Property Market 2015

The_Conductor

audi12 wrote: »

The market is in freefall it would seem in some areas

I wouldn't go as far as saying its 'in freefall'.
It is certainly trending downwards- particularly in the greater Dublin area- but radiating outwards. Previously where some property categories were proving resilient- counter to common sense this was mainly the apartment sector- which hadn't recovered to the same extent as houses- that too is now falling.

Volumes are too thin to make a decent call- but prices being achieved- in the same estates and/or roads- are definitely getting softer and softer.......

Freefall indicates a route of some sort- I don't think we're there.

Thargor

Just anecdoral but Blackrock 3-bed prices seem to be 100k up on Daft and Myhome than when family members were buying 18 months ago, 550 vs 450k.

South Galway where the rest of the family is seems to be dead, stuff just not selling, signs literally rotting on the roadside.

audi12

Thargor wrote: »

Just anecdoral but Blackrock 3-bed prices seem to be 100k up on Daft and Myhome than when family members were buying 18 months ago, 550 vs 450k.

South Galway where the rest of the family is seems to be dead, stuff just not selling, signs literally rotting on the roadside.

100 k up or down

johnp001

The_Conductor wrote: »

I wouldn't go as far as saying its 'in freefall'.
It is certainly trending downwards- particularly in the greater Dublin area- but radiating outwards. Previously where some property categories were proving resilient- counter to common sense this was mainly the apartment sector- which hadn't recovered to the same extent as houses- that too is now falling.

Volumes are too thin to make a decent call- but prices being achieved- in the same estates and/or roads- are definitely getting softer and softer.......

Freefall indicates a route of some sort- I don't think we're there.

Probably not in freefall yet, that's true.

The sequence of events in the previous crash was:
1. Sky high prices chased ever upwards by buyers who did not care what they paid for them on the basis that they were appreciating in value massively.
2. Prices stopped skyrocketing, once this was apparent buyers were unwilling to borrow so far beyond their means.
3. Price increases stopped and reversed, sellers in denial refused to sell below their notional "value" of the property. Market stalled for quite a long period.
4. As the price decreases became undeniable more sellers started taking the best price they could get and the market started to move again.

The major difference I see this time is that at step 3 we now have the property price register which will make it far more obvious how much the houses that do have to sell (e.g. executor, divorce, emigration, repossession) are selling for.

This should serve to make the "stalled market" phase considerably shorter this time around and the correction should happen a lot more quickly.

marathonic

johnp001 wrote: »

Probably not in freefall yet, that's true.

The sequence of events in the previous crash was:
1. Sky high prices chased ever upwards by buyers who did not care what they paid for them on the basis that they were appreciating in value massively.
2. Prices stopped skyrocketing, once this was apparent buyers were unwilling to borrow so far beyond their means.
3. Price increases stopped and reversed, sellers in denial refused to sell below their notional "value" of the property. Market stalled for quite a long period.
4. As the price decreases became undeniable more sellers started taking the best price they could get and the market started to move again.

The major difference I see this time is that at step 3 we now have the property price register which will make it far more obvious how much the houses that do have to sell (e.g. executor, divorce, emigration, repossession) are selling for.

This should serve to make the "stalled market" phase considerably shorter this time around and the correction should happen a lot more quickly.

On the other hand, people that bought in 2014/2015, during which you suggest prices are too high, bought when bank lending practices were very tight.

If you look at the average income/expenditure statement of those that purchased a house this year in, for example, the €350,000 - €400,000 bracket, and compare it to that of the group who purchased in the same price bracket during the 2007 boom, I imagine that you'd be quite surprised.

What is the average length of a property price cycle? I imagine that it'd be highly, highly unusual to have two booms and busts in the same decade.

gaius c

marathonic wrote: »

On the other hand, people that bought in 2014/2015, during which you suggest prices are too high, bought when bank lending practices were very tight.

If you look at the average income/expenditure statement of those that purchased a house this year in, for example, the €350,000 - €400,000 bracket, and compare it to that of the group who purchased in the same price bracket during the 2007 boom, I imagine that you'd be quite surprised.

What is the average length of a property price cycle? I imagine that it'd be highly, highly unusual to have two booms and busts in the same decade.

We didn't flush all the troubled mortgages from the previous bubble out of the system so they'll still be there stinking things up as this bubble/dead cat bounce goes south.

I do agree with you that buyers from the last few years are unlikely to be in as much trouble. Half the market was/is cash and they've just blown their own money so the "new" risk to our banking system is low.

johnp001

marathonic wrote: »

On the other hand, people that bought in 2014/2015, during which you suggest prices are too high, bought when bank lending practices were very tight.

The Central Bank has recently moved to tighten bank lending practices so they obviously don't agree that they were very tight in 2014/2015.

marathonic wrote: »

If you look at the average income/expenditure statement of those that purchased a house this year in, for example, the €350,000 - €400,000 bracket, and compare it to that of the group who purchased in the same price bracket during the 2007 boom, I imagine that you'd be quite surprised.

I have no idea what the point you are making about purchasers this year in the 350k-400k bracket is. This is a very small segment of the market and I don't profess to know anything about it specifically so I don't know what you it is that you are suggesting would surprise me.

marathonic wrote: »

What is the average length of a property price cycle? I imagine that it'd be highly, highly unusual to have two booms and busts in the same decade.

Not nearly as unusual as having 15% default rate on property loans.

marathonic

johnp001 wrote: »

The Central Bank has recently moved to tighten bank lending practices so they obviously don't agree that they were very tight in 2014/2015.

They were a lot tighter than in 2007/2008. That's for sure - even without the Central Banks new rules.

johnp001 wrote: »

I have no idea what the point you are making about purchasers this year in the 350k-400k bracket is. This is a very small segment of the market and I don't profess to know anything about it specifically so I don't know what you it is that you are suggesting would surprise me.

Take any other price bracket then. The average purchaser in the 250k -300k price bracket in 2007/2008 will have had significantly less disposable income after housing costs than the average purchaser in that same bracket today.

In fact, forgetting about price brackets altogether, the average purchaser overall has significantly higher disposable income today than they did in 2007/2008.

jam_mac_jam

Barely Hedged wrote: »

Markets move because an underlying changes. You can measure and rank the underlyings to determine what might cause it to move, in what direction and by how much. In this thread I've sought to have an evidence or ranking of the underlyings based discussion.

Just because you fail to grasp this, you label people as fortune tellers? Such comments highlight your level of knowledge or understanding as non exsistent, something you originally sought to paint other people as having with your post

I am calling people fortune tellers because they sound so sure.

marathonic

jam_mac_jam wrote: »

I am calling people fortune tellers becausethey sound so sure.

I'd rather read a thread with people sounding so sure of their convictions than a thread with in excess of 2100 posts, all containing disclaimers about how the information is only their opinion.

Surely, common sense should prevail and the disclaimers can be taken as implicit. It's the nature of a property price prediction thread.

Greyian

marathonic wrote: »

In fact, forgetting about price brackets altogether, the average purchaser overall has significantly higher disposable income today than they did in 2007/2008.

Are you factoring in tax rises, USC etc into those assumptions?

johnp001

marathonic wrote: »

They were a lot tighter than in 2007/2008. That's for sure - even without the Central Banks new rules.

I don't agree with this at all.
Looking at the figures from the latest Central Bank publication:
Financial Statistics Summary
it shows lending amounts averaging about 30% higher in 2007/2008 than in 2014/2105

Do you have an alternative source for that assertion?

marathonic wrote: »

Take any other price bracket then. The average purchaser in the 250k -300k price bracket in 2007/2008 will have had significantly less disposable income after housing costs than the average purchaser in that same bracket today.

In fact, forgetting about price brackets altogether, the average purchaser overall has significantly higher disposable income today than they did in 2007/2008.

Last September there were some figures published that come to the opposite conclusion.
Game over for mortgage affordability?
Please post if there is a more up to date study that you are basing your above statement on.

jam_mac_jam

marathonic wrote: »

I'd rather read a thread with people sounding so sure of their convictions than a thread with in excess of 2100 posts, all containing disclaimers about how the information is only their opinion.

Surely, common sense should prevail and the disclaimers can be taken as implicit. It's the nature of a property price prediction thread.

Yes I agree with your point somewhat , however I think a lotof people lost a lot of money being told if they don't get on the ladder nowthey will be doomed never to own a house.

We really can't be sure what is going to happen and when Isee that sentiment I suppose I get irritated. I honestly think there is adanger in being so sure and people getting swept along with it.

stove_salesman

market is very regional , Dublin and galway got so far ahead , it was inevitable that both would ease a little , was at an auction n galway three weeks ago and some properties were bought for considerably less than would have been the case last year

limerick only got off the floor last year and is most certainly on the up , its still at least 30% cheaper than galway however

alastair

A lot of wishful negativity (is that a thing?) evident in this thread.

Price rises over the last couple of years, and particularly the 6 months up to May, are more than a dead cat bounce. Dublin prices (for it's those I'm familiar with) reflect a few realities:

1. The gradual, if unspectacular, improvement in the economy, and employment.
2. The highly constrained supply of properties for sale - until Spring of this year.
3. The shortage of rental properties, and conversely, the attraction of selling up for existing landlords (particularly those with now-illegal pre-63 bedsit properties).
4. The pressure on those with end-of-life 10% deposit mortgage deals to buy quickly.

The rolling back of some prices this Spring/Summer is mainly the influence of the 10% deposit buyers having nabbed somewhere already, and of the increased options in the market - lots of other places to consider if the seller gets too greedy. Sale prices will probably continue their gradual upward trend over the next couple of years, with small fluctuations driven by supply levels. Crazy rents will certainly prompt more have-a-go new landlords, and push some onto the property 'ladder' where they might have opted to rent otherwise.

House prices in Dublin aren't in silly territory, and even with additional increases in prices, wouldn't look particularly out of whack with, say Belfast, which has been very much an outsider to celtic tigers, property bubbles, reckless lending and all the other contagins (cheap credit excepted) that influenced prices here.

So all in all, I'd say the naysayers are clinging on to a pessimism that's rather overplayed. Cautious and constrained positivity is the new black.

Thargor

audi12 wrote: »

100 k up or down

Up as I said in the post lol...

gosplan

alastair wrote: »

A lot of wishful negativity (is that a thing?) evident in this thread.

Price rises over the last couple of years, and particularly the 6 months up to May, are more than a dead cat bounce. Dublin prices (for it's those I'm familiar with) reflect a few realities:

1. The gradual, if unspectacular, improvement in the economy, and employment.
2. The highly constrained supply of properties for sale - until Spring of this year.
3. The shortage of rental properties, and conversely, the attraction of selling up for existing landlords (particularly those with now-illegal pre-63 bedsit properties).
4. The pressure on those with end-of-life 10% deposit mortgage deals to buy quickly.

The rolling back of some prices this Spring/Summer is mainly the influence of the 10% deposit buyers having nabbed somewhere already, and of the increased options in the market - lots of other places to consider if the seller gets too greedy. Sale prices will probably continue their gradual upward trend over the next couple of years, with small fluctuations driven by supply levels. Crazy rents will certainly prompt more have-a-go new landlords, and push some onto the property 'ladder' where they might have opted to rent otherwise.

House prices in Dublin aren't in silly territory, and even with additional increases in prices, wouldn't look particularly out of whack with, say Belfast, which has been very much an outsider to celtic tigers, property bubbles, reckless lending and all the other contagins (cheap credit excepted) that influenced prices here.

So all in all, I'd say the naysayers are clinging on to a pessimism that's rather overplayed. Cautious and constrained positivity is the new black.

Yes, I'd say it'll drop slightly, revert to last summer prices and then stabilise.

It's simply a matter of buyers coming to the table in a much more orderly line, particularly for houses that are above 220. Each extra 10k on a house means buyers need 2k more in savings.

There's just no more potential for scrambles for property right now. Unless that is if you price it attractively.

Tbh the one huge difference for me, as a potential buyer, is that I'm busy saving and watching the market. I can see houses that are ridiculously overpriced and I'm not even going to bother viewing them. The pressure to get on the ladder is gone and just because you add 50k to last years price for the house your granny left you, it doesn't mean people are going to be in a hurry to meet your valuation. This just doesn't work with increasing supply and that's not going away with the 400-500k houses because the buyers aren't there.

Floodzie

gosplan wrote: »

This just doesn't work with increasing supply and that's not going away with the 400-500k houses because the buyers aren't there.

I think the market as a whole is starting to get more sensible, a lot of places I am keeping an eye on, are at or under the asking price.

I was trying to buy last year and it was crazy - we just gave up. We'd show up for viewings for a 350k property to find the current bid was already at 350k, - and this after only 1 viewing! Very demoralising.

We're looking around the 400-500k mark this year and things are looking more promising. With the 3.5 multiple of salary for most people, that should hopefully cool things down a bit. Someone earning (say) 70k would only get 245k, plus need 24500 for first time buyer, or 49000 for everyone else. 2 people earning over 70k would only get around 500k, and that's not including stamp duty.

So I think the very interesting price changes are for houses that were 539+ coming down to 539 for the above reasons (2 borrowers + deposit). Same story with 300k coming down to 269500, because there is a larger pool of potential single income buyers.

I would hazard a guess that properties will stabilise around those two bands.

sapper

Im on the hunt for my second last house (Lucan area) at the 500k+ mark as well right now (ie. the one I raise my kids in) and I agree that right now the clamour of buyers is gone, however when it comes to houses in this bracket that have a lot of positives (ie, nice size/condition/area/garden) there still seems to be one or two buyers that are happy to pay the (inflated) asking price.

I think thats due to the lack of supply in general, and therefore the even greater lack of supply of "nice" houses.

One good sized house came up for me recently, priced at least 10% over what it would have been up for last Sep..sure enough someone came along and offered the asking straight up, even though the only interest was my bid at 10% under. I'm told the vendor is actually holding out for more and the bidders are thinking about it. Theres still some buyers panicking out there....

...obviously not boards.ie readers...

Floodzie

sapper wrote: »

Theres still some buyers panicking out there....

...obviously not boards.ie readers...

Haha - that's for sure! :-)

Surely we are seeing the last of the panickers now though? If that house had been up post-August (when the the very last of the 6 month mortgage-approval-in-principal buyers from Feb are finally off the scene) would you now have that house?

Or are people, like the rest of us boards.ie readers, waiting for those people to depart the market, and then we all rush in causing another bump? :-) (I'm only half joking!!)

Greyian

Floodzie wrote: »

I think the market as a whole is starting to get more sensible, a lot of places I am keeping an eye on, are at or under the asking price.

I was trying to buy last year and it was crazy - we just gave up. We'd show up for viewings for a 350k property to find the current bid was already at 350k, - and this after only 1 viewing! Very demoralising.

We're looking around the 400-500k mark this year and things are looking more promising. With the 3.5 multiple of salary for most people, that should hopefully cool things down a bit. Someone earning (say) 70k would only get 245k, plus need 24500 for first time buyer, or 49000 for everyone else. 2 people earning over 70k would only get around 500k, and that's not including stamp duty.

So I think the very interesting price changes are for houses that were 539+ coming down to 539 for the above reasons (2 borrowers + deposit). Same story with 300k coming down to 269500, because there is a larger pool of potential single income buyers.

I would hazard a guess that properties will stabilise around those two bands.

I'm curious why you've picked 70k as the salaries for this theory. The average salary is nowhere close to 70k...

Sam the Sham

We recently went sale agreed on a property on the northside after 5 months of serious searching (3 years of casual searching before that). Must've looked at about 50 houses and made bids on about a dozen. We were searching in the low-to-mid 300K range in Dublin (southside mostly but also some northside).

What we found was that properties that seemed realistically priced resulted in bidding wars (like the one for that 15 Russell Avenue property near Croker) that quickly got out of hand, i.e., upwards of €400/sq. foot. Far from the market tapering off, this sort of thing repeatedly happened with any property that was done up halfway decently, regardless of size. And these were properties that were extremely compromised in other ways: small or inexistent gardens, small size, no parking, locations on busy roads or undesirable in other ways. Other properties that saw these kinds of bidding wars: 101 Inchicore Road in Kilmainham/Inchicore, which went for €355K, 5 Irwin Court in Kilmainham, which went for at least €340K; 9 Herberton Road in Crumlin which also went for upwards of €340K; as did 121 Keeper Road in Drimnagh.

Then there were a handful of properties that didn't seem to go anywhere but whose owners were certain that they "deserved" more. Some of these were taken off the market when the owners saw the writing on the wall and some are still out there. An example of the latter: 336 Kimmage Road. It's right on a main road with no parking, small with only two beds and has, bizarrely, used the attic conversion for the only bathroom in the house. Nice garden and redbrick and designed by a famous architect (big swing) but €375K seems totally aspirational to me. One wonders where these people think things are going to go. They could wait 6 months and find that it's worth even less...

Floodzie

Greyian wrote: »

I'm curious why you've picked 70k as the salaries for this theory. The average salary is nowhere close to 70k...

Sorry - I should have explained that this represents the top 10% of earners, and this is also the bracket I fall into.

Sam the Sham

Floodzie wrote: »

Sorry - I should have explained that this represents the top 10% of earners, and this is also the bracket I fall into.

Is it the top 10% of households?

sapper

Floodzie wrote: »

Haha - that's for sure! :-)

Surely we are seeing the last of the panickers now though? If that house had been up post-August (when the the very last of the 6 month mortgage-approval-in-principal buyers from Feb are finally off the scene) would you now have that house?

Or are people, like the rest of us boards.ie readers, waiting for those people to depart the market, and then we all rush in causing another bump? :-) (I'm only half joking!!)

In my mind the turning point will be when the headlines start talking about prices "stabilising" (it will take a "freefall" scenario for them to talk about falls in any sort of prices - they will trumpet asking prices going up but will never talk about asking prices going down)

When you are buying a house and really on the hunt its a daily thing - scouring myhome, boards.ie, news sites, following every sale in the area you're interested in - you know which way the market is going.

When you are selling a house you only really have the media, estate agents and the result of sales that were agreed 3-6 months ago to go on. Add to that the fact that sellers natural inclination (greed? )is to ask for a higher price than the last sale.

When the media calls the stabilising market I think buyers will be more cautious with their bids and sellers will be trying to attract as many buyers as possible with low asking prices

Floodzie

Sam the Sham wrote: »

Is it the top 10% of households?

I thought it was earners... not 100% on that though.

gaius c

alastair wrote: »

A lot of wishful negativity (is that a thing?) evident in this thread.

Price rises over the last couple of years, and particularly the 6 months up to May, are more than a dead cat bounce. Dublin prices (for it's those I'm familiar with) reflect a few realities:

1. The gradual, if unspectacular, improvement in the economy, and employment.
2. The highly constrained supply of properties for sale - until Spring of this year.
3. The shortage of rental properties, and conversely, the attraction of selling up for existing landlords (particularly those with now-illegal pre-63 bedsit properties).
4. The pressure on those with end-of-life 10% deposit mortgage deals to buy quickly.

The rolling back of some prices this Spring/Summer is mainly the influence of the 10% deposit buyers having nabbed somewhere already, and of the increased options in the market - lots of other places to consider if the seller gets too greedy. Sale prices will probably continue their gradual upward trend over the next couple of years, with small fluctuations driven by supply levels. Crazy rents will certainly prompt more have-a-go new landlords, and push some onto the property 'ladder' where they might have opted to rent otherwise.

House prices in Dublin aren't in silly territory, and even with additional increases in prices, wouldn't look particularly out of whack with, say Belfast, which has been very much an outsider to celtic tigers, property bubbles, reckless lending and all the other contagins (cheap credit excepted) that influenced prices here.

So all in all, I'd say the naysayers are clinging on to a pessimism that's rather overplayed. Cautious and constrained positivity is the new black.

That point is incorrect. Prices started rolling back last autumn, which was before the new CB rules were announced.

marathonic

One point about average salary is that it shouldn't be used to calculate ideal average house prices. I read this on a UK forum but it also applies here.

The average salary includes a significant number of low earners. These are people in jobs that put them in a position where they cannot afford a house, regardless of deposit.

In some cases, these people are in low-paid jobs with future potential of rises putting them in a position to buy. In others, it'll be people that expect to rent for life (I'm not suggesting that there is an issue with this in case someone takes unnecessary offence).

Using average salary to calculate the price of a house, in an ideal world, uses the assumption that anyone in employment should be able to afford a house. This has not been the case in the past, is not the case now and will never be the case in the future.

alastair

gaius c wrote: »

That point is incorrect. Prices started rolling back last autumn, which was before the new CB rules were announced.

'Fraid not. Not according to the CSO or the MyHome asking price report - Average Dublin asking prices rose 2.2% for the final quarter of 2014. A slower rise than the previous 6 months for sure, but certainly not a fall. If you don't buy into asking prices having any relevancy, then the CSO measure of paid prices puts Dublin prices at a 3.1% increase for Q4 2014. Again, that's a rise, not a fall.

The Central Bank flagged that they would be limiting lending ratios at the start of October, so while the specifics weren't known to prospective buyers, the intent was clear well before January.

Greyian

alastair wrote: »

'Fraid not. Not according to the CSO or the MyHome asking price report - Average Dublin asking prices rose 2.2% for the final quarter of 2014. A slower rise than the previous 6 months for sure, but certainly not a fall. If you don't buy into asking prices having any relevancy, then the CSO measure of paid prices puts Dublin prices at a 3.1% increase for Q4 2014. Again, that's a rise, not a fall.

While the PPR has the peak as August 2014 nationwide or July 2014 for Dublin.