Property Market 2015

Barely Hedged

johnp001 wrote: »

Unfortunately, that could well be right.
In any case the consequences of QE are, at best, housing supply starting to improve and at worst another imminent collapse due to the ponzi scheme you describe.
The argument that I was replying to above, i.e. that the global economy was successfully fixed since the 2008 crash, that we now have at least 30 years of plain sailing for the Irish economy ahead and that we should all buy some houses in north Wicklow that are appreciating at 50% a year (in a totally sustainable way)* as a surefire get-rich-quick scheme does not hold any water for me...

(* An example from the estate-agent written piece in the Independent at the weekend.)

I never implied it was successfully fixed merely that were not in the huge uncertain times of 08-10 and that ignoring the depth of the situation we were in then compared to now is extremely naieve.

My point being that if you think the same level of price drops will occur in the property market as did in 08-10, youre not right.

I dont advocate huge advances in the prices of property. I think in Dublin, they have reached a peak for the next few years in most areas which means 5% growth next year versus 30% last year.

Commuter areas will see a search for value and push up more than Dublin.

Cities in Ireland that have yet to see significant advances i.e. Waterford, Sligo etc will see gains of 10% due to the current low levels, expected wage growth and increased interest in property purchases

johnp001

Barely Hedged wrote: »

I never implied it was successfully fixed merely that were not in the huge uncertain times of 08-10 and that ignoring the depth of the situation we were in then compared to now is extremely naieve.

My point being that if you think the same level of price drops will occur in the property market as did in 08-10, youre not right.

I dont advocate huge advances in the prices of property. I think in Dublin, they have reached a peak for the next few years in most areas which means 5% growth next year versus 30% last year.

Commuter areas will see a search for value and push up more than Dublin.

Cities in Ireland that have yet to see significant advances i.e. Waterford, Sligo etc will see gains of 10% due to the current low levels, expected wage growth and increased interest in property purchases

I acknowledge your opinion but would disagree with it.
The property market is volatile and irrational so it is very possible that sentiment among buyers and sellers will take some time to catch up to the realities of the market as evidenced in the PPR and CSO figures, the daft Q4 2014 report, the tax treatment of property, the incoming lending restrictions etc...
My belief is that the price increases of the last 18 months are not sustainable. House price inflation running at 30 times the EU average and 75 times the rate of inflation cannot be considered sustainable.
Affordability, as compared with 2008 (a time when a large proportion of mortgage holders are now not paying their mortgage) has not improved.
Hopefully, due to factors above, prices will continue to reverse gradually and find a plateau within the next two years. If prices increase in 2015 then there will inevitably be major price drops in the property market.

by the seaside

johnp001 wrote: »

I acknowledge your opinion but would disagree with it.
The property market is volatile and irrational so it is very possible that sentiment among buyers and sellers will take some time to catch up to the realities of the market as evidenced in the PPR and CSO figures, the daft Q4 2014 report, the tax treatment of property, the incoming lending restrictions etc...
My belief is that the price increases of the last 18 months are not sustainable. House price inflation running at 30 times the EU average and 75 times the rate of inflation cannot be considered sustainable.
Affordability, as compared with 2008 (a time when a large proportion of mortgage holders are now not paying their mortgage) has not improved.
Hopefully, due to factors above, prices will continue to reverse gradually and find a plateau within the next two years. If prices increase in 2015 then there will inevitably be major price drops in the property market.

I agree with you in terms of the fundamentals, but the timings are very difficult to predict, and bubbles can inflate for a long time, especially with QE.

Remember:

The market can stay irrational longer than you can stay solvent.

johnp001

by the seaside wrote: »

I agree with you in terms of the fundamentals, but the timings are very difficult to predict, and bubbles can inflate for a long time, especially with QE.

I agree and acknowledge this in my post.

johnp001 wrote: »

... it is very possible that sentiment among buyers and sellers will take some time to catch up to the realities of the market ...

by the seaside wrote: »

Remember:
The market can stay irrational longer than you can stay solvent.

True again. I'm hoping for a bit of rationality in 2015 on the basis that evidence from late 2014 suggests it is starting to happen. The major fear would be that irrationality prevails in the short term, the bubble continues to inflate and the upshot is a larger and more prolonged price crash.
Bubble mindset is to think that 2013/2014 price rises are sustainable or that a discount off the 2007 price represents value.

by the seaside

johnp001 wrote: »

I agree and acknowledge this in my post.





True again. I'm hoping for a bit of rationality in 2015 on the basis that evidence from late 2014 suggests it is starting to happen. The major fear would be that irrationality prevails in the short term, the bubble continues to inflate and the upshot is a larger and more prolonged price crash.
Bubble mindset is to think that 2013/2014 price rises are sustainable or that a discount off the 2007 price represents value.

My major fear is that I buy before the bubble bursts. But I guess I'm probably 12 months off from buying.

handlemaster

with new deposit rules in place where now for the market ?

Michael D Not Higgins

handlemaster wrote: »

with new deposit rules in place where now for the market ?

Supply is still constricted, demand is still increasing, credit availability is now slightly more restricted. Slower growth is my prediction.

jay0109

handlemaster wrote: »

with new deposit rules in place where now for the market ?

With so much mortgage approvals in place (the banks will be busy in the next few days), I expect growth in the start of the year followed by a levelling off from mid summer onwards.
Dublin +3 to +5% for 2015

The_Conductor

jay0109 wrote: »

With so much mortgage approvals in place (the banks will be busy in the next few days), I expect growth in the start of the year followed by a levelling off from mid summer onwards.
Dublin +3 to +5% for 2015

I'd be inclined to concur with this forecast.

by the seaside

There's a lot of stuff going on in the wider Eurozone that could blow up (or not) with a significant effect.

Other than that: it's just become a whole lot harder to buy in Dublin, so this will create a downward pressure on prices, but I don't know how this will play against upward pressures.

I've correctly predicted 6 of the last 2 property crashes, so I'm going to sit on the fence now.

Michael D Not Higgins

by the seaside wrote: »

There's a lot of stuff going on in the wider Eurozone that could blow up (or not) with a significant effect.

Other than that: it's just become a whole lot harder to buy in Dublin, so this will create a downward pressure on prices, but I don't know how this will play against upward pressures.

I've correctly predicted 6 of the last 2 property crashes, so I'm going to sit on the fence now.

300% success rate eh? Or did you mean 2 of 6? What 6 were those and what 2 did you predict?

gaius c

It's a joke.

by the seaside

gaius c wrote: »

It's a joke.

Sadly, not original.

http://en.wikipedia.org/wiki/Paul_Samuelson#Miscellaneous

For many years, Samuelson wrote a column for Newsweek. One article included Samuelson's most quoted remark and a favorite economics joke:

To prove that Wall Street is an early omen of movements still to come in GNP, commentators quote economic studies alleging that market downturns predicted four out of the last five recessions. That is an understatement. Wall Street indexes predicted nine out of the last five recessions! And its mistakes were beauties.

The Spider

Michael D Not Higgins wrote: »

300% success rate eh? Or did you mean 2 of 6? What 6 were those and what 2 did you predict?

Ha quick off the mark with the righteous indignation huh? Comedy must not be a strong point!

Michael D Not Higgins

The Spider wrote: »

Ha quick off the mark with the righteous indignation huh? Comedy must not be a strong point!

Barely Hedged

johnp001 wrote: »

I acknowledge your opinion but would disagree with it.
The property market is volatile and irrational so it is very possible that sentiment among buyers and sellers will take some time to catch up to the realities of the market as evidenced in the PPR and CSO figures, the daft Q4 2014 report, the tax treatment of property, the incoming lending restrictions etc...
My belief is that the price increases of the last 18 months are not sustainable. House price inflation running at 30 times the EU average and 75 times the rate of inflation cannot be considered sustainable.
Affordability, as compared with 2008 (a time when a large proportion of mortgage holders are now not paying their mortgage) has not improved.
Hopefully, due to factors above, prices will continue to reverse gradually and find a plateau within the next two years. If prices increase in 2015 then there will inevitably be major price drops in the property market.

My point of contention, and main bone to pick since the economy started to improve, is that a replication of the scale of losses we experienced in 2008 - 2010 is simply not going to happen. For all the factors you include, not one or the cumulative impact of them all, would even come near to the factors that caused the losses in 2008 - 2010.

They will moderate the growth numbers you have indicated but reverse them on a significant scale - no.

In residential Dublin, wage growth, supply restrictions and demand will push prices up to the range of +5% to +8%.

Apartments in the city centre will be flat or fall. Most likely fall

Bob24

Barely Hedged wrote: »

Apartments in the city centre will be flat or fall. Most likely fall

What is your rational behind this? Lack of investors due to end of capital gain tax exemption and new lending rules?

I have seen a few in the grand canal docks area (not sure if you classify as city centre) and there seem to be a mix of investors and FTBs at the viewings.

I think there has been a bit more supply in the past few months, but there still seem to be some competition to buy the decent ones.

Barely Hedged

Bob24 wrote: »

What is your rational behind this? Lack of investors due to end of capital gain tax exemption and new lending rules?

I have seen a few in the grand canal docks area (not sure if you classify as city centre) and there seem to be a mix of investors and FTBs at the viewings.

I think there has been a bit more supply in the past few months, but there still seem to be some competition to buy the decent ones.

Bob24 wrote: »

What is your rational behind this? Lack of investors due to end of capital gain tax exemption

Yes.

There will be a demand for the more "residential" (large sqm, well managed blocks, large balconies with views) flats but the drop off from the lack of sales in the "investment" type flats that investors were rushing to buy over the past two years will net off the formers gains

MarkAnthony

Barely Hedged wrote: »

Yes.

There will be a demand for the more "residential" (large sqm, well managed blocks, large balconies with views) flats but the drop off from the lack of sales in the "investment" type flats that investors were rushing to buy over the past two years will net off the formers gains

Personally I don't agree with this but it's no doubt well thought out/researched. My less well thought out/researched point of view (and bear in mind how many people go into Dublin property thinking things through and researching them) is that there is still some way to go on Dublin apartments close to the City. I don't think we'll see a drop off in increases until 1 bed apartments hit the c. 175/200K level as serious thought then has to be given to finding an alternative. Until then I think there's enough demand in people who are focusing completely on location.

Up 10% this year is my guess.

Bob24

MarkAnthony wrote: »

Personally I don't agree with this but it's no doubt well thought out/researched. My less well thought out/researched point of view (and bear in mind how many people go into Dublin property thinking things through and researching them) is that there is still some way to go on Dublin apartments close to the City. I don't think we'll see a drop off in increases until 1 bed apartments hit the c. 175/200K level as serious thought then has to be given to finding an alternative. Until then I think there's enough demand in people who are focusing completely on location.

Up 10% this year is my guess.

I am not sure how much people are actually ready to pay for them, but in the area I was mentioning asking prices for 1 beds are well above 200K: http://www.myhome.ie/residential/dublin-2/property-for-sale-in-grand-canal-dk?minbeds=1&maxbeds=1

Very limited supply and very few transactions though ...

MarkAnthony

I'd say the increases are going to come from the less desirable areas coming up to similar (location adjusted) levels. I can't imagine (but am going to be proved wrong no doubt) that people will pay much more than 300K for a one bed post bust. Although for some, in limited circumstances the value would be there.

jay0109

MarkAnthony wrote: »

I can't imagine (but am going to be proved wrong no doubt) that people will pay much more than 300K for a one bed post bust.

Much more than 300k for a 1 bed :eek:
Was that a typo and you meant to say less than 200k!!!

You do know that 300k (for a 1 bed at that) is around 8 times the average industrial wage

MarkAnthony

jay0109 wrote: »

Much more than 300k for a 1 bed :eek:
Was that a typo and you meant to say less than 200k!!!

You do know that 300k (for a 1 bed at that) is around 8 times the average industrial wage

Yes, of course but people will pay a premium for apartments near work. When they can't get directly in that area they'll move outward (to a degree). There are still apartments around the city representing good value and I expect to see some upward pressure there.

Taylor365

Bob24 wrote: »

I am not sure how much people are actually ready to pay for them, but in the area I was mentioning asking prices for 1 beds are well above 200K: http://www.myhome.ie/residential/dublin-2/property-for-sale-in-grand-canal-dk?minbeds=1&maxbeds=1

Very limited supply and very few transactions though ...

http://www.myhome.ie/residential/brochure/7-the-camden-the-gasworks-dublin-4-grand-canal-dk-dublin-4/2983369

AAAAAAAAAAAAAAAAAAAAAHAHAHAHAHAHA

Bob24

Taylor365 wrote: »

http://www.myhome.ie/residential/brochure/7-the-camden-the-gasworks-dublin-4-grand-canal-dk-dublin-4/2983369

AAAAAAAAAAAAAAAAAAAAAHAHAHAHAHAHA

Well, well, well ... who said Ireland would ever learn from its mistakes :-)

Not saying this is not reaching crazy territory, but I guess the reasoning for people buying these is that you will rent it to a Google/Facebook/Twitter/Dropbox/LinkedIn employee for €1400+ per month (and increasing every year due to shortage of residential units compared to the workforce of young and well-paid professionals who want to live in the area).

seamus

Those units may also specifically be targetting companies like Google, where the company itself may buy local properties and furnish them for executives and other employees to use while travelling between offices. Facebook and Google in particular would probably see at least two executives per week staying two nights a week. So a serviced apartment @ €280k may work out cheaper/more preferable to paying for 16 nights in deluxe rooms at the Marker every month.

It's probably a bit silly to assume that everyone who works in the Grand Canal Dock area wants to live right there. Anywhere within the city is close enough to the dock. A technology worker five years out of college could easily pull down €60k and would qualify for a €210k loan under the new rules. The repayment on this would be €1,000 or less, when the cost of renting in the same block would be €1,300+.

Bob24

seamus wrote: »

It's probably a bit silly to assume that everyone who works in the Grand Canal Dock area wants to live right there.

Sure not everyone, but A LOT of people do. The Internet companies are bringing a lot of decently paid people from abroad and giving them free food - these people will pay high rents to be next to their new friends/colleagues and be able to enjoy their work perks in the evening as well (and money saved on free food and no transport cost goes into the rent). I live in the area and I can tell rents for 1 beds have increased 100 euros or more per year in the past 5 years due to high demand and lack of sufficient supply.

Taylor365

3 Situations where that sells:

1. Daddy's paying
2. Delusional
3. Company stop over

Bob24

Taylor365 wrote: »

3 Situations where that sells:

1. Daddy's paying
2. Delusional
3. Company stop over

I think you got the main one there.

The Spider

Before anyone thinks we're back at the peak or heading to it, take a look at this link and check google maps for the actual houses, I have to admit my jaw hit the floor.

Prices at the start of 2007

http://www.independent.ie/unsorted/property/auctions-are-back-with-a-bang-26291290.html