Property Market 2019

voluntary · 15-05-2019 9:02am

The 'most profitable' doesn't always mean the one with the highest margins. Sometimes the most profitable development would be the one which attracts the most demand and will be quickest to flip and free up the capital for next development. Selling slow is expensive, especially where developers have permanent costs (salaries, leased equipment etc). The most successful companies operate on low margins but high turnover (look at Ryanair or Amazon).

cruizer101 · 15-05-2019 9:05am

The Student wrote: »

Do you honestly see any politician ever voting for a changes in the law which would end up in someone being evicted from a property. This would be political suicide.

This is what I find bizarre though, I think the majority of people would be happy with a change like that.
The issue is those who wouldn't be happy include a lot of people who like to make a lot of noise (kinda like the water protests).

Census 2016 shows that Owner Occupied make up 1,147,552, rented local authority 143,178, rented other 326,493.
So the vast majority are owner occupied so probably aren't overly anti eviction, (obviously a certain amount will be).

I honestly think the majority would be in favor of better legislation around evicting problem tenants, no one wants problem tenants in a rented house down the road from the house you own, but they are the quiet majority who just get on with life and work and pay their taxes and don't shout the loudest.

JJJackal · 15-05-2019 9:16am

Just an observation - looking at 2 properties. Bids seem to be flying in. Both are currently over asking. Bidders have bid in 10k increments in both (which I thought was unusual - the properties I am looking at are mid range prices in Dublin)

Is there a guide for bids based on value of house eg 1k increase for 100k house (a 1k increase on a 1million house would not make sense?)

The Student · 15-05-2019 9:46am

cruizer101 wrote: »

This is what I find bizarre though, I think the majority of people would be happy with a change like that.
The issue is those who wouldn't be happy include a lot of people who like to make a lot of noise (kinda like the water protests).

Census 2016 shows that Owner Occupied make up 1,147,552, rented local authority 143,178, rented other 326,493.
So the vast majority are owner occupied so probably aren't overly anti eviction, (obviously a certain amount will be).

I honestly think the majority would be in favor of better legislation around evicting problem tenants, no one wants problem tenants in a rented house down the road from the house you own, but they are the quiet majority who just get on with life and work and pay their taxes and don't shout the loudest.

Exactly they are the quiet majority, but look at the presidential elections and Peter Casey's votes, perhaps the silent majority would vote for those who are actually willing to state exactly how the majority are feeling.

The problem is that a single candidate or a small number of candidates who get elected can really do anything to change the system. We need a majority to change the system.

My concern is that this will get even worse for all people involved, be they renters, home owners, local authorities or landlords.

I do fear the parties on the left and their view on the housing market.

But this is for another discussion.

Zenify · 15-05-2019 10:09am

JJJackal wrote: »

Just an observation - looking at 2 properties. Bids seem to be flying in. Both are currently over asking. Bidders have bid in 10k increments in both (which I thought was unusual - the properties I am looking at are mid range prices in Dublin)

Is there a guide for bids based on value of house eg 1k increase for 100k house (a 1k increase on a 1million house would not make sense?)

People have very different views on this:

https://touch.boards.ie/thread/2057979291/1

Amirani · 15-05-2019 11:05am

Residential Property Price figures released by the CSO for March: https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexmarch2019/

Slight Month-on-Month increase nationally of 0.2%. The Year-on-Year rate though now drops to 3.9%.

Dublin down again slightly by 0.3% MoM. Up 1.2% versus last year.

voluntary · 15-05-2019 11:30am

Amirani wrote: »

Residential Property Price figures released by the CSO for March: https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexmarch2019/

Slight Month-on-Month increase nationally of 0.2%. The Year-on-Year rate though now drops to 3.9%.

Dublin down again slightly by 0.3% MoM. Up 1.2% versus last year.

Seems like the price drops in Dublin accelerated, -0.1 in February to -0.3% in March all residential and houses were worse, moved from +0,2% gain in February to -0.5% loss in March.

-0.5% means 2k montly loss on a 400k house, so negates the 'rent is a dead money' argument.

Jaster Rogue · 15-05-2019 11:39am

voluntary wrote: »

Seems like the price drops in Dublin accelerated, -0.1 in February to -0.3% in March all residential and houses were worse, moved from +0,2% gain in February to -0.5% loss in March.

-0.5% means 2k montly loss on a 400k house, so negates the 'rent is a dead money' argument.

No it doesn't. Not unless the €400k house dropped by €2k every month from now on until the price reached €0.

voluntary · 15-05-2019 11:46am

Jaster Rogue wrote: »

No it doesn't. Not unless the €400k house dropped by €2k every month from now on until the price reached €0.

The price decreases in Dublin have been negating the 'rent is dead money' for hte last 6 or 7 months. Nobody knows the future.

Mind, while taking a mortgage, more than half of montly repayment would also be a 'dead money' in a form of bank interest. Only the capital repayment part MINUS (property tax + maintenance costs + management fees) is not a dead money.

Graham · 15-05-2019 11:53am

voluntary wrote: »

The price decreases in Dublin have been negating the 'rent is dead money' for hte last 6 or 7 months. Nobody knows the future.

Over the life of a typical mortgage you are unlikely to end up with a property that's worth less than you paid for it. At current interest rates you're also likely to be paying less per month than someone renting a similar property.

Over a lifetime of paying rent you are guaranteed to end up with nothing to show for it.

voluntary · 15-05-2019 11:59am

Graham wrote: »

Over the life of a typical mortgage you are unlikely to end up with a property that's worth less than you paid for it. At current interest rates you're also likely to be paying less per month than someone renting a similar property.

Over a lifetime of paying rent you are guaranteed to end up with nothing to show for it.

Yeah, in a long run that's right. The timing is the key though.

If you rent and spend let's say 1500 per month, then this is your monthly 'dead money'

If you buy with mortgage and pay 1500 montly (25 year mortgage), then I can only assume 1000 would be interest and 500 capital repayment.
So the 'dead money' this month was: 2000 (capital depreciation) + 1000 (interest) + 40 (property tax) + 150 (management fees) + 50 maintenance = 3240

Just saying. When prices decrease even by small amount each month then ownership/mortgage becomes pretty costly in terms of 'dead money'

Graham · 15-05-2019 12:05pm

voluntary wrote: »

Yeah, in a long run that's right. The timing is the key though.

I'd say you're half right, 'the long run' is the key.

aloooof · 15-05-2019 12:07pm

voluntary wrote: »

Yeah, in a long run that's right. The timing is the key though.

If you rent and spend let's say 1500 per month, then this is your monthly 'dead money'

If you buy with mortgage and pay 1500 montly (25 year mortgage), then I can only assume 1000 would be interest and 500 capital repayment.
So the 'dead money' this month was: 2000 (capital depreciation) + 1000 (interest) + 40 (property tax) + 150 (management fees) + 50 maintenance = 3240

Just saying. When prices decrease even by small amount each month then ownership/mortgage becomes pretty costly in terms of 'dead money'

As another poster mentioned, they are incredibly unlikely to continue this trend during the entire duration of the mortgage.

What you are calling "dead money" is the cost of having security of your home vs not buying at the exact optimal bottom of the market. A figure of ~3k is comparatively minor in this context, even leaving aside capital appreciation over the long run.

The_Conductor · 15-05-2019 12:08pm

Graham wrote: »

Over the life of a typical mortgage you are unlikely to end up with a property that's worth less than you paid for it. At current interest rates you're also likely to be paying less per month than someone renting a similar property.

Over a lifetime of paying rent you are guaranteed to end up with nothing to show for it.

However, we are in uncharted waters. Interest rates have never been as low for such a protracted period time of time (in both an Irish and an international context). This has driven other asset class prices (including residential property and stock market prices)- to staggering levels. If/when 'normalisation' of interest rates occurs (which may very well be over a number of years)- its entirely plausible that it'll have negative correlation with other asset prices (including residential property prices).

Its a game of playing with time frames- and also inflation (regardless of how low it is). However- just because ye 500k 3 bed semi is still worth 500k in 25 years time- or has even increased significantly- does not necessarily mean its necessarily a good purchase at today's prices.

Its not possible to use historic norms- to predict the future in any meaningful fashion- when we're in completely uncharted water.

Mickiemcfist · 15-05-2019 12:39pm

voluntary wrote: »

If you buy with mortgage and pay 1500 montly (25 year mortgage), then I can only assume 1000 would be interest and 500 capital repayment.
So the 'dead money' this month was: 2000 (capital depreciation) + 1000 (interest) + 40 (property tax) + 150 (management fees) + 50 maintenance = 3240

Just saying. When prices decrease even by small amount each month then ownership/mortgage becomes pretty costly in terms of 'dead money'

That's stretching things a little. Youd rarely if ever sell your primary residence and not buy another one so the monthly loss isn't real unless you buy another in a completely different market.

The 2k loss in the above example isnt a loss, it's a worse deal than you could have got, a comparison is saying I bought a jumper the other day for 100 & now it's on sale at 50, I've lost 50 quid.

voluntary · 15-05-2019 1:43pm

Mickiemcfist wrote: »

That's stretching things a little. Youd rarely if ever sell your primary residence and not buy another one so the monthly loss isn't real unless you buy another in a completely different market.

The 2k loss in the above example isnt a loss, it's a worse deal than you could have got, a comparison is saying I bought a jumper the other day for 100 & now it's on sale at 50, I've lost 50 quid.

I don't believe such decline would encourage home owners to sell, could however relax the pressure on buy by people currently renting (especially if someone is lucky enough to be locked into an rent restricted zone and paying below the market rates). As long as a decline by more than 0.1% per month continues it should be cheaper to rent than to buy (less money burnt as 'dead money').

Regarding your example, well, the end result is the same, right? You're 50 euros worse off buying that jumper than your friend who paid for it 50 less. The terms 'gain' and 'loss' are very liquid and don't mean much. What matters is what's your balance at the end of the day.

Blowfish · 15-05-2019 1:45pm

aloooof wrote: »

As another poster mentioned, they are incredibly unlikely to continue this trend during the entire duration of the mortgage.

What you are calling "dead money" is the cost of having security of your home vs not buying at the exact optimal bottom of the market. A figure of ~3k is comparatively minor in this context, even leaving aside capital appreciation over the long run.

It's not so much the viewpoint of someone who already has a mortgage, but more of someone who doesn't. i.e. if in Oct last year a first time buyer was at the point of 'do I buy now or in 6 months/1 year?' the choice to wait would have been the better as the drop in value (even though not a lot percentage wise) has so far more than offset typical rents.

Mickiemcfist · 15-05-2019 1:50pm

voluntary wrote: »

I don't believe such decline would encourage home owners to sell, could however relax the pressure on buy by people currently renting (especially if someone is lucky enough to be locked into an rent restricted zone and paying below the market rates). As long as a decline by more than 0.1% per month continues it should be cheaper to rent than to buy (less money burnt as 'dead money').

Regarding your example, well, the end result is the same, right? You're 50 euros worse off buying that jumper than your friend who paid for it 50 less. The terms 'gain' and 'loss' are very liquid and don't mean much. What matters is what's your balance at the end of the day.

Replying to your final line, most reports are showing that it is cheaper to pay a mortgage in Dublin than it is to rent currently. So your bank balance at the end of the day/week/month will be higher if you buy. Even if the house value reduced to zero - you'll end up with years of "free rent" once you've paid off the mortgage.

No matter what way you look at it, renting is dearer (the clue is that nobody wants to rent out their house for less than they're paying for it).

voluntary · 15-05-2019 2:05pm

Mortgage monthly repayments may be made cheaper then rent, but only on some strong assumptions, like:
1) you don't include the deposit in the calculation, so minimum of 40/80k on 400k home (manipulative assumption)
2) you stretch the repayment term to 30 or 35 years, so basically pay pretty much interest only and very little capital. (poor advice assumption)
3) you ignore the other costs associated with ownership in the comparison (property tax, maintenance, management fees) (false assumption)
4) the house prices do not collapse, so you won't lose the deposit (very weak assumption)
5) you can hand the keys back if you move into a negative equity and have the debt forgiven (false assumption)

cruizer101 · 15-05-2019 2:29pm

voluntary wrote: »

2) you stretch the repayment term to 30 or 35 years, so basically pay pretty much interest only and very little capital. (poor advice assumption)

Think you have you calculations a bit off on this one with current interest rates.

A 300k mortgage @2.6% will have repayment of 1,200 which in first month is 650 interest and 550 capital by 4 years in you are payment more off the capital than you are in interest.

Interest is a big expense alright but its far off paying interest only initially.

Mickiemcfist · 15-05-2019 2:36pm

voluntary wrote: »

Mortgage monthly repayments may be made cheaper then rent, but only on some strong assumptions, like:
1) you don't include the deposit in the calculation, so minimum of 40/80k on 400k home (manipulative assumption)
2) you stretch the repayment term to 30 or 35 years, so basically pay pretty much interest only and very little capital. (poor advice assumption)
3) you ignore the other costs associated with ownership in the comparison (property tax, maintenance, management fees) (false assumption)
4) the house prices do not collapse, so you won't lose the deposit (very weak assumption)
5) you can hand the keys back if you move into a negative equity and have the debt forgiven (false assumption)

Ok replying in order

1) 40k deposit is under 100 a month on a 400k home spread over the length if you want to add that
2) 30/35 years of paying mortgage vs paying rent until you die
3) True
4) House prices typically fall & rise together, so the house you'd be moving to would also be comparitavely cheaper, so there's little transactional difference
5) Nobody has suggested that, however looking at the last recession I'd much rather have been a homeowner than a tenant, homeowners seem to be immune from eviction

Even assuming the same monthly cost to rent vs buy, its a choice between renting forever, or paying a fixed amount over 35 years which eventually finishes, there's very little pro's in the rent forever column.

beaz2018 · 15-05-2019 2:44pm

voluntary wrote: »

Seems like the price drops in Dublin accelerated, -0.1 in February to -0.3% in March all residential and houses were worse, moved from +0,2% gain in February to -0.5% loss in March.

-0.5% means 2k montly loss on a 400k house, so negates the 'rent is a dead money' argument.

Are you assuming that every house in Dublin has gone down in value by this amount based on a CSO headline % number? Surely certain areas will improve/fall in price over time quicker/slower than others depending on a number of factors.

The Student · 15-05-2019 2:47pm

Mickiemcfist wrote: »

Ok replying in order

1) 40k deposit is under 100 a month on a 400k home spread over the length if you want to add that
2) 30/35 years of paying mortgage vs paying rent until you die
3) True
4) House prices typically fall & rise together, so the house you'd be moving to would also be comparitavely cheaper, so there's little transactional difference
5) Nobody has suggested that, however looking at the last recession I'd much rather have been a homeowner than a tenant, homeowners seem to be immune from eviction

Even assuming the same monthly cost to rent vs buy, its a choice between renting forever, or paying a fixed amount over 35 years which eventually finishes, there's very little pro's in the rent forever column.

4) We are talking about an investment property not your PPR so a fall in property will affect your investment decision.

Mickiemcfist · 15-05-2019 2:52pm

The Student wrote: »

4) We are talking about an investment property not your PPR so a fall in property will affect your investment decision.

Ehh, the comparison is between buying or renting an investment property?? How does that makes sense?

voluntary · 15-05-2019 3:17pm

beaz2018 wrote: »

Are you assuming that every house in Dublin has gone down in value by this amount based on a CSO headline % number? Surely certain areas will improve/fall in price over time quicker/slower than others depending on a number of factors.

It's more a theretical and statistics/average/trend/sentimets based consideration.

But that's how trends are being established. When prices decrease over a period of time, it's more likely that they will keep decreasing as potential buyers hold off. There's the lower cost aspect associated with delayed purchase. When prices go up, they're likely to continue going up, as there's this 'missing the train' aspect of a purchase and higher cost associated with a purchase delay.

The Student · 15-05-2019 3:33pm

Mickiemcfist wrote: »

Ehh, the comparison is between buying or renting an investment property?? How does that makes sense?

The comparison was if renting was "dead money" and that the purchasing property was always better then renting.

If you purchase a property to rent out and its value falls lower than its purchase price or the outstanding debt due on the mortgage when you sell it then you have made a loss.

If you are renting and rents fall you are better off as you don't have the risk of property prices falling the same way somebody who has purchased a property for investment purposes.

Purchasing a property for investment is a long term investment, if the rents drop tenants will happily move to that place that offers them the best value for their money. An investor does not have the same luxury, if property values fall there is nothing the investor can do.

cruizer101 · 15-05-2019 4:01pm

Your argument makes no sense.

You either compare purchasing a property to live in with renting a property to live in.
Or compare purchasing an investment property to investing the money elsewhere like into shares.
There is no point in mixing the two, otherwise you might as well compare purchasing a property to live in with investing in shares.

The debate around what is the better way to accommodate yourself buy or rent.

JJJackal · 15-05-2019 4:45pm

An important point that is being missed re purchasing a place to live - you have a place to live. Irrespective of changes in rent, landlord selling or moving in and you can make changes to that place to suit your own needs. You can rent out a room if you want - thus increasing income by up to 14,000 per year tax free.

Re very small price changes either positive or negative - the sale or not of a few very expensive properties can cause minor fluctuations - this can be seen in the property price register too

Lets say the average price of a home is 400,000 and you sold 1000 homes for 400,000 (this obviously wont happen but as an example). Another home comes on market for 10 million. This would increase the average sale price to almost 410,000 - thus a perceived 3% rise in house prices - in truth they haven't risen at all.

A very expensive home is not sold in Ireland every month I would think. Alternatively you could think of it as a new estate going on sale with houses priced at 1 million (again not too common). These could all go through in a single month.

The current decreases also reflect houses sold in November/December/January - I suspect these are not the best months for buying. No of sales dips in January every year as per property price register

voluntary · 15-05-2019 4:48pm

The key thing is, nobody should be forced into purchasing a property to live in for life if he's not settled yet in one place for good. The current situation with rents reaching extreme levels is doing just that - forcing people to buy (and get stuck). This can't end up well and many current buyers will lose out on career oportunities and/or relocation options or even personal live choices.

voluntary · 15-05-2019 4:50pm

JJJackal wrote: »

Lets say the average price of a home is 400,000 and you sold 1000 homes for 400,000 (this obviously wont happen but as an example). Another home comes on market for 10 million. This would increase the average sale price to almost 410,000 - thus a perceived 3% rise in house prices - in truth they haven't risen at all.

CSO stats would cater for that. They publish adjusted figures.

Property Market 2019

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