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Central Bank to limit amount banks lend for home purchase

handlemaster

http://www.irishtimes.com/business/sectors/financial-services/central-bank-to-impose-limits-on-home-loans-1.1948176

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by the seaside

The Spider wrote: »

Well it's not, there is no supply in Dublin, basic laws of economics, low supply high prices. Until that changes prices will continue to rise. More and more jobs economy is going to keep growing into 2015 and beyond.

http://www.irishtimes.com/business/ibec-forecasts-spectacular-5-7-growth-in-economy-1.2045845

3,086 properties available in Dublin, of that 2,065 are houses and of that 1,764 are three bed houses, and of that 819 are semi-detached, 354 are detached.

So that's 819 semi-detached houses for sale in Dublin that has a population of 1.8 million and that's expanding rapidly.

Sorry but when you look at the numbers, there is just no way any reasonable amount of supply can be provided to meet the demand in the next few years.

Anyone who has their head screwed on and wants to buy a house should be looking at their options sooner rather than later.

You seem very certain. How do you know this is not another bubble?

mr_seer

There was a shortage in the supply of houses in 2006 and demographics were pointing to increasing demand. If you use that logic then prices never would have fallen (collapsed) after the last bubble.

If you want to talk fundamentals, then compare house prices to incomes. Average Dublin house prices (your 3 bed semi) are running at a multiple of c. 10x the average gross salary. 5x is considered to be the international norm for sustainability. This also does not take into account the fact that income tax in Ireland is disproportionately high, as is the cost of living

Fkall

gaius c wrote: »

CSO basically excludes half the market because it doesn't take account of cash sales.

When you look at the PPR data, the figure for November is -11%. Admittedly, data for November is still coming in but the chances of that going positive are slim.

Very early days. Will need to wait till March or so before we can call a trend.

As you are aware from discussions on thepropertypin analysising PPR data using simple averages is a meaningless exercise.

Fkall

gaius c wrote: »

MOM
+1% year on year.
December (so far) is 0% YOY

Using month on month simple averages is a wast of time

Repeat your analysis using a 12 month moving above and you get a very different result

gaius c

Yes landlord. We all know about your methods for torturing data until it confesses.

Sala

Epic work on the spreadsheets!!

The Spider

by the seaside wrote: »

You seem very certain. How do you know this is not another bubble?

Don't see it,and I was one of the people screaming bubble las time around. Loads of credit buy what toucan et, circa 2002-2006.

Different this time no supply and not looking likely.

Geuze

[QUOTE=mr_seer;93556190

If you want to talk fundamentals, then compare house prices to incomes. Average Dublin house prices (your 3 bed semi) are running at a multiple of c. 10x the average gross salary. 5x is considered to be the international norm for sustainability. This also does not take into account the fact that income tax in Ireland is disproportionately high, as is the cost of living[/QUOTE]

Are 3-bed semis now at 10* 36k = 360k??

Note that wages are higher than average in Dublin, so average earnings are probably above 36k.

Also note that income taxes are lower than in most other countries.

My parents pay 9% on 49k.

Barely Hedged

mr_seer wrote: »

If you want to talk fundamentals, then compare house prices to incomes. Average Dublin house prices (your 3 bed semi) are running at a multiple of c. 10x the average gross salary. 5x is considered to be the international norm for sustainability. This also does not take into account the fact that income tax in Ireland is disproportionately high, as is the cost of living

What is the average price of a 3 bed semi in Dublin?

The_Conductor

Fkall wrote: »

Using month on month simple averages is a wast of time

Repeat your analysis using a 12 month moving above and you get a very different result

You can do that yourself with the CSO figures- it does show a few interesting hiccups- alongside some surprising flatlines when the media were continuing to report price rises. It'll take you less than 5 minutes to graph it.

BarneyThomas

The single biggest factor for house prices going one way or the other is - jobs (stability,confidence and prospects of keeping one).

The last property crash was caused huge losses of jobs. It wouldnt have mattered how much people paid for houses.

Whatever happens to trigger a loss of jobs is irrelevant. If it happens property prices will fall big time. If it doesnt happen i dont see much change in property prices. Maybe a slow rise, but who knows.

Lots of jobs = lots of people competing to buy the same property = prices rising
Lots of job losses = no one wanting to buy property = falling prices.

The_Conductor

Barney- I actually disagree.
The biggest factor governing house prices- is supply and demand.
There is a constrained supply- which has supported prices (at their current inflated levels- and they inflated levels- regardless of what anyone tells you).

People have to be homed- irrespective of whether they are in employment or not. Even if they are in gainful employment- it does not necessarily mean that they can afford to live where they ideally would like to.

From an investment perspective- investors have by-and-large abandoned the market- as the current prices are not supported by rental yields (despite much unhappiness among those who rent- at the ridiculous prices rental units are achieving).

The current market is over 40% first time buyers- and the remnant largely those trading up and down- with investors @ under 10%- which is a very low level.

Current prices are ridiculous- and the mindset of developers are borderline insanity. We've all heard the developer in the midlands who has said the building industry cannot deliver needed housing until average property prices in Portlaoise and Tullamore reach 200k........ Like what?

If the supply side are suggesting that a minimum of 200k is necessary to even consider constructing needed residential units- we need to look at where the costs involved are- and work on normalising them. It certainly doesn't cost this much to construct a dwelling in a provincial location in any other country- so why does it here? Are the laborers back at their old tricks- remember brickies were earning more than surgeons during the boom- is there a wholly unreasonable wage expectation on the part of the various trades?

If there is a wholly unreasonable/unrealistic wage expectation- why? Is it because our cost of living is so out of kilter with everywhere else? If so- what can be done to bring it back to normal levels?

Our entire economy is prefaced on cossetted sectors protecting their own- at the cost of consumers and the economy at large. Looking at the Electricity bill I received today- I have a Public Service Levy of 30 Euro on it- which goes towards keeping inefficient turf and coal generation plants open. Thats bonkers. We have the same in every other sector- charges for silly shenanigans that almost any other country would laugh at.

And so- we have our high minimum wage- coupled with high social welfare- just to let people make ends meets- which in turn crucifies the tax payer- not that the government seem to mind or care.

I don't know what the next government is going to bring- but a ruthless mob of people who genuinely want to strip the stupidity out of the system- and while they're at it- simplify the tax code- so everyone pays a reasonable tax rate- but no-one is crucified for working- and then we might get somewhere. At the moment- we have the multinationals based here bluntly telling the government they are not going to recruit more workers- because its impossible to pay them. When you're hitting just shy of 60% tax (depends on the sector) on all wages over 34k- you rapidly see the issue- its not feasible to pay staff- the government are just going to purloin any reasonable salaries.

Back to housing- get our costs under control- and supply will increase- prices will fall- investors will hop back into the market again- when rental yields reach investment levels- and rents in turn will fall because of increased supply in that sector.

At the moment- the issue is a lack of equilibrium- and a dogged refusal to look at core fundamentals- and get to grips with why the market is rigged in Ireland- and by god- it is rigged.

The government seem to see rising prices as some sort of vindication of their policies- when it anything but........

BarneyThomas

Conductor.
Of course you are right, all sorts of variables and conditions can be present.
To put my post earlier post very simply, i believe no jobs, no house buying. That works for me, but noone has to agree with me. Ive been wrong a lot in the past.
Investors (for the most part) wont buy them as they are going down. They will start to buy them as they are bouncing along the bottom.

For now though, Yields are still looking quite good to me and i am still planning to buy in the first quarter of next year. I have several on my short-list at this time. And i would consider myself an investor, not just in property. Im sure if there is a major economic downturn and there are huge job losses that rents and prices will tumble, but an event like that, while it could come from anywhere is pretty rare in the grand scheme of things.

I havent looked yet, but im pretty sure a lot of people on boards (as i have seem on a lot of other message boards and heard people saying) when they saw the minor decreases in prices last year at the end of the year, thought they had a handle on the "fundamentals" and proclaimed that house prices are going to go down in 2014. This will be predicted every year for some reason or another. It will happen eventually sometime, but it will be a rare event compared to years when prices rise. Im sure the same people will be back with a different take on it now that there are reports of price falls in the latter part of the year again.

The_Conductor

Well- are we bouncing along the top now? We've had a few months in the past year where prices were stagnant- a few where prices fell- a few where there were price increases of between 3 and 5% in a single month alone.

We don't have a properly functioning market- I'm glad you think there is still fundamental value there for you as an investor- perhaps a quarter of potential investors would agree with you- the other 3/4 have abandoned the market.

Investors- that is proper investors- look at the core fundamentals of the market- and see do valuations support a reasonable rental yield. Most investors- are not in it for the asset price appreciation- they see letting property as a business- and one for which they are entitled to earn a reasonable return on an ongoing basis. Some people churn properties for profit- but they are in a different category to investors seeking a long term sustainable yield from their properties.

At the moment- so much is wrong with the economy in general, taxation, our social welfare system, our cost of living, our parochial politics etc etc etc- we really are our own worse enemies. Until we sit down and redesign the country from the bottom up- we are screwed- to put it bluntly.

BarneyThomas

The_Conductor wrote: »

Well- are we bouncing along the top now? We've had a few months in the past year where prices were stagnant- a few where prices fell- a few where there were price increases of between 3 and 5% in a single month alone.

We don't have a properly functioning market- I'm glad you think there is still fundamental value there for you as an investor- perhaps a quarter of potential investors would agree with you- the other 3/4 have abandoned the market.

Investors- that is proper investors- look at the core fundamentals of the market- and see do valuations support a reasonable rental yield. Most investors- are not in it for the asset price appreciation- they see letting property as a business- and one for which they are entitled to earn a reasonable return on an ongoing basis. Some people churn properties for profit- but they are in a different category to investors seeking a long term sustainable yield from their properties.

At the moment- so much is wrong with the economy in general, taxation, our social welfare system, our cost of living, our parochial politics etc etc etc- we really are our own worse enemies. Until we sit down and redesign the country from the bottom up- we are screwed- to put it bluntly.

I couldnt tell you where we are in the cycle.
If I tried id be making it up.
The rental yield works for me. Id consider myself a proper investor too.

Any economy in any country has problems all over the place. An economy is just an economy. Nothing special about any of them. They are all imbalanced catastrophes waiting to happen at the end of it all. Its all about hedging your bets in the end. Hopefully you can prepare for the catastrophic part. Got some fright the last time.

The_Conductor

Anyone who had factored capital appreciation into their equations- got mauled. I'd strongly suspect that we're back at this stage again- but I could well be wrong.......

A significant sector of the workforce (the public sector with over 400,000 employees) are on 25% lower NET pay than they were on 5 years ago. The private sector by and large- has not had significant pay cuts- they did however have all the job losses that occurred.

A deciding factor in all of this- might be the nature of the new employment in the economy. If the new employment is high skilled, well paid jobs- in sustainable sectors- brilliant. If its largely an increase in low paid service sector jobs- its good that its people off the dole queues- but its not going to make much of a difference otherwise- they're still not going to be queuing to buy a house, come what may (though they will be happy if rents fall).

Ireland- our economy- and our government- are particularly inept. We're not the worst in the world- but by god- we have core issues that anyone with a half an inclination could knock lumps out of.

Until we stop crucifying employees- we're not going to get moving again.......

BarneyThomas

The_Conductor wrote: »

Anyone who had factored capital appreciation into their equations- got mauled. I'd strongly suspect that we're back at this stage again- but I could well be wrong.......

A significant sector of the workforce (the public sector with over 400,000 employees) are on 25% lower NET pay than they were on 5 years ago. The private sector by and large- has not had significant pay cuts- they did however have all the job losses that occurred.

A deciding factor in all of this- might be the nature of the new employment in the economy. If the new employment is high skilled, well paid jobs- in sustainable sectors- brilliant. If its largely an increase in low paid service sector jobs- its good that its people off the dole queues- but its not going to make much of a difference otherwise- they're still not going to be queuing to buy a house, come what may (though they will be happy if rents fall).

Ireland- our economy- and our government- are particularly inept. We're not the worst in the world- but by god- we have core issues that anyone with a half an inclination could knock lumps out of.

Until we stop crucifying employees- we're not going to get moving again.......

You are right about capital appreciation. It should never be factored into expectations. I never counted on it and always presumed there would be none, even in years of high growth. It just happens that i have had a lot of capital appreciation and thankfully not depreciation, but the return i aim for is always net of any capital appreciation/depreciation.

I doubt investors at this stage are counting on any capital appreciation. I assume, like myself, that they treat it as a bonus if it comes along.
For example the properties that I have on my shortlist at the moment will be bought for approx 90k and rent for 1k a month. that yield will be perfectly fine for me, even if there was no capital appreciation.

I disagree about our government being more inept than any other.
I think they are just the same as any other. You just get what you get and you get on with it. Same the world over.

I have lived in Kenya, the USA, France and Brazil in the past.
Everyone always thinks their own government is the most inept.

Its Christmas and i got to go do the Santa thing.
Its been nice talking - very civilized compared to anther discussion i got involved with elsewhere

Thats me finished on the internet for the foreseeable future, but i wouldnt mind coming back next December and see how things have gone.

Take care.

The_Conductor

Happy Christmas everyone- I've Santa helping duties here too

moxin

Take this with a pinch of salt if you like.

There are 2 3-bed houses asking roughly nearly 300k on my road in a well established area on a main thoroughfare in the "mature" burbs of the northside of Dublin beside amenities like schools and tons of shops, both houses were lived in by elderly people so need to be fully refurbished.

They are still for sale this Xmas eve, builders and investors have expressed no interest so far since about September. Any couple wishing to buy at that price will have to fork out tens of thousands to modernise the properties. My own thoughts on this is that the tax incentive that runs out in a week has not resulted in a sale of these 2 houses. Who else is there to buy them?

Cuddlesworth

The_Conductor wrote: »

A deciding factor in all of this- might be the nature of the new employment in the economy. If the new employment is high skilled, well paid jobs- in sustainable sectors- brilliant. If its largely an increase in low paid service sector jobs- its good that its people off the dole queues- but its not going to make much of a difference otherwise- they're still not going to be queuing to buy a house, come what may (though they will be happy if rents fall).

I know the multinational I work for had Dublin and Galway as one of the few regions in the world they were willing to hire in for non-location specific roles at the start of the year(2 of 7).

Now its Galway. Wage expectations in Dublin are too high due to the cost of living expenses. Its a reality that if living costs increase in Galway, it too will be removed from the list.

Piriz

moxin wrote: »

Take this with a pinch of salt if you like.

There are 2 3-bed houses asking roughly nearly 300k on my road in a well established area on a main thoroughfare in the "mature" burbs of the northside of Dublin beside amenities like schools and tons of shops, both houses were lived in by elderly people so need to be fully refurbished.

They are still for sale this Xmas eve, builders and investors have expressed no interest so far since about September. Any couple wishing to buy at that price will have to fork out tens of thousands to modernise the properties. My own thoughts on this is that the tax incentive that runs out in a week has not resulted in a sale of these 2 houses. Who else is there to buy them?

Can you post a link to these properties or tell us the location please......?

gaius c

BarneyThomas wrote: »

The single biggest factor for house prices going one way or the other is - jobs (stability,confidence and prospects of keeping one).

The last property crash was caused huge losses of jobs. It wouldnt have mattered how much people paid for houses.

Whatever happens to trigger a loss of jobs is irrelevant. If it happens property prices will fall big time. If it doesnt happen i dont see much change in property prices. Maybe a slow rise, but who knows.

Lots of jobs = lots of people competing to buy the same property = prices rising
Lots of job losses = no one wanting to buy property = falling prices.

Barney
You're wrong. House prices topped out in 2006/2007, well before the big rise in unemployment in 2009/2010.

Mr. teddywinkles

ffactj wrote: »

Maybe you should look up the definition of interference.
Leave well enough alone and it will shake itself out and stay shaken out.

Keep interfering and it will never find a level. It will keep swinging back and forth.

At the cost of the taxpayer again. Don't think so

matt-dublin

Mr. teddywinkles wrote: »

At the cost of the taxpayer again. Don't think so

The government will never have to bail out the banks again, the ECB And EMF put in controls to assist banks that were in capital difficulty.

Remember the government asked them recently could they retrospectively get the funding so the government could have the money back?

moxin

Piriz wrote: »

Can you post a link to these properties or tell us the location please......?

Glasnevin, not gonna post the road where i live now am i?

One is directly across the road from me, there were viewings by couples in the last couple of months but no-one jumped, both houses are literally shells which need serious updating. I saw the "adult children" removing everything possible from the house opposite me before it went on the market, nosey me

Piriz

not exactly glasnevin but this is a decent house at a decent price comparing to others in surrounding area..

http://www.myhome.ie/residential/brochure/106-ballygall-road-west-glasnevin-dublin-11/2951981

gaius c

moxin wrote: »

Glasnevin, not gonna post the road where i live now am i?

One is directly across the road from me, there were viewings by couples in the last couple of months but no-one jumped, both houses are literally shells which need serious updating. I saw the "adult children" removing everything possible from the house opposite me before it went on the market, nosey me

Stripping the house bare? Could well be repos then.

Mongfinder General

matt-dublin wrote: »

The government will never have to bail out the banks again, the ECB And EMF put in controls to assist banks that were in capital difficulty.

Remember the government asked them recently could they retrospectively get the funding so the government could have the money back?

You're assuming that Ireland remains part of the Eurozone.

These guys are going to take a few seats in Germany. http://en.wikipedia.org/wiki/Alternative_for_Germany

Apparently the Chancellor is a little concerned.

matt-dublin

Mongfinder General wrote: »

You're assuming that Ireland remains part of the Eurozone.

These guys are going to take a few seats in Germany. http://en.wikipedia.org/wiki/Alternative_for_Germany

Apparently the Chancellor is a little concerned.

Ha ha, you're assuming we can afford to pull out, revert to a heavily undervalued punt and pull through? It would leave us in a worse situation than we were in during the recession!

Also did no one tell u to believe nothing on Wikipedia?

Mongfinder General

matt-dublin wrote: »

Ha ha, you're assuming we can afford to pull out, revert to a heavily undervalued punt and pull through? It would leave us in a worse situation than we were in during the recession!

Also did no one tell u to believe nothing on Wikipedia?

What makes you feel I think we can afford to pull out?

There's another group here on Wikipedia you might take a look at.

http://en.wikipedia.org/wiki/Sinn_F%C3%A9in

Here's the thing. The clue is in the name. Ourselves alone. Your complacency is quite breathtaking. These guys don't give a fcuk about financial stability. They're all about fcuking up as much of the opposition as possible.

And that my friend is pretty much everybody.