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Property Market 2015

handlemaster

http://m.independent.ie/business/personal-finance/property-mortgages/return-of-property-porn-as-prices-go-through-the-roof-30857063.html

What are your predictions for 2015 property market both rental and sales.

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alastair

gaius c wrote: »

So for the summer, we have less houses selling but at lower price points. It's a flight to quality with poor quality houses (or poorly priced good houses) simply not selling. Less cheap houses sold means the average will actually increase. CSO index is probably more useful at a time like this. Unsold stock is building up. We're in a phoney war phase until vendors see reality.

I'm not so sure about this 'phoney war' notion. It really boils down to 'don't price based on getting something more than the best prices of last year'. If new-to-market (sensibly priced) properties equate to (sensibly priced) 2014 prices, then they'll probably achieve that. It's an end to rapid price increases, and a return to slow price increases.

The increase in stock means no-one's really forced to consider poor quality (or overpriced) houses, so they'll obviously be slower to sell than in a scenario where there's limited stock available. Most vendors that have chanced their arm on bumping up asking prices from peaks of 2014 would appear to have already seen reality and dropped their asking - stock that's come onto market since the spring generally seems to adhere to 'sensible' 2014 asking prices. Unless you expect a meaningful reduction in property values, most vendors seem to be seeing reality.

El_Dangeroso

El_Dangeroso wrote: »

I know the DNG one is on this afternoon. What other auctions happened this week?

Actually O'Donnellan and Joyce auction auction is also on now. Live results here:
http://www.odonnjoyce.com/Auction/Results

Shocked at the price achieved by presentation rd. that house was tiny and had no parking!

johnp001

El_Dangeroso wrote: »

Actually O'Donnellan and Joyce auction auction is also on now. Live results here:
http://www.odonnjoyce.com/Auction/Results

Shocked at the price achieved by presentation rd. that house was tiny and had no parking!

This morning's session was an absolute bloodbath.
Whatever managed to sell nearly all went for the bare reserve. Some went for below the advertised maximum reserve. 7 out of 32 lots were withdrawn at auction.

Rambler11

El_Dangeroso wrote:

I know the DNG one is on this afternoon. What other auctions happened this week?

Colleran auction also on yesterday.

Rambler11

El_Dangeroso wrote:

Shocked at the price achieved by presentation rd. that house was tiny and had no parking!

Agree with you. But apart from that house the others look to be reasonable.. I thought things had gone a bit mad in Galway recently but maybe things are stabilizing!?

El_Dangeroso

Rambler11 wrote: »

Agree with you. But apart from that house the others look to be reasonable.. I thought things had gone a bit mad in Galway recently but maybe things are stabilizing!?

That was the only one that stuck out at me as a ludicrous price. I always wonder in those cases if the purchaser knew something the rest of the humble public did not, like some gold bullion buried under the floor-boards, I mean that price would get you a nicer house in a central part of Dublin, it baffles me. The rest went for realistic prices in my opinion.

The only problem with Galway city in general right now is the quality of stock is so bad across all price ranges. All executor sales that need loads of work done.

Unless of course you want to live in the endless suburb that is knocknacarra then you've loads of choice.

handlemaster

I still dont see prices coming down in dublin 15 if anything there steddily increasing

OfflerCrocGod

handlemaster wrote: »

I still dont see prices coming down in dublin 15 if anything there steddily increasing

People being pushed out from other parts of Dublin to there?

TheDriver

I don't see any let up in asking prices or rate of sales in large Cork commuter towns. In fact it seems anything decent is gone in reasonable time and making good money with a number of interested parties....
Very little stock and no sign of let up. In fact 14 empty units in an estate in Mallow sold by Nama to housing association for social housing hence no fire sales going on.

gosplan

OfflerCrocGod wrote: »

People being pushed out from other parts of Dublin to there?

This is a fairly basic opinion as I don't work in the sector or anything but it seems that money is just harder to come by in terms of mortgages.

So if Davy said the other day that half a bn less will be drawn down this year then that means people have less to spend(unless as someone pointed out a lot of cash comes in).

I think the obvious houses to be affected in the capital are the 3-bed semis that go in a radius about 5km from Dublin City Centre.

Prices of these had been pushing towards 500k for no real reason other than people were being given the money to be foolish with. Now all that silliness that sees houses across the road going for 75k more because of postcode makes no sense to people because they have they have to work so hard for their mortgage.

I think good well priced houses will always sell but the silliness that comes with being given too high a mortgage and trying to catch the 'best' house you can before it goes out of reach is hopefully over.

I mean hyper extend yourself for the forseeable future to live in Raheny or move to D15 and save 1k per month on repayments?

You can see why there's be a bunching of prices. The 3.5 lti in particular means a vast vast amount of people can no longer borrow enough for a 500k house.

MarkAnthony

gosplan wrote: »

I mean hyper extend yourself for the forseeable future to live in Raheny or move to D15 and save 1k per month on repayments?

Or go literally 500 yards up the road into Kilbarrack and it's cheaper than most parts of D15! D5 pricing is bonkers, as I'm fond of saying!

handlemaster

I think the sub 200k semi in Dublin must be coming to an end. The people dropping down are pushing these houses up

gaius c

handlemaster wrote: »

I think the sub 200k semi in Dublin must be coming to an end. The people dropping down are pushing these houses up

And then who will buy the houses those people can't afford anymore?

The amount of credit available to buy houses has been drastically curtailed. Unless Noonan comes up with a scheme to demolish old people's houses when they die in order to strangle supply, it's fairly evident that prices will drop.

handlemaster

gaius c wrote: »

And then who will buy the houses those people can't afford anymore?

The amount of credit available to buy houses has been drastically curtailed. Unless Noonan comes up with a scheme to demolish old people's houses when they die in order to strangle supply, it's fairly evident that prices will drop.

Doesnt make any sence

gaius c

Follow your own logic.

People have less money to spend on houses therefore house prices increase???
That's what makes no sense.

alastair

gaius c wrote: »

And then who will buy the houses those people can't afford anymore?

Non first-time-buyers? Buy-to-let investors, given the growth in rent prices? Down-sizers? Returning ex-pats? Plenty of possibilities.

gaius c wrote: »

The amount of credit available to buy houses has been drastically curtailed. Unless Noonan comes up with a scheme to demolish old people's houses when they die in order to strangle supply, it's fairly evident that prices will drop.

That's not evident at all. Stock levels are still well below 2009 levels, so while there's doses more to buy than there was in the last couple of years, it's not really back to anywhere near it's historic peak capacity. The CB 20% deposit rule really only significantly impacts first time buyers. Anyone else has probably sold a house recently and don't have deposit concerns. The clear deposit-saving delay that first time buyers will have to work with may actually have very little impact (up or down) on property prices, or credit accessibility - time will tell.

alastair

gaius c wrote: »

Follow your own logic.

People have less money to spend on houses therefore house prices increase???
That's what makes no sense.

Increased deposits (that really only impact on a minority) don't equate to less money to spend. It's less to borrow for some, but it may well leave buyers spending exactly the same as they would have in a 10% deposit scenario.

gosplan

I have to agree with Gauis here - though not an expert.

If the amount being spent(but not necessarily the no of mortgages being sought and approved) has just been slashed by the CB rules, then how can the gross housing stock still expect to fetch the same prices.

Where's the extra cash coming from?

I get some people might be trading up and some month be coming back from Dubai but for prices to remain stable, there needs to be a massive cash injection.

I don't think it'll be a collapse or anything but given stock is Ok, then house values will absolutely have to chase the buyers who all just moved down a rung or two on the ladder.

koheim

I know most people discussing property here is extremely bearish. But I also see this:

Mortgage approval and drawdown is at 1970 level, only way is up.
More people employed, salaries are up. Most people are working and have good, secure jobs
No quality stock available, only crap and overpriced houses on market. Land and building material cost will increase.
Income taxes can only be reduced in the next few budgets
But the big one is the interest rates. Ireland has the highest rates in Europe, but this will have to be reduced and there is no point in stress testing at 6% for the foreseeable future. We will not see ECB rates above 2% in at least 5 years.

Also, imo the only way to really compare house prices is to use price pr square meter, then you will find trends and see real price changes.

handlemaster

gaius c wrote: »

Follow your own logic.

People have less money to spend on houses therefore house prices increase???
That's what makes no sense.

I said people who cant afford the more expensive house purchase houses cheaper theres à floor around the 200k mark appearing so this price level has come up.

OfflerCrocGod

alastair wrote: »

Non first-time-buyers? Buy-to-let investors, given the growth in rent prices? Down-sizers? Returning ex-pats? Plenty of possibilities.

All these people will have the same deposit rules as any other entity in the market (I believe BTL have more onerous conditions). I can't imagine many downsizers will be buying 400K+ houses in Dublin, what are they downsizing from, Shrewsbury Road?

I was under the impression that second time buyers had to have a 20% deposit in cash and the equity in their current house wasn't counted, does anyone have any information on that point?

alastair

OfflerCrocGod wrote: »

All these people will have the same deposit rules as any other entity in the market (I believe BTL have more onerous conditions). I can't imagine many downsizers will be buying 400K+ houses in Dublin, what are they downsizing from, Shrewsbury Road?

You don't need to be downsizing from Shrewsbury road to spend €400 grand on gaff. A decent two bed apartment in the city will cost you that no bother, as would a small victorian terrace in a gentrified location.

The same deposit rules apply for sure, but anyone who's not a first time buyer is likely to be cash/deposit rich, and it won't be a concern.

OfflerCrocGod wrote: »

I was under the impression that second time buyers had to have a 20% deposit in cash and the equity in their current house wasn't counted, does anyone have any information on that point?

Second time buyers here are typically not in a chain, but have already sold, and have the cash in a bank.

OfflerCrocGod

Those are prices you'd expect to pay before the CB rules because there was more credit in the market. Now that there is less it's imaginable that those prices will weaken given the buyer pool that they could once hope to attract has reduced.

I was under the impression that most sales for second time buyers would go through chains. If you had a family would you really sell up, rent another house and then go house shopping?

alastair

handlemaster wrote: »

I said people who cant afford the more expensive house purchase houses cheaper theres à floor around the 200k mark appearing so this price level has come up.

That's true for some - those in a hurry to buy in the main, but many more will just take the time to build up bigger deposits - as was always the norm before things went mad in 2002 onwards.

alastair

OfflerCrocGod wrote: »

I was under the impression that most sales for second time buyers would go through chains. If you had a family would you really sell up, rent another house and then go house shopping?

From those I know who have traded up in recent years, this is more common than opting to go into a chain. Possibly because of constraints on stock, and it may well change with the current inflation in rental costs, but that's been my experience.

NinjaTruncs

alastair wrote: »

From those I know who have traded up in recent years, this is more common than opting to go into a chain. Possibly because of constraints on stock, and it may well change with the current inflation in rental costs, but that's been my experience.

Estate agents also recommend to clients not to get into a chain. Unless the property is struggling to sell most agents won't entertain buyers who are in a chain.

alastair

OfflerCrocGod wrote: »

Those are prices you'd expect to pay before the CB rules because there was more credit in the market. Now that there is less it's imaginable that those prices will weaken given the buyer pool that they could once hope to attract has reduced.

Those are prices that you had to pay, only recently, when there was precious little credit in the market (even with a notional 10% deposit, banks simply weren't approving mortgages). We're still at a point where half of property purchases are cash buyers, and two thirds of mortgages are to buyers with an existing mortgage. So the impact of the deposit change is unlikely to lower property values, just force more sensible debt exposure.

If anything is likely to reduce property prices, it's increased stock, not the CB rule.

Villa05

alastair wrote: »

That's true for some - those in a hurry to buy in the main, but many more will just take the time to build up bigger deposits - as was always the norm before things went mad in 2002 onwards.

Is it now generally accepted that the bubble was from 2002 to 2006. Have the 6 years prior to 2002 been forgotten.

This time period, I believe encompassed
- the change from 20/25 year mortgages to 30/35
- the move away from 3 times one salary + 0.5 the second salary to 5 to 10 times combined salary

These measures drove up prices by far more than 100% mortgages. The move by the Central Bank has reigned in the salary multiples considerably. All other things being equal, this should put considerable downward pressure on price in areas that have bounced significantly since 2012

% Annual Change
1998 29.8%
1999 17.9%
2000 21.3%
2001 4.4%
2002 13.3%
2003 13.8%
2004 8.6%
2005 9.3%
2006 14.7%
2007 7.3%
2008 -7.0%
2009 -18.4%
2010 -12.4%
2011 -13.8%
2012 -11.5%
2013 +2.1%
2014 +13.0%
Source: Permanent TSB/ESRI house price index (pre-2006), CSO (2006 on)

Villa05

koheim wrote: »

I know most people discussing property here is extremely bearish. But I also see this:

Mortgage approval and drawdown is at 1970 level, only way is up.
More people employed, salaries are up. Most people are working and have good, secure jobs
No quality stock available, only crap and overpriced houses on market. Land and building material cost will increase.
Income taxes can only be reduced in the next few budgets
But the big one is the interest rates. Ireland has the highest rates in Europe, but this will have to be reduced and there is no point in stress testing at 6% for the foreseeable future. We will not see ECB rates above 2% in at least 5 years.

Point 1 and 3 are indicating price is too high therefore considerably reduced qualified demand.
Point 2 Employment is up but salaries are flat - New jobs appear to be lower paying
Point 4 We have one of the highest public and private debts in the world. Reduced taxes going forward cannot be depended upon
Point 5 Interest rate cycle is beginning to change, US expected to increase this year. Ireland has the highest rates because of our immaturity and inability to deal with bad debts. This has to be priced into new mortgages

gaius c

alastair wrote: »

Non first-time-buyers? Buy-to-let investors, given the growth in rent prices? Down-sizers? Returning ex-pats? Plenty of possibilities.

That's not evident at all. Stock levels are still well below 2009 levels, so while there's doses more to buy than there was in the last couple of years, it's not really back to anywhere near it's historic peak capacity. The CB 20% deposit rule really only significantly impacts first time buyers. Anyone else has probably sold a house recently and don't have deposit concerns. The clear deposit-saving delay that first time buyers will have to work with may actually have very little impact (up or down) on property prices, or credit accessibility - time will tell.

Actually, the 20% rule is for non-first time buyers.
First time buyers only need a 10% deposit up to €220k.
So your thesis is completely invalid.