July CSO Figures

El_Dangeroso

lima wrote: »

Yeah every viewing I go to for Apartments in Dublin is just rich middle class couples in their 60's looking to protect their massive cash piles. The people who actually need these apartments cannot buy them because of these old people. It's wrong.

Went to a property auction a couple months ago (not to buy just more to have a nosy at what went on)

There were two other couples our age in the room, the rest was all white haired people scrambling to get their hands on anything.

I do wonder if the removal of the cgt exemption at the end of the year is going to have any effect at all on these people? I'm beginning to think not.

Thatislegal

For me the question is what is the main factor driving price rises? Cash, we know that since the bottom, over half of all sales were cash. Who has 200/300k cash? Not the shafted 20/30 something generation, that's for sure. Why is the cash coming in to the market? No where else to go.

So the questions are, would the market get to where it is without the cash buyer driving it? Hard to tell. There seems to be supply issues alright. One has to ask though, would the supply issues be enough to drive the market this high? I suspect not.

What would drive the market in the absence of the cash buyer? Credit. What is credit based on? Income and employment. Real wages are stagnant and young people aren't as debt hungry (aka stupid) as in 2007. Most property buys at the moment don't make sense from an investment point of view, Dirt free post office bonds offer a better return than most property, once one deducts property appreciation. Of course there's a real risk of depreciation too.

My guess is we'll see a tapering in rises as the end of the Noonan tax sweetie expires, perhaps even a fall early next year. Though in the medium term supply is still an issue and perhaps more of an issue is political interference. Watch out for 'Help to Buy' scheme. That could screw the market totally. Don't let it be spun to you as a good thing. E-mail your local TD, it won't take long. Come out hard against it. One must watch out for attempts to shamelessly transfer yet more wealth from the young to the old.

On a positive note if we do see large drops in prices by early next year, these cash buyers will have done a lot of the Negative equity generation and citizens a favour. As unlike the last bubble this one has been paid for up front.

L1011

If cash buyers were all investors, there would be far more rental properties coming to market. There aren't.

Bigcheeze

Interesting chart from the Economist. Ireland not on a great trajectory but not currently overvalued. https://twitter.com/theeconomist/status/506124618491760640

gaius c

Bigcheeze wrote: »

Interesting chart from the Economist. Ireland not on a great trajectory but not currently overvalued. https://twitter.com/theeconomist/status/506124618491760640

Did you note the *?
"Relative to long term average" it says. If that "long term" is anything less than 20 years, it's worthless.

Thatislegal

Fair point, but they don't need to be investors to bid up prices, but even if they are, why would we need to see more rental properties go to market? A lot of sales have existing tenants that simply change their standing orders from one landlord to another.

No doubt there's a supply issue. No doubt there's a lot of cash buyers chasing the few properties out there.. The question is what is the dominant factor? In other words, how much of that supply issue is now priced in?

My guess is, these guys with cash (50% of sales since the bottom of the market), whether trying to take advantage of Noonans tax break sweetie or not, have bid the market in excess of what's reasonable. Why, because they can, there's no limit on how wasteful one is with one's cash. Remember, we're not talking about rocket scientists or professional investors here. Why in excess of reasonable? Well, in credit affordability terms, house buying is now as expensive as in the 'boom'. Wages are stagnate, unemployment is incredibly high, employment T&C for the shafted generation are terrible and the demand for credit, though up, is still really poor. All reflected in the declining birth rate.

In addition, yields on rental properties are now weak and on 3 beds, non existent. Couple that with the rise of Sinn Fein and threat to all those tax write offs landlords can make, I wouldn't/won't be getting involved. IMO one would be better off putting a lump sum in a Dirt free post office scheme than rolling the dice on this dysfunctional market.

My guess is increases will taper by years end, start of 2015 as tax break expires and the market becomes more credit driven, then it should decline some. Maybe 20%. Then again the market could 'go up like a rocket' from here. Which would be sad to see, one housing bubble a generation is definitely enough, two would be just depressing.

The_Conductor

MYOB wrote: »

If cash buyers were all investors, there would be far more rental properties coming to market. There aren't.

Most reports are now stating that investors have fallen to between 15 and 20% of the market for properties- current market rents do not support property as a viable investment (despite rents being close to all-time-highs.....).

The First-Time-Buyer- is now the largest market segment- however closely followed by current home owners- both on over 40% of the market.

At very least in the Dublin regional market- it would appear that current property owners are selling again- in order to purchase alternate properties- with first time buyers providing a viable outlet for apartments and other properties that current owners wish to divest. Even with this- there is still a significant shortage of these high density units- hence their continued increases in prices- however, many of today's first-time-buyers are spurning these properties- and going head-to-head with other purchasers for ye semi detached with front and back garden.........

Some interesting comments from Jan O'Sullivan in yesterday's IT- looks like the stupor of the 2020 strategy may be awakening..........

MouseTail

Do you have a link Conductor? I am a fan of the Strategy but its not Jan OSullivans remit any more.

mr_seer

The_Conductor wrote: »

Most reports are now stating that investors have fallen to between 15 and 20% of the market for properties- current market rents do not support property as a viable investment (despite rents being close to all-time-highs.....).

The First-Time-Buyer- is now the largest market segment- however closely followed by current home owners- both on over 40% of the market.

At very least in the Dublin regional market- it would appear that current property owners are selling again- in order to purchase alternate properties- with first time buyers providing a viable outlet for apartments and other properties that current owners wish to divest. Even with this- there is still a significant shortage of these high density units- hence their continued increases in prices- however, many of today's first-time-buyers are spurning these properties- and going head-to-head with other purchasers for ye semi detached with front and back garden.........

Some interesting comments from Jan O'Sullivan in yesterday's IT- looks like the stupor of the 2020 strategy may be awakening..........

Conductor, I think the part about the % of cash buyers is incorrect. It appears that you are referring to a survey by the Chartered Surveyors Institute however if you correlate the number of properties financed by mortgages versus the number of sales in Dublin in H1 2014 you will find that they still make up less than 50%. This suggests that c. 50% of the market is still transacting in cash only

The_Conductor

MouseTail wrote: »

Do you have a link Conductor? I am a fan of the Strategy but its not Jan OSullivans remit any more.

Will try to see if I can find it (I don't have an Irish Times account anymore).