Depressing Dublin House prices

Oral Surgeon · 02-01-2014 4:57pm

Theboinkmaster wrote: »

Therefore the €500k house in D14 is still overvalued?

Too much of a jump imo....
Therefore this couple can't afford this house... If other couples can afford this and are willing to pay it, then it is technically not overpriced...

Theboinkmaster · 02-01-2014 5:27pm

Oral Surgeon wrote: »

Too much of a jump imo....
Therefore this couple can't afford this house... If other couples can afford this and are willing to pay it, then it is technically not overpriced...

but is the current problem houses like these are being bought for 500k when the underlying long-term economic value might be more really more like 400k.

and the reason being cash buyers, and hence the potential bubble currently in SCD and once these are gone and back to normal mortgage owners this house may drop to more like 400k.

in a normaly operating market would a 140k couple not be able to comfortably live in a 4 bed semi D in rathfarnham? hence why they are currently going for 500k+ but really they should be 400k. Current cash bubble being why they're affordable but not to the "normal" couple.

So the normal couple on 140k with 100k saved cannot compete with another couple in the same demographic but they have 500k cash (returning from overseas, inheritance etc.)

So answer me this - ordinary 4 bed semi Ds in rathfarnham going for 500k (with probably another 100k to modernise, bring up BER rating etc.). Who is buying these and why is D14 house like this 12x average professional salary?

The Spider · 02-01-2014 5:34pm

Theboinkmaster wrote: »

but is the current problem houses like these are being bought for 500k when the underlying long-term economic value is really more like 400k.

and the reason being cash buyers, and hence the potential bubble currently in SCD and once these are gone and back to normal mortgage ownders this house may drop to more like 400k.

in a normaly operating market would a 140k couple not be able to comfortable live in a 4 bed semi D in rathfarnham? hence why they are currently going for 500k+ but really they should be 400k. Current cash bubble being why they're affordable but not to the "normal" couple.

So the normal couple on 140k with 100k saved cannot compete with another couple in the same demographic but they have 500k cash (returning from overseas, inheritance etc.)

So answer me this - orginary 4 bed semi Ds in rathfarnham going for 500k (with probably another 100k to modernise, bring up BER rating etc.). Who is buying these and why is D14 house like this 12x average professional salary?

People who have deposits are buying them, I went over the ways to achieve this and what people are doing, where I work it's only the guys on big bucks who are buying in SCD at the moment, talking 190-350 a year, and a lot of share options on top of that.

There are other people buying, but they're buying in Lucan, Blanchardstown etc, these guys would be on around 60-75 a year. Others like me have chosen the commuter towns.

The only people buying in SCD can afford it, believe me I know.

It's like buying a car 65 grand seems nuts to me to spend on a car, yet I'm seeing plenty of 13 reg audis, bmws and mercs on the road, make no mistake there's still plenty of cash around.

Plates · 02-01-2014 5:40pm

If you find a house you like, that you're likely to want to stay in for 10 or more years and you can afford it then buy it. Whether the price goes up, down or stays the same it doesn't matter if you're not planning to sell. Your gain or loss on what you paid makes no difference.

Unless you win the lotto you'll never buy your absolute dream house - there will always be compromises.

Potatoeman · 02-01-2014 5:41pm

As long as NAMA is still operating and there is next to no repos then no its not a normally functioning market.
I hope we dont have to listen to these people buying moan about being tricked in a few years.

gaius c · 02-01-2014 5:45pm

Theboinkmaster wrote: »

Assume in my example the €100k is already saved therefore the €500k house is mortgaged at €400k.

So over 30 days that's about €2k per month. That couple on 2 x €70k is pulling in about €7,500 net per month.

So I'm asking how affordable is that? yes it's less than 1 third of the household income so may seem prudent but are you now meant to get a mortgage on main income not two?

Therefore that suddenly becomes €2k out of say €3,700 per month which to me may not seem prudent?

Therefore in this case I'd say this couple cannot afford that house? Then if so who can afford such houses? I would have thought in theory a couple on €140k should be able to afford a 4bed semi D in Rathfarnham but going on these numbers it's a stretch perhaps?

Therefore the €500k house in D14 is still overvalued?

You forgot to add a factor for the people living in the same houses, not paying their mortgage but who can't be evicted because it's "the family home".

Theboinkmaster · 02-01-2014 5:54pm

The Spider wrote: »

People who have deposits are buying them, I went over the ways to achieve this and what people are doing, where I work it's only the guys on big bucks who are buying in SCD at the moment, talking 190-350 a year, and a lot of share options on top of that.

There are other people buying, but they're buying in Lucan, Blanchardstown etc, these guys would be on around 60-75 a year. Others like me have chosen the commuter towns.

The only people buying in SCD can afford it, believe me I know.

It's like buying a car 65 grand seems nuts to me to spend on a car, yet I'm seeing plenty of 13 reg audis, bmws and mercs on the road, make no mistake there's still plenty of cash around.

I don't believe that - only those individuals on 190-350k per year are buying in the likes of Rathfarnham?! I assumed those people would be buying in the likes of Foxrock, Donnybrook etc?

Also say how many houses are in Rathfarnham and how many people in Dublin earn 190-350k? Major disconnect i believe.

My gut tells me a couple on say 150k per year with 100k saved should easily be able to buy in Rathfarnham but with the type of house i mentioned typically going to 500+ it seems out of reach...

The Spider · 02-01-2014 6:10pm

Theboinkmaster wrote: »

I don't believe that - only those individuals on 190-350k per year are buying in the likes of Rathfarnham?! I assumed those people would be buying in the likes of Foxrock, Donnybrook etc?

Also say how many houses are in Rathfarnham and how many people in Dublin earn 190-350k? Major disconnect i believe.

My gut tells me a couple on say 150k per year with 100k saved should easily be able to buy in Rathfarnham but with the type of house i mentioned typically going to 500+ it seems out of reach...

Ok fair cop maybe not Rathfarnham, I'd consider that and Ballinteer the lower end of the desirability areas, but then again not technically in SCD.

I took a look at the availability of 4 bed houses in rathfarnham, think there's only 23, we looked at rathfarnham end of 2011, start of 2012, we were looking for 4 bed houses. We saw one at 375, about 165 sq metres I think, but it needed a lot of work, would have easily taken another 100 to renovate. We also saw what seemed like a decent size 4 bed that was on at 420, but that was more than I was willing to pay to live in Rathfarnham.

So even a couple of years ago the value wasn't that great, so god knows what it's like now.

We bought outside commuter town and all that, best decision we ever made, actually got a massive bargain and the drive is grand.

Then again horses for courses.

Zamboni · 02-01-2014 8:41pm

Assuming there will be a halt in increase or even a reversal in property prices in the medium term based on the below:
Increased supply of new housing (big push for this in the media, right or wrong)
BTL repossessions
Increased difficulty getting mortgages

...just how much cash/wealth do we think is out there to sustain the current short term increases?
Let's face it, house prices are not based on salary multiples - for the time being.
It really is now just an asset class and if people are cashing in deposits because of crap interest rates and DIRT and trading novices are cashing into dive into property because of perceived capital appreciation, then I wonder how long and big this little DCB bubble can grow before the next inevitable bust?
We didn't learn from our mistakes the first time round through cheap finance and now we've decided to try again with a different approach - with the only wealth left in the country, private savings/stocks.
It'll all end in tears. Again.

*I'm not using SCD anymore because it appears to be entirely subjective.

johnnyskeleton · 02-01-2014 9:03pm

SeanSouth wrote: »

If you have enough money to purchase a house in that area or the capacity to borrow and repay the required amount of money then you can purchase and live in that area. Its as simple as that.All this talk about profiling and entitlement is irrelevant to the task of purchasing a house.

We live in a capitalist society. Prices are set by the interplay of supply and demand. No one has to buy, No one has to sell. If you decide to buy you must pay the market price prevailing at that time. If you decide to sell you must also accept the market price. If you dont like the price, you don't have to buy, If a seller doesn't like the prevailing price, he doesn't need to sell.

It may be irrelevant to purchasing a house, but it is relevant to gauging the current activity in the Dublin housing market, which is, you know, what this thread is all about.

If we are told that one mercedes sold for €100k yesterday, then that is the price of a mercedes yesterday. If we are attempting to assess what the price of the same car will be tomorrow, we must look not just at the last transaction price, but at all the factors which determine supply and demand. If, for example, we know that there are more people waiting to buy a merc than there are mercs available, we can fairly expect that the price will go up. On the other hand, if we hear an announcement that all world governments are going to stop using mercs for state cars, and will use toyotas instead, then we can realistically expect the price to go down.

Turning to the housing market, the question that has to be asked is "who is buying all these houses?". There are so many factors that it can never be fully answered, but there are two major viewpoints:

1) there are a lot of middle aged professionals who never bought (or bought and sold in 2006/07 for a profit), who have a large deposit saved and/or inheritance/windfall from sale of house, steady jobs, low outgoings, who have decided that now is the time to buy a house, and very few properties that tick all of their desireability boxes, therefore we are seeing a fundamental and sustainable demand led increase in price; and

2) NAMA / lack of repossessions by the banks means that supply is artificially constrained at the moment, and even if there are some people that fit into the above grouping, there are more available houses in these areas of south dublin than there are people of that kind. Therefore, what we are seeing is an artificial shortage of supply that is only temporary.

How is the question of a hypothetical person's means relevant to this? Well, if the well to do middle class couple are the target market for the south dublin suburban semi detached house, then the larger the discrepancy between their means and the actual sales prices the greater the chances that it is a bubble. If they are not the target market, then who are? If you need to be a lotto winner or russian oligarch to buy a house in ballsbridge, and no lotto winners or russian oligarchs want to live there, then it can reasonably be inferred that the price is currently too high and will go down.

Theboinkmaster · 02-01-2014 10:20pm

johnnyskeleton wrote: »

It may be irrelevant to purchasing a house, but it is relevant to gauging the current activity in the Dublin housing market, which is, you know, what this thread is all about.

If we are told that one mercedes sold for €100k yesterday, then that is the price of a mercedes yesterday. If we are attempting to assess what the price of the same car will be tomorrow, we must look not just at the last transaction price, but at all the factors which determine supply and demand. If, for example, we know that there are more people waiting to buy a merc than there are mercs available, we can fairly expect that the price will go up. On the other hand, if we hear an announcement that all world governments are going to stop using mercs for state cars, and will use toyotas instead, then we can realistically expect the price to go down.

Turning to the housing market, the question that has to be asked is "who is buying all these houses?". There are so many factors that it can never be fully answered, but there are two major viewpoints:

1) there are a lot of middle aged professionals who never bought (or bought and sold in 2006/07 for a profit), who have a large deposit saved and/or inheritance/windfall from sale of house, steady jobs, low outgoings, who have decided that now is the time to buy a house, and very few properties that tick all of their desireability boxes, therefore we are seeing a fundamental and sustainable demand led increase in price; and

2) NAMA / lack of repossessions by the banks means that supply is artificially constrained at the moment, and even if there are some people that fit into the above grouping, there are more available houses in these areas of south dublin than there are people of that kind. Therefore, what we are seeing is an artificial shortage of supply that is only temporary.

How is the question of a hypothetical person's means relevant to this? Well, if the well to do middle class couple are the target market for the south dublin suburban semi detached house, then the larger the discrepancy between their means and the actual sales prices the greater the chances that it is a bubble. If they are not the target market, then who are? If you need to be a lotto winner or russian oligarch to buy a house in ballsbridge, and no lotto winners or russian oligarchs want to live there, then it can reasonably be inferred that the price is currently too high and will go down.

what do you think of the specific example I gave? 140k joint income couple with 100k deposit, rathfarnham 4 bed semi D for 500k etc.?

Glenbhoy · 02-01-2014 10:35pm

Theboinkmaster wrote: »

Assume in my example the €100k is already saved therefore the €500k house is mortgaged at €400k.

So over 30 days that's about €2k per month. That couple on 2 x €70k is pulling in about €7,500 net per month.

So I'm asking how affordable is that? yes it's less than 1 third of the household income so may seem prudent but are you now meant to get a mortgage on main income not two?

Therefore that suddenly becomes €2k out of say €3,700 per month which to me may not seem prudent?

Therefore in this case I'd say this couple cannot afford that house? Then if so who can afford such houses? I would have thought in theory a couple on €140k should be able to afford a 4bed semi D in Rathfarnham but going on these numbers it's a stretch perhaps?

Therefore the €500k house in D14 is still overvalued?

I'd say they can afford it and should probably go for it if that's where they want to stay. What they can get for 500K in rathfarnham might be an issue though, as chances are they'd not be able to get somewhere they'd be happy to stay in long term.
If one partner chooses to stop working, they net income of the other would not be half due to tax credits and band transfers etc. Creche fees would also presumably be drastically reduced (which they will in 3/4 years in any case).
Also, it's common for one partner to reduce hours as opposed to quit completely.
One last thing to consider is that potential repayments of about 2K per month are probably not substantially higher than rent for a family type house in D16.

ezra_pound · 03-01-2014 12:04am

Theboinkmaster wrote: »

I've a (simple?) question. Couple in their early 30s on €70k each both working in good professions, 1 baby in creche. Rent in SCD and have €100k saved.

Should they be entitled to live in SCD or is it out of their reach - for example a 1,300sq ft semi D that's asking about €500k currently in say Rathfarnham D14.

Should they in theory be able to buy this property? Are they the type of earners/demographic that can live in SCD or do they earn enough/saved enough? Should they easily afford this or out of reach? If out of reach what exact type of person/couple can then afford to live in SCD...

It sounds like you certainly should be able to.

My point is simply that one should not overly focus on income ratios in determining what proportion of the population can afford to live in a sector of the property market. It sounds like you should be able to afford a fine property. The issue is that people refer to cash buyers as if they are about to dissapear in a few months.

In capitalism there are people with... Capital

...and income for investment in property is not exclusively a function of income. All the more so in the more salubrious areas.

Cash buyers are not a new phenomenon of the present market. However the drying up of mortgage lending means that they have assumed a greater weight in the mix of demand volume in raw currency.

Shane732 · 03-01-2014 12:15am

The Spider wrote: »

People who have deposits are buying them, I went over the ways to achieve this and what people are doing, where I work it's only the guys on big bucks who are buying in SCD at the moment, talking 190-350 a year, and a lot of share options on top of that.

There are other people buying, but they're buying in Lucan, Blanchardstown etc, these guys would be on around 60-75 a year. Others like me have chosen the commuter towns.

The only people buying in SCD can afford it, believe me I know.

It's like buying a car 65 grand seems nuts to me to spend on a car, yet I'm seeing plenty of 13 reg audis, bmws and mercs on the road, make no mistake there's still plenty of cash around.

I'm coming in slightly late into the conversation here so I'm not sure what the €190k - €350k relates. Are you saying that the only people buying in SCD are people on €190k - €350k? Is that a family income or a single persons income?

johnnyskeleton · 03-01-2014 12:17am

Theboinkmaster wrote: »

what do you think of the specific example I gave? 140k joint income couple with 100k deposit, rathfarnham 4 bed semi D for 500k etc.?

I'm going to choose my words carefully because words like "should be" or "expect" will be pounced upon. Perhaps people can just take it as a given that the expectation culture in the bubble was obscene and I am not buying into it, I am simply stating what I think is the logical place to live for different types of people.

I think that 70k is a great income and is among the top salaries in Ireland. I would be cautious about simply adding two salaries and getting a combined income (because childcare has to be factored in), so I would asses it as a more conservative joint income of €105k, which is massive.

I also think 100k is a huge amount of money to have saved.

I believe people who have a great income and a huge amount of savings should probably be able to afford to buy a premium property in a good area if they max themselves out or a modest property in an average area while holding something back. So the max spend available is €450k. I would have thought that that should get you a very nice house in Rathfarnham or possibly an ok/good house in Rathfarnham with some change left over to do the refurb etc.

Shane732 · 03-01-2014 12:20am

Theboinkmaster wrote: »

I've a (simple?) question. Couple in their early 30s on €70k each both working in good professions, 1 baby in creche. Rent in SCD and have €100k saved.

Should they be entitled to live in SCD or is it out of their reach - for example a 1,300sq ft semi D that's asking about €500k currently in say Rathfarnham D14.

Should they in theory be able to buy this property? Are they the type of earners/demographic that can live in SCD or do they earn enough/saved enough? Should they easily afford this or out of reach? If out of reach what exact type of person/couple can then afford to live in SCD...

Personally I think this comes down to how stable the individuals jobs are and what their plan is in terms of both individuals working for the foreseeable future.

If both individuals intend on working into the future and have stable permanent jobs then I would say a mortgage of €400k is very doable.

Theboinkmaster · 03-01-2014 12:44am

What does this say about the scd market though, does it not indicate a bubble?

Professional couple on very good income with very good deposit saved still can't easily afford a house in rathfarnham? It may be doable but not comfortable?

If this example cannot buy comfortably does this not indicate prices should come down more?

Who can afford to buy in this market and how many such couples exist?

The Spider · 03-01-2014 2:41am

Shane732 wrote: »

I'm coming in slightly late into the conversation here so I'm not sure what the €190k - €350k relates. Are you saying that the only people buying in SCD are people on €190k - €350k? Is that a family income or a single persons income?

I'd better clarify, when I say SCD I mean the traditional areas, Mount Merrion, Blackrock, Glenageary Sandymount etc, although Ranelagh Dartry can be popular because of transport links.

And we're talking about 1 income, these guys wives don't work. The flip side is that even though it's a good income, you can lose your job a lot quicker too when you have that amount of responsibility.

handlemaster · 03-01-2014 9:28am

Please stop mentioning SCD or south Dublin etc its nauseating at this stage. We all know prices were and are higher there.

jon1981 · 03-01-2014 10:40am

handlemaster wrote: »

Please stop mentioning SCD or south Dublin etc its nauseating at this stage. We all know prices were and are higher here.

+1!

Also irrespective of the average increase/decrease, prices are going up in areas where people want to live whether that's north or south Dublin!!!

Oral Surgeon · 03-01-2014 10:43am

handlemaster wrote: »

Please stop mentioning SCD or south Dublin etc its nauseating at this stage. We all know prices were and are higher there.

Northsider???;)

jon1981 · 03-01-2014 10:45am

Oral Surgeon wrote: »

Northsider???;)

Formally southsider and by choice to move before everyone jumps in assuming i couldn't afford the southside!

anyway my point is, there was serious competition and bidding going on even on the northside "bud"

Theboinkmaster · 03-01-2014 11:01am

The Spider wrote: »

I'd better clarify, when I say SCD I mean the traditional areas, Mount Merrion, Blackrock, Glenageary Sandymount etc, although Ranelagh Dartry can be popular because of transport links.

And we're talking about 1 income, these guys wives don't work. The flip side is that even though it's a good income, you can lose your job a lot quicker too when you have that amount of responsibility.

I'm referring to the likes of Rathfarnham, Churchtown, Dundrum etc. Seems like average houses seem out of reach of high enough earners (couple on 150k) which doesn't make sense.

For example if a 3 bed semi D in rathfarnham is average 450k and this is approx 10x average professional wages i wonder what this ratio would have been back in the 70s and 80s?

Intuitively houses in the likes of D14 still seem way overpriced IMO and i expect drops once cash buyers dry up.

jon1981 · 03-01-2014 11:05am

Theboinkmaster wrote: »

I'm referring to the likes of Rathfarnham, Churchtown, Dundrum etc. Seems like average houses seem out of reach of high enough earners (couple on 150k) which doesn't make sense.

For example if a 3 bed semi D in rathfarnham is average 450k and this is approx 10x average professional wages i wonder what this ratio would have been back in the 70s and 80s?

Intuitively houses in the likes of D14 still seem way overpriced IMO and i expect drops once cash buyers dry up.

according to myhome this is SCD:

<option value="1254">Ballybrack</option>
<option value="1258">Blackrock</option>
<option value="1260">Booterstown</option>
<option value="1284">Dalkey</option>
<option value="1287">Deansgrange</option>
<option value="1296">Dun Laoghaire</option>
<option value="1304">Glasthule</option>
<option value="1305">Glenageary</option>
<option value="1307">Glencullen</option>
<option value="1317">Killiney</option>
<option value="1321">Kilternan</option>
<option value="1336">Monkstown</option>
<option value="1337">Mt. Merrion</option>
<option value="1384">Rathmichael</option>
<option value="1391">Sandycove</option>
<option value="1402">Shankill</option>
<option value="1405">Stepaside</option>
<option value="1407">Stillorgan</option>

gaius c · 03-01-2014 11:19am

Theboinkmaster wrote: »

I'm referring to the likes of Rathfarnham, Churchtown, Dundrum etc. Seems like average houses seem out of reach of high enough earners (couple on 150k) which doesn't make sense.

For example if a 3 bed semi D in rathfarnham is average 450k and this is approx 10x average professional wages i wonder what this ratio would have been back in the 70s and 80s?

Intuitively houses in the likes of D14 still seem way overpriced IMO and i expect drops once cash buyers dry up.

Rathfarnham is a huge area though. What part do you mean?
Butterfield Avenue, for example, is not a place that John & Mary middle income are ever going to be able to afford.

Theboinkmaster · 03-01-2014 11:21am

jon1981 wrote: »

according to myhome this is SCD:

<option value="1254">Ballybrack</option>
<option value="1258">Blackrock</option>
<option value="1260">Booterstown</option>
<option value="1284">Dalkey</option>
<option value="1287">Deansgrange</option>
<option value="1296">Dun Laoghaire</option>
<option value="1304">Glasthule</option>
<option value="1305">Glenageary</option>
<option value="1307">Glencullen</option>
<option value="1317">Killiney</option>
<option value="1321">Kilternan</option>
<option value="1336">Monkstown</option>
<option value="1337">Mt. Merrion</option>
<option value="1384">Rathmichael</option>
<option value="1391">Sandycove</option>
<option value="1402">Shankill</option>
<option value="1405">Stepaside</option>
<option value="1407">Stillorgan</option>

I was referrring to area rather than postal code - so south Dublin is what i mean. South of the liffey but inside the m50.

Theboinkmaster · 03-01-2014 11:25am

gaius c wrote: »

Rathfarnham is a huge area though. What part do you mean?
Butterfield Avenue, for example, is not a place that John & Mary middle income are ever going to be able to afford.

Say Butterfield Orchard or Park, Edenbrook Park, Glenbrook Park that whole area near Ballyroan - if you look at those houses they're all average 3 bed semi Ds with a garage and there's thousands of them.

What do you call middle income - €150kpa? I would thought someone on that should be able to buy in this area but the houses are €450k....

jon1981 · 03-01-2014 11:28am

Theboinkmaster wrote: »

Say Butterfield Orchard or Park, Edenbrook Park, Glenbrook Park that whole area near Ballyroan - if you look at those houses they're all average 3 bed semi Ds with a garage and there's thousands of them.

What do you call middle income - €150kpa? I would thought someone on that should be able to buy in this area but the houses are €450k....

assuming 50k deposit, 400k is 2k a month roughly over 30 yrs. That's well within reach of of a joint income of 150k.

alastair · 03-01-2014 11:30am

handlemaster wrote: »

Please stop mentioning SCD or south Dublin etc its nauseating at this stage. We all know prices were and are higher there.

What bugs me is the rather arbitrary nature of what seems to constitutes 'SCD'. Seemingly the 'traditional' understanding of 'SCD' only includes the fancier addresses. This 'SCD' that excludes Ballinteer, Ballybrack, Shankill, and anywhere with a sniff of council housing is only the product of some selective snobbery.

Potatoeman · 03-01-2014 11:32am

Theboinkmaster wrote: »

I'm referring to the likes of Rathfarnham, Churchtown, Dundrum etc. Seems like average houses seem out of reach of high enough earners (couple on 150k) which doesn't make sense.

For example if a 3 bed semi D in rathfarnham is average 450k and this is approx 10x average professional wages i wonder what this ratio would have been back in the 70s and 80s?

Intuitively houses in the likes of D14 still seem way overpriced IMO and i expect drops once cash buyers dry up.

This reminds me of just before the colapse of the bubble where anyone questioning the prices and affordability were shrugged off. We really havnt learned anything if we think only 5% of the population can live south of the Liffey.

Depressing Dublin House prices

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