Softening house market?

I think the banks are anticipating the next round of EU interest rate hikes. AUB are moving on a 0.5% increase now. Generally they will have an idea what the EU rate will rise by. By raising now it gives them a chance to allow those at drawdown stage to complete the process without any negative conquences not like FI.

As well it's mostly fixed rates that effect the market, most borrower's will be opting for a five year fixed. Fir every 100k borrowed it will add 500/year to repayments or about 42 euro/month.

On a 300k loan it's 125/months or the takeaway coffee budget for a single person who is getting one every day.

Well that's fine Bass. Well it is once:

A) That person buys a 4 Euro cup of coffee every day which they can cut out

B) None of their other expenses have also increased

That 0.5% increase that resulted in a 125 Euro increase can also easily become a 2% increase equal 500 Euro per month. At which stage the person would probably be running out of hypothetical cups of coffee. I don't think people are overly concerned with that specific increase, more sop on what could easily be coming next

I still can't phantom this figure from the census from just the start of this year, there were over 35K houses empty cause they are "rental property". Not to add deceased or renovation. Only fraction of which are on the market, so people have been holding on to empty property for a long time. Will be interesting to see what happens in the near future.

Thinking about the possibility of a huge correction in house prices it doesnt hurt to compare and contrast between the previous crash and now.

Admittedly it's easy to say with hindsight but 30% correction in house prices (and then some) 15 years ago made sense. Increases in prices were on the back of unsustainable credit back then. The economy had been roaring along ever more reliant on construction which helped fuel the bubble. We were churning out apartment blocks and housing estates in places no one had ever ventured but it didn't matter.

Moving along 15 years. We are still coming to terms with a decade plus underinvestment in the housing stock - demand is there. mortgage lending is heavily controlled - possibly the rules were too restrictive - with very little chance for it to get out of control ( or more importantly have gotten out of control already).

Okay mortgage rates will go up and possibly quickly but we're taking a couple of percentage points. It'll squeeze some but those mortgage rules mean it shouldn't be anywhere near the shock of the credit crunch we had back in the crisis.

If we're to have a dramatic fall it's going to have to come down to a surge in unemployment. On that front the only way is down. We're more or less at full employment. Where the bad news might come from is a hit to FDI. A Pfizer or a Google moving it's business elsewhere but even then I don't think the numbers employed in these sectors are anything like there were in construction back in the day. In that situation we'd all end up paying a bit more tax as we wouldn't have the corp tax to pay for everything.

For most people I don't think the combination of higher mortgage rates, higher taxes and electricity is going to reduce their ability to repay a mortgage by the amount required to see a drop in house prices by 30%. Even 10% would be a large fall but there are definitely more clouds than sunlight on the horizon.

You can't post something sensible like that. No it Chicken Licken type posting that is only allowed. Can you not see the raggy barefoot children starting to appear on the street. The restaurants and pubs all closing, the soup kitchens in D4, the lads stand at street corners looking for jobs.

The public service will see a 7.5% pay increase over the next twelve months along with increments most for you ger staff so about a 10% increase for staff under 40 years of age.

A lot of the private sector will add another 5-8% to pay. Accross most sectors.

Add to that the tax relief in the budget. A single person on 38k would have taken home about 31k. After the pay rises, an increment and the recent changes the same person on 42k will take home about 34k. The actual increase is about 2900 euro a year or 240/ month.

How much is residential property undervalued at the minute in your opinion Bass?

Noticed an estate agent in Leixlip has delisted and relisted a property, presumably so the drop in asking price isn’t logged.

Dropped from €475k -> €449,500

https://www.daft.ie/for-sale/detached-house-2-ashbrook-easton-road-leixlip-co-kildare/4278787?partner=anpost&utm_campaign=property_alert_email_residential_for_sale&utm_medium=email&ea=1&utm_source=property_alert

Looking at the ppr Number 5 sold for €430k (asking price) In December 2020.

Pay rises in the private sector are being reported weekly at this stage by the big co’s.

Job creation in high paying sectors is slowing. MNCs are all that matter...job losses are coming. Prices will fall. No need for twenty paragraphs to explain the obvious...

I do not think aerBnB is where these houses are. I explained in another thread about analysis from a lad that I knew doing the census. Now this was a mixed rural and small urban area. Generally mix of vacancies was, previously rented, rental needed/being refurbished, houses where older people were in nursing homes or gone to live with relative's, houses where owners were deceased, inherited houses where new owner was either selling or retaining the property.

Property is neither over valued or undervalued it's at a price a bidder is willing to pay and a seller accepts. As I have posted frequently I expect house prices to slacken by about 10% national average over the next 12 months I do not see a collapse like 2008-10 as we have no surplus of stock. If it drops much further builders will stop building.

It's seems to be where the labour market is at. Most large private sector companies more or less follow PS pay. I am allowing for 2ish precent less not including increments. I have a son a first year graduate and his friends on graduate programs are getting 7-8% off larger firms.

BOI agreed a 7.5% pay rise for staff in Feb this year I presume that other banks have increased pay by similar amounts. In the last few weeks BOI & AIB have agreed to give staff a 1k tax free voucher this year not performance related.

Just read through this according to them it's about 25/ month/100 k the extra 0.5% is. So 75 euro on a 300k mortgage. So people can still got for a coffee Saturday morning to meet there friends. A takeaway flask from at home on work days

Variable rates not effected. They are going to offer a one year fixed deposit rate or 0.5% to tie in present deposits I imagine from November

I guess it is your opinion against mine and time will tell how it plays out. You were one of the staunch believers who told that banks wouldn't raise their interest rates quickly as they had a large deposit base and didn't need ECB. Yet here we are a month after the interest rate went positive, most banks are looking at increasing rates.

Time will tell....

uk residential said to be 25-30% over valued at present

ireland said to be only 7% overvalued (possibly a little more than that)

deleted

no point.

Okay, sorry but you have demonstrated you have no clue what you are talking about.

And I am not talking about a bubble in just property, I'm talking about a bubble in everything.