Media: House Prices in Dublin falling by EUR1,000 per month

Interested Observer · 25-06-2019 10:57am

stevedublin wrote: »

too long or too short?

Miles too long.

Lumen · 25-06-2019 10:58am

OEP wrote: »

But each seller can realistically only sell to a subset of those buyers, so the price is driven by the richest in that subset. What I mean is, the richest 10% aren't going to be interested in a crap house in a crap area, but the poorest 10% will be - therefore they're the ones driving the price for that seller.

Sure, there are sub-markets by location. Someone buying in Donegal doesn't have to worry about how much money Dubs have to spend.

Nonetheless, houses are always bought by the person who will pay the most out of those who are interested, and that means you can get large price swings based solely on variations in supply.

seamus · 25-06-2019 11:33am

hmmm wrote: »

I agree with all this. Now that prices have stabilised, we need to work on either reducing rents, or making it easier for renters to buy (within the CBI limits).

It's all linked tbh. With a stabilisation of prices, naturally follows that properties become more affordable and people leave the rental market.
This has the effect of reducing demand in the rental sector, leading to a drop in rents.

Rents, like purchase prices are a reflection of what the market can bear. Rents dropped 22% during the recession.

lawred2 · 25-06-2019 11:48am

Lumen wrote: »

It's not quite that simple.

In a market where there are more potential buyers than sellers, prices can vary even with fixed credit availability, by exclusion.

So crudely, if there are 5,000 sellers and 50,000 buyers, the prices will be set by what the richest 10% of buyers are willing and able to pay.

If the supply increases to 10,000 the prices will be set by the richest 20% of buyers, which means that prices will tend to come down, regardless of changes to credit availability.

Obviously there are other factors like elasticity of supply and demand, credit availabilty, and cash buyers weighing up alternative investments.

that presumes that all 5000 houses are in Malahide and Foxrock.

Askthe EA · 25-06-2019 12:37pm

Interested Observer wrote: »

Miles too long.

Way too long, the only thing is, they could be referring to situations where the applicants arent strong and are told to come back in 6 months.

The_Conductor · 25-06-2019 12:40pm

Askthe EA wrote: »

Way too long, the only thing is, they could be referring to situations where the applicants arent strong and are told to come back in 6 months.

More likely submitted all manner of documentation to a broker while seeking AIP and then went faffing around looking at houses- and when they finally made up their minds the original documentation had to be resubmitted (or indeed the AIP itself may have lapsed)........... It doesn't normally take 8 months- unless the prospective buyer is faffing around the place.

Askthe EA · 25-06-2019 12:42pm

The_Conductor wrote: »

More likely submitted all manner of documentation to a broker while seeking AIP and then went faffing around looking at houses- and when they finally made up their minds the original documentation had to be resubmitted (or indeed the AIP itself may have lapsed)........... It doesn't normally take 8 months- unless the prospective buyer is faffing around the place.

Indeed, we got ours in 3 weeks (but had engaged with a broker prior to that)

Lumen · 25-06-2019 1:17pm

lawred2 wrote: »

that presumes that all 5000 houses are in Malahide and Foxrock.

That makes no difference to the underlying point.

adocholiday · 25-06-2019 1:38pm

For me as a recent house buyer the worry is that when our 4 year fixed term is up we'll be forced onto a less favourable rate. Our hope was that house prices would stabilize or rise a small bit more over the next few years and at the end of our fixed term we'd pay a big chunk off and try to re-fix at a more favourable rate.

House prices falling will scupper that plan. Still though we don't plan on selling any time soon so regardless the impact won't be too great. Still an awful lot better than renting!

SozBbz · 25-06-2019 1:43pm

adocholiday wrote: »

For me as a recent house buyer the worry is that when our 4 year fixed term is up we'll be forced onto a less favourable rate. Our hope was that house prices would stabilize or rise a small bit more over the next few years and at the end of our fixed term we'd pay a big chunk off and try to re-fix at a more favourable rate.

House prices falling will scupper that plan. Still though we don't plan on selling any time soon so regardless the impact won't be too great. Still an awful lot better than renting!

How does this make any difference? Were you banking on the market value of the house to impact the LTV%?

Even if house prices fall a bit, it doesn't stop you making a lump sum payment once you exit your fixed period, nor does it stop you fixing again at whatever the prevailing rates are.

Fian · 25-06-2019 1:54pm

Nikki Sixx wrote: »

Fair play to you, hope you feel the same when your neighbour buys an almost identical property for €100,000 less than you paid.

Odd post. Who hurt you or are you just bitter that you lost out in a bidding war recently?

I am sale agreed on a recent purchase. No contracts signed so I could withdraw if I chose. I won't, happy to proceed with it. If prices fall in the coming year or two grand. I won't be selling in the coming year or two, in the long run this purchase will work out fine and this is the property I want to buy.

adocholiday · 25-06-2019 2:08pm

SozBbz wrote: »

How does this make any difference? Were you banking on the market value of the house to impact the LTV%?

Even if house prices fall a bit, it doesn't stop you making a lump sum payment once you exit your fixed period, nor does it stop you fixing again at whatever the prevailing rates are.

In a nutshell yes we were hoping that the market value of the house would increase and in turn then improve the LTV. We still intend on making the lump sum payment and refixing, but possibly not at the favourable rate we could achieve if house prices also maintained or grew.

We borrowed well below our max approval so it's not a major issue, just would have been nice if it worked out that way. For example a very brief glance at Ulster Bank's rates at the moment there's a 0.3% difference in a 7 year fixed rate between an 80% LTV and a 90% LTV mortgage so significant savings can be achieved.

SozBbz · 25-06-2019 2:26pm

adocholiday wrote: »

In a nutshell yes we were hoping that the market value of the house would increase and in turn then improve the LTV. We still intend on making the lump sum payment and refixing, but possibly not at the favourable rate we could achieve if house prices also maintained or grew.

We borrowed well below our max approval so it's not a major issue, just would have been nice if it worked out that way. For example a very brief glance at Ulster Bank's rates at the moment there's a 0.3% difference in a 7 year fixed rate between an 80% LTV and a 90% LTV mortgage so significant savings can be achieved.

Fair enough. Well you never know, worth exploring at the time.

IMO people talk too much about "the market" like its one homogenous market and all units are equal. In reality its a series of overlapping, interconnected smaller markets. Markets for urban homes, rurual homes, down sizers, growing families....etc etc.

Prices have actually been falling in Dublin for properties of €900k for about the last year or so, maybe longer. Its a rarified section of the market so hard to judge. It doesnt really mean much for mid priced 3 bed semi's.

In short, the market doesnt go up or down by whatever %....thats just an average. depending on what you've bought you may or may not out perform the headline statistics.

Also presumably you will have paid down some of the capital portion of the loan so you might get into that 80% bracket with a combination of lump sum, capital repayments.

Also to add, I drew down a mortgage almost 4 years ago. The sum remaining is down by almost 7.5% and its not actually 4 years until october - it will be at almost 8% then I think. Rates when I took the loan were a good bit higher than now, and i've since refixed, but still it shows that you could get close to reducing the sum by 10% in 4 years. If you've a lump sum, I'd easily see 10% being possible in 4 years. Also, ask you lender if they allow for any over payment during a fixed term. My current mortgage is with BOI and they allow a 10% overpayment every month. They just added it to my standing order on my request, and while its not a huge sum, it helps to chip away at the capital.

3DataModem · 25-06-2019 2:31pm

The_Conductor wrote: »

Essentially- they are blaming both the construction of new houses

Woo-hoo! At last. Loads going up in Fingal at the moment, and some I'd regard as good value.

The_Conductor wrote: »

and the fact the lenders are not granting their full complements of lending exemptions which means loan ceilings are putting a brake on what people can afford to pay

Woo-hoo! At last. This is what the ceilings are designed to do. Interest rates are still super low in Ireland, and we shouldn't tinker with them.

voluntary · 25-06-2019 3:28pm

Eric Cartman wrote: »

The only people who want those caps removed either cannot afford the house theyre trying to loophole themselves into buying, are estate agents or are the people still in negative equity that should just swallow that debt like any other investor and shut up.

Or people who own multiple properties and would like to make some fat gains before this whole thing goes bust again.

JJJackal · 25-06-2019 3:42pm

adocholiday wrote: »

In a nutshell yes we were hoping that the market value of the house would increase and in turn then improve the LTV. We still intend on making the lump sum payment and refixing, but possibly not at the favourable rate we could achieve if house prices also maintained or grew.

We borrowed well below our max approval so it's not a major issue, just would have been nice if it worked out that way. For example a very brief glance at Ulster Bank's rates at the moment there's a 0.3% difference in a 7 year fixed rate between an 80% LTV and a 90% LTV mortgage so significant savings can be achieved.

Ulster Bank allow you to pay extra 10% /year while on fixed term. Paying that bit extra every month would be preferable to the lump sump at the end of year 4 - as you will save on the interest on the extra you paid every month. Might not be alot but still

voluntary · 25-06-2019 3:50pm

SirGerryAdams wrote: »

I really don't buy that the CB rules are having the impact NOW. They had an impact years ago I think when government were doing nothing and there was no good news on housing.

The CB rules were brought in 4 years ago. Why would it take 4 years for it to have an effect?

It's not like you have a bunch of cash buyers and high earners and once they all buy, there's no more of them. People are constantly getting married, getting increase in wages, deciding to buy.

Cash buyers are down. I don't think this is because there are none, I reckon they're waiting to see what happens with prices/Brexit/Trump and they definitely won't be flocking back in the current environment.

Well, it's a simple math.

The average Dublin household income is about 45k (41k in 2015 according to CSO).

LTI at 3.5x income gives around 160k loan, with exception it makes 202k

So an average familiy/household in Dublin is limited to 160k loan, and some averagers are limited to 202k loan.

Incomes are increasing but not as fast as properties, therefore the ceiling had to be found somewhere.

Lumen · 25-06-2019 4:07pm

voluntary wrote: »

Well, it's a simple math.

The average Dublin household income is about 45k (41k in 2015 according to CSO).

LTI at 3.5x income gives around 160k loan, with exception it makes 202k

So an average familiy/household in Dublin is limited to 160k loan, and some averagers are limited to 202k loan.

Incomes are increasing but not as fast as properties, therefore the ceiling had to be found somewhere.

It really isn't simple maths.

As far as I know there is no CSO source of income statistics which answers the question "what is the average income in Dublin of those households who would like to buy a house with a mortgage?".

You'd need to conduct a very specific survey to get that data.

The overall averages have all sorts of irrelevant groups in them, like people who own a house already, people who effectively have a council house for life, young adults who aren't looking to buy, etc etc.

[Deleted User] · 25-06-2019 4:14pm

Average house hold income is too broad for that.
It includes everyone from students to retired people.

Lumen · 25-06-2019 4:20pm

Relevant to the question of affordability, here's a recent 157 page report from the ESRI.

Not sure it's been discussed here yet.

Exploring Affordability in the Irish Housing Market
https://www.esri.ie/system/files/publications/JA201922.pdf

Abstract wrote:

This paper examines housing affordability in Ireland by looking at the distribution of housing costs across households. Using microdata from the SILC survey over the period 2006-2016, the contribution of this paper is threefold. First, the paper considers the trends in the cost of housing in Ireland across groups of households split by age, region, household structure, and their position in the income distribution. Second, we apply selected international housing affordability definitions and explore the share, and composition, of households in Ireland that would be captured by these definitions. We do not find evidence of universal affordability difficulties in the Irish market. However, certain groups do face acute affordability challenges. Third, working towards a definition of housing cost affordability for use in Irish policy discussions, we provide some guidance as to what such a definition could look like.

OEP · 25-06-2019 4:38pm

Lumen wrote: »

Sure, there are sub-markets by location. Someone buying in Donegal doesn't have to worry about how much money Dubs have to spend.

Nonetheless, houses are always bought by the person who will pay the most out of those who are interested, and that means you can get large price swings based solely on variations in supply.

Yes, which brings us right back to the point that central bank limits have had a big influence in capping what the most someone is willing / able to pay for a house - for a good proportion of the houses. You could make a reasonable assumption that the average (combined) salary of most first time buyers / buyers of 3 bed semi-d's is 100k - 120k (in Dublin). So it took 4 years for the prices to rise to this level of 3.5 times 100 - 120, and that brings us right back to the original statement - not by you.

Steveire · 25-06-2019 5:25pm

Grumpypants wrote: »

Loads of houses in my estate went for 100-150k less than we paid. It was great we got lots of new families moving in.

Someone else's good fortune has only a positive impact on my outlook.

Username does not check out

Lumen · 25-06-2019 8:45pm

OEP wrote: »

Yes, which brings us right back to the point that central bank limits have had a big influence in capping what the most someone is willing / able to pay for a house - for a good proportion of the houses. You could make a reasonable assumption that the average (combined) salary of most first time buyers / buyers of 3 bed semi-d's is 100k - 120k (in Dublin). So it took 4 years for the prices to rise to this level of 3.5 times 100 - 120, and that brings us right back to the original statement - not by you.

Yeah. One of the interesting things about the average value of mortgage approvals is that they seem completely uncorrelated with prices.

http://www.bpfi.ie/wp-content/uploads/2019/05/Website-mortgage-approvals-time-series-Apr2019.xls

I spent a couple of years tracking this data around 2013-2015, and it was remarkably stable.

However, the number of mortgage approvals has crept up steadily, and that's possibly been the main driver of increases. What's been happening is that more and more potential buyers have accumulated larger and larger deposits (not reflected in the mortgage values) and the "winners" have been those with relatively more cash.

dor843088 · 25-06-2019 9:36pm

As someone who bought before the last crash let me tell you it does sting. Watching your biggest investment of your life crash in value like an lead balloon is really scary. Negative equity throws up problems as well like not being able to move house for a decade no matter what . Job offer else where ? More kids ? Bad neighbours move in ? Divorce ? Forget it your stuck. It also affects your net worth for life and can still affect you if youd planned to downsize for retirement. Unless youv lived it youv no idea the carnage and stress it can cause.

LuckyLloyd · 25-06-2019 11:19pm

I think we all understand that. And, as such, we should all support the Central Bank limitations which will make it so much more unlikely for anyone to slip into negative equity in such a way that impinges their quality of life

Macha · 26-06-2019 5:48am

A lot of what you mention can happen to anyone buying a house. Moving is never easy and often expensive, obviously negative equity makes it impossible for many.

Something to think about in the context of this country's obsession with home ownership. AND it shows how Ireland's entirely mismanaged housing sector is damaging for pretty much everyone.

Wanderer78 · 26-06-2019 5:57am

Macha wrote:

Something to think about in the context of this country's obsession with home ownership. AND it shows how Ireland's entirely mismanaged housing sector is damaging for pretty much everyone.

What is the percentage of ownership in Ireland, and isn't it fairly average compared to other European countries?

Dramatic changes are required, but I truly can't see it happening, overall, current policies are more geared towards the homeowner than the none homeowner, radical changes don't suit this arrangement as it would upset the status quo, we re effectively stuck in a loop.

Lumen · 26-06-2019 6:46am

Wanderer78 wrote: »

What is the percentage of ownership in Ireland

From the ESRI report...

Wanderer78 · 26-06-2019 6:48am

Lumen wrote: »

From the ESRI report...

thank you, and what is the comparison towards other European countries?

Lumen · 26-06-2019 6:51am

Wanderer78 wrote: »

thank you, and what is the comparison towards other European countries?

DYOR!

Media: House Prices in Dublin falling by EUR1,000 per month

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