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

"I agree it is very strange how our runaway population growth gets very little coverage in all the very lengthy discussion of the housing crisis, though. Its the number one factor propelling it now, and is starting to get discussed in forums like this, but its never discussed in the media or by politicians still. I'd suspect because too many people are still afraid of being called racist for even mentioning the obvious - that its not reasonable or sustainable."

I would agree with the above. The problem is that too many influential people with connections benefit from the crisis as it stands so there isn't the political will to change things.

Thank you for proving my point.

I'll repeat my above post here and include the post I was responding to. I've also bolded the important point of that post.

"relaxing LTI rules is a terrible idea. When the central bank did it a few years back from 3.5 to 4.5x income all it did was make prices jump, no benefit to supply.

Throwing more money at the demand side of the equation will never fix anything"

"It's what the public wanted. The 3.5 LTI rule was very unpopular to those who didn't understand Economics."

I hope that's clearer now.

Is it buying a house in Wexford that has heralded the death of Western Civilization?

The straw that broke the camel's back.

Price rises next year are definitely on the cards unless there is a big economic shock.

HTB to be extended to 2nd hand homes

ECB interest rates to fall dramatically given the state of the German and French economies

A healthy domestic economy

FDI doesn't seem to be slowing down anytime soon.

10%+ growth could be on the cards.

It's nothing definite yet but there has been some talk of extending the First home scheme (rather than help to buy) to 2nd hand homes. I think it was also suggested that HtB could be extended to €40k max, up from €30k. But I'm not sure if there's any tak of bringing the HtB to 2nd hand homes.

https://www.rte.ie/news/business/2024/1205/1484914-number-of-landlords-in-ireland-up-5-7-rtb-figures-show/

Article on RTE yesterday evening stating a 5.7% increase in the number of landlords from Sept 2023 to Sept 2024, an increase of roughly 6,000 to 104,327.

It does also state that also that landlords issued almost 4,000 notices of termination.

This data seems to show that landlords are not leaving in their droves as has often been mentioned throughout this and other threads.

The RTB director stated that "Some landlords in the Dublin area are reappearing regionally and moving their investment."

Seems that rent caps are making them re-evaluate their investment and see better opportunities in certain regional areas where these are less stringent.

Could be the replacement of single landlords with institutional landlords, the latter of which would tend to do things by the book?

“The UK statistics agency defines properties costing more than five years of income as “unaffordable”.

The above is a line from an article in the FT today that said only the top 10% could afford to buy a property in England  with less than five years of household income in the year to March 2023.

If we were to apply this matrix to the Irish market what % would we be looking at?

Median house price in Cork is €380k as of mid-2024. Median house price in Galway is €390k at same.

Very far from "extremely cheap by international standards".

My thoughts on this.

"HOUSEHOLDS ARE SPENDING almost as much of their incomes on mortgage repayments as they were in the latter stages of the Celtic Tiger, according to new economic analysis...

... On average, households spent 33% of their disposable income on mortgage repayments between July and October this year. It’s the highest share of spending on mortgages that Ireland has seen since 2007 and early 2008."

This is interesting as this would be close to the limit of what bank's would be willing to offer retail customers in terms of DSR (mortgage payment/net income). This metric doesn't imply that people are about to start defaulting on their mortgage though unless there is a dramatic shift in the economy (which would lead to defaults regardless), but it could possibly have an affect on the demand side for house purchases if people can no longer meet the minimum DSR criteria in future applications. Though this could also mean that people downsize their expectations relative to their salary. That said, there seems to be no shortage of state/institutional demand.

However, we seem to be entering a period where interest rates should be dropping so this should ease the pressure on DSRs for retail customers.

"For example, for a household with a net income of €40,000, spending 33% of disposable income on mortgages repayments would equate to €13,010 per year or €1,100 per month. For a household with a net income of €65,000, it would be €21,450 per year or €1,787.50 per month."

This is assuming that DSRs are flat across incomes. Unlikely.

"The immediate outlook isn’t great for prospective homeowners either, with the number of homes completed in the first six months of this year lower than in the same period of 2023 (although the completion rate picked up after that)…

Seasonal patterns typically show an increase in house completions in the final three months of the year – but it’s unlikely that home completions will exceed 33,000 by the end of this month. As a result, the ESRI is maintaining its forecast that just over 33,000 units will be completed in 2024.

That is well short of the 52,000 homes needed per year to address the supply issue, according to the Central Bank..."

Yes, this and net migration will keep house prices elevated. This is the most important point here.

"The report estimates that house prices are overvalued in the region of 8% to 10%, which means that householders are particularly vulnerable to a “painful correction” of prices like that which was seen between 2007 and 2012."

The peak to trough fall between 2007 and 2012 was around 50% and this was due to a Ponzi like housing market backed by a poorly regulated credit bubble. This is simply not the environment we find ourselves in now.

Another rate cut. That ESRI paper needs revising. 😁

Families now taking on Celtic Tiger-level debts to buy home, ESRI report warns | Irish Independent

I know a small number of people who have taken over 35% or more debt to their income ratio, because they desperately wanted to buy house. They're happy now because the property prices have further gone up and had they waited, they may not have been able to buy today is what some of them told me. Sad state of affairs.

There is a canary in the coalmine that died a long time ago; rents being far more than mortgages. This is completely wrong and can only be effected in an inefficient (ie highly interventionalist) market. It springs to mind “free money” as often the rent on a property covers the mortgage and then some…there is no such thing as a free lunch; it is the taxpayer that is subsidising homeowners in Ireland and one’s belief in the corporate tax boon goes parallel with one’s belief in the property market; sky’s the limit essentially.