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

It makes sense that all 200 of your test group here in your scenario are experiencing higher costs in every other aspect of life from eating to going to work. I would love to have a big house by the sea in Howth, I could be seen as part of the demand for such a House, but can I afford one. Hell no. The same can be said about the vast majority of property in this country.

So you think the money people actually earn have no consequences when it comes to buying what will possibly be the biggest purchase of their lives? To me its probably the factor that will determine if a person buys or does not buy and the wiggle room your talking about is being diminished by the day from inflation and interest rate rises.

True and there will be micro conditions such as kids, closeness to school or work, etc that will probably have more of a sway on the decision to buy or not to buy. However on the flip side we can also agree that costs in the day to day spend have impacted on all 200 in the test groups wallets and the cost of buying the house has gotten a lot more expensive over the last 18/24 months for each and every one of them as well. So it will come out in the wash over the next 2/3/4 quarters if the costs of Ireland Inc has quelled demand via affordability.

Mind you, it's not just a binary choice - buy / don't buy. It might be, 'we'll still buy, but we're going to spend less - which might mean a smaller house, house further out etc.' So demand at the upper end starts to drop off, demand at the lower end stays the same/intensifies, but with an upper limit on what people will pay. So if the heat comes out of the market at the upper end, average prices overall come down just due to reduced volumes of the more expensive houses, even if at the lower end, people are still facing lots of competition over a limited pool of housing?

Rising rates will more than likely result in less property transactions in the 2nd market but not necessarily a reduction in price due to the fact that people won’t sell if (unless the have to) they think their property is worth more than the market will pay. Without a catalyst that forces people to sell all that will happen is a reduced supply. And before anyone says what if they can’t afford their mortgage well in that situation it would be unlikely that they would be able to rent as it’s more expensive again. All that happens is the market freezes till something changes such as

1)new houses being cheaper (not going to happen with inflationary pressures) which changes the sellers mind on what his property is worth.

2) The buyer has more disposable income (not happening at present with inflation)

3) a couple get divorced and have to sell

4) a major increase in supply of new properties

5) a fall in population( don’t see this happening when 35k work permits issued last year and 90k+ people seeking asylum)

6) rent becomes cheaper than mortgage repayment and as a result a drop in demand.

The fact that LTI limits have increased and people are getting wage increases (they are not in line with inflation) which means that they can borrow more than they could a year ago will put upward pressure on prices

The ‘pull up the drawbridge behind you’ brigade.

So shortsighted that they don’t connect blocking any particular type of housing being built and having to raid their own life savings to help their darlings get on the ladder. Probably on the other side of the county. If they even can buy!

I don't but the news stories are starting to ramp up with regards to them being delivered.

two biggest jokes of re-sales:

bought 950k early 2022

Bought 775k last August and cut the tiny garden in half with that glasshouse extension.

Drove past these the other day. Still unsold......From €599!

I have seen a few small builders that are sitting on small developments of 2-6 houses. In most cases they have little or no borrowings. Because of the cost of building and sites they figure there is no margin going building again and are maximising the profit on existing stock.

One lad closed out a deal locally twelve months ago the LA took them on a 15 year lease. These were small two bed houses in a village. Another is sitting on five 3&4 bed houses virtually finished for the last 36 months. He has them with an auctioneer but no price visible on them.

Saw a small builder that had two bungalows build in 2008/9 he held them until about three years ago.

If he has not sold them by now he obviously can afford to sit on them

Problem is Irish weather is very unforgiving. The moisture droplet is very small. As I often point out show me the oldest timber frame building in Ireland. There is timber houses standing in England since the 1500's or before.

I was listening to a Pat Kenny radio show one morning. He had a discussion on about building costs in general. I think there is a government body that tests and approved new building technology. There was this technology specialist on from them. He explained that technology transfer was not as easy as many imagined. Wood framed windows work very well in Sweden and Scandinavian countries in general, the same frames wrap in an Irish setting. Heat exchangers that are tested for Germany will not last in the west of Ireland because of the salt in the air.

That evening on RTE radio we had this lad prattling on about a cousin of his that had not used concrete blocks in houses he build in 30+ years. He was waffling away until he was asked where in Ireland he was operating........ oops he was in Germany.

There is no easy solutions. The thing about modular is that these houses will need to be maintained on the outside to get a decent lifespan in Ireland. Many of the cladding used will not stand up to a lad belting a sliotar or any ball off them. Timber frame will need to be treated every 3-4 years.

That is the cement factory in Limerick you are talking about it will still be there in thirty years. Incinerator's have much lower emissions than previously as well scrubbers put in the flues reduce emissions to a very low level. In reality you are probably getting greater harm off the lad burning coal or rubbish in his open fire or stove near you

People forget that you can stress test over any mortgage length. Unless you are limited on possible duration you can probably stress test to 35 years.

Banks seem to concentrate on the 4X LTI, that you have a 10% deposit and also sem to want to see you can repay such a loan ( saving the amount of the repayment for 6 months or saving and rent combined) if you can manage these generally it's the 4LTI is the actual limit