Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

Softening house market?

1798082848587

Comments

  • Registered Users, Registered Users 2 Posts: 17,999 ✭✭✭✭Thargor


    Doesnt it always slow into Winter and pick up again in Spring though?



  • Registered Users, Registered Users 2 Posts: 19,248 ✭✭✭✭Bass Reeves


    And what exactly will that do. There is probably 4+ areas that influence house prices.

    Site costs yes a market crash could reduce these however that in itself would not significantly reduce house prices

    Materials were expensive, however they have slightly dropped, but carbon taxes on building materials ( mainly effects steel and concrete) is going to keep increasing.

    Labour costs are high at present but it hard to see them significantly reduce. There is a shortage of construction workers in Ireland and it's hard to see excess workers elsewhere which will significantly reduce prices

    Regulations are adding cost all the time whether it's the concrete levy, planning, design, etc, unless we changevthe

    Slava Ukrainii



  • Registered Users, Registered Users 2 Posts: 1,305 ✭✭✭DataDude


    Not sure how seasonal the CSO data is. Although the October data probably represents summer sales so wouldn’t expect it to be a big factor this month.



  • Registered Users, Registered Users 2 Posts: 1,839 ✭✭✭mcsean2163


    You left out rent, immigration and rent subsidies.

    When rents go up REITs will pay more for houses. Investors pay more, etc

    When immigration is positive the demand on housing increases and rent goes up.

    When the government subsidises rent less people emigrate and more REITs enter the market and rents go up and house prices go up.

    There seems to be real anger and despair building for an ever greater section of the population. I'm not sure what will happen if the accommodation crisis keeps going this way but Irish did fight back before (land war).

    That time we the underlings were in it together against mostly wealthy absentee landlords. This time it looks uglier if the reactions below are a reflection of reality.




  • Registered Users, Registered Users 2 Posts: 3,573 ✭✭✭Timing belt


    The one thing that does need to be factored in is the split between new and existing houses…. There is a lag in new house prices in the CSO where someone agreed the price and the house got delivered in 9 months time….I suspect that if you drilled into cso data that there is probably a difference story between executed and filled in the current climate.



  • Advertisement
  • Registered Users Posts: 1,551 ✭✭✭kaymin


    If you don't like it don't read it. Plenty of other people appreciated the article being posted. It reflects the facts of what is happening on the ground in Sweden where there was a shortage of property just like there is in Ireland and interest rates are on a similar trajectory just with a time lag in the EU. Not sure why you believe I think Sweden is exactly the same as Ireland but there are similarities. Why would the fact that existing homeowners are on variable rates affect buyers who can avail of fixed rates?



  • Posts: 0 [Deleted User]


    You might want to read what Bass posted again, virtually all exiting owners and prospective buyers in Sweden are on variable rates, they are all exposed to rate hikes, whereas in Ireland a significant percentage have availed of fixed rates which means they are not as affected by rate hikes during the duration of the fixed term. He is not saying variable rate owners affect fixed rate buyers.



  • Registered Users Posts: 1,551 ✭✭✭kaymin


    He said "the fact that it seems that virtually all Swedish mortgages are variable and this is effecting...buyers" and I have asked why?

    Prospective buyers are not on variable rates as you've stated, they can choose fixed rate products if they want. In any case I fail to see why this differentiates the Swedish market from the Irish market which is what he is implying - this is a feature of every property market - buyers can choose variable or fixed rate products - both are available in the Swedish market.



  • Posts: 0 [Deleted User]


    Affects BOTH buyers and owners in Sweden, they all suffer when rates go up. There may be a reason why mortgage rates are predominantly variable in Sweden, maybe banks don’t offer fixed rates like they do here, maybe the Swedes don’t believe in fixing their mortgages. But in Ireland many owners and buyers do fix their rates, so increasing rates don’t affect as many people here, hence the affects of rate increases may not be felt as much in the property market here as they seem to be in Sweden.



  • Registered Users, Registered Users 2 Posts: 7,182 ✭✭✭amacca


    If both fixed and variable are available why are such a high percentage of Swedish buyers on variable rates?....


    If the vast majority of Swedish buyers are on variable rates it very much does differentiate their market from ours...



  • Advertisement
  • Registered Users Posts: 1,551 ✭✭✭kaymin


    But it's the effects on buyers I've asked about. Anyway its nonsense so I'm not sure why I'm bothering.



  • Posts: 0 [Deleted User]


    You don’t see the correlation between such a high percentage of variable rate mortgages and property prices in Sweden at a time when rates are rising, and the benefit of a much higher percentage of fixed mortgages in Ireland? How can that be?



  • Registered Users Posts: 1,551 ✭✭✭kaymin


    Differentiate how though, from the perspective of where property prices go from here?

    It takes two seconds to google fixed rate mortgages offered in Sweden: https://www.nasdaqomxnordic.com/bonds/sweden/mortgagerates



  • Posts: 0 [Deleted User]


    And a second less to find the percentage of variable rate mortgages there, but what are the implications on property prices in a market where a huge percentage of both owners and buyers are exposed to rising rates? Then consider why a market with a much higher rate of fixed mortgages may not be affected in the same way.



  • Registered Users, Registered Users 2 Posts: 3,038 ✭✭✭cute geoge


    I think alot of market forces are down to sentiment ,while you consider variable mortages to be a negative so prices should drop .Older lads would consider 3.5% mortage rates as affordable compared to rates 10 +years ago and like always said 'rent is dead money'



  • Registered Users, Registered Users 2 Posts: 19,248 ✭✭✭✭Bass Reeves


    At this stage in the cycle fixed rates are running 1.5-2% below variable rates. In Ireland it's actually higher than that. I have not even checked other factors in Sweden.

    Its comparing apples and oranges. There is even people comparing what is happening in the commercial sectors with residential sector.

    At present in Ireland demand exceeds supply by a factor of 2 or 3 to one. Ya of 100k houses appeared out of somewhere it would cool the market there is nothing to indicate that such supply will happen.

    Actually I not sure why I am bothering either.

    Slava Ukrainii



  • Registered Users Posts: 1,551 ✭✭✭kaymin


    Because both variable and fixed rates are going up for house purchasers and its house purchasers that determine the price of properties not existing homeowners.



  • Posts: 0 [Deleted User]




  • Registered Users Posts: 1,551 ✭✭✭kaymin


    You're comparing fixed rates versus variable rates at one point in time. The banks are considering market interest rates over the life of the mortgage in determining their pricing - it's not like they're giving free money away to fixed rate mortgage holders. The lack of supply also existed in the Swedish market not so long ago.



  • Registered Users Posts: 1,551 ✭✭✭kaymin


    lol. It's buyers and sellers that make a market. Those holding onto their homes are not participating in the market. Seems obvious but clearly not to some.



  • Advertisement
  • Posts: 0 [Deleted User]


    For those that understand, no explanation necessary, for those that cannot, no explanation possible.



  • Registered Users Posts: 1,551 ✭✭✭kaymin


    🤣Profound. When you can't play the ball, play the man!



  • Registered Users, Registered Users 2 Posts: 19,248 ✭✭✭✭Bass Reeves


    At the start of this year I predicted the Irish residential market would cool by 10% but it would be over 12-24 months. I have seen nothing to indicate yet I am wrong. However there is no benefit to buyers in that.

    Why so.

    Because a mortgage take out 3-6 months ago would have a lower variable rate than one taken out in 6-12 months time.whennyou factor in rental cost along with it over five years the cost is virtually the same

    Will we see a collapse in Boise prices in the order on 25% plus. Ya if MNC wages drop by 10-15% and unemployment rises to 10%, and EU interest rates rise to 3.5-4% There is no indication that such actions will happen it would take a combination of events to cause such an action.

    Actually the biggest issue Ireland is facing over the next 1-3 years is the temporary exodus of younger workers now that COVID is over. The vast majority of these workers will be from the construction/utility sector.

    Most people at present borrow in 3-5 year fixed cycles. Usually if you manage the first 5-10 years of a loan the increase in capital V the decrease in interest payments smooths the effects of any rate rise.

    Slava Ukrainii



  • Registered Users, Registered Users 2 Posts: 7,523 ✭✭✭fliball123


    I don't like the fecker Murphy but he was trying to say that if the government had its own workers building houses that the profit element could be cut out of the expense. The other lad who was from the construction side kept saying that model that Murphy was on about would increase costs without actually stating how and when pressed how it would he got annoyed.



  • Posts: 0 ✭✭✭ [Deleted User]


    Further rate hikes today and further planned. Banks will be offering loans out at a minimum of 4% from here on out. Prices don't change instantly, but banks are already getting more stringent in handing out loans as they're expecting prices to drop/recession. I've had colleagues in work have to prove their employment, and their college education and jump through hoops to get approval. It is getting more difficult.

    There is always a latency with hikes and prices, when rates go up, prices go down. It is a matter of time.



  • Registered Users, Registered Users 2 Posts: 3,038 ✭✭✭cute geoge


    Do you seriously think any gobvernment workers or government firm could turn out houses cheaper than even the dearest building firm you are on cloud cuckoo land to begin with.Just look at the attempt by the office of public works to supply modular houses for the refugees,They Government made noises about supplying these modular homes last March and the o.p.w. have nor even got a site yet to put them on ,god help if they actually have to build any !!



  • Registered Users Posts: 192 ✭✭IWW2900




  • Registered Users Posts: 271 ✭✭tom_murphy112


    Data from last year suggest that over 40% of renters rely on HAP or other government subsidies. All great as long as MNC dollar roles in, what will happen when it slows down ? Exchequer is spending everything as they come in, nothing put a side.

    HAP was a temporary measure when it was introduced years ago, as a stop gap till more social houses were built. This never happened, and the state just kept expanding the scope of HAP and here we are, where it costs the state over €1 Billion just in rent subsidies to private and commercial landlords.

    Any temporary measures our government has come out with, inevitably just becomes the norm. As with HAP, something tells me the we will see eviction ban just become a thing, with more or less lifetime tenancy guarantee. The government has no other option, as they have backed themselves into a corner!



  • Registered Users, Registered Users 2 Posts: 7,523 ✭✭✭fliball123


    As Murph pointed out historically we did build social units its only a recent phenomenon that we stopped (last 20 years) so it can be done... .. I think Modular houses ramped up is the way to go and move both refugees and those on welfare into these. Hopefully this new planning bill will help expedite building



  • Advertisement
  • Registered Users, Registered Users 2 Posts: 3,573 ✭✭✭Timing belt


    You need to remember that Sweden was up there with NZ, Canada and Australia for price rises and have been warned by the ESRB about vulnerabilities in its housing market for 5+ years and had estimated that Swedish housing was 45+% overvalued at the same time they we’re saying the Irish housing market was 20% undervalued. That was in the feb 2022 report.

    source: https://www.esrb.europa.eu/pub/pdf/reports/esrb.report220211_vulnerabilities_eea_countries~27e571112b.en.pdf



  • Registered Users Posts: 1,551 ✭✭✭kaymin


    According to the following report Sweden and Ireland have more or less the same house price to income ratios as of Q2 2022:


    I'd wonder about the ECB / EC models used when preparing the following chart (page 23 of the ESRB report):

    • EC uses PV of rental income as part of its model and based on that judges Irish prices to be undervalued - which is a logical conclusion except that it's a house of cards (social unrest, State can't afford it, SF may get into power, unaffordable to vast swathes of the population without State aid, erosion of property rights).
    • ECB on the otherhand uses a model that determines appropriate house prices as a function of income, the real housing capital stock per household, and real average mortgage interest rates. Which is fine when everything is stable but where does the model leave us when interest rates are on an upwards trajectory.

    I'd have thought the number of years of income needed to buy 100 sqm would be the best indicator of overvaluation and Ireland has the worst overvaluation except for Croatia by this measure.


    Post edited by kaymin on


  • Registered Users, Registered Users 2 Posts: 5,434 ✭✭✭Padre_Pio


    Not all 100sqm are equal.

    What is the average standard of housing in Croatia?



  • Registered Users Posts: 1,551 ✭✭✭kaymin


    No idea. Are you suggesting Irish property overvaluation is justified based on build quality?



  • Registered Users, Registered Users 2 Posts: 978 ✭✭✭Ozark707



    No let up in IR rises for the foreseeable. Looks like another 1.5% of rises are baked in for 1H2023.


    The ECB president said it was “tempting to assume that all central banks are doing the same thing all the time”. But Lagarde added: “If you compare us to the Fed, we have more ground to cover, we have longer to go”. She warned of a further half-point rate rise at the ECB’s next meeting in February and “possibly the one after that and possibly thereafter.” Dashing hopes that the ECB could stop its rate rises soon, she said: “We are not slowing down. We are in for the long game.” 





  • Registered Users, Registered Users 2 Posts: 3,573 ✭✭✭Timing belt


    i will stick with the risk assessment of ESRB rather than cherry pick stats to get a point across.

    The fact remains Sweden has has extreme house price growth in recent years which make’s Ireland house price growth look flat in comparison. They have been flagged as high risk and have been given warnings that their housing market is exposed to an crash…Ireland is classified as medium risk and haven’t received any warnings…the biggest risk identified for Ireland was lack of supply and the risk of driving house prices higher as a result.



  • Advertisement
  • Registered Users Posts: 1,551 ✭✭✭kaymin


    Well that's a cop-out if ever I heard one. I haven't cherry picked any stats - I've referred to the core models on which the ESRB has based their analysis of the Irish housing market. 20% undervalued is frankly a nonsense assessment and I've pointed out why. A model without any stress testing of the inputs particularly given the current shift away from historically low interest won't stand up to the test of time.

    Just to add, the ESRB report shows Irish house prices are vastly overpriced per one of the three measures they present. You've selected one of their other models which shows a 20% undervaluation - someone is cherry picking the stats and it ain't me.

    Post edited by kaymin on


  • Registered Users, Registered Users 2 Posts: 6,433 ✭✭✭Claw Hammer


    The government as in the local authorities) used to build houses. They had their own workers and build to a high standard. It was noticed around the 1990s that it was costing more to provide houses that way that the equivalent house was selling for on the open market. The councils then decided to simply buy houses from developers and save money. The trouble with employing labour directly is that the workers unionise and can't be laid off during periods of temporary inactivity and insist on outdated work practices in order to keep the numbers up. I saw 4 men appear to repair a burco boiler in a government office one day. A plumber and his mate, an electrician and his mate came to do a job that would have been done by a handyman in a hotel in 20 minutes. This was after the plumber and his mate came to look at it and said "electrical" and walked off. the electrician wouldn't work on the boiler until the water was turned off ( plumbers job). Neither the plumber or the electrician would take their own tools from their tool boxes. That was their mate's job.

    There has been woeful under-investment in apprenticeships and training for the trades for years. There was a time when the local authorities and the board oif works could attract applications from top class tradesmen. Now thay are not on the field.

    Anyone who thinks that the housing problem can be solved by the government employing labour directly to build houses is badly mistaken.



  • Registered Users, Registered Users 2 Posts: 1,786 ✭✭✭DownByTheGarden


    Look what has happened to rents even, when the government got in on setting rents.



  • Registered Users, Registered Users 2 Posts: 1,343 ✭✭✭herbalplants


    I know for fact an acquaintance of mine bought an apartment small cramped thing, couldn't even call it apartment outside Stockholm about 10 years ago for like 40k eur and sold it early this year for 150k. Obviously in their kroner.

    They have a very controlled rental market by the state.

    Remember the shills only get paid when you react to them.



  • Registered Users, Registered Users 2 Posts: 5,434 ✭✭✭Padre_Pio


    I'm suggesting there may be a reason that 100sqm in Ireland is more preferable d expensive that 100sqm in Croatia.

    Seems like a strange metric.



  • Advertisement
  • Registered Users Posts: 138 ✭✭byrne249


    This doesn't mean a whole lot without a rake of other data points. The most obvious being the size of the houses being bought in Sweden compared with here. These guys were playing around with interest only mortgages that were sitting at a low of 1.3% only a year ago, it's pretty obvious they will get burned much worse than we will.



  • Registered Users Posts: 1,551 ✭✭✭kaymin


    The chart at the bottom of my post gives the ratio of income to the cost of 100sqm of a house. Ireland far outstrips all except Croatia on this measure.



  • Registered Users Posts: 1,551 ✭✭✭kaymin


    Well it's more expensive in Croatia, relative to incomes there so it doesn't really prove your point. I think you may be misunderstanding the point of the chart.



  • Registered Users Posts: 138 ✭✭byrne249


    Missed that first time round. True.

    If I was being pedantic I would say that it is not clear how that number is arrived at. Seems likely they are comparing apartments to our houses with a small garden.

    If I go on Numbeo and check the prices per square metre of apartments in European cities, Dublin comes in 3k/m2 less than Stockholm which is rather significant.

    https://www.numbeo.com/cost-of-living/region_prices_by_city?itemId=100&region=150&displayCurrency=EUR



  • Registered Users Posts: 192 ✭✭IWW2900


    The dominos are starting to pick up pace.

    How much does everyone think house prices will have dropped by this time next year, percentage wise.

    Im going to say 15 percent drop by this time next year, leading on for more drops in 2024. 2024 could really surprise people how much we can drop.



  • Registered Users Posts: 171 ✭✭Beigepaint


    Realistically the answer is that it is unknowable how much the drops will be. If the average drop is more than 10% I’m sure the government will massively intervene somehow to prop up the prices.



  • Registered Users Posts: 565 ✭✭✭theboringfox




  • Posts: 0 [Deleted User]


    What dominos?

    I think marginal increase. I'd say we are getting close to a drop in prices but I think there is still enough pent up demand to sustain prices for another year. A lot will depend on what happens to the rental market when the moritorium ends and how well IT companies ride out their current difficulties.

    We will have to bookmark these predictions for next December, there have been lads on here predicting a crash every December for the last 10 years or more with a lot of confidence, I'm sure some December they will be right and then we will get all the I told you sos.



  • Registered Users, Registered Users 2 Posts: 13,503 ✭✭✭✭Mad_maxx


    The only people who think that the state can do it better are ideologues like that clown Rory Hearne who is never off radio or television



  • Posts: 0 [Deleted User]


    Did you catch Paul Murphy on Prime Time last week with Michael O’Flynn? Murphy is sure the State can build houses at the same price as a private developer, O’Flynn literally laughed at him.



  • Advertisement
This discussion has been closed.
Advertisement