Property Market 2015

Barely Hedged

gaius c wrote: »

I just did if you cared to read it.

Can you link to some of the Bloomberg/FT articles predicting Irish house prices to increase please?

It was a statement of the fact not a question. What about the other points I raised as you said earlier I was not supporting the debate?

I said a market, not the Irish property market. They are the main economic indicators that determine the performance of an economy and hence are the main explanation as to house price growth. Its the big stuff that matters not the fact that you saw 5 houses that were vacant. Seems like a perfectly valid reason for a vendor to have a property vacant particularly given the rumour out there that all the cash buyers will disappear. Common sense really that you would broaden the market you're appealing to

gaius c

Barely Hedged wrote: »

It was a statement of the fact not a question. What about the other points I raised as you said earlier I was not supporting the debate?

I said a market, not the Irish property market. They are the main economic indicators that determine the performance of an economy and hence are the main explanation as to house price growth. Its the big stuff that matters not the fact that you saw 5 houses that were vacant. Seems like a perfectly valid reason for a vendor to have a property vacant particularly given the rumour out there that all the cash buyers will disappear. Common sense really that you would broaden the market you're appealing to

You want me to Fisk your post?
I can if you want but to save time, I just went for the main support of your argument and busted that instead.

Let me turn it around. With the evidence provided that the majority of Irish workers will not be seeing payrises, where will the money come from to sustain last year's rises?

Also, please account for new CB rules restricting credit available based on those stationary wages in your hypothesis.

Barely Hedged

gaius c wrote: »

Again, appeal to emotion and ad hominem.

Can you explain why you consider that those prices constitute outrageously good value?
Please do feel free to compare Dublin to other similarly sized first world cities.

Or are you simply using the "they are so much cheaper than they used to be before" metric?

Ahh now seriously - really. This is bordering ludicrios. I'm almost tempted to close my account after that post as there's clearly nothing to learn from this forum if that's the level of interpretation around property prices in Dublin.

Can you show your above post to a third party and see what they think?

gaius c

Can you explain why you consider that those prices constitute outrageously good value?

Barely Hedged

gaius c wrote: »

Can you explain why you consider that those prices constitute outrageously good value?

Can you ask a third party if they feel 120k to 150k for a two bed apartment in Dublin 2 is good value?

gaius c

Barely Hedged wrote: »

Can you ask a third party if they feel 120k to 150k for a two bed apartment in Dublin 2 is good value?

http://en.wikipedia.org/wiki/Argumentum_ad_populum

Can YOU explain it to me please?

P.S. You have picked a rather low value for D2. There were individual sales at that level but 2012 still saw apartments selling for €346000 as was the case with Apartment 9 Butlers Court, Sir John Rogersons Quay and Apartment 6, 1821 Existing Building, Lower Mount Street sold for €467k in 2012.

Barely Hedged

gaius c wrote: »

http://en.wikipedia.org/wiki/Argumentum_ad_populum

Can YOU explain it to me please?

I'm sorry. I really can't help you if that needs to be explained to you.

In that case you're never going to think property prices are nothing but overvalued the whole time.

How can you argue with such subjectivity as that

johnnyskeleton

Greyian wrote: »

Is it possible that landlords who are selling don't believe investors would buy the properties as the yield might be insufficient at current prices, so they need the tenants out of the houses so as to target owner occupiers?

Yes, but even then they are narrowing the field somewhat. Owner occupiers will want to see that the place is lived in rather than abandoned (I went to view a property a few years ago that had been unoccupied for a while. The electricity was cut so there were no lights, the water was off so people couldn't check that the plumbing worked etc. In the end I think it turned a lot of people off).

Even if owner occupiers want it, they will presumably be concerned as to potential rental value in the event that their circumstances change or as a means of valuing the property.

Barely Hedged

johnp001 wrote: »

I don't think it is a given that the lower prices of 2011/12 were the aberration and that the norm is higher prices.
Price increases had been exceeding income increases for considerable time before the first crash - this was why sentiment chased prices as high as it did because people had less purchasing power in the property market as time went on and became desperate to get on the ladder and willing to leverage themselves to an historically unprecedented degree.
This illustrates my point about sentiment being as significant as income level in determining prices.

The only thing that is completely self-evident is that the boom prices were unaffordable, this is proven by the fact that a large proportion of the loans granted to buy at these prices are not being repaid and many of the properties bought at these prices cannot be sold for enough to cover the outstanding loan even many years of repayments later.

If you're considering sentiment as being significant in the determination of house prices, can you cast your mind back to what caused the sentiment of 2011/12 and tell me what economic problems can replicate this in 2015 to prove out your point that 2011/12 was not an abberation but the norm?

Again and again I repeat the point that loads of places in Dublin are affordable on the Ann & Barry average income = 3 bed in D14 should be 300k argument - loads. The underlying theme of many of the posts are that houses are not affordable to them in the areas they want.

Sure, there's some cases where a house clearly has unrealistic asking price but for the most part it's just people who earn more money than them competing in the bidding process. It's a tough realisation to swallow and denial softens the blow

dearg lady

I'm not knowledgeable enough to make predictions on where prices are going, but I have to agree with gaius on the price base. When you look at historical house prices you can see that even in 2011/2012 prices were not outrageously low. Someone posted a graph, but I can't find it now!

ezra_pound

dearg lady wrote: »

I'm not knowledgeable enough to make predictions on where prices are going, but I have to agree with gaius on the price base. When you look at historical house prices you can see that even in 2011/2012 prices were not outrageously low. Someone posted a graph, but I can't find it now!

They were in relation to rental yield, which is what counts.

Did the graph show average rents?

dearg lady

ezra_pound wrote: »

They were in relation to rental yield, which is what counts.

Did the graph show average rents?

Found a nifty little graph on The Economist website that includes price against rent too. http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

Why is it only in relation to rental yield that counts? Sorry, I'm trying to understand!

The_Conductor

Rental yield is probably the only measure by which you can gauge whether, or not, a house price makes economic sense. Investors will demand a cost associated with the asset to reflect- market volatility, the costs associated with regulatory and other compliance issues, the risk associated with a tenancy etc etc.

In an Irish context- many of these costs are higher than they are in other countries- the risk cost associated with tenancies- is higher here than almost anywhere else in the world, because of the manner in which our legislation is structured in favour of tenants over landlords (despite what many people might imagine).

The flipside of the coin is investors are seeking the best return on their capital- and with low yields from stocks and bonds- they are more than willing to explore assets that might be considered expensive, just to get a return which is increasingly difficult to find elsewhere.

Traditionally the rate of return demanded has been between 6 and 8% (occasionally better rates- even as high as 12%- were available in the Irish market in 2011-2012........)

Current rates of return- despite the perception of most tenants about rents being high- are insufficient to interest investors- as the risk premium associated with letting property in the Irish market- is not there. Aka- prices have to fall- or rents rise- before an equilibrium will be regained (probably both).

Many investors (Blackrock etc) bought into the Irish residential market- viewing it as a cash-cow- are will be sorely disappointed if either prices fall- or rents do not increase.

Smaller landlords- are being pushed out of the market by government policies- which is tightening the supply of rental property- and driving rents higher- but not to the extent that its worth investors while buying into the market.........

Its a mess- not helped by government interference, and government policies which while intended to favour buyers of PPRs over investors- is not affecting prices as intended because of a lack of supply. If supply increased- there might be a disproportionate fall in prices- which might get investors back on board- but as it stands- the economic rent associated with investing in property in Ireland- does not add up.

johnp001

Barely Hedged wrote: »

If you're considering sentiment as being significant in the determination of house prices, can you cast your mind back to what caused the sentiment of 2011/12 and tell me what economic problems can replicate this in 2015 to prove out your point that 2011/12 was not an abberation but the norm?

I was referring to sentiment in the housing market. What caused the negative sentiment was that prices stopped rising and started falling.
People therefore had an expectation that they would be able to buy at some time in the future (even though incomes were falling at that time) so they didn't pull out every stop to borrow more than they could afford to pay unaffordable prices as in 2006/7.

In terms of economic problems in 2015, take your pick.
Greeks printing drachma all weekend and look set to default (possibly as early as next week) is the most imminent one that springs to mind.
The problems caused by the recent property/banking crash have not been tidily resolved by bailing out the banks. That all still has to be paid for.

Best economic scenario is if German economy returns to strong growth in the near future in which case ECB policy will become to raise rates to cool the economy. This increase in interest rates will cause more defaults, because prices have been and are unaffordable, and will reduce property prices.

Any other economic scenario is going to be less desirable. Economic stagnation following a property crash looks like this:

for example...

Barely Hedged wrote: »

Again and again I repeat the point that loads of places in Dublin are affordable on the Ann & Barry average income = 3 bed in D14 should be 300k argument - loads. The underlying theme of many of the posts are that houses are not affordable to them in the areas they want.

Sure, there's some cases where a house clearly has unrealistic asking price but for the most part it's just people who earn more money than them competing in the bidding process. It's a tough realisation to swallow and denial softens the blow

This seems completely irrelevant to my posts.

The Spider

Usual nonsense from the same people who were saying that house prices were going to drop further in 2012, what do ya know, they didn't!!

Anyone come out and say they were wrong? Nope instead they're preaching the same old guff and will inevitably be proven wrong again, and when they're wrong they'll continue to spout it.

When the economy is good in Ireland, they'll point to China, Greece, Outer Mongolia, maybe there's an asteroid on the way that'll drive down house prices, and you'll get that charred D4 husk!

Point is a lot of the people who are spouting this guff, thought they were the clever ones for not buying and maybe calling the bust, the problem is they missed the bottom and they have a real problem accepting that, especially the fact that they more than likely missed out on the d14 dream home that they could have afforded but wanted cheaper still.

As has been said, plenty of houses in Blanch, Tallaght and Lucan, if you want to live on the east coast you missed it, deal with it, and try and give some honest predictions.

I for one would like to see the people who were so terribly terribly wrong at least come out and admit it, then we can all move on from there.

You know who you are.

Panda_Turtle

Wait until interest rates go below zero.

We are all facked then and houses will be cheaper than 2012. Predict 2018 for this.

MarkAnthony

I just want to know where all these amazing houses were for sale during the 'bottom'. From what I saw it was all crap apart from the odd gem and everyone else stayed put until things recovered.

Piriz

The Spider wrote: »

Usual nonsense from the same people who were saying that house prices were going to drop further in 2012, what do ya know, they didn't!!

Anyone come out and say they were wrong? Nope instead they're preaching the same old guff and will inevitably be proven wrong again, and when they're wrong they'll continue to spout it.

When the economy is good in Ireland, they'll point to China, Greece, Outer Mongolia, maybe there's an asteroid on the way that'll drive down house prices, and you'll get that charred D4 husk!

Point is a lot of the people who are spouting this guff, thought they were the clever ones for not buying and maybe calling the bust, the problem is they missed the bottom and they have a real problem accepting that, especially the fact that they more than likely missed out on the d14 dream home that they could have afforded but wanted cheaper still.

As has been said, plenty of houses in Blanch, Tallaght and Lucan, if you want to live on the east coast you missed it, deal with it, and try and give some honest predictions.

I for one would like to see the people who were so terribly terribly wrong at least come out and admit it, then we can all move on from there.

You know who you are.

It has been put to you before the rationale used by people to predict price drops was based on sound economic argument. The amount of mortgages in arrears and not being repossessed and returned to the market for sale is abnormal. This would have led to greater falls in 2012 if it was dealt with like any other country. Also government CGT intervention helped to find a floor. Don't be so brash about people missing the bottom, it was not so simple to get a mortgage in 2011/12 AFAIR.

Panda_Turtle

Panda_Turtle wrote: »

Wait until interest rates go below zero.

We are all facked then and houses will be cheaper than 2012. Predict 2018 for this.

How would cheap money make prices crash?

Prices could be cheaper in 2018 if there is more supply and the Central Bank rules have been properly enforced but sub-zero interest rates would push in the opposite direction (unless I misunderstand something fundamental - which is always very possible )

The Spider

Piriz wrote: »

It has been put to you before the rationale used by people to predict price drops was based on sound economic argument. The amount of mortgages in arrears and not being repossessed and returned to the market for sale is abnormal. This would have led to greater falls in 2012 if it was dealt with like any other country. Also government CGT intervention helped to find a floor. Don't be so brash about people missing the bottom, it was not so simple to get a mortgage in 2011/12 AFAIR.

No it wasn't it was based in fantasy, repossessions will give a house to everyone, seriously come on. And for some reason no one thought that the banks would rather sell any repossessions they had for maximum profit so they would'nt make a move until the market recovered, no the banks were going to sell them for buttons :rolleyes:

And let's not forget the absolute fantasy that everyone was going to get their desirable three bed semi in SCD for three times the average industrial wage, there was and still is, a form of blindness when it's pointed out that not everyone in the country can live in SCD, if they could no one would live in Lucan.

Absolute fantasy economics for the most part and has been proven as the bottom is a distant memory, so now those theories are being twisted around to fit the narrative of a vain hope of property crash mark two.

Piriz

The Spider wrote: »

No it wasn't it was based in fantasy, repossessions will give a house to everyone, seriously come on. And for some reason no one thought that the banks would rather sell any repossessions they had for maximum profit so they would'nt make a move until the market recovered, no the banks were going to sell them for buttons :rolleyes:

And let's not forget the absolute fantasy that everyone was going to get their desirable three bed semi in SCD for three times the average industrial wage, there was and still is, a form of blindness when it's pointed out that not everyone in the country can live in SCD, if they could no one would live in Lucan.

Absolute fantasy economics for the most part and has been proven as the bottom is a distant memory, so now those theories are being twisted around to fit the narrative of a vain hope of property crash mark two.

Firstly, the banks have repossessed feck all of the properties in long term arrears coz our courts are jammed and the government have done their best to delay and kick the can down the road, nobody expected the banks to sell for cheap but nobody expects people to stay in houses they can not afford.. this item could still result in a large amount of properties coming onto the market.

Nobody expressed any "fantasy" as you say that "everyone was going to get their desirable three bed semi in SCD for three times the average industrial wage" that is just nonsense speak from you.

For the record plenty of people do not want to live or buy on SCD, it is not the Mecca to many of us as it is to you and others.

Fkall

Piriz wrote: »

It has been put to you before the rationale used by people to predict price drops was based on sound economic argument. The amount of mortgages in arrears and not being repossessed and returned to the market for sale is abnormal. This would have led to greater falls in 2012 if it was dealt with like any other country. Also government CGT intervention helped to find a floor. Don't be so brash about people missing the bottom, it was not so simple to get a mortgage in 2011/12 AFAIR.

The simple economic argument the doom merchants missed in 2012 was that it was cheaper to buy a house than build it.

Piriz

Fkall wrote: »

The simple economic argument the doom merchants missed in 2012 was that it was cheaper to buy a house than build it.

thats a fair point and was great for those who could get a mortgage or had the cash to buy it but it does not negate the fact that with repossessions as par of course for other countries we would have seen greater supply thus lowered prices.

anyway the thread should be future focused rather than arguing about who said what and did what in 2011/12. I think the CB rules will see a reduction in property prices this year and into next Have you looked at what 350k buys you in Dublin at the moment... there is not much value there... if you have to stump up about 60k of your cash for a deposit and high interest rate mortgage for the rest you'll be looking for better than is out there at the moment... sentiment is changing i reckon..

Fkall

Again, ignoring land costs how much does it cost t build a 3 bed in Dublin today? Don't forget you need to build to current regulation with appropriate supervision and of course the development levies.

Piriz

Fkall wrote: »

Again, ignoring land costs how much does it cost t build a 3 bed in Dublin today? Don't forget you need to build to current regulation with appropriate supervision and of course the development levies.

don't patronise me, i didn't ignore anything, land costs are linked to affordability, the current regulations and levies are subject to change given the housing crisis.. the prices can only go up strategy is flawed

Fkall

I was not patronising you.

Rather I was attempting to highlight a simple reality that in a growing market the cost of building acts as a hard floor to the prices.

And when you calculate the cost of building you need to include all the costs: professional fees; development levies; finance costs; etc.

MysticalRain

The Spider wrote: »

Usual nonsense from the same people who were saying that house prices were going to drop further in 2012, what do ya know, they didn't!!

Anyone come out and say they were wrong? Nope instead they're preaching the same old guff and will inevitably be proven wrong again, and when they're wrong they'll continue to spout it.

When the economy is good in Ireland, they'll point to China, Greece, Outer Mongolia, maybe there's an asteroid on the way that'll drive down house prices, and you'll get that charred D4 husk!

Point is a lot of the people who are spouting this guff, thought they were the clever ones for not buying and maybe calling the bust, the problem is they missed the bottom and they have a real problem accepting that, especially the fact that they more than likely missed out on the d14 dream home that they could have afforded but wanted cheaper still.

As has been said, plenty of houses in Blanch, Tallaght and Lucan, if you want to live on the east coast you missed it, deal with it, and try and give some honest predictions.

I for one would like to see the people who were so terribly terribly wrong at least come out and admit it, then we can all move on from there.

You know who you are.

Er Spider, you were wrong about quite a few things yourself. House prices have actually dipped, when you told us they would continue to rise indefinitely. You also told us there would be no mass repossessions. Also, I don't recall anyone comparing the Irish economy to "Outer Mongolia". Only to other functioning economies in first world countries.

So if prices drop next year, will you be here telling us you were wrong?

Panda_Turtle

Deleted User wrote: »

How would cheap money make prices crash?

Prices could be cheaper in 2018 if there is more supply and the Central Bank rules have been properly enforced but sub-zero interest rates would push in the opposite direction (unless I misunderstand something fundamental - which is always very possible )

Was only joking. Sub zero interest rates would never happen, would they? Although it would be good

The_Morrigan

Folks I'm getting real tired of the same old people personalising their posts and making smart comments. If you don't start discussing facts and attacking posts, rather than posters, I will start issuing thread bans.

There will be no individual warnings from here on in.

The Spider

MysticalRain wrote: »

Er Spider, you were wrong about quite a few things yourself. House prices have actually dipped, when you told us they would continue to rise indefinitely. You also told us there would be no mass repossessions. Also, I don't recall anyone comparing the Irish economy to "Outer Mongolia". Only to other functioning economies in first world countries.

So if prices drop next year, will you be here telling us you were wrong?

They won't drop, but I've said previously where I expect things to be, trawl the thread and find it. Prices will finish up at the end of 2015.

As to repossessions, I think you'll find that I've always said there wouldn't be repossessions when prices were dropping as it didn't make sense for he banks to sell at a loss.