Property Market 2015

Barely Hedged

The_Conductor wrote: »

However- the flipside of the coin- is a strawpoll taken by Irishlandlords.ie suggest in excess of 30% of current landlords are desperately trying to get out of the sector (primarily because of the crap regulatory regime applicable to landlords in this country).

There are both positive and negative factors at play here.

In addition- wages did not fall throughout the recession- employment rates fell- but wages for pre-existing employees, by and large, did not (with the exception of the public sector).

The new jobs are predominantly of a lesser standard and under worse terms and conditions than pre-existing employees (pretty much across the board). I can't see many of these jobs being a driver of purchasing in the residential property sector.

Personally- I think the slight rise in August prices may very well be the last hurrah for the cash buyers- who are on the verge of extinction (they have been up to 40% of the market for the previous 8 years- but are now in freefall).

I'd be more interested in mortgage draw-down figures- and how they compare- than in absolute sale prices too- given the poor volumes on which the August figures are based. A few big sales- really are such that they can distort the reported figures.........

No offence, but to be honest there's a lot of hopeful/wishful thinking in your post there.

A straw poll of any group who are digesting negative news will result in negative reactions. It's knee jerk, not a statement of intent.

Lower wages before the recession but also lower property prices - a more than proportional drop on the property prices side.

Why is the cash buyers last hurrah this month? Why was it not with the phasing out of the CGT exemption, the drop in yields etc etc. Fact is, cash buyers will always remain a significant part of a property market. Statistics from the UK, with a similar property market to ourselves, points to cash buyers making up 30% of the market on average

kennyb3

The_Conductor wrote: »

However- the flipside of the coin- is a strawpoll taken by Irishlandlords.ie suggest in excess of 30% of current landlords are desperately trying to get out of the sector (primarily because of the crap regulatory regime applicable to landlords in this country).

Can totally understand that. That plus the high marginal tax rate & strong property prices at present.But they aren't getting out due to low rents that's for sure.

None of that makes the slightest bit of difference to the person faced with a rent v buy decision does it? (seems like deflection)

The_Conductor wrote: »

There are both positive and negative factors at play here.

In addition- wages did not fall throughout the recession- employment rates fell- but wages for pre-existing employees, by and large, did not (with the exception of the public sector).

Agreed it's not, and has never been shown, that it's wage growth that drives property prices.

The_Conductor wrote: »

The new jobs are predominantly of a lesser standard and under worse terms and conditions than pre-existing employees (pretty much across the board). I can't see many of these jobs being a driver of purchasing in the residential property sector.

I think you are being a bit flippant here. There are many ex-pats returning home from London and the likes as there are now good jobs to come back to. They come armed with significant deposits. A lot of my friends are accountants and would be in this boat.The Big 4 are all recruiting, particularly at a senior level. It's the same with a lot of the multi nationals.

I don't think all of these new jobs are menial in nature. CSO average wages have gone nowhere recently (from memory) - neither massively up or down. But if you are increasing the numbers in employment you are getting some at the bottom, middle and top ends. you are increasing the buyer pool.

(not to mention the lack of supply)

The_Conductor wrote: »

Personally- I think the slight rise in August prices may very well be the last hurrah for the cash buyers- who are on the verge of extinction (they have been up to 40% of the market for the previous 8 years- but are now in freefall).

Cash buyers taking 8+ months to close? Seems excessive.

I think the 'verge of extinction' is hyperbole - what % are they currently? Falling from from a uniquely high level doesn't equal 'verge of extinction'

The_Conductor wrote: »

I'd be more interested in mortgage draw-down figures- and how they compare- than in absolute sale prices too- given the poor volumes on which the August figures are based. A few big sales- really are such that they can distort the reported figures.........

How do you know the August volumes?

Mortgage drawdowns don't compare homogeneous property however, so doesn't really tell you anything about price.

alastair

Deleted User wrote: »

Yeah, at least give it a year and collect a full set of data. There's nothing really to 'review' yet.

...

Anyway, 3% on Dublin houses. :eek:

Yet another nail in the coffin of the 'Price index will be down YoY by end of year' proponents.

irishguy1983

Any idea whether to buy or not now?

Based in Cork City and it seems a bit crazy at the moment in terms or prices/availability - will this improve? Are prices likely just to go up in the next 2/3 years? I know these questions are impossible to answer with any real certainty but just looking for some thoughts

Can't stay at home much longer but don't want to panic buy - renting it not an option as it is so expensive and there are hardly any places available.

handlemaster

irishguy1983 wrote: »

Any idea whether to buy or not now?

Based in Cork City and it seems a bit crazy at the moment in terms or prices/availability - will this improve? Are prices likely just to go up in the next 2/3 years? I know these questions are impossibly to answer with any real certainty but just looking for some thoughts

Can't stay at home much longer but don't want to panic buy - renting it not an option as it is so expensive and there are hardly any places available.

if you cant stay at home much longer, you don't want to panic buy and renting is not an option, then its a b&b or hotel or homelessness

Theboinkmaster

irishguy1983 wrote: »

Any idea whether to buy or not now?

Based in Cork City and it seems a bit crazy at the moment in terms or prices/availability - will this improve? Are prices likely just to go up in the next 2/3 years? I know these questions are impossible to answer with any real certainty but just looking for some thoughts

Can't stay at home much longer but don't want to panic buy - renting it not an option as it is so expensive and there are hardly any places available.

I bought in Dublin 4 months ago knowing prices will probably drop a few % over remainder of this year/next year. Depends on personal circumstances as we've baby on the way but you could drive yourself mad second guessing the market. If you find a house you can afford now and want to live there long-term go for it IMO.

Good time to buy in Dublin I think given all the for sale signs, volume definitely up. My experience is just Dublin though, don't know anything about the Cork market.

road_high

kennyb3 wrote: »

I'd imagine it's the extortionate rent (ever increasing with no short term end in sight) that's forcing people into the market and pushing up prices.

We bought only 2 years ago now and our rent would now be €300pm more than our mortgage (which is just bbelow 80% LTV). That's a crazy difference.

Rents and mortgage were neck and neck when we bought.

Anyone with a deposit has to be seriously considering buying given the current rental market.

Have to agree. I bought as my rent was creeping up the past two years and have risen sharply where I live (Kilkenny) with no end in sight as nothing has been built the past 6 years at all.

irishguy1983

Theboinkmaster wrote: »

I bought in Dublin 4 months ago knowing prices will probably drop a few % over remainder of this year/next year. Depends on personal circumstances as we've baby on the way but you could drive yourself mad second guessing the market. If you find a house you can afford now and want to live there long-term go for it IMO.

Good time to buy in Dublin I think given all the for sale signs, volume definitely up. My experience is just Dublin though, don't know anything about the Cork market.

Why are you so sure prices will drop? What are your thoughts there?

I'm not second guessing at all really - there just isn't that many affordable places available to buy and any that are there just seem to go so quickly!

I know that nobody can predict the future but I am thinking prices will just go up really with lack of availability - this may change as new places are built but that will take a considerable amount of time. Then again maybe I am looking at it too simply!

Jaketherake

There is a simple reason how asking prices can be going down and actual prices be going up at the same time.

What we are seeing is a lesson in what an asking price actually is.

It will be glaringly obvious to anyone who has sold a property in the past year or so.

In my own case here is what happened. Rough numbers here, but you get the idea.

I saw prices were going up at a pace.
I decided I would sell a property that I want to offload.
I was aware of the large increases in price that were happening, so decided to put in on at an asking price that was very (even overly) ambitious, 15% more than the last one that was on the PPR.
As I suspected might happen, the property didnt shift (if it had i would have been delighted). So I reduced it to a moderately ambitious price 10% over last PPR.
Eventually (very recently) it sold at roughly 8% more than last PPR (7 months before my sale). But 2% less than mine and identical properties were asking at the time. So sold for 8% over the last one the PPR and 2% less than the prevailing asking price.

So for that particular property
8% increase in actual sale price
2% decrease in asking price

People saw the price rises and decided, i'll sell and get me some of that. They jumped too much in their asking prices and what we see now is a correction in asking prices. Asking prices are falling slightly. Actual selling prices are still trundling along wherever they are going. Up, by the looks of it.

Jaketherake

Or 7% down on my original asking price

Villa05

kennyb3 wrote:

Agreed it's not, and has never been shown, that it's wage growth that drives property prices.

My 2 cents would be that access to finance is the critical driver of price.
1. The big players buying up portfolios of property have access to very cheap credit so they have a significant advantage over the ftb. Interstingly some have made soundings that they are no longer buying Dublin as there is no value currently

2. The ftb 3.5 multiple of salary puts a ceiling on price and means the ftb can't really compete with number 1. They are left with the scraps that are not in portfolios. There are far more ftb than supply meaning only those that are in the best possible position can buy. The nature of the completely dysfunctional market means buyers may be overpaying for poor quality housing

Archaeoliz

My Home's Q3 report seems to reflect what I'm seeing. Moderating prices, but rising gently, Growth in the mid-single digits (5%) sounds about right, but IMHO it's on the high side to be sustainable for those requiring a mortgage. I think it may well slip down to 2% growth to match annual salary increases, but only if the CB rules are allowed to stay for the medium to long term (5-20 years). Supply is still relatively low and keeping prices higher than they would be due to the laws of supply and demand.

Interesting point I thought was that rents are now only 0.5% away from their previous peak (and for us personally trying to buy - our mortgage would be significantly cheaper than our rent. We've just chosen to live in an area where there are no properties for sale, not just bad stock but nothing at all in our village so we're changing our search... got to adapt!)

http://www.myhome.ie/reports/2015-q3

Alter_Ego

alastair wrote: »

Yet another nail in the coffin of the 'Price index will be down YoY by end of year' proponents.

If you look at Dublin, this actually has fallen from 25% YoY August 2013-2014 to 8.2% YoY August 2014 to August 2015. So it is still quite likely it will go into negative numbers by the end of the year.

Off course media will just pick the static that suits their story, so if Dublin is falling they will shout about national price increase while the rest of the country is still catching up.

I think it just boils down to the simple supply and demand, when more houses come on the market, the prices will fall, assuming Noonan won't mess with the CB restrictions.

Bob24

Alter_Ego wrote: »

If you look at Dublin, this actually has fallen from 25% YoY August 2013-2014 to 8.2% YoY August 2014 to August 2015. So it is still quite likely it will go into negative numbers by the end of the year.

Off course media will just pick the static that suits their story, so if Dublin is falling they will shout about national price increase while the rest of the country is still catching up.

I think it just boils down to the simple supply and demand, when more houses come on the market, the prices will fall, assuming Noonan won't mess with the CB restrictions.

What you are saying is that the pace of the price increase has reduced (which anyone in there right mind was expecting). But the price index is not down YoY, it is up 8% as you mentioned.

Villa05

Alter_Ego wrote:

I think it just boils down to the simple supply and demand, when more houses come on the market, the prices will fall, assuming Noonan won't mess with the CB restrictions.

That pretty much sums it up. Supply is controlled by a very small number of people and Honohan himself said that the rules would be reviewed if they had an overly negative impact on price. I think it would take another economic shock to see any drastic falls in price. The main players appear to have control over the market for now.

alastair

Alter_Ego wrote: »

If you look at Dublin, this actually has fallen from 25% YoY August 2013-2014 to 8.2% YoY August 2014 to August 2015. So it is still quite likely it will go into negative numbers by the end of the year.

It's really not. Look at the previous year's autumn-winter monthly figures to establish how much it needs to fall between now and the end of the year. Unless there's a significant sea change between now and then, it's unlikely that there's any chance of a negative YoY.

kennyb3

Also how does Alter_ego reckon it will go negative when the last month has just been +3% - impossible to make that assumption against that backdrop.

Alter_Ego

It's has slowed down from 25% to 8% in a year, that's 17% reduction. Divided by 12 months = 1.4 % per month. 4 months left until the end of year = further reduction by 5.6 %. So maybe while not exactly into negative, but close to it.

It may take a bit longer, it may bounce up again, but soon people will stop buying altogether, as there is simply not going to be anything to buy there.

No one can predict the future, but my feeling is current prices are very close to optimum level, and if supply was better, they would be lower. All those articles comparing to peak prices are pathetic. It's not going to go back to that level anytime soon, there is no point referring to it at all.

caviardreams

Alter_Ego wrote: »

It's has slowed down from 25% to 8% in a year, that's 17% reduction. Divided by 12 months = 1.4 % per month. 4 months left until the end of year = further reduction by 5.6 %. So maybe while not exactly into negative, but close to it.

It may take a bit longer, it may bounce up again, but soon people will stop buying altogether, as there is simply not going to be anything to buy there.

No one can predict the future, but my feeling is current prices are very close to optimum level, and if supply was better, they would be lower. All those articles comparing to peak prices are pathetic. It's not going to go back to that level anytime soon, there is no point referring to it at all.

Do you understand the difference between the first and second derivative i.e. the rate of change? They are not the same thing.

Alter_Ego

caviardreams wrote: »

Do you understand the difference between the first and second derivative i.e. the rate of change? They are not the same thing.

There is only one derivative here, YoY prices, measured month on month. Which one is the second?

Bob24

Alter_Ego wrote: »

There is only one derivative here, YoY prices, measured month on month. Which one is the second?

You have been talking about the change in YoY prices. Since YoY prices already are a derivative of prices, if you compare different values of YoY prices you are looking at a second derivative.

In short: prices are still increasing (first derivative is a positive value), but the rate of the increase (the second derivative) is lower than it was a year ago.

alastair

Bob24 wrote: »

You have been talking about the change in YoY prices. Since YoY prices already are a derivative of prices, if you compare different values of YoY prices you are looking at a second derivative.

In short: prices are still increasing (first derivative is a positive value), but the rate of the increase (the second derivative) is lower than it was a year ago.

...When it was increasing like crazy.

I love the way the voodoo calculations still don't manage to produce a YoY negative outcome.

The only way that there's going to be a negative YoY is if something catastrophic happens, and in short order too. Slow and steady growth looks like it's here for the short term at least.

Villa05

alastair wrote:

The only way that there's going to be a negative YoY is if something catastrophic happens, and in short order too.

The central bank rules have not been in long enough to see there full effect.

Something catastrophic for the irish market is a properly functioning one, We have not had one for 30 years plus.

what could an election bring with the gap between the haves and the have nots

also the world economy is very fragile even after mass money printing and crazy low interest rates. Asset prices have increased to an unsustainable level as a result of this, while wages remain static or falling. Reminds me of the symptoms of the last catastrophy. How long can it continue?

Alter_Ego

Bob24 wrote: »

You have been talking about the change in YoY prices. Since YoY prices already are a derivative of prices, if you compare different values of YoY prices you are looking at a second derivative.

Thanks for the explanation.

caviardreams wrote: »

Do you understand the difference between the first and second derivative i.e. the rate of change? They are not the same thing.

I do understand it, just couldn't express it as eloquently as you have put it - English is only my second language.

Kinda what I said though, the rate of increase is decreasing at a decent enough pace, at least for my liking.

alastair

Villa05 wrote: »

The central bank rules have not been in long enough to see there full effect.

Something catastrophic for the irish market is a properly functioning one, We have not had one for 30 years plus.

what could an election bring with the gap between the haves and the have nots

also the world economy is very fragile even after mass money printing and crazy low interest rates. Asset prices have increased to an unsustainable level as a result of this, while wages remain static or falling. Reminds me of the symptoms of the last catastrophy. How long can it continue?

Seems like an awful lot of excuses there to distract from what's shaping up to be a year of moderate increases in property prices, in a context of an improving economy, and no suggestion that current prices are unsustainable.

brice_nobes

Alter_Ego wrote: »

Bob24 wrote: »

You have been talking about the change in YoY prices. Since YoY prices already are a derivative of prices, if you compare different values of YoY prices you are looking at a second derivative.

Thanks for the explanation.



I do understand it, just couldn't express it as eloquently as you have put it - English is only my second language.

Kinda what I said though, the rate of increase is decreasing at a decent enough pace, at least for my liking.

your clutching at straws and making yourself look foolish

the trend is upwards and very decisively so , we are only three years into this current property cycle , cycles last longer than this bar a major economic event , our bear market from 2007 to 2012 was much longer than a typical one and the fall was much greater regardless of the rise from 1996 to 2007

The_Conductor

brice_nobes wrote: »

bar a major economic event

• Collapse of asian markets esp. the Chinese market by over 50% over the past 8 weeks.
• Signals from the Fed that the increase in interest rates which was postponed in September- is now penciled in for November.
• Major regrading of sovereign debts for all the BRICs alongside 14-15 other countries highlighted by both of the agencies.
• In an Irish context- lack of housing highlighted for cancelling expansion plans by 2 major international employers here (Intel and Twitter) since Wednesday.
• Conference on tax avoidance- breaks up without agreement on how to tackle avoidance measures and transfer pricing- due to lack of concern by the Commission (which is understandable if you examine Juncker's CV).
• Revision of OECD global economic growth forecasts down to 2.3% (from 3.5%)
• Worst Chinese factory PMI figures in over 8 years out last Thursday (they weren't as bad as some people had imagined they might be- but they were still shocking).

Will I go on?

Plenty of major economic indicators are turning very badly in the wrong direction. We've the 7th most open economy globally here. If the global economy sneezes- we catch a cold.

alastair

The_Conductor wrote: »

• Collapse of asian markets esp. the Chinese market by over 50% over the past 8 weeks.
• Signals from the Fed that the increase in interest rates which was postponed in September- is now penciled in for November.
• Major regrading of sovereign debts for all the BRICs alongside 14-15 other countries highlighted by both of the agencies.
• In an Irish context- lack of housing highlighted for cancelling expansion plans by 2 major international employers here (Intel and Twitter) since Wednesday.
• Conference on tax avoidance- breaks up without agreement on how to tackle avoidance measures and transfer pricing- due to lack of concern by the Commission (which is understandable if you examine Juncker's CV).
• Revision of OECD global economic growth forecasts down to 2.3% (from 3.5%)
• Worst Chinese factory PMI figures in over 8 years out last Thursday (they weren't as bad as some people had imagined they might be- but they were still shocking).

Will I go on?

Plenty of major economic indicators are turning very badly in the wrong direction. We've the 7th most open economy globally here. If the global economy sneezes- we catch a cold.

The only real catastrophic possibility in that mix, that would impact on a 2015 YoY figure, is the Chinese situation imploding in short order. So, while it's great fun to go on about awful possibilities that might happen (where's the asteroid, or bird flu?), it kind of misses the point of the actual ongoing factors that are increasing propert prices. If your point is that it's always possible bad stuff might happen, and it could disrupt normal economic cycles, then sure, but that's what the man said already.

Villa05

You don't buy a house for 2015, you buy it for life

Alter_Ego

brice_nobes wrote: »

Alter_Ego wrote: »

your clutching at straws and making yourself look foolish

the trend is upwards and very decisively so , we are only three years into this current property cycle , cycles last longer than this bar a major economic event , our bear market from 2007 to 2012 was much longer than a typical one and the fall was much greater regardless of the rise from 1996 to 2007

I don't see what's foolish about pointing out to a trend that house price increases are generally slowing down? Yes, they are still going up, but slower and slower.