Property Market 2018

The_Conductor · 17-01-2018 9:01am

KellyXX wrote: »

I never heard that before

Fixed rates have already risen across most Irish Institutions in the last 3 weeks.
If you don't believe me- go out and check.
Variable rates- have not risen (yet).
The Irish Central Bank even issued a warning to government about how exposed Irish borrowers are- earlier this week.

If you want to stick your head in the sand- that is entirely your prerogative.

KellyXX · 17-01-2018 9:12am

The_Conductor wrote: »

Fixed rates have already risen across most Irish Institutions in the last 3 weeks.
If you don't believe me- go out and check.
Variable rates- have not risen (yet).
The Irish Central Bank even issued a warning to government about how exposed Irish borrowers are- earlier this week.

If you want to stick your head in the sand- that is entirely your prerogative.

It's not that I don't believe you think these things can be predicted. I just don't. I've worked in finance for 2 decades now and if there is one thing I have learned it's that predictions about interest rates and markets , even from experts are not worth the effort.

Tell me this, we are in the 2018 property predictions thread that you are active in and started, so I assume there are some going back for many years. If you go back to all your own predictions going back as far as the threads go, how did you do? I bet you were wrong more than you were right, and I bet at the time you thought you were right each time, and then came up with a reason to yourself why you were wrong after each one. And even when as the law of averages tells us, you were right, you assumed that it wasn't luck those times.

You can't predict interest rates. Go back 10 years and find anyone who thought interest rates would ever be as low as they have been the last few years. Noone thought it was even possible. And that includes experts.

Certainly nobody posting on boards knows. We are just having fun on the sidelines guessing with the inputs we have available, but guessing.
So it's fun, but ultimately meaningless when we think we can tell the future.

Bob24 · 17-01-2018 9:36am

The_Conductor wrote: »

KellyXX wrote: »

When did you first think interest rates would start rising? I think it every year now for the last 6 or 7 . I still think it.

The ECB slashed its QE (quantitative easing) programme in half on the 1st of January- and are scheduled to reappraise it on the 1st of September.
Inflation rates in the Eurozone are already hovering above comfortable levels- with food and fuel recently soaring. The Fed in the US- have now had 3 interest rate rises- and its suggested there will be 2 there later this year...........

Interest rates rising are a foregone conclusion.

Do we think Irish banks will immediately raise their variable rates, or that they will initially be content with tracker rates increasing with the ECB ones and let them converge with variable rates?

Samuel T. Cogley · 17-01-2018 9:39am

Villa05 wrote: »

Calling the bottom in the interest rate cycle. I envisage fixed rates to start rising in the near future.

Would strongly advise variable rate customers to consider fixing for 10 years. Boi and KBC offer good rates for 10 year fixed

Please note I'm not a financial adviser. This is only my reading of the market

2.95% fixed for ten years fully squared away yesterday. Happy man saved me the guts of a grand a year on the previous variable I was on. If rates go down they ain't going much lower where as the sky is the limit for them going up.

Mind you people should keep in mind with fixed rates, they can go up if interest rates sky rocket. Which I don't see them doing but you never know.

Samuel T. Cogley · 17-01-2018 9:42am

Bob24 wrote: »

Do we think Irish banks will immediately raise their variable rates, or that they will initially be content with tracker rates increasing with the ECB ones and let them converge with variable rates?

I think they'll make some token gestures. We'll see a 0.25% rise in interest rates with 'only' 0.15-0.2% passed on and much fanfare about Irish rates and the rest of Europe and how Irtish banks really do care etc.

So we'll see some convergence and eventually people moving off trackers onto 'attractive' fixed rates (waaaaaaay down the line).

Bob24 · 17-01-2018 9:43am

KellyXX wrote: »

You can't predict interest rates. Go back 10 years and find anyone who thought interest rates would ever be as low as they have been the last few years. Noone thought it was even possible. And that includes experts.

One thing is clear, the ECB refinancing rate of 0% is hardly going any lower (for reference it was 3.75% in 2008). So the only direction it can go is up, and the only question is when (I have no prediction for the timing but it surely will happen at some point).

Bob24 · 17-01-2018 10:00am

Bob24 wrote: »

One thing is clear, the ECB refinancing rate of 0% is hardly going any lower (for reference it was 3.75% in 2008). So the only direction it can go is up, and the only question is when (I have no prediction for the timing but it surely will happen at some point).

And adding to that: we are in a very precarious economic situation. There is a decent economic recovery in Europe but this is with all the previously unthinkbale measures still in place (mainly arge QE and 0% interest rates). If anything goes wrong in the near future there is very little the ECB could do as it's stimulus policies are already running full steam.

And of course something like this would have an negative effect on our property market.

Lumen · 17-01-2018 10:25am

Bob24 wrote: »

And adding to that: we are in a very precarious economic situation. There is a decent economic recovery in Europe but this is with all the previously unthinkbale measures still in place (mainly arge QE and 0% interest rates). If anything goes wrong in the near future there is very little the ECB could do as it's stimulus policies are already running full steam.

You're saying you can't think of anything the ECB could do, but you could have made the same argument before QE and ZIRP.

So the question is, what currently "unthinkable" measures could be introduced? The obvious one is helicopter money. It's really no more "unthinkable" than QE. It just requires the will to implement.

Bob24 · 17-01-2018 10:31am

Lumen wrote: »

You're saying you can't think of anything the ECB could do, but you could have made the same argument before QE and ZIRP.

So the question is, what currently "unthinkable" measures could be introduced? The obvious one is helicopter money. It's really no more "unthinkable" than QE. It just requires the will to implement.

To clarify what I meant ... of course you can always go further into uncharted territory. But every time you are not able to reload your other guns and have to ressort to yet another more risky policy, you are putting yourself in a more precarious position.

johnp001 · 17-01-2018 10:38am

Lumen wrote: »

You're saying you can't think of anything the ECB could do, but you could have made the same argument before QE and ZIRP.

So the question is, what currently "unthinkable" measures could be introduced? The obvious one is helicopter money. It's really no more "unthinkable" than QE. It just requires the will to implement.

The problem that central banks have with helicopter money is that its CPI inflationary effects are more immediate than QE/bond buying programs. Fed balance sheet expansion has blown up a massive stockmarket bubble but if they had done helicopter money on this scale instead then the effect on consumer prices would be far greater than is the case from buying debt.
BoJ has been using negative rates to "successfully" kick the can down the road so ECB may continue down the road of ZIRP depending on how committed it is to the reduction in the rate of bond buying or just re-instate the bond buying (SNB seems to be taking up the slack for what the ECB is no longer buying so far anyway)

Lumen · 17-01-2018 10:56am

johnp001 wrote: »

The problem that central banks have with helicopter money is that its CPI inflationary effects are more immediate than QE/bond buying programs

The ECB has an inflation target of 2%. They have consistently undershot this for the last FIVE years.

If they actually believed in the target they would have acted already, but...Germans.

Euro_area_annual_inflation_and_its_main_components%2C_January_2007-December_2017-e.png

Euro_area_annual_inflation_and_its_main_components%2C_January_2007-December_2017-e.png

trixiebust · 17-01-2018 12:51pm

I'm currently helping an in-law look for, & purchase a property. I have spoken to more than one estate agent, who have had property advertised for so long, they can no longer even contact the owners to see if they are interested in a sale.
Yet her solicitor informs her of price rises in the area & to buy before prices creep up again - crazy stuff.

For anyone looking at prices - this site I find gives better information than the standard property price register....

https://propertypriceregisterireland.com/about/

pablo57 · 18-01-2018 3:16pm

Samuel T. Cogley wrote: »

2.95% fixed for ten years fully squared away yesterday. Happy man saved me the guts of a grand a year on the previous variable I was on. If rates go down they ain't going much lower where as the sky is the limit for them going up.

Mind you people should keep in mind with fixed rates, they can go up if interest rates sky rocket. Which I don't see them doing but you never know.

Samuel T. Cogley wrote: »

I think they'll make some token gestures. We'll see a 0.25% rise in interest rates with 'only' 0.15-0.2% passed on and much fanfare about Irish rates and the rest of Europe and how Irtish banks really do care etc.

So we'll see some convergence and eventually people moving off trackers onto 'attractive' fixed rates (waaaaaaay down the line).

Me and my wife are currently on the house hunt as first time buyers. We're going to buy second-hand and are heading down the variable route in order to overpay on mortgage repayments, probably from month 3 or 4 (however long it takes to pay for re-decorating and furniture). The thinking, obviously, it to reduce the interest in the long run and get the mortgage paid off in 15 years or so.

Are variable rates really likely to rise so much that the benefit of over-paying the mortgage on a monthly basis would be out-weighed by the security of, say, a 5-year fixed rate and then dumping a lump sum at the end of that term?

(By the way, fascinating discussion, all!)

draiochtanois · 18-01-2018 3:19pm

This post has been deleted.

Browney7 · 18-01-2018 3:21pm

pablo57 wrote: »

Me and my wife are currently on the house hunt as first time buyers. We're going to buy second-hand and are heading down the variable route in order to overpay on mortgage repayments, probably from month 3 or 4 (however long it takes to pay for re-decorating and furniture). The thinking, obviously, it to reduce the interest in the long run and get the mortgage paid off in 15 years or so.

Are variable rates really likely to rise so much that the benefit of over-paying the mortgage on a monthly basis would be out-weighed by the security of, say, a 5-year fixed rate and then dumping a lump sum at the end of that term?

(By the way, fascinating discussion, all!)

Why not fix a certain % and keep a variable portion that you hope to repay by a certain time period? You need to do the sums though to see what works for you!

Cyrus · 18-01-2018 3:27pm

draiochtanois wrote: »

This post has been deleted.

you should look into the break costs on fixed term mortgages, they arent what you might think at the moment

Henbabani · 18-01-2018 3:35pm

https://www.irishtimes.com/business/technology/cliff-taylor-what-does-apple-s-38bn-us-tax-payment-mean-for-ireland-1.3360040
how do you think this tech giants(Apple, Microsoft, Facebook) tax payment to US influence on Ireland economy and Ireland propery market?

draiochtanois · 18-01-2018 3:54pm

This post has been deleted.

Villa05 · 18-01-2018 3:58pm

pablo57 wrote:

Are variable rates really likely to rise so much that the benefit of over-paying the mortgage on a monthly basis would be out-weighed by the security of, say, a 5-year fixed rate and then dumping a lump sum at the end of that term?

BOI allow you to make a 10% overpayment on a fixed rate mortgage

A 1% rise in interest rates adds 50euro per month to repayments for every 100,000 borrowed roughly speaking

keane2097 · 18-01-2018 4:12pm

draiochtanois wrote: »

This post has been deleted.

R&D grants also

Zenify · 18-01-2018 4:25pm

draiochtanois wrote: »

They don't.

Many stupidly think FDI companies are here for one reason namely tax even though other EU countries have lower Including zero corporation tax.

Some of the factors

Reliable electricity supply
Low levels of industrial unrest.
English speaking.
People with other language skills are happy to live and work here
Time difference to US 5 - 8 hours (allows for follow the sun operations along with a base in Singapore
IP laws
tax treaties (as opposed to tax rates)
standard of education and literacy (Intel's latest fabs requires staff with Masters or PhD
Flight connections both passenger and air freight
etc, etc

I remember the IMF and the EU pushing Ireland to increase our corperation tax rate during our bailout. We had nothing to bargain with to keep it, somehow we managed to go through the process and keep it. If it wasn't important to the Irish economy we would have changed it.

I still wonder how we managed to do that. The EU is a bad cookie to try and negotiate with, just look at brexit and Greece. They didn't give an inch.

If we aren't competitive with our corporate tax I don't think we will have a property crises as there will be no jobs. But we would probably have a much more serious crises.

Bob24 · 18-01-2018 11:00pm

draiochtanois wrote: »

This post has been deleted.

It is not the only factor but it is a major one.

Some of your other factors are correct (low levels of industrial unrest - if you except specific industries like public transport), others are probably overestimating Ireland compared to European competition (education is good but doesn't espcially stand out in Europe), and some seem a bit bizarre (Flight connections both passenger and air freight? - Don't get me wrong we have good connections given the size of our country - being an island probably encourages that - but there are lots of European cities with better air connections than Dublin especially for non-european destinations).

I am not trying to bash Ireland in any way, I really like this country and see many positive aspects in it. But we have to be realistic if we don't want to be caught off-guard: tax rates (and more importantly tax-avoidance mechanisms) are a major reason why the wealthiest American multinationals all flocked to a small country at the periphery of Europe which besides Northern Ireland has no road or rail connection with any other European territory. Not the only reason of course, but a major one. And actually we explain that very well when other Europeans complain about our tax policies: We rightly tell them that given our position and the fact that the EU is a common market but not a country with wealth transfer between regions, peripheral regions have to provide incentives otherwise capital would do what it does in all other integrated economic area: naturally flow to the large and core economic centres (think Frankfurt, London, etc) and desert peripheral areas. And that given the lack of wealth transfer between regions in the EU peripheral areas wouldn't survive without financial incentives for that capital (as opposed to looking at a country level whereby capital also flows to economic centres, *but* some of the wealth it creates is sent back to peripheral regions by the national government which in the EU doesn’t happen except for very minimal structural funds).

Zenify wrote: »

I remember the IMF and the EU pushing Ireland to increase our corperation tax rate during our bailout. We had nothing to bargain with to keep it, somehow we managed to go through the process and keep it. If it wasn't important to the Irish economy we would have changed it.

I still wonder how we managed to do that. The EU is a bad cookie to try and negotiate with, just look at brexit and Greece. They didn't give an inch.

If we aren't competitive with our corporate tax I don't think we will have a property crises as there will be no jobs. But we would probably have a much more serious crises.

Yes indeed. I think on keeping our tax rates, basically what let us keep things as they were is that everyone knew that increasing rates would hurt the economy badly and the EU needed a good news story which Ireland was delivering (to be fair we did take a lot of pain and we were presented as a model country to other troubled EU countries and to the world as things started to improve). So they probably let go to make sure they wouldn’t endanger our recovery.

CalRobert · 19-01-2018 11:36pm

KellyXX wrote: »

I lived 9Km from the station, in a different town.
In Dublin I lived 8KM from work and it took me 1 hour and 20 minutes on average door to door for my commute.

If you'd had a safe, separated cycle path that'd be 25 minutes, and nearly free. But cycle paths are apparently not something we do here.

Bob24 · 20-01-2018 12:37am

CalRobert wrote: »

KellyXX wrote: »

I lived 9Km from the station, in a different town.
In Dublin I lived 8KM from work and it took me 1 hour and 20 minutes on average door to door for my commute.

If you'd had a safe, separated cycle path that'd be 25 minutes, and nearly free. But cycle paths are apparently not something we do here.

There are some in Dublin to be fair. I regularly use Dublin Bikes from grand canal docks to the N11and the one along the canal is fairly nice and pleasant.

But agreed there are not enough and sometimes they are awkwardly mixed with traffic.

And also one thing we won’t get away with is that our weather doesn’t encourage cycling. Yes you can get propper gear and all, but rain and/or wind can make it fairly unpleasant. The UK is not that much better of course :-) ... but a few years ago I spent spring working from the south of France and definitely cycled more (both better cycle lanes and dryer weather helped).

Samuel T. Cogley · 20-01-2018 1:26am

CalRobert wrote: »

If you'd had a safe, separated cycle path that'd be 25 minutes, and nearly free. But cycle paths are apparently not something we do here.

We do them in places that have either a good bus service or my favourite, the one down the James Larkin Road - an example of how to do it to be sure - but that basically duplicates the DART to Clontarf Road.

The_Conductor · 20-01-2018 9:45am

Zenify wrote: »

I remember the IMF and the EU pushing Ireland to increase our corperation tax rate during our bailout. We had nothing to bargain with to keep it, somehow we managed to go through the process and keep it. If it wasn't important to the Irish economy we would have changed it.

I still wonder how we managed to do that. The EU is a bad cookie to try and negotiate with, just look at brexit and Greece. They didn't give an inch.

If we aren't competitive with our corporate tax I don't think we will have a property crises as there will be no jobs. But we would probably have a much more serious crises.

We bargained with them- and with the unions- and cut payrates beyond the suggested cuts in the public sector, we brought in the LPT, USC- and a raft of other taxes and charges.

The commentary in the international media- was confusion as to why the Irish public sector (with their paycuts) and the public at large (with tax hikes) did not revolt in a manner akin to how there was massive public outcry in other countries.

To this day- the Irish are sold in international financial media- as meek and pliant- the biggest lament from FDI companies though- is that without the unwinding of the tax hikes- its simply impossible to financially remunerate employees to work in Ireland (with a marginal tax rate of 52% on income over 34k).

Amusement/confusion- and a commentary of how perhaps the Irish spirit was broken historically possible as a result of the famine- are all discussions- I've heard in meetings- and in the media (even shrill financial media- like Squawkbox- have ran this byline).

We hiked all manner of indirect taxes, cut pay for 400,000 public sector workers and did our nut- to protect corporation tax at all costs- and in conjunction with the historical aberation (interest rates) and the ECB buying Irish government debt as fast as we could print it- we squeezed by.

Now- we're loosing FDI and international posts- because we don't have the facilities (notably housing) amenities and services (notably a lack of public transport- and stupid density rules)- and its impossible to pay staff because tax rates are stratospheric.

We bust our nuts to solve one problem- and created a raft of other problems- down the road, as a result. The resultant problems were highlighted at the time- however, as they were in the future- to repurpose a phrase from Douglas Adams- they were a SEP (that is- Someone Else's Problem).

Now we have to solve all these problems- at a time where quantitative easing has been cut- interest rates *are* increasing, we have 200 billion of public debt- which is frightening purchasers of Irish debt and comes up at every single roadshow- and we have to refinance 50 billion of debt over the next 4 years.

We dodged a bullet during the downturn (to a certain extent)- however, we stored up a raft of other problems- that are slowly coming home to roost. Some of the issues are being creatively dealt with- so instead of public sector pay restoration- we're making the cuts permanent by imposing extra public sector levies- so headline payrates- look good- but the deductions hide a multitude of sins. Social welfare bills- are being pandered to- look at that lady down in Clare who tried to offer bail in court during the week- who admitted to the judge her social welfare disbursements were worth over 120k per annum . It really is a matter of time- before fury boils over- the quotation from Leona Helmsley (only the little people pay tax)- features more and more in the media and on social media these days. It actually suits politicians to have attention focused solely and squarely on the abortion debate- it diverts attention from the elephant in the corner of the room............

We need a massive increase in our infrastructure- notably good sized, high density, housing units- in decent locations. A 2-3 hour commute- should not be accepted as 'normal' by anyone- however, it is.

Q&A · 20-01-2018 10:03am

Browney7 wrote: »

Why not fix a certain % and keep a variable portion that you hope to repay by a certain time period? You need to do the sums though to see what works for you!

I'd echo this point. I think the split mortgage tends to get lost in the discussion between current rip-off mortgage rates that are bound to go down and impending avalanche of future rate increases.

My original thinking was to stay variable as I valued the ability to overpay above the certainty of fixing. However, I've come to realise there's a middle ground. With some fixed rates equal too or below variable rates and the fact I don't think there will be a significant reduction (if any) in banks variable rates I've decided to fix a portion of my mortgage.

I've worked out what I expect to be able to pay off in one year and plan to fix the REST. That is the part I was never going to be able to make a dent in over the next 12 months. The REST will be split across the various fixed-rate options using the same approach (i.e., as the next mortgage segment roles off its fixed rate I hope to be clearing the previous variable portion). This way I get to keep the ability to overpay (and most importantly of all pay off the mortgage early) but also a large degree of certainty in terms of rates.

I won't get all the benefits/costs of decreases/increases in variable rates but I will get some of it. But given my view that we are at our close to the bottom of the interest rate cycle I think this approach will pay off over the life time of the mortgage.

It does depend on your own circumstances but it does focus the mind on the lifetime cost of the mortgage rather than today's interest rate.

Wanderer78 · 20-01-2018 10:44am

More 'expansionary fiscal contraction' i say, worked a treat last time! We have to get on top of this stuff soon or we ll devour ourselves

The_Conductor · 20-01-2018 10:57am

Wanderer78 wrote: »

More 'expansionary fiscal contraction' i say, worked a treat last time! We have to get on top of this stuff soon or we devour ourselves

Like in the 'Murder by Death' lyrics- 'The beatings will continue, until moral improves'..............

And the saddest thing of all- the electorate reward the same fools, time and time again. Hell, even FF have rehabilitated themselves- and are in the process of repackaging themselves as a liberal party to try and appeal to the 20-something urbanites.

It never ceases to amaze me that this country has never truly imploded- and while I'm incrementally more cynical the older I get- I also understand the bigger picture just a little bit more- and I despair more and more- because I understand that things will quite simply never change.

We really have flogged the FDI drum to death- and all we have to show for our efforts is 200 billion in public debt- and a demographic time bomb which is going to really kick us in the gonads in the next 7-8 years.

Its all well and good suggesting we continue to crucify our workforce- however, our dependency ratio is shooting up, and we've hit so many bottlenecks- that the simplest thing to do is sit down, state that we have destroyed our country- and come up with an all-encompassing plan and roadmap on how to put the country back together again.

We can't simply sell ourselves as 'a great little country on the periphery of Europe- where you can place your EMEA operations- and we'll not tax you'. We need more appropriate housing units- to attract the type of workers we need. We need better facilities and amenties. And- above all else- we need to be able to make it worthwhile people's while to work in this country. Booting the can down the road- and storing up more and more troubles- may have served the Irish people well in the past- unfortunately though- eventually the can gets so battered, you can no longer boot it- and you actually have to do something about it. This is the debate we should be having- but its completely toxic.

mugsymugsy · 20-01-2018 11:07am

The_Conductor wrote: »

Like in the 'Murder by Death' lyrics- 'The beatings will continue, until moral improves'..............

And the saddest thing of all- the electorate reward the same fools, time and time again. Hell, even FF have rehabilitated themselves- and are in the process of repackaging themselves as a liberal party to try and appeal to the 20-something urbanites.

It never ceases to amaze me that this country has never truly imploded- and while I'm incrementally more cynical the older I get- I also understand the bigger picture just a little bit more- and I despair more and more- because I understand that things will quite simply never change.

We really have flogged the FDI drum to death- and all we have to show for our efforts is 200 billion in public debt- and a demographic time bomb which is going to really kick us in the gonads in the next 7-8 years.

Its all well and good suggesting we continue to crucify our workforce- however, our dependency ratio is shooting up, and we've hit so many bottlenecks- that the simplest thing to do is sit down, state that we have destroyed our country- and come up with an all-encompassing plan and roadmap on how to put the country back together again.

We can't simply sell ourselves as 'a great little country on the periphery of Europe- where you can place your EMEA operations- and we'll not tax you'. We need more appropriate housing units- to attract the type of workers we need. We need better facilities and amenties. And- above all else- we need to be able to make it worthwhile people's while to work in this country. Booting the can down the road- and storing up more and more troubles- may have served the Irish people well in the past- unfortunately though- eventually the can gets so battered, you can no longer boot it- and you actually have to do something about it. This is the debate we should be having- but its completely toxic.

Ever thought of becoming a TD

Property Market 2018

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