Property Market 2019

Ush1 · 18-07-2019 10:36am

The crash worked for me. When I graduated from college it was peak boom and I was thinking I would get a nice apartment. I started saving, the crash happened, didn't lose my job so kept saving and bought a house in 2012 for 185k, it's now valued at 325k.

It was sheer luck but I was resigned to be only able to afford an apartment on my own but was delighted to be able to buy a 3 bed semi on my own.

ELM327 · 18-07-2019 10:44am

Ush1 wrote: »

The crash worked for me. When I graduated from college it was peak boom and I was thinking I would get a nice apartment. I started saving, the crash happened, didn't lose my job so kept saving and bought a house in 2012 for 185k, it's now valued at 325k.

It was sheer luck but I was resigned to be only able to afford an apartment on my own but was delighted to be able to buy a 3 bed semi on my own.

That works assuming you are able to find someone to lend to you in a downturn. Not always the easiest.

Essentially if there is a downturn but you are not impacted then it artificially inflates your buying power by virtue of the fact that some of your "competitors" have had theirs reduced

duffman13 · 18-07-2019 10:53am

rireland wrote: »

Eh no, banks are there to protect the banks.

There's a reason banks have been told to offload underperforming loans.

I worked previously for a bank, no one, and I mean no one enjoyed working in the environment of restructures etc. Banks have to offload the loans because they are worthless for the most part and the central bank is there to regulate the banks and protect everyone

Its the on example of a state body doing a brilliant job. Things may relax in the next year or two, but not before then and any relaxation in rules I'd say will be counter balanced which may help someone like yourself

The central bank will look at increasing multiples of salary in the future based on % deposit. In other words a 30% deposit may get get you 4 or 4.5 times your salary. IMO this will replace th ed current exemptions system soon enough

Ush1 · 18-07-2019 10:54am

ELM327 wrote: »

That works assuming you are able to find someone to lend to you in a downturn. Not always the easiest.

Essentially if there is a downturn but you are not impacted then it artificially inflates your buying power by virtue of the fact that some of your "competitors" have had theirs reduced

True. It's the cost of living that gets tricky during a boom and not getting sucked into a trap of consumerism when there is money available. New cars, holidays, clothes, phones etc...

Most of my mates didn't save penny as they whittled it away on those things and then either are still here moaning they can't afford a house or went off to Australia or Canada.

Graham · 18-07-2019 10:55am

Ush1 wrote: »

The crash worked for me. When I graduated from college it was peak boom and I was thinking I would get a nice apartment. I started saving, the crash happened, didn't lose my job so kept saving and bought a house in 2012 for 185k, it's now valued at 325k.

It was sheer luck but I was resigned to be only able to afford an apartment on my own but was delighted to be able to buy a 3 bed semi on my own.

It wasn't all luck.

You had saving and you bought at a time when there were still very large parts of the market hiding under duvets waiting for the storm to pass.

Mad_maxx · 18-07-2019 11:27am

Graham wrote: »

It wasn't all luck.

You had saving and you bought at a time when there were still very large parts of the market hiding under duvets waiting for the storm to pass.

Plus he had to ignore the noise from sites like property pin telling him that the 185k house ( he bought) would eventually be worth under a hundred grand

Ush1 · 18-07-2019 11:37am

Mad_maxx wrote: »

Plus he had to ignore the noise from sites like property pin telling him that the 185k house ( he bought) would eventually be worth under a hundred grand

Very true, and the noise of buy a property at mad prices in 2008 before they go even higher!

whatever76 · 18-07-2019 11:47am

Ush1 wrote: »

The crash worked for me. When I graduated from college it was peak boom and I was thinking I would get a nice apartment. I started saving, the crash happened, didn't lose my job so kept saving and bought a house in 2012 for 185k, it's now valued at 325k.

It was sheer luck but I was resigned to be only able to afford an apartment on my own but was delighted to be able to buy a 3 bed semi on my own.

So jealous but congrats !! I am at a stage where i have a substantial deposit but with limited supply in where I want to but finding it difficult to find something I like and within my 300k budget - am hitting 40 so its a long term purchase so to speak and trying to keep mortgage under 200k if I can ( buying on my own ).

0gac3yjefb5sv7 · 18-07-2019 11:49am

Torn between buying an apartment which feels more secure IMO (not as in price secure) vs 2 bed house which may have some room to extend.

beauf · 18-07-2019 11:55am

Buy where you want to live. , Has room with out extending for the next 10yrs. once you've tick those boxes, then look at which is the better investment.

No point living in a great investment if it causes problems for your daily living for a decade.

fliball123 · 18-07-2019 1:04pm

beauf wrote: »

I like the way buying outside of Ireland or Dublin just isn't considered. No lateral thinking whatsoever.

Same goes with those on the housing list. No where outside the M50 will be considered , yet the tax payers who a high % commute from the surrounding counties for 1.5+ hour commute have to buy houses they can afford oustide Dublin so they can help Annie with 4 kids from 3 different dads live beside mammy and daddy so she has a baby sitter for micky money night. The tail is wagging the dog in this country

fliball123 · 18-07-2019 1:07pm

duffman13 wrote: »

I worked previously for a bank, no one, and I mean no one enjoyed working in the environment of restructures etc. Banks have to offload the loans because they are worthless for the most part and the central bank is there to regulate the banks and protect everyone

Its the on example of a state body doing a brilliant job. Things may relax in the next year or two, but not before then and any relaxation in rules I'd say will be counter balanced which may help someone like yourself

The central bank will look at increasing multiples of salary in the future based on % deposit. In other words a 30% deposit may get get you 4 or 4.5 times your salary. IMO this will replace th ed current exemptions system soon enough

Thats not a bad work around the more skin in the game for the buyer the higher you can borrow, means less risk for the bank

Mad_maxx · 18-07-2019 5:20pm

Ush1 wrote: »

Very true, and the noise of buy a property at mad prices in 2008 before they go even higher!

Stopped clocks and all that

riddles · 23-07-2019 7:36am

Being mid 40s and remembering the 80s and general level of penury around at that time. I personally feel everything is over priced here relative to perhaps where the next few years can take us. But with all major purchases don’t discount going with your gut instinct.

SozBbz · 23-07-2019 9:25am

Heard this on the radio the other day.

Completions being scaled back to 21,000 for 2019 (down from 22,000). This appears to be the construction industry limiting supply as prices have softened.

https://www.independent.ie/business/personal-finance/property-mortgages/glut-of-homes-for-sales-leads-to-fall-in-housing-output-38324691.html

While we have a supply shortage, this is the obvious consequence if prices look weak. This backs up my earlier prediction that we will not see any major price reductions.

Cuddlesworth · 23-07-2019 9:57am

SozBbz wrote: »

Heard this on the radio the other day.

Completions being scaled back to 21,000 for 2019 (down from 22,000). This appears to be the construction industry limiting supply as prices have softened.

https://www.independent.ie/business/personal-finance/property-mortgages/glut-of-homes-for-sales-leads-to-fall-in-housing-output-38324691.html

While we have a supply shortage, this is the obvious consequence if prices look weak. This backs up my earlier prediction that we will not see any major price reductions.

Looking at a couple of the larger planned developments around Dublin, it seems more likely that the construction companies can't or won't ramp up fast enough. There are pretty excessive gaps between things like groundworks to the cranes/builders landing in most sites around me.

Mickiemcfist · 23-07-2019 9:58am

Cuddlesworth wrote: »

Looking at a couple of the larger planned developments around Dublin, it seems more likely that the construction companies can't or won't ramp up fast enough. There are pretty excessive gaps between things like groundworks to the cranes/builders landing in most sites around me.

It's definitely can't rather than won't. Having a half built site while holding funding is exceptionally expensive.

23-07-2019 11:26am

SozBbz wrote: »

Heard this on the radio the other day.

Completions being scaled back to 21,000 for 2019 (down from 22,000). This appears to be the construction industry limiting supply as prices have softened.

https://www.independent.ie/business/personal-finance/property-mortgages/glut-of-homes-for-sales-leads-to-fall-in-housing-output-38324691.html

While we have a supply shortage, this is the obvious consequence if prices look weak. This backs up my earlier prediction that we will not see any major price reductions.

Beyond the headline:

But apartment construction is surging as investment funds pour money into the development of these units
.
.
.
Goodbody economist Dermot O’Leary said there is now a rising inventory of unsold stock forming for house builders.

So they're building what they think will sell.

SozBbz · 23-07-2019 11:43am

Noah Scruffy Kale wrote: »

Beyond the headline:

So they're building what they think will sell.

Obviously.

But the point being is that its down on last year, and significantly down on what had been estimated for this year.

They're cutting back as they're no interest in flooding the market with stock they can't shift at what they determine to be the right price.

mariaalice · 23-07-2019 11:50am

SozBbz wrote: »

Obviously.

But the point being is that its down on last year, and significantly down on what had been estimated for this year.

They're cutting back as they're no interest in flooding the market with stock they can't shift at what they determine to be the right price.

The cost of land and labour in Ireland is very high and shows no sign of going down other costs such as fitting out have droped and are of better quality.

In other words, the cost of land and labour are the big factors in building so prices can only go down so much before it is not profitable to build.

handlemaster · 23-07-2019 11:58am

JDD wrote: »

I think he's less referring to someone staining your couch to the risk of someone deciding not to pay their rent and overholding for six months or more.

I've said it before and I'll say it again. Q3 2020 - Q2 2021 is when the economy will slump. It won't crash like 2008 as that was a once in a lifetime crash, akin to 1929, but about 15% will come off property prices. Save your cash, and wait to buy until then. I would have done that myself only we had to buy last year when we did. If you're okay renting for another couple of years I'd wait.

So for someone to hold out to 2021 they will in dublin be paying min 1400 per month. Then when they start looking two years from now they will not find anything straight away. So you could be within three years. The wait is for a 15% discount to today prices you say. Look at the rent that is been paid out its not that straight forward. If you find a property you can afford to buy then buy.

AlmightyCushion · 23-07-2019 12:00pm

SozBbz wrote: »

Obviously.

But the point being is that its down on last year, and significantly down on what had been estimated for this year.

They're cutting back as they're no interest in flooding the market with stock they can't shift at what they determine to be the right price.

It's not down on last year. Last year there were only 18000 completions.

https://www.thejournal.ie/housing-completion-cso-2018-4482831-Feb2019/

It also isn't significantly down on estimates for this year. The same person previously estimated we would build 21,700 units this year so he revised it down by 700 units.

https://www.independent.ie/business/personal-finance/property-mortgages/housing-market-could-be-facing-a-hit-in-2019-37776825.html

Activity has begun to recover in recent years with 14,400 houses and apartments completed in 2017 with Goodbody Stockbrokers chief economist Dermot O'Leary estimating that almost 18,500 were built in 2018 and forecasting 21,700 for 2019.

airportgirl83 · 23-07-2019 12:24pm

I'd say they'll start looking at building different type of properties - lower spec, size and price as a result. I've viewed many beautiful new build houses at c.500k mark - hardly affordable to FTB hence more challenging to sell.

mariaalice · 23-07-2019 1:10pm

Lower spec won't lower the cost of land and Labour.

airportgirl83 · 23-07-2019 1:12pm

mariaalice wrote: »

Lower spec won't lower the cost of land and Labour.

No it won't but it does contribute to the price....e.g. aluclad windows, walk in closets, kube kitchens surely it's not thrown in for free.

dontparkhere · 23-07-2019 4:33pm

Lots of talk of difficulty obtaining finance after the last crash. How many times salary would it have been possible to borrow around 2012/13?

beauf · 23-07-2019 5:26pm

dontparkhere wrote: »

Lots of talk of difficulty obtaining finance after the last crash. How many times salary would it have been possible to borrow around 2012/13?

Its not that simple. As the bank could simply say no and not follow their own rules.

I know someone who was putting up 2/3 and wanted to borrow a 1/3 and had great difficulty to get a mortgage for that.

Twenty Grand · 23-07-2019 5:31pm

beauf wrote: »

I know someone who was putting up 2/3 and wanted to borrow a 1/3 and had great difficulty to get a mortgage for that.

It's not to do with fractions or multiples of salary.
It's your ability to pay back.

You could have 80% of a house value and be refused a mortgage because you can't demonstrate you can pay back the loan.

beauf · 23-07-2019 7:40pm

I think if you can save 2/3 the other 1/3 isn't going to be a problem. As it was this couple had joint income of at least 200k. In very secure jobs.

The point being they were well with the rules (these were the banks rules) and had difficulty getting a loan. The banks simply weren't lending.

The rules were immaterial to what loan you could get at that time. The media was full of stories of business's who couldn't get loans either.

It's not that long ago. Do people not remember?

Amirani · 23-07-2019 7:45pm

beauf wrote: »

I think if you can save 2/3 the other 1/3 isn't going to problem. As it was this couple had joint income of at least 200k.

The point being they were well with the rules (these were the banks rules) and couldn't get a loan. The banks simply weren't lending.

The rules were immaterial to what loan you could get. The media was full of stories of business's who couldn't get loans either.

It's not that long ago. Do people not remember?

Banks were lending, they just changed the criteria and made it much stricter. Hence they were lending a lot less, but still lending in the right cases.

Your anecdotes aren't data. At the lowest point in 2011, Banks still gave out 2.5bn in housing loans. Outside of 2011, the lowest number of housing loans given in a year was over 17,000.

beauf · 23-07-2019 8:12pm

My point was there wasn't hard rules as there are now. The banks had rules, lifted them, then there was the crash and afterwards it was difficult to get any loan for a whole.

If there were rules then it should be easy to quote them to answer the question asked.

dontparkhere wrote: »

Lots of talk of difficulty obtaining finance after the last crash. How many times salary would it have been possible to borrow around 2012/13?

https://www.thejournal.ie/banks-arent-lending-esri-report-smes-911884-May2013/
https://www.irishtimes.com/business/financial-services/irish-banks-second-only-to-greece-for-refusing-loans-1.732190
https://namawinelake.wordpress.com/2011/05/17/irish-mortgage-market-is-flat-lining-new-lending-figures-for-q1-2011-show/
http://www.finfacts.ie/irishfinancenews/article_1028663.shtml

In 2011 mortgage approvals at 12,900 were the lowest since the 1970 total of 12,500 when the data series began.

airportgirl83 · 23-07-2019 8:26pm

dontparkhere wrote: »

Lots of talk of difficulty obtaining finance after the last crash. How many times salary would it have been possible to borrow around 2012/13?

I borrowed 270k in 2012 which was about 4 times salary, had deposit of 15% of the purchase price.

TSQ · 23-07-2019 8:51pm

AlmightyCushion wrote: »

It's not down on last year. Last year there were only 18000 completions.

https://www.thejournal.ie/housing-completion-cso-2018-4482831-Feb2019/

It also isn't significantly down on estimates for this year. The same person previously estimated we would build 21,700 units this year so he revised it down by 700 units.

https://www.independent.ie/business/personal-finance/property-mortgages/housing-market-could-be-facing-a-hit-in-2019-37776825.html

Yes, obviously scare stories about fall off in construction designed to put frighteners on Central Bank to ease the lending rules.

IspeakcozIcan · 24-07-2019 11:20am

There has been a strong increase in the number of mortgages taken out to buy homes: "10,157 mortgages were issued in the April to June period. This is a rise of 8.8pc".

https://www.independent.ie/business/personal-finance/property-mortgages/mortgage-drawdowns-jump-as-prices-ease-38340772.html

beauf · 24-07-2019 11:27am

Interesting the difference. More mortgages vs perception of building slowdown (media spin?)

24-07-2019 11:32am

beauf wrote: »

Interesting the difference. More mortgages vs perception of building slowdown (media spin?)

Far more 2nd hand dwellings sell each year than new houses.

AlmightyCushion · 24-07-2019 11:33am

beauf wrote: »

Interesting the difference. More mortgages vs perception of building slowdown (media spin?)

Building has increased on last year. The rate of growth has slowed but it's still estimated to be at about 11% year on year growth for this quarter

Mickiemcfist · 24-07-2019 12:37pm

https://www.independent.ie/business/personal-finance/rents-are-driven-up-as-shift-from-home-ownership-risks-pension-timebomb-38341150.html

I don't know how many times I've said it, but the rent for life thing really doesn't make sense unless you die at 66.

The Student · 24-07-2019 1:01pm

Mickiemcfist wrote: »

https://www.independent.ie/business/personal-finance/rents-are-driven-up-as-shift-from-home-ownership-risks-pension-timebomb-38341150.html

I don't know how many times I've said it, but the rent for life thing really doesn't make sense unless you die at 66.

I think you may be looking at this too simplistic. Assume rents are less than a mortgage (in a normal market this would be the case as was in the period after the crash).

The difference between the mortgage payments and the rent could be invested in a pension which could be used to pay rent in retirement.

People do not factor in the savings from renting (in a normal market) and what they could or should be doing with those savings. It would appear people would spend rather than invest/save.

Yes renting in retirement is impossible if you are relying solely on the State Pension but with proper planning and a bit of foresight paying rent (in a normal market) is possible in retirement.

Other European countries seem to be able to do it.

24-07-2019 1:04pm

The Student wrote: »

I think you may be looking at this too simplistic. Assume rents are less than a mortgage (in a normal market this would be the case as was in the period after the crash).

Why is this normal?

The Student · 24-07-2019 1:13pm

Noah Scruffy Kale wrote: »

Why is this normal?

If a person can purchase something for less than the rental/hire price then common sense would suggest they purchase the item.

So if a rent is higher than a mortgage people would purchase rather than rent as it would cost less to purchase rather than rent.

If rent is below a mortgage payment then people would rent as its cheaper and the landlord is getting his mortgage or a large part of it paid and eventually the landlord will own the property.

For example (a very simple one figs are not correct, just using this to explain my rationale. I am ignoring tax etc) if the mortgage is €1000 a month and the rent is €800 then the landlord has to put €200 to the rent to pay the mortgage. So rather than paying €12000 a year mortgage the landlord is paying €2400.

At the end of the day the rent is cheaper than the mortgage so its cheaper for the tenant than buying. The tenant should then invest the "savings" they are making into either a pension or some other investment.

So purchasing a property does not need to be the only way to ensure your accommodation needs in retirement.

Cuddlesworth · 24-07-2019 1:14pm

Mickiemcfist wrote: »

https://www.independent.ie/business/personal-finance/rents-are-driven-up-as-shift-from-home-ownership-risks-pension-timebomb-38341150.html

I don't know how many times I've said it, but the rent for life thing really doesn't make sense unless you die at 66.

Assistant Professor Orla Hegarty, a housing expert from UCD's School of Architecture, Planning and Environmental Policy, said the State's whole pension system relies on 70pc of people not having to pay housing costs when they retire.

Hate to break it to you Orla, our state pension system has a lot more problems then a couple of additional RA people.

terrydel · 24-07-2019 1:22pm

beauf wrote: »

I think if you can save 2/3 the other 1/3 isn't going to be a problem. As it was this couple had joint income of at least 200k. In very secure jobs.

The point being they were well with the rules (these were the banks rules) and had difficulty getting a loan. The banks simply weren't lending.

The rules were immaterial to what loan you could get at that time. The media was full of stories of business's who couldn't get loans either.

It's not that long ago. Do people not remember?

The important point here is how much did that 1/3 equate to?
If its 1mil quid then even their high combined income makes it a huge risk to pay back.

Mickiemcfist · 24-07-2019 1:31pm

The Student wrote: »

I think you may be looking at this too simplistic. Assume rents are less than a mortgage (in a normal market this would be the case as was in the period after the crash).

The difference between the mortgage payments and the rent could be invested in a pension which could be used to pay rent in retirement.

People do not factor in the savings from renting (in a normal market) and what they could or should be doing with those savings. It would appear people would spend rather than invest/save.

Yes renting in retirement is impossible if you are relying solely on the State Pension but with proper planning and a bit of foresight paying rent (in a normal market) is possible in retirement.

Other European countries seem to be able to do it.

So rather than risk property price speculation they have to hope that they're lucky enough to retire at a point when markets are strong, I dunno man. Bird in the hand & all that. I'd rather own & know I won't be poor when I retire than rent & hope I won't be.

24-07-2019 1:47pm

The Student wrote: »

If a person can purchase something for less than the rental/hire price then common sense would suggest they purchase the item.

So if a rent is higher than a mortgage people would purchase rather than rent as it would cost less to purchase rather than rent.

If rent is below a mortgage payment then people would rent as its cheaper and the landlord is getting his mortgage or a large part of it paid and eventually the landlord will own the property.

For example (a very simple one figs are not correct, just using this to explain my rationale. I am ignoring tax etc) if the mortgage is €1000 a month and the rent is €800 then the landlord has to put €200 to the rent to pay the mortgage. So rather than paying €12000 a year mortgage the landlord is paying €2400.

At the end of the day the rent is cheaper than the mortgage so its cheaper for the tenant than buying. The tenant should then invest the "savings" they are making into either a pension or some other investment.

So purchasing a property does not need to be the only way to ensure your accommodation needs in retirement.

Ok, any evidence to back all this up?

There are significant barriers in place when it comes to buying a house that don't exist when renting, i.e. the deposit for one. Renting can be far more convenient and much less of a commitment.

The figures you give for the LL above, in terms of cash in the short term it is costing them money to rent out the house purely on the mortgage. You also don't factor in all the maintenance costs associated with being an LL renting out a property. This doesn't make any sense, why would anyone do it?

aloooof · 24-07-2019 1:58pm

Noah Scruffy Kale wrote: »

The figures you give for the LL above, in terms of cash in the short term it is costing them money to rent out the house purely on the mortgage. You also don't factor in all the maintenance costs associated with being an LL renting out a property. This doesn't make any sense, why would anyone do it?

Because they are gaining equity in the property.

The Student · 24-07-2019 1:58pm

Noah Scruffy Kale wrote: »

Ok, any evidence to back all this up?

There are significant barriers in place when it comes to buying a house that don't exist when renting, i.e. the deposit for one. Renting can be far more convenient and much less of a commitment.

The figures you give for the LL above, in terms of cash in the short term it is costing them money to rent out the house purely on the mortgage. You also don't factor in all the maintenance costs associated with being an LL renting out a property. This doesn't make any sense, why would anyone do it?

That's the very point I am making that renting in a normal market would be less than a mortgage.

The above figs were for illustrative purposes only. A landlord will own the property at the end of the mortgage having only paid €2400 each year although the mortgage was €12k. (Again I am ignoring tax, maintenance costs etc).

If a landlord got a mortgage for one year and purchased a property for €12k and rented it out and for €800 a month then at the end of the year he has paid €2400 out of his own pocket but has an asset work €12k (again ignore tax, and other costs) Multiply this by 25 yrs and this is how a normal property market should work.

24-07-2019 2:05pm

aloooof wrote: »

Because they are gaining equity in the property.

I know, but slowly and it doesn't help you pay the mortgage and the maintenance bills every month.

aloooof · 24-07-2019 2:14pm

Noah Scruffy Kale wrote: »

I know, but slowly and it doesn't help you pay the mortgage and the maintenance bills every month.

No, but anyone purchasing an investment property should have done their due diligence on this. i.e. that they could afford the difference and maintenance bills.

An investment property costing €200 per month after mortgage / maintenance costs etc. would be a very attractive/lucrative proposition to a lot of people who could afford the cash flow hit. The (admittedly, illiquid) equity acquired would likely be an awful lot higher than that.

beauf · 24-07-2019 4:22pm

aloooof wrote: »

No, but anyone purchasing an investment property should have done their due diligence on this. i.e. that they could afford the difference and maintenance bills.

An investment property costing €200 per month after mortgage / maintenance costs etc. would be a very attractive/lucrative proposition to a lot of people who could afford the cash flow hit. The (admittedly, illiquid) equity acquired would likely be an awful lot higher than that.

200 isn't much of a cushion at time of historically high rents.

If rents were to fall 50% what then...

Property Market 2019

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