Property Market 2015

The_Conductor

handlemaster wrote: »

http://www.independent.ie/business/personal-finance/property-mortgages/central-bank-rules-hit-dublin-house-prices-with-a-dose-of-reality-31599423.html

indo running with prices have leveled off in dublin

Leveled off? Its 'asking prices' that have leveled off- not sale prices.
Supply of property for sale- is now at its highest point since since 2010- which indicates buyers and sellers- regardless of price falls- are not seeing eye to eye.

I was talking to one seller yesterday- a landlord- who is selling their 2 bedroom apartment in Lucan village. They were advised by the estate agent (who is in the valuation panel for all the local banks) to bring the property to market @ 200k. They decided to go for a lower level- of 189k- not massively lower- but below that psychological barrier (not to mention in the lower tax band). They've had it on the market for almost 3 months- and are only getting limited numbers of people at open evenings- and no serious offers thus far........ They seem to be whats happening across the board- you'll get a few tyre kickers at viewings- alongside a few locals who might have it in mind to sell themselves and want to see what the lie of the land is.

Lengths to sell- are lengthening- rapidly.

Looking at asking prices- and commenting on falls in asking prices- really has very little to with with house price inflation- its more a measure of whether or not sellers are seeing sense- and actually engaging with the market- as those who wish to sell- actually are.

Volumes are still far to thin for anyone to imagine we have a functional market- another plank in the equation- that the media seem loathe to admit.

handlemaster

The_Conductor wrote: »

Leveled off? Its 'asking prices' that have leveled off- not sale prices.
Supply of property for sale- is now at its highest point since since 2010- which indicates buyers and sellers- regardless of price falls- are not seeing eye to eye.

I was talking to one seller yesterday- a landlord- who is selling their 2 bedroom apartment in Lucan village. They were advised by the estate agent (who is in the valuation panel for all the local banks) to bring the property to market @ 200k. They decided to go for a lower level- of 189k- not massively lower- but below that psychological barrier (not to mention in the lower tax band). They've had it on the market for almost 3 months- and are only getting limited numbers of people at open evenings- and no serious offers thus far........ They seem to be whats happening across the board- you'll get a few tyre kickers at viewings- alongside a few locals who might have it in mind to sell themselves and want to see what the lie of the land is.

Lengths to sell- are lengthening- rapidly.

Looking at asking prices- and commenting on falls in asking prices- really has very little to with with house price inflation- its more a measure of whether or not sellers are seeing sense- and actually engaging with the market- as those who wish to sell- actually are.

Volumes are still far to thin for anyone to imagine we have a functional market- another plank in the equation- that the media seem loathe to admit.

so u thinking asking prices are to high?

The_Conductor

handlemaster wrote: »

http://www.irishtimes.com/budget-2016-how-do-we-fix-the-housing-crisis-1.2385755

Interesting video by the Irish times

It is an interesting video- but it has more glaring omissions than solutions.......

Yes- we need to build between 22k and 30k new homes per annum.
The vast majority of these are needed in the immediate vicinity of our major cities- principally Dublin. We need high rise- high density developments- of property of sufficient size to bring up families and with proper facilities and amenities (on the continent/the US- its the norm to have immediate access to public transport, schools, gyms, swimming pools, shops etc etc.

We have built vast quantities of housing where no-one wants to live- if we are to stop this from ever happening again- we need to target any inducements to developers to immediate city centres- and this has to include high rise high density developments.

As for over a thousand new tenants each month- seeing as landlords are being crucified by the tax man- and any I know are actively trying to exit the market- I don't see how the private sector is going to help with immediate supply. A telling statistic- landlords pay more than twice the amount of tax on rental income than the entire population pay in USC at the moment. Something has to give.........

This morning we have another high profile death on our streets- a poor soul who passed away in the doorway of a promintent café on George's street over-night.......

The government don't seem to have a policy- and I don't blame Alan Kelly- the government itself seems to be at loggerheads with the Minister tasked with dealing with the issue.

Another salient point that no-one seems to have mentioned- is the manner in which renting is seen as a short term solution on the road to owning a property in Ireland. This is unique- and indeed- is one of the central reason why neither tenants nor landlords have been clamouring for the long term rental leases common elsewhere (though housing charities- and indeed the Minister- seem keen on the idea). It is not normal for everyone to own their own property. Its not.

We need better protection for both landlords and tenants- alongside a rental regime seen as fast and fair to all. The current PRTB- is seen as part of the problem- by both tenants and landlords- and other state funded organisatoins- such as Threshold- are actively dispensing advice advocating illegal behaviour. This is nuts.

The Irish Time video- is well worth the 5 minutes to take a look at- however, you can drive a horse and carriage down the issues it blatantly ignores.

The_Conductor

handlemaster wrote: »

so u thinking asking prices are to high?

Certainly- however, aside from the deposit issue- even putting a 3.5 times income limit on mortgage loans- is a far bigger dampener on the market than almost any other factor- this multiple has been ignored across the board by almost all lenders (particularly in what they consider as 'income') for the last 2 decades. This multiple is finally being policed.

There are too few earners on 250k+ to support the number of properties of 650k+ asking prices in the Dublin area (and similar at almost every price band). As you go down the strata- the deposit requirement becomes a bigger issue- than does the salary multiple.........

Until such a time as we actually start to deliver sufficient housing units- where people actually want to live- we are not going to get a true feel for what reasonable asking/sale prices are...........

Shedite27

handlemaster wrote: »

http://www.irishtimes.com/budget-2016-how-do-we-fix-the-housing-crisis-1.2385755

Interesting video by the Irish times

I don't understand the comment at 4:50...
"When the state gets involved soley in contracting for the construction, the profit that is required by the builder is far less that relying on developers who require a larger profit margin"

Is he saying that the state is the builder? So the state would sell them for cost price whereas the developer will build them for cost+profit?

If so, his next comment is that the state could build them for 50% cost. Are developers really getting 100% markup on new builds?

Jaketherake

As usual state interference will lead to tears.
Its like a swing. Push one way and then push the other way and you make the swing bigger.
Leave alone and let it settle down itself.
It will take time, but interfering is worse.

slowjoe17

Shedite27 wrote: »

I don't understand the comment at 4:50...
"When the state gets involved soley in contracting for the construction, the profit that is required by the builder is far less that relying on developers who require a larger profit margin"

Is he saying that the state is the builder? So the state would sell them for cost price whereas the developer will build them for cost+profit?

If so, his next comment is that the state could build them for 50% cost. Are developers really getting 100% markup on new builds?

I think he's saying that if the construction cost is 100k, a developer will require an x% profit margin on top of this, so the cost is 100x(1+x/100).

That fella is bit of an eejit though. "You can't control a market unless you are involved in it"?

How about reducing tax on landlords?
How about taxing land banks?
How about a tax holiday on the first 10k of profits from development for a limited period?
How about requiring local authorities to update lists of derelict buildings?
How about compulsory purchase of sites that have been derelict for more than 5 years?

And that's without cutting ANY red tape.

Cuddlesworth

Shedite27 wrote: »

If so, his next comment is that the state could build them for 50% cost. Are developers really getting 100% markup on new builds?

In most cases you have 2-3 parties creaming off the top and large sums of money tied up for 3-10 years.

The bank who loaned the money, the developer who risks capital to get the loan and the builder who builds(sometimes developer and builder are one). In the state's case, they could easily combine both the lender and financier roles.

I don't think it would be unreasonable for both a bank and developer to expect a 10-20% return depending on the timescales.

For new council housing, the state would immediately be able to build 20% cheaper as they would not be obliged to meet or pay off the 20% social housing allowance.

They could CPO land and streamline planning permission.

So there could be half of your final private cost to build. On a side note, they also would not be affected by the risk of price swings, as the intention would not be to sell.

People would get off RA and into state supplied housing and the rental market would calm down as the lower end pressure is removed.

There are advantages to the state building social housing rather than dumping it on private builders and buyers, which is what they have tried to do.

handlemaster

http://m.independent.ie/business/personal-finance/house-prices-tumble-as-buyers-caught-in-a-rentdeposit-catch-22-31601501.html

Hard to know where prices will be this time next year

JP 1800

That article is so biased towards the estate agent side of things. The slowing down of prices was always inevitable and estate agents are cribbing due to lack of business. The issue with house prices come into availability and affordability.
The lack of supply has pushed up prices but the prices have climbed too high for those first time buyers to afford. "Falling house prices are not a sign of success or affordability" well neither are increased house prices a metric for a healthy economy. I can see the push for vested interests to relax the CB rules which in my opinion should be left alone, prudent lending although painful now will benefit the market in the long run leading to stable prices.

handlemaster

JP 1800 wrote: »

That article is so biased towards the estate agent side of things. The slowing down of prices was always inevitable and estate agents are cribbing due to lack of business. The issue with house prices come into availability and affordability.
The lack of supply has pushed up prices but the prices have climbed too high for those first time buyers to afford. "Falling house prices are not a sign of success or affordability" well neither are increased house prices a metric for a healthy economy. I can see the push for vested interests to relax the CB rules which in my opinion should be left alone, prudent lending although painful now will benefit the market in the long run leading to stable prices.

I agree stable prices will be good for all in the long run

P.s. except when im selling I want there to be an almighty bubble LOL

El_Dangeroso

handlemaster wrote: »

I agree stable prices will be good for all in the long run

P.s. except when im selling I want there to be an almighty bubble LOL

Thing is that you'll have to buy something else in that almighty bubble. Bubbles only benefit speculators.

mathie

JP 1800 wrote: »

That article is so biased towards the estate agent side of things. The slowing down of prices was always inevitable and estate agents are cribbing due to lack of business. The issue with house prices come into availability and affordability.
The lack of supply has pushed up prices but the prices have climbed too high for those first time buyers to afford. "Falling house prices are not a sign of success or affordability" well neither are increased house prices a metric for a healthy economy. I can see the push for vested interests to relax the CB rules which in my opinion should be left alone, prudent lending although painful now will benefit the market in the long run leading to stable prices.

Not my sentiments but ... I've a relative who is trying to gauge where the market is at (as they're thinking of selling) and they think a lack of a local EA selling is a sign of the bottom of the market.

Bob24

Residential rents now above peak levels - won't these very high rents eventually apply very strong upwards pressure on property prices?

JP 1800

mathie wrote: »

Not my sentiments but ... I've a relative who is trying to gauge where the market is at (as they're thinking of selling) and they think a lack of a local EA selling is a sign of the bottom of the market.

In what way do they think it is the bottom of the market?,

stevedublin

Bob24 wrote: »

Residential rents now above peak levels - won't these very high rents eventually apply very strong upwards pressure on property prices?

If investors can get loans with low deposits....

Archaeoliz

stevedublin wrote: »

If investors can get loans with low deposits....

As long as low deposit is more than 30% of the property value (min Loan to Value for Buy to Let mortgages under the new rules)

Archaeoliz

JP 1800 wrote: »

In what way do you think it is the bottom of the market?,

+1

Prices went up on average by c. 20% Year on Year in 2014. That's quite a substantial way from the bottom and IMHO utterly unsustainable. We appear to be in a bit of a plateau at the moment with (as The Conductor said earlier) sellers and buyers not able to see eye to eye.

I don't think it's a great time to be buying, but we've just put an offer in on a place 7% below asking - about half an hour ago. Buying because we want a house, yes it's an investment but we know it's value can and will go up and down.

handlemaster

Could this be the lull before prices take off again. FG look like getting back in again I think will bring more investment from abroad as investors like certainty

mathie

JP 1800 wrote: »

In what way do they think it is the bottom of the market?,

They think that once people "get used to" the idea of the 20% deposit it'll come back up in the spring.
That 2015 is a stagnant year and that those who were going to buy in 2015 brought their purchase forward to 2014 to avoid the new deposit rules.

I can't see what will force house prices back up next year if the deposit rules are kept in place.

The_Conductor

Bob24 wrote: »

Residential rents now above peak levels - won't these very high rents eventually apply very strong upwards pressure on property prices?

Investors are falling off the cliff as a percentage of purchasers of property- the even higher 30% deposit requirement- alongside tax and regulatory requirements- mean the environment for investors has cooled significantly.

Even with rents the way they currently are- the % ROI for most investors- is now almost at a historically low point- given the change in the regulatory environment.

The big beneficiary of high rents- is the Irish Revenue Commissioners- not the tenant- and certainly not the landlord.

Change the regulatory environment, make the tax treatment of rental income more favourable- and of course- increase supply of property in locations where people want to live- and watch rents fall to 'normal' levels.

Normal- is taken to be 25% of a tenant's net income.

handlemaster

The investors who buy BTL properties will have to be encouraged to buy more properties or thé government will have to start building which looks unlikely. Tomorrows budget will be interesting. I think the government will throw à bone to landlords which wont address the issues with high taxation etc

The_Conductor

handlemaster wrote: »

The investors who buy BTL properties will have to be encouraged to buy more properties or thé government will have to start building which looks unlikely. Tomorrows budget will be interesting. I think the government will throw à bone to landlords which wont address the issues with high taxation etc

If we're not building more properties where people want to live (which obviously- we're not)- trying to encourage BTL landlords to buy more properties in these locations- is only going to start a price war between BTL investors- and other categories of prospective purchasers. Anyone looking for a PPR- is going to be pissed- if they get outbid by a BTL investor- who gets more favourable treatment than does a regular purchaser.........

We have to be careful how we structure/deal with this. The knux of the problem is we are not building sufficient properties- where people want to live- not that there aren't enough landlords buying properties in particular locations........... One does not equate with the other.

OfflerCrocGod

We have record rents.
We have very low building.
We have a recovering economy.

Prices are stagnant.

Now where will prices go once building picks up again?

Shedite27

OfflerCrocGod wrote: »

We have record rents.
We have very low building.
We have a recovering economy.

Prices are stagnant.

Now where will prices go once building picks up again?

Where are they gonna build all these new houses?

The_Conductor

Shedite27 wrote: »

Where are they gonna build all these new houses?

They have to be in specific high demand areas.
We already have 200,000 vacant properties around the country where people have zero interest in living. Indeed- Allsop failed to shift several thousand apartments and holiday homes in Donegal and the other border counties recently- even at rock bottom prices- it is the case that even if something is free- or almost free- if its not in the right location- its for all intents and purposes- worthless.

We need a consistent supply of good quality, reasonably sized, good spec'ed, well serviced properties- predominantly in the Dublin area- with a smaller quantity in Cork, Galway and other cities around the country. Even a few midland locations which had good supplies of reasonable property leftover from the boom- have ran down their stocks (even places like Portlaoise/Tullamore/Athlone- could do with construction of good quality units- however, on a vastly smaller scale than that which is becoming more critical by the day in the Pale).

Dublin is now turning away multinational jobs- both through lack of residential- but also office and commercial space. This is stupid and something that we should be ashamed of- and willing to put resources into.

Cuddlesworth

OfflerCrocGod wrote: »

Prices are stagnant.

No matter what side of the fence you fall on, there is a simple truth.

Prices have been swinging wildly for 20 years now. So it strikes me as unlikely that they will just "stagnate" now.

Shedite27

The_Conductor wrote: »

They have to be in specific high demand areas.

Totally agree, I've been looking at the new builds in Dublin recently and the prices are very high. The premium for a new home seems to be about 25%, so as long as that's going on, the new homes they're building are either going to be unsuitable for (a) price or (b) location

johnp001

Taoiseach: Budget will deal with housing shortage

Villa05

Cuddlesworth wrote:

Prices have been swinging wildly for 20 years now. So it strikes me as unlikely that they will just "stagnate" now.

We have being abusing rules on how much people can borrow for over 20 years. Now we have clear rules. They will stagnate or rise/fall moderately in unison with local market economy.

I do see pressure on these rules though and we have very weak and a shade corrupt people in power. Things will change for the worse if the rules come under pressure