sentiment. The war in Ukraine was kicking off around the end of the quarter, I think, and inflation was a worry, but nothing on the scale of now, with daily warnings of a massive global recession.

Cantstandsya · 20-06-2022 02:03PM

https://www.boards.ie/discussion/comment/119226488#Comment_119226488

I think things have changed a little bit since then...

Consumer sentiment index January - 81.9

Consumer sentiment index May - 55.5

Bass Reeves · 20-06-2022 02:09PM

https://www.boards.ie/discussion/comment/119226250#Comment_119226250

On the meantime most people's wages will have gone up by 10+%. People buying back in 2017/18 will have sen a 30% rise in value in there property. Some may have been single then and in a relationship now. If still single they can rent a room if they are under pressure. If they are in a relationship they will have both wages gone up by 10%. Most will have sub 300k loan

The really peculiar thing is many of these when refining may end up on lower rates. Mortgage rates were particularly bad pre 2018. Banks were charging 3% for 5 year fixed. Advant money has helped reduce these rates.

Those reducing will all be in the less than 70 LTV rate now. This will knock a quarter to a half a percent off the rate above 70%LTV.

A 300k loan over 25 years still is in the 1400/month repayment range.

Mic 1972 · 20-06-2022 02:23PM

https://www.boards.ie/discussion/comment/119226804#Comment_119226804

Looking at the graph, I'm looking for trend similarities between the Consumer sentiment index and the house prices

The graph shows a drop from 2018 to 2020. That drop doesn't seem to be have a correlation to the house prices in the same time frame, which instead continued to grow.

I'd be happy to be proven wrong on this one

Cantstandsya · 20-06-2022 02:28PM

https://www.boards.ie/discussion/comment/119226867#Comment_119226867

I guess the possible scenario playing out in my head doesn't involve everything just remaining exactly as is right now over the next year or two i.e. more inflation -> higher interest rates -> re-emergence of eurozone debt crisis -> unemployment etc. Probably won't happen of course.

Villa05 · 20-06-2022 02:42PM

Have we been playing Hide and Seek with the mortgage arrears issue?

It would appear that many of those troubled mortgages sold by the banks are stuck on the variable rates

The mortgages sold include performing and non-performing loans, and are on tracker and variable rates. Some 85,000 family home mortgages have been sold by mainstream banks in recent years..........

A recent Central Bank report estimated that 54pc of the accounts sold to vultures are in long-term mortgage arrears

https://www.independent.ie/business/personal-finance/property-mortgages/homeowners-whose-mortgages-were-sold-to-vultures-face-rate-rise-41769141.html

Cantstandsya · 20-06-2022 02:46PM

https://www.boards.ie/discussion/comment/119226970#Comment_119226970

Simply one number that shows that things have changed drastically since Q1. Incidentally, Dublin prices did drop in 2019 (along with interest rates).

I think we will all know by September what is going to happen but I think it takes Ostrich levels of denial to suggest the wind hasn't changed over the past couple of months.

markodaly · 20-06-2022 04:19PM

https://www.boards.ie/discussion/comment/119226627#Comment_119226627

This.

Q1 2022 is a long time ago. Back then the Fed thought that inflation was still transitory. Now they are throwing the kitchen sink at trying to rein in inflation.

Stocks are in a bear market, Crypto has crashed near 80%, War in Ukraine, China has major issues to deal with, and Inflation is rampant across the entire western world......

Numbers from Q2 onwards will be very different from Q1. The winter could be bleak as people just batten down and see what transpires.

Villa05 · 20-06-2022 06:51PM

Buyers 2019

Median age 38

Median household salary 81,500

http://www.rte.ie/news/business/2022/0620/1305894-local-electoral-district-house-purchases/

Bass Reeves · 20-06-2022 08:21PM

Just working off the medians for Pembroke. A median joint purchaser buying a house for 750k and borrowing 600k. Repayments would be 2600/ month. There salary was 161k presuming they achieved a 5% a erage pay rise they would now be earning 170k between them. There annual net salary is nearly 110k or 9k/ month. Repayments are 28% of take home pay.

awec · 20-06-2022 08:31PM

https://www.boards.ie/discussion/comment/119228368#Comment_119228368

I think if you do the calculation for most price points, assuming that people bought at close to max LTV and max LTI, then you're always going to get a percentage between 25 and 30.

This is exactly what the LTI rules were designed to do.

enricoh · 20-06-2022 09:43PM

https://www.boards.ie/discussion/comment/119227112#Comment_119227112

Dublin Live: Recession Ireland: Top economist warns Dublin tech sector already 'laying people off' for first time.

https://www.dublinlive.ie/news/dublin-news/recession-ireland-top-economist-warns-24266521?utm_source=newsshowcase&utm_medium=gnews&utm_campaign=CDAqEAgAKgcICjCHoP0KMJ7K9AIwgadY&utm_content=bullets

PommieBast · 20-06-2022 11:39PM

https://www.boards.ie/discussion/comment/119227079#Comment_119227079

A notably absent figure is the write-down on the value of the loan books when they were sold.

Bass Reeves · 20-06-2022 11:51PM

https://www.boards.ie/discussion/comment/119229074#Comment_119229074

What do you mean by that

Roberto_gas · 21-06-2022 06:29AM

People who managed to hold themselves in last crash from buying..how did u navigate 2-3 years of slump from 2008-2011 before buying? Where there articles similar to this year of impeding recession/crash? Or it was your foresight or anything else you watched out for..

awec · 21-06-2022 08:41AM

https://www.irishtimes.com/environment/2022/06/21/plonking-16-storeys-in-front-of-peoples-houses-is-ridiculous-planned-residential-scheme-for-dundrum-village-prompts-concerns/

These NIMBYs are going into overdrive at this stage and seem to be getting plenty of air time, front and centre of the Irish Times site today. I find their argument entirely disingenuous, and I do not believe for a second their spiel that if the developer had made a smaller development they wouldn't have complained.

And the number of times Dundrum is referred to as a village, without question, is astonishing. Dundrum is not a village, it has not been a village in a very long time. It's a major area in Ireland's capital city.

This development needs to go ahead.

tigger123 · 21-06-2022 10:38AM

https://www.boards.ie/discussion/comment/119229408#Comment_119229408

No matter what the development or design is intended to be, its never the right one, somehow.

Pulling the ladder up after themselves.

Underground · 21-06-2022 11:01AM

The Dundrum nimbys are among the worst, and that's saying something given some of the dynamite quotes we've gotten from the Milltown nimbys in the last year.

They packed out Taney Hall to the rafters with nimbys voicing their objections to the scheme, average age in the room of circa 70.

There is a quote in that article from a woman who says her family bought their house in the area when it was first built in 1963. The irony seems to be completely lost on them that if residents at the time had objected to her house being built she would not be in such a privileged position today to voice their objection to a new scheme in Dundrum.

Take note of the politicians objecting to the scheme. FG are all over this one. Jim O'Leary is quoted in that article spouting absolute nonsense that the scheme needs to cater to employment as well as residential needs. Jim, if you're reading this, I would challenge you to take a walk around Dundrum Town Centre and even Nutgrove Shopping Centre and count all of the help wanted signs in the shop windows, there's quite a few of them. You say that the area is zoned for mixed use and 95% of the scheme is to be used for residential units, I would have thought that is perfectly commensurate with the need for housing presently. Josepha Madigan was a notable objector to the scheme too.

The nimbys are a national disgrace and it's near time their objections were treated with appropriate disdain.

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

Comments

Irish house prices running 40% above long-term link to income

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