What is your opinion of the future of property prices?

2rkehij30qtza5

Prices seem to be increasing, even if the increases each year are small. This increase is even more apparent in Dublin than in other parts of the country.

What are people's thoughts on the future of property prices?

Do you think they will get to a point and level-off or will they continue to creep up year on year.

Do you think price increases will be small or will increase by even greater %ages from here on?

Just curious what people think...

Villa05

Dublin and commuter areas are in a bubble and it will not end well. Prices are out of reach of the majority of people working in Dublin. This Property is marketed as an affordable Dublin city family property for those priced out of the market. The property require considerable refurbishment and has an asking price of €365,000 which is 10 times average salary and nearly 20 times average disposable income (Income - State deductions)

Those that tried to hide the last bubble are saying "You cannot have a bubble without credit" are wrong. While credit is scarce we have central banks around the world printing money. This money is not filtering down to Joe or Jane public so it needs to find a home. This home includes Greek, Irish Debt and Dublin property. Someone is going to get burned, where Ireland is concerned when someone important gets burned. Taxpayer bails them out

It is hard to predict where prices go from here in the short term as the market is rigged, however the fundamentals would point to a considerable fall in prices when the rigged market is found out. These fundamentals include:

Upcoming significant drop in the population of young people in the FTB, renter category.
Emigration amongst our younger people at family creating age
Continuing lower salaries for people entering the workforce in the past 4 years
Ageing population leading to a pension crisis

Zombie de-leveraging banks meaning new mortgage loans will be close to historic lows for some time
40,000 mortgages 2 years or more behind in repayments. The most likely solution in this scenario is repossesion + write off on the remaining debt. This will create a double whammy of increased supply of property on the market + increased losses for the banks meaning less credit for new mortgages.
I know people will say this has not happened to date, but the longer you leave a problem fester the greater the after affects are

on_my_oe

I would like to hope that there will be a dip next year... The government wanted prices up, so they extended the CGT deadline out a year - and the investors, particularly those with cash keep coming. Next year they'll disappear but sellers will probably still hope for the high(er) prices they've been hearing about this year.

murphaph

Villa05 wrote: »

Dublin and commuter areas are in a bubble and it will not end well. Prices are out of reach of the majority of people working in Dublin. This Property is marketed as an affordable Dublin city family property for those priced out of the market. The property require considerable refurbishment and has an asking price of €365,000 which is 10 times average salary and nearly 20 times average disposable income (Income - State deductions)

Not being able to buy the property you live in is certainly not restricted to Dublin or Ireland. My sister in law and her family recently moved out of Munich city centre and bought in a commuter town 25 miles outside because the flat they could afford to rent in Munich would have cost over a million to buy. They wanted to stay in the area but realised long term it would be a poor financial decision and moved out. I imagine it's the same story in many cities. Economic prosperity brings with it such changes and Ireland is much more prosperous now than 30 years ago, despite the national debt we voted upon ourselves.

Villa05

murphaph wrote: »

Not being able to buy the property you live in is certainly not restricted to Dublin or Ireland. My sister in law and her family recently moved out of Munich city centre and bought in a commuter town 25 miles outside because the flat they could afford to rent in Munich would have cost over a million to buy. They wanted to stay in the area but realised long term it would be a poor financial decision and moved out. I imagine it's the same story in many cities. Economic prosperity brings with it such changes and Ireland is much more prosperous now than 30 years ago, despite the national debt we voted upon ourselves.

Correct me if I'm wrong but I suspect, in Germany, Commuter town means commuter town i.e Infrastructure, attitude and service is present to get you to work swiftly and economically.

dashcamdanny

There was a line for the show houses in Sallins recently. The prices of the new builds are increasing in the area. Not so slowly either.

I would love to sell and get my 2006 price back in my pocket. Wont hold my breath though.

topcatcbr

A 4-5% increase per year would have been considered normal way before any tiger or bubble madness.

anything below 2% increase would be a devaluation allowing for inflation.

therefore much of the country has room to grow. Dublin has seen some speculation recently and needs to level off soon to avoid the mistakes of the past

bmwguy

Villa05 wrote: »

Correct me if I'm wrong but I suspect, in Germany, Commuter town means commuter town i.e Infrastructure, attitude and service is present to get you to work swiftly and economically.

I can access Dublin city centre in 30 minutes by a choice of 2 train stations and 3 dublin bus routes. Its not even in county Dublin. We have commuter towns here too, Ireland isnt all bad!

lima

topcatcbr wrote: »

A 4-5% increase per year would have been considered normal way before any tiger or bubble madness.

anything below 2% increase would be a devaluation allowing for inflation.

therefore much of the country has room to grow. Dublin has seen some speculation recently and needs to level off soon to avoid the mistakes of the past

Isn't the inflation rate currently 0.2% though?

http://www.irishtimes.com/business/economy/annual-inflation-remains-steady-at-0-2-per-cent-1.1698574

kampik

I found this site today, it could be useful to someone who would like to check house prices in their area or any area by comparing price with Google street view house picture.

Google this: propertypriceregister.ie/Website/npsra/pprweb.nsf/PPR?OpenForm

Boards wont let me put up links yet, silly rule for genuine user...

topcatcbr

lima wrote: »

Isn't the inflation rate currently 0.2% though?

http://www.irishtimes.com/business/economy/annual-inflation-remains-steady-at-0-2-per-cent-1.1698574

"domestically-driven services inflation is now running at a much punchier 3 per cent, better reflecting the recovery in the domestic economy through the second half of 2013,”
from your link

This inflation rate is not normal though

The aimed for inflation national rate is usually 2% with house price rising slightly more.

Frank Lee Midere

murphaph wrote: »

Not being able to buy the property you live in is certainly not restricted to Dublin or Ireland. My sister in law and her family recently moved out of Munich city centre and bought in a commuter town 25 miles outside because the flat they could afford to rent in Munich would have cost over a million to buy. They wanted to stay in the area but realised long term it would be a poor financial decision and moved out. I imagine it's the same story in many cities. Economic prosperity brings with it such changes and Ireland is much more prosperous now than 30 years ago, despite the national debt we voted upon ourselves.

We voted that debt because of the last bubble. Dublin and Ireland has just seen the biggest destruction of wealth since WW II. There are still hundreds of thousands in mortgage arrears. The "big cities are expensive" argument won't wash.

Frank Lee Midere

topcatcbr wrote: »

A 4-5% increase per year would have been considered normal way before any tiger or bubble madness.

anything below 2% increase would be a devaluation allowing for inflation.

therefore much of the country has room to grow. Dublin has seen some speculation recently and needs to level off soon to avoid the mistakes of the past

Assets should never increase higher than inflation for long unless previously undervalued.

on_my_oe

Dan O'Brien from the Independent doesn't think there's a bubble...

http://www.independent.ie/business/personal-finance/property-mortgages/the-property-bubble-wont-burst-because-there-isnt-one-30241835.html

lima

topcatcbr wrote: »

"domestically-driven services inflation is now running at a much punchier 3 per cent, better reflecting the recovery in the domestic economy through the second half of 2013,”
from your link

This inflation rate is not normal though

The aimed for inflation national rate is usually 2% with house price rising slightly more.

I'm not that informed in this area, but why not include oil prices and interest rates into inflation? Would they not have knock-on effects in prices? Everywhere I search it says 0.2% for the inflation rate in Ireland.

David900

lima wrote: »

I'm not that informed in this area, but why not include oil prices and interest rates into inflation? Would they not have knock-on effects in prices? Everywhere I search it says 0.2% for the inflation rate in Ireland.

Overall inflation rate is running at 0.2% but inflation can be broken down into many components.
For example, the euro area inflation rate for April was estimated at 0.7% - below the anticipated level of 0.8%.
If you strip out the more volatile components to this sure as externally driven energy and food prices (presumably because these are based on commodity prices but I'm open to correction on that) core inflation came in at 1%. Hitting economist expectations.

This is why the ECB has been slow to bring in non-standard policies as the core inflation rate, although low, has been stronger than the headline rate.

After prices overshoot to the downside during a market decline, they often rise faster than expected when they begin to rise again. This has occurred in Dublin due to pent up demand and low levels of stock on the market. I think this should begin to ease over the coming year as new stock is brought to the market.

Muahahaha

on_my_oe wrote: »

Dan O'Brien from the Independent doesn't think there's a bubble...

http://www.independent.ie/business/personal-finance/property-mortgages/the-property-bubble-wont-burst-because-there-isnt-one-30241835.html

I saw that earlier. If Dan O'Brien is saying there isn't a bubble then there definitely is one.

Frank Lee Midere

Muahahaha wrote: »

I saw that earlier. If Dan O'Brien is saying there isn't a bubble then there definitely is one.

I don't know him, he says he warned about the bubble in 2006 though to counter claims that he might be wrong now.

That said there are two mantras these guys come out with.

1) you can't have a bubble without a credit bubble.
2) supply is constrained.

The answer to that are

1) of course you can have a cash bubble. It's just not sustainable.
2) supply is constrained partially by gov interference, partly by the lack of repossession, partly by price. It's easy to see that the supply could double or more in any year. Demand won't.

snubbleste

Frank Lee Midere

David900 wrote: »

Overall inflation rate is running at 0.2% but inflation can be broken down into many components.
For example, the euro area inflation rate for April was estimated at 0.7% - below the anticipated level of 0.8%.
If you strip out the more volatile components to this sure as externally driven energy and food prices (presumably because these are based on commodity prices but I'm open to correction on that) core inflation came in at 1%. Hitting economist expectations.

This is why the ECB has been slow to bring in non-standard policies as the core inflation rate, although low, has been stronger than the headline rate.

After prices overshoot to the downside during a market decline, they often rise faster than expected when they begin to rise again. This has occurred in Dublin due to pent up demand and low levels of stock on the market. I think this should begin to ease over the coming year as new stock is brought to the market.

What happened in Dublin is the prices just about hit the long term average (relative to wages) and then backed up. Given the overhang from the last bust we should have seen an undershoot of larger proportions and for longer.

The Economist metric on average prices is a weak one, firstly because the average is affected by the very bubble you are trying to model ( that is before 2000-2007 the 30 year average much be lower) and because a proper metric would be average house price to post tax income.

quadrifoglio verde

Well without an increase in supply and more mortgages being given out, house prices in Dublin are going to continue going up.
Personally if it was me, id buy somewhere that i could happily see myself living in over the next 20 years and raising a family in.

Don't buy into this crap of getting on the ladder like what was thrown around a few years ago. If house A is 20% more expensive than house B and you buy house B in the hope that you can flip it in a few years to buy house A, house A will have risen as well by a similar amount.

Also buy what you can afford to buy and make sure that you're better off buying and not renting. Theres more to home ownership, than paying the mortgage.

The current price of property, or where its going, whether up or down doesn't bother me if I'm buying as a family home.
If I'm buying as an investment to rent out, then I want a nice yield of at least 10% but good luck finding that.

handlemaster

Dublin house prices will continue to rise for another two/ three years . House building hasn't kicked off yet and will take time to catch up with the demand in the mean time,the curve will be an upward trajectory on prices.

Villa05

on_my_oe wrote: »

Dan O'Brien from the Independent doesn't think there's a bubble...

http://www.independent.ie/business/personal-finance/property-mortgages/the-property-bubble-wont-burst-because-there-isnt-one-30241835.html

He raises some valid points, but lets break them down
Point 1 Bubbles can't inflate without excessive credit
Dan correctly believe the cause of the bubble was excessive credit in the Irish economy driven by banks borrowing short term from other banks in Europe and loaning it out to joe and jane home buyer in Ireland i.e. a transfer of money in EU Banks to Irish house buyers. This has all stopped so there cant be a bubble?
Quantitative easing or money printing by central banks is doing the same thing via a different route the money is not going to Joe an Jane, but to investors

Point 2 Prices to average incomes are now below the long run average
Issues with this metric as pointed out by Frank Frank Lee Midere altough I would add that we had abnormal property price increases from 96 to 07

The Economist metric on average prices is a weak one, firstly because the average is affected by the very bubble you are trying to model ( that is before 2000-2007 the 30 year average much be lower) and because a proper metric would be average house price to post tax income.

there are also other issues: This metric measures the country as a whole and not Dublin or other hotspots in isolation.
15 houses in Tipperary were sold at the latest allsop auction at €12,000 per house. How many transactions like this have there been and how does this affect the national average. Dublin and most of the rest of the country are different planets.

Point 3 High property price inflation is not necessarily proof of a bubble

An articlefrom the same rag published on the same day

PETER FLANAGAN – PUBLISHED 04 MAY 2014 02:30 AM

A two-bed prime apartment can be had for a little over €400,000 currently, but at very attractive yields.

What do you think?

murphaph

Bubbles can definitely inflate without credit. Come check out the bubble Berlin is experiencing! Foreign (and domestic) cash rich investors are pumping money into Berlin property because the 2% return is still better than the bank and seen as low risk (which it isn't really).

Germany as a whole is experiencing a property bubble which has been driven by investors looking for a perceived safe port in a storm for their money. They see German property as that safe port and thus prices are increasing.

Do people also think that the massive price increases in Chelsea & Kensington are credit driven? Some people just have money and plenty of it. You certainly do likely need credit to inflate property prices in Ballygobackwards but not in Dublin, so long as rents are high enough to provide a half decent return to investors, foreign and domestic.

Villa05

handlemaster wrote: »

Dublin house prices will continue to rise for another two/ three years . House building hasn't kicked off yet and will take time to catch up with the demand in the mean time,the curve will be an upward trajectory on prices.

I wont say you are wrong in your prediction as such is the nature of the way we do things in this country i.e. corruption, bad planning, voting for known (at best dishonest) people, you can see how areas that are overpriced may rise further and areas that are under priced may fall further. In the long run this will come back to kick us in the ass.

Check out the large fall in population in the 15 to 30 age group between 2008 and 2013(-225,000). Add in lower salaries, higher unemployment, emigration amongst this demographic.
Property may rise for 2 to 3 years driven by the few in the 30 to 39 age group who escaped the madness last time out but the next collapse is not far off. In Dublin the current madness is a Selling opportunity and a trap for buyers.

2008 2009 2010 20111 2012 2013
15 - 19 " 295.6 294.3 289.4 281.0 275.7 274.5
20 - 24 " 373.6 354.4 326.3 298.6 277.7 258.8
25 - 29 " 408.3 400.6 381.6 362.9 341.2 320.0

http://www.cso.ie/en/releasesandpublications/er/pme/populationandmigrationestimatesapril2013/#.U2daLfkVq_i

Daithi_2014

You can easily tell the people who dont know what they are talking about.
They are the ones telling you that they know where prices are going. They dont and they cant. Unless they are psychic.
So decide, are they knowingly bullsh1tting you, while pretending they have some superior knowledge, as bullsh1tters tend to do ..... or are they psychic.

handlemaster

Daithi_2014 wrote: »

You can easily tell the people who dont know what they are talking about.
They are the ones telling you that they know where prices are going. They dont and they cant. Unless they are psychic.
So decide, are they knowingly bullsh1tting you, while pretending they have some superior knowledge, as bullsh1tters tend to do ..... or are they psychic.

You missed "your opinion" in the thread title.

Daithi_2014

handlemaster wrote: »

You missed "your opinion" in the thread title.

Didnt.

Theboinkmaster

Daithi_2014 wrote: »

You can easily tell the people who dont know what they are talking about.
They are the ones telling you that they know where prices are going. They dont and they cant. Unless they are psychic.
So decide, are they knowingly bullsh1tting you, while pretending they have some superior knowledge, as bullsh1tters tend to do ..... or are they psychic.

I don't see anyone on this thread claiming to know where property prices are going, just sharing opinions :cool:

dizzymiss

What people think their house is worth and what they would actually sell their house for are so so different!

We are first time buyers and looking on the outskirts of Galway. Some of the listing prices are imho and the opinion of most people I know, ridiculous. A lot of houses in areas we are looking have increased their prices in the last number of weeks for no real reason other than the frenzy that is being communicated through media about increading property prices. Depand in galway is high because people are holding out on putting their houses for sale because they think the frenzy will get them a better price. And it probably will because people are stupid and succumb to frenzy.

A house is only worth what someone serious is willing to pay. Asking prices are going up but the amounts people are able to get a mortgage for arent so an entire section of buyers are going to get priced out. It's all an illusion. A dangerous one at that.

makeorbrake

dizzymiss wrote: »

We are first time buyers and looking on the outskirts of Galway. Some of the listing prices are imho and the opinion of most people I know, ridiculous. A lot of houses in areas we are looking have increased their prices in the last number of weeks for no real reason other than the frenzy that is being communicated through media about increading property prices. Demand in galway is high because people are holding out on putting their houses for sale because they think the frenzy will get them a better price. And it probably will because people are stupid and succumb to frenzy. It's all an illusion. A dangerous one at that.

Galway prices have been ridiculous over the past 12 months. Galway is a nice city and place to live but clearly many people are deluded - as it's not this good - not good enough to justify current pricing.

It's hard to believe this is happening only 7 years after the peak of the boom.