'Market has gone mad in Dublin' Any truth?

techdiver

Shedite27 wrote: »

Lot of people in that market, not a lot of houses, so it's obviously going to go for more. It's not the sort of house you'd need to trade up from so negative equity or resale value isn't a worry.

Hilarious! €577,000 for a standard 4 bed house! 92k over asking would have been crazy in 2006 never mind now!

My advise would be to walk away! Don't get suckered in by this mini bubble.

Also negative equity doesn't just effect those wishing to "trade up". What happens if their financial position changes? Loss of a job, reduction in income and they can't meet the mortgage repayments? Negative equity then plays a major role in their lives. Just ask many of the people who over leveraged themselves during the bubble.

proponent

techdiver wrote: »

Hilarious! €577,000 for a standard 4 bed house! 92k over asking would have been crazy in 2006 never mind now!

My advise would be to walk away! Don't get suckered in by this mini bubble.

Also negative equity doesn't just effect those wishing to "trade up". What happens if their financial position changes? Loss of a job, reduction in income and they can't meet the mortgage repayments? Negative equity then plays a major role in their lives. Just ask many of the people who over leveraged themselves during the bubble.

believe me we will be walking away! we know what we are good for and its a cool €127k below that.

im just pi$$ed off that you cant low ball in some areas. I have always been bearish throughout the bubble and held off, ive just got the hump now that EA's still spout their bullish nonsense at every viewing, which is lapped up by other viewers

BostonB

LowKeyReturn wrote: »

I just think we have different ideas on where we want to live and indeed very different budgets. ....In the end one has to make their own decisions but I'm always grateful for people's advice (sorry if it doesn't sound like it - I genuinely am however).

Its got nothing to do with any personal budgets or ideas.

The Market dictates the price. There's no getting around that. So you have to understand what drives the market. While you might not agree with the market, there's no smoke with out fire. So while the market might get blown out of proportion from reality, or good sense. Its based on real common sense principles.

You don't have to have kids to realise that constant distractions are not desirable, and the better they mix the happier and productive they are. That's true of most people. That's just being pragmatic.

So take the house in Goatstown. It ticks a lot of the boxes for a good location. Even if it wasn't in prime south dublin location. The latter just boosts the desirability skywards. Location, location location after all. You can obviously find other property in other areas that ticks many of the same boxes, without the premium. But if its a good location, it will always command a higher price.

murphaph

The dead cat is bouncing higher and higher....

LowKeyReturn

BostonB wrote: »

Its got nothing to do with any personal budgets or ideas.

Of course it does! If everyone could afford €500,000 - €500,000 houses would be €5m.

BostonB wrote: »

The Market dictates the price. There's no getting around that. So you have to understand what drives the market. While you might not agree with the market, there's no smoke with out fire. So while the market might get blown out of proportion from reality, or good sense. Its based on real common sense principles.

I do agree with the market. Market says I cant buy a €500,000. Market says oh you want to do X as a career X = Y amount of money per year. (in my case 0 for the first 2)

BostonB wrote: »

You don't have to have kids to realise that constant distractions are not desirable, and the better they mix the happier and productive they are. That's true of most people. That's just being pragmatic.

Not getting into the children rearing debate.

BostonB wrote: »

So take the house in Goatstown. It ticks a lot of the boxes for a good location. Even if it wasn't in prime south dublin location. The latter just boosts the desirability skywards. Location, location location after all. You can obviously find other property in other areas that ticks many of the same boxes, without the premium. But if its a good location, it will always command a higher price.

I'm not sure we're arguing that point.

Shedite27

Just as a point of reference, Holywell is a much nicer estate across the road. 4 bed semi-d's sold there for €440k in Mar 2012 and €497k in Dec 2012 (pics in this link)

I viewed both these houses. Would much prefer them over the one currently going for €577k. Definitely points to a big spike (hopefully) at present

gaius c

RATM wrote: »

Couldn't agree more with this, I also reckon it is a DCB since the end of MIR in 2012. In fact over 100 years of economic analysis of property crashes in countries around the world shows us that it is almost unheard of not to have a dead cat bounce in a long bear. A 4 year backlog since credit stopped flowing means there is a large backlog of buyers and the available stock has shrunk due to a combination of no new building and family break-ups, divorces, which place additional pressure on supply.

Other factors to consider are the avalanche of repos that have yet to begin. Although this is likely to mainly effect apartment prices it will undoubtedly have an overall effect on the market.

Interest rates are another factor. We at least know that they are at a historic low and can now only head in one direction.

It would also be the first bubble bust in recorded history to settle exactly at "fair" value and not undershoot.

BostonB

LowKeyReturn wrote: »

Of course it does! If everyone could afford €500,000 - €500,000 houses would be €5m.....

I'm not referring to you personally. I'm making a general point.

All those properties are effected by the same common factors. Its those common factors that you ignore with the idea that a 4 bed in one area is the same as one in another in another, with the exception of price. Walking/commuting distance of a major shopping centre, schools, 3rd level, train, luas, dart, swimming pools, cinema, work, family, friends. If you're buying at 5m of course its not the normal market. Location might be near the marina, airport, easy links to europe. The principles are the same though.

kennyb3

The issue is quite obviously supply - there were over 5,000 propertis for sale on daft.ie (dublin city) in early May 2012, there are only just under 3,400 on at present (32% lower). It's pretty chronic in the more desirable/higher priced areas from what I can see, hence the bidding wars.

Even if a glut of repossessions (highly unlikely - as we'll see a drip feed if it finally happens) started tomorrow morning, it would probably be a year plus before those properties hit the market.

I've yet to see anyone conclusively answer the supply question - where it will come from, when and in what numbers it will increase.

liffeylite

RATM wrote: »

Couldn't agree more with this, I also reckon it is a DCB since the end of MIR in 2012. In fact over 100 years of economic analysis of property crashes in countries around the world shows us that it is almost unheard of not to have a dead cat bounce in a long bear. A 4 year backlog since credit stopped flowing means there is a large backlog of buyers and the available stock has shrunk due to a combination of no new building and family break-ups, divorces, which place additional pressure on supply.

Other factors to consider are the avalanche of repos that have yet to begin. Although this is likely to mainly effect apartment prices it will undoubtedly have an overall effect on the market.

Interest rates are another factor. We at least know that they are at a historic low and can now only head in one direction.

Although there are good points made here, I don't think they represent the full picture....

300,000 people have emigrated from Ireland in the last 4 years. in the same period, almost 200,000 have migrated TO Ireland. Also, each of these years have baby boom periods and will continue to be so for 3 or 4 years to come due to age profiling. new household formation represents higher demand for property.

regardless od the stats on emigration, the population of Ireland is still larger today than it has been at anytime in any of our life times and Dublin leads this charge.

unemployment is very high, but Dublin has the lowest level of this in the country. there are lots of people in Ireland and especially in Dublin that earn a lot of money. Ireland has the highest average salary in Europe! and second highest in the world.

Dublin also has the largest spending power on average in the highest earning country in Europe. of course there is money in the city!

http://www.therichest.org/business/the-top-10-highest-average-salary-per-country/

the fact that the country is broke does not mean that all of the population aren't well off.

I think another major reason for these crazy prices, along with the obvious shortage in well regarded areas, is the fact that the rent prices for houses in Dublin are ridiculous! compare them to the values in any uk city bar London and they are astronomical.

if people can afford to buy house out right and they intend to stay in it long term, it makes sense to buy it if the price sits well against the cost it would be to rent it for 10 years and own nothing at the end of it.

There are always two sides to the story and it often seems that the wealth in Ireland, and it is there, is overlooked by a lot of analysts. the glaring one is emigration. people always cite the number of people leaving but never the fact that 1000 people a week actually move to Ireland- many of them returning irish.

there are more people moving to Ireland than there are irish people leaving. net emigration only exists because of the combination of irish and non=nationals leaving.

Also, there is local migration to the Dublin area due to it being the largest employment centre. 100s of villages being emptied of their 20 and 30 something population has no impact on houses in D4 or D6. However, people coming to work at pwc, Microsoft, google, facebook etc from abroad on big wages does have an effect.

There are a lot of factors to the house price levels in Ireland and Dublin in particular.

Just trying to show the other side of the coin.

BostonB

I think some of the demand will be met by LL getting out of the rental market, as the RA falls and costs increase. Also a lot of bedsits are no longer suitable for the rental market and will have to be sold or redeveloped. Many LL's especially those with buy to lets which are no longer viable. I think would leap at a decent of getting out of the rental market.

Duggys Housemate

RATM wrote: »

Interest rates are another factor. We at least know that they are at a historic low and can now only head in one direction.

I don't think that interest rates will, in fact, increase very radically for new buyers, as every ECB increase will allow banks to get more money back from their trackers, so they don't have to raise interest rates on the rest. ( The opposite is happening now).

As for the "good area" thing, it's obviously mostly a thing for Dubliners. Looking at the map I can see no reason why Goatstown is a good area, its almost in Wicklow. Meanwhile north of the Liffey and close to the city very little is happening.

However that part of the market is clearly divorced from normal people - to get a mortgage at 550K you would probably need to earn about 200K if their criteria are as stringent as they claim these days, or have the money. It doesn't seem there could be that many people in either position.

evolving_doors

LowKeyReturn wrote: »

Thanks for the replies to be specific about our circumstances:

Cash buyers c. €100,000 D7/8 (not worried about the area being ideal we can live with that) looking for a fix up house.

This was ideal but has been sold.

Dont forget that if it's a doer upper yer after then at least chalk down another 80 k if you want to get it up to spec for modern family standards (extension etc.!) ...youre going to be rightly stuck in a few years if you have kids out want to rent it out..also consider schools..a few more bob maybe in the walknstown direction and you might actually have an investment!

gurramok

Alot of soundbites Liffeylite. Migration stats are here http://www.cso.ie/en/media/csoie/releasespublications/documents/population/2012/popmig_2012.pdf

In Ireland, there are about 120,000 less adults in the 15-30 age range in 2012 than there were in 2006. Granted there are more in their 30's and 40's, its a generation gap which will and is affecting sales as there are fewer young people there to buy. There is no point mentioning baby boom periods unless people want to and can afford to move to bigger accommodation and can get out of negative equity.

BostonB

Duggys Housemate wrote: »

...Looking at the map I can see no reason why Goatstown is a good area, its almost in Wicklow. ...

Is it a map of Ireland?

GetWithIt

Duggys Housemate wrote: »

I don't think that interest rates will, in fact, increase very radically for new buyers, as every ECB increase will allow banks to get more money back from their trackers, so they don't have to raise interest rates on the rest. ( The opposite is happening now).

This makes very little sense. How do you think Trackers work? Why do you think they are loss making for the banks?

proponent

[QUOTE= to get a mortgage at 550K you would probably need to earn about 200K[/QUOTE]


this is the bit i dont get.. nobody earns that sort of money... and if they do they aint bidding in goatstown. trader downers, cash buyers?

To get our mortgage approval we had to bare all to the banks and this i had no problem with this as its how it should always have been and its all about ability to save and stress testing etc... so who is getting the appprovals for these in my view vast sums of money?

Duggys Housemate

BostonB wrote: »

Is it a map of Ireland?

If you zoom out.

techdiver

gurramok wrote: »

Alot of soundbites Liffeylite. Migration stats are here http://www.cso.ie/en/media/csoie/releasespublications/documents/population/2012/popmig_2012.pdf

In Ireland, there are about 120,000 less adults in the 15-30 age range in 2012 than there were in 2006. Granted there are more in their 30's and 40's, its a generation gap which will and is affecting sales as there are fewer young people there to buy. There is no point mentioning baby boom periods unless people want to and can afford to move to bigger accommodation and can get out of negative equity.

Very true.

Also add to this that unemployment amongst younger people in their 20's is significantly higher than in any other age bracket. This basically means that by the time these people reach their late 20's/early 30's they won't have as many years of earning (saving, record of credit repayments, etc) behind them and their careers will be behind where they would normally be at the age point (i.e. earning less than the current crop in their 30's, adjusted for inflation). This will then have a further knock on effect on prices as affordability will be challenged.

Evidence of this is very prominent in so called areas of high skilled, plentiful employment where there are challenges for entry into the jobs market for graduates. In my area, software development, there is a perceived shortage of people, but at the same time employers are not hiring graduate level employees. They see them as a short term cost rather than a asset long term. I have siblings and relatives with degrees in various disciplines who are either unemployed or working in non related minimum wage positions.

This all points to lower earning potential for the next batch of buyers, as their careers will lag behind the expected paths.

Solair

It's a blip.
My concern is that a rake of repossessions and sales will ultimately kick in. It's inevitable really given the % of mortgages in distress.

I can't see this as much more than a blip and a very localised one at that too.

Duggys Housemate

GetWithIt wrote: »

This makes very little sense. How do you think Trackers work? Why do you think they are loss making for the banks?

I know exactly how trackers work which is why I said what I said.

liffeylite

proponent wrote: »

this is the bit i dont get.. nobody earns that sort of money... and if they do they aint bidding in goatstown. trader downers, cash buyers?

To get our mortgage approval we had to bare all to the banks and this i had no problem with this as its how it should always have been and its all about ability to save and stress testing etc... so who is getting the appprovals for these in my view vast sums of money?

Again, see my previous post. Ireland has the 2nd highest average salary in the world!

Dublin is at the peak of this earning spectrum.

A couple both on 70k plus, bringing in 150k a year could save a deposit for a house worth this amount in not too long a time. I am not saying there are millions of them, but there are still a fair amount of people with this type of cash.

http://www.therichest.org/business/the-top-10-highest-average-salary-per-country/

GetWithIt

Duggys Housemate wrote: »

I know exactly how trackers work which is why I said what I said.

Ok, can you explain - to me - why a higher ECB rate would result in the banks losing less on a Tracker of, say, ECB+1%?

Duggys Housemate

GetWithIt wrote: »

Ok, can you explain - to me - why a higher ECB rate would result in the banks losing less on a Tracker of, say, ECB+1%?

because they can charge existing tracker customers more per month, and get more revenue per month.

liffeylite

gurramok wrote: »

Alot of soundbites Liffeylite. Migration stats are here http://www.cso.ie/en/media/csoie/releasespublications/documents/population/2012/popmig_2012.pdf

In Ireland, there are about 120,000 less adults in the 15-30 age range in 2012 than there were in 2006. Granted there are more in their 30's and 40's, its a generation gap which will and is affecting sales as there are fewer young people there to buy. There is no point mentioning baby boom periods unless people want to and can afford to move to bigger accommodation and can get out of negative equity.

once again, the population of ireland is irrelevant when you are talking about the Dublin market only. 15 - 25yos don't buy houses. its people in their late 20 and 30s that are the largest purchasers. Dublin has more people in this age category than it has had in the last few hundred years, and your stats tell you that.

Therefore, prices in Dublin have to be influenced by this. not everyone is mortgaged to the hilt and a lot of these people currently aren't mortgaged at all- just waiting in the wings and saving up deposits.

Duggys Housemate

liffeylite wrote: »

Again, see my previous post. Ireland has the 2nd highest average salary in the world!

Dublin is at the peak of this earning spectrum.

A couple both on 70k plus, bringing in 150k a year could save a deposit for a house worth this amount in not too long a time. I am not saying there are millions of them, but there are still a fair amount of people with this type of cash.

http://www.therichest.org/business/the-top-10-highest-average-salary-per-country/

i think that argument is whats commonly called "one site on the internet what proves my point".

2 salaries of 70K would be unusual to say the least. And many high earners in the public sector would be losing jobs, or income, over the last while. Most on that income are older, too.

Only IT has held up.

As for what they could afford on that income - they need to save about 110K, which is ok. But thats not enough if you assume that banks are looking for a a about 2.5 combined salary ( or working that out from post tax income) they are not earning enough.

Duggys Housemate

liffeylite wrote: »

once again, the population of ireland is irrelevant when you are talking about the Dublin market only. 15 - 25yos don't buy houses. its people in their late 20 and 30s that are the largest purchasers. Dublin has more people in this age category than it has had in the last few hundred years, and your stats tell you that.

Therefore, prices in Dublin have to be influenced by this. not everyone is mortgaged to the hilt and a lot of these people currently aren't mortgaged at all- just waiting in the wings and saving up deposits.

Wheres your info on Dublins demographics for late 20's-30s?

And why do you assume people are stopping aging?


EDIT: also i doubt the Dublin is special nonsense, which we heard in the boom. Dublin prices have fallen as much, or more, than the rest of Ireland. IF demographic pressures were higher, that wouldn't have happened. ( In London, where the UK stagnated, it didn't happen).

GetWithIt

Duggys Housemate wrote: »

because they can charge existing tracker customers more per month, and get more revenue per month.

Don't their costs increase by the same amount?

Duggys Housemate

GetWithIt wrote: »

Don't their costs increase by the same amount?

If the banks need loans in a year - yes ( although interbank loans follow some weird logic); however in any one year the loans needed by the banks would be less than the outstanding loans they are owed by their tracker debtors. Which is 60% of their books.

This is why they raise rates for everybody else when the ECB reduces rates.

GetWithIt

Duggys Housemate wrote: »

however in any one year the loans needed by the banks would be less than the outstanding loans they are owed by their tracker debtors. Which is 60% of their books.

I do not understand what you mean by this.

Taken in isolation, 1 tracker mortgage at ECB+1% losses more, less or the same when the ECB rate is 1%, 2% or 3%?