Property Market 2015

The_Conductor

alastair wrote: »

But no-one is claiming that continued 'inappropriate property price appreciation' is likely. A relatively flat scenario that sustains the average 2014 prices is what we currently have, and even with increased stock and the new 20% deposit regime, there's no indicators that prices will drop back below those 2014 averages.

The 20% regime (for non-first time buyers) will only fully kick in once the last of the approvals under the old regimen finally expire (last possible date under the Central Bank rules is the 11th of August). We do not have the full effect of the new regime kicking in just yet.

The new regime excludes BTL landlords (who were up to 30% of all buyers) from the market- with a more onerous deposit requirement- of a maximum of 70% LTV for properties. The big anamoly here is the REITs (Real Estate Investment Trusts)- who operate outside all of this- and have been releasing supply into the rental sector.

The 'relatively flat scenario that sustains 2014 prices' that we currently have- is artificial. Price rises in rural areas- are masking definite trends downwards in the Dublin market- and if/when rural prices follow Dublin prices- the masking effect will turn to a multiplying effect instead. The elephant in all debate about Irish prices- wholly aside from the fact that we have 3 distinct property markets now- is the ridiculously low volumes that we are talking about. Where volumes are so low- any transactions out of the ordinary- which I'd argue include NAMA sales- and the likes of Allsop selling entire blocks of apartments which are then flipped- do skew prices.

We have a 'relatively flat market' only if you are trying to argue that the Irish property is a single market- and not at least 3 separate submarkets- which are acting independently of one another.

alastair

The_Conductor wrote: »

We did not have commensurate falls in late April/May/June in the Dublin market in 2014 (and 2013)- that are evident in the data here.

There is in 2012 though. Not that it matters - you can't rely on repeats of any patterns on prices.

The_Conductor

alastair wrote: »

And yet, there's nothing to suggest that we're about to see the kind of dramatic price falls that would result in dropping back to 2013 prices - even in Dublin. I'm not sure what major issues you believe are becoming apparent, but there's always been an obvious stratification between Dublin and the rural property market, and there probably always will be.

Rural prices recovered a greater percentage of their previous 2007 values- than did Dublin- and yet Dublin prices turned? I don't know what our hangup about 2013 prices is- they were overly inflated too (but in very thin volumes).

Its hard to call- but all-in-all there are a number of factors lining up that together will impact on the overall market.

If Dublin volumes but not prices picked up (which is entirely plausible- there are a number of category of owners who are trying to sell- before current prices fall- notably BTL owners)- even a small increase in over-all volume- could have a magnified effect- because volumes are at an artificially low level.

johnp001

The_Conductor wrote: »

Dublin's falls at the start of the year- if you look at figures for previous years- mirrored what happened previously. Dublin's falls more latterly- do not- they are out of pattern. Its not appropriate to point at the falls in Q1 and say- we recovered from them in 2014- therefore something similar will happen in 2015. We did not have commensurate falls in late April/May/June in the Dublin market in 2014 (and 2013)- that are evident in the data here.

The sole driver of any growth at all- gross- over the last 5 months- has been rural price rises (which would still show rises nationally- even if you stripped out Dublin prices for the last 5 months).

The types of property selling- are also of interest- in the Dublin market- there had been an increase in the absolute number of sales of lower value properties- in Q1- before the levels of activity in the market sunk below levels at which we can conduct a valid statistical analysis. I'd suggest the current issue- is a vast increase in supply- particularly of properties just above the thresholds that people are capable of financing- that is causing a logjam (and is only going to get worse). If you were to look at Cork- for example- this massive increase in supply- has not happened yet- but is foreseeable.

The Dublin / Other major urban centres / rural markets- have clearly stratified now- and major issues are becoming more apparent.

And there is further stratification with urban adjacent areas performing well while rural prices continue to languish.
Cork prices and volumes are both increasing strongly according to PPR.
In the greater dublin area Kildare, Louth and Meath are also all strongly up on the PPR graphs.
Limerick is performing well.
Meanwhile counties without proximity to major urban centres e.g. Longford, Roscommon, Offaly, Sligo, Mayo, Tipperary are all still on a downward trajectory.

The_Conductor

alastair wrote: »

There is in 2012 though. Not that it matters - you can't rely on repeats of any patterns on prices.

Its not reliable- and indeed- Economist are the only ones who have managed to make careers out of explaining why their predictions don't pan out as they originally anticipated. I only hold them in marginally higher esteem than I do journalists. I like looking at raw data- which is why I studied statistics- many many years ago- however, as you've quite rightly suggested- you can present it in such a way to support pretty much any argument. The only way of having any credence- is to have a history of presenting the data in a particular manner.

Anyhow- its hard to discuss even prices- when any discussion is rendered nebulous at best- because of the pitiful volumes of transactions- we do not have a functional property market.

alastair

The_Conductor wrote: »

The 'relatively flat scenario that sustains 2014 prices' that we currently have- is artificial. Price rises in rural areas- are masking definite trends downwards in the Dublin market- and if/when rural prices follow Dublin prices- the masking effect will turn to a multiplying effect instead. The elephant in all debate about Irish prices- wholly aside from the fact that we have 3 distinct property markets now- is the ridiculously low volumes that we are talking about. Where volumes are so low- any transactions out of the ordinary- which I'd argue include NAMA sales- and the likes of Allsop selling entire blocks of apartments which are then flipped- do skew prices.

We have a 'relatively flat market' only if you are trying to argue that the Irish property is a single market- and not at least 3 separate submarkets- which are acting independently of one another.

No offence - but that's pretty much besides the point. We've always had a stratified property market - that's not going to change, nor is the averaging of those stratified markets into a national average. The current price scenario is no more 'artificial' than any other time - be it a scenario of rises or falls. There's no definite trend evident in Dublin, other than an end to the rapid price increases prompted by constrained stock and the impetus to buy before the CB rules kicked in. That itself wasn't a trend either, as it could only sustain within that context.

The_Conductor

johnp001 wrote: »

And there is further stratification with urban adjacent areas performing well while rural prices continue to languish.
Cork prices and volumes are both increasing strongly according to PPR.
In the greater dublin area Kildare, Louth and Meath are also all strongly up on the PPR graphs.
Limerick is performing well.
Meanwhile counties without proximity to major urban centres e.g. Longford, Roscommon, Offaly, Sligo, Mayo, Tipperary are all still on a downward trajectory.

Dublin and surrounding counties are no longer performing well though- they have turned, PPR data notwithstanding. Cork- is- however on improbably low volumes. The other counties you mentioned- appear to have unusual volume transactions- possibly NAMA or receiver sales? Its very hard to try to get a clear picture- the one thing that is clear- is Dublin is just about threading water- barely- other major urban centres- notably Cork and Galway- are not seeing commensurate falls to Dublin yet (though recent auction results in both cities suggest the writing is on the wall). The rural sales (aside from the contenders for falls you've noted)- are the only thing keeping national figures positive at the moment.

PPR figures- are interesting- in that they include cash sales- which the CSO data doesn't. We're not able to- but were we able to analyse just cash sales nationally- I think you'd see entirely different trends- than the amalgamed figures are suggesting.........

The_Conductor

alastair wrote: »

No offence - but that's pretty much besides the point. We've always had a stratified property market - that's not going to change, nor is the averaging of those stratified markets into a national average. The current price scenario is no more 'artificial' than any other time - be it a scenario of rises or falls. There's no definite trend evident in Dublin, other than an end to the rapid price increases prompted by constrained stock and the impetus to buy before the CB rules kicked in. That itself wasn't a trend either, as it could only sustain within that context.

The Dublin market is now being fed with vastly higher volumes of property- than previously- however, the volumes of sales- has not increased. The lengths of time to sell a property- are stretching continuously. Estate Agents are telling prospective sellers to carry out remedial works and then to come back to them in a few months time- in order to kick additional supply down the road. This is a trend in the Dublin market- aside from actual prices- there is now, contrary to what we all accept, a balloon in the quantity of property for sale on the Dublin market- without a commensurate balloon in the number of prospective buyers.

alastair

The_Conductor wrote: »

The Dublin market is now being fed with vastly higher volumes of property- than previously- however, the volumes of sales- has not increased. The lengths of time to sell a property- are stretching continuously.

Dublin still has comparitively low levels of stock on the market. There's still lots of room for growth there. Autumn will tell us what kind of volume of sales to expect, as it's the typical dead time of year until then in any case.

Floodzie

alastair wrote: »

Dublin still has comparitively low levels of stock on the market. There's still lots of room for growth there. Autumn will tell us what kind of volume of sales to expect, as it's the typical dead time of year until then in any case.

Still seeing lots of new stock coming on the market in Dublin... http://www.myhome.ie/recent/dublin

gaius c

Floodzie wrote: »

Still seeing lots of new stock coming on the market in Dublin... http://www.myhome.ie/recent/dublin

Yeah, was quiet for a few weeks but starting to pick up again.

The_Conductor

250 properties over the last week (since the 23rd of July) in Dublin? Something seems a bit odd? 250 properties new to the market in Dublin in a week seems a bit improbably high to me? Its the end of July- but even at peak selling- it would still seem a bit improbable.

gaius c

The_Conductor wrote: »

250 properties over the last week (since the 23rd of July) in Dublin? Something seems a bit odd? 250 properties new to the market in Dublin in a week seems a bit improbably high to me? Its the end of July- but even at peak selling- it would still seem a bit improbable.

It's not peak selling time. It's getting your house onto the market in time for peak selling time. Autumn typically wouldn't be as busy as spring but the Irish market hasn't been typical for a long time.

My myhome alert email (new houses and price drops) is after getting so long that you can't read it in gmail and have to open a separate window to view all the properties.

Will be very interesting to see if we get the big transaction surge in Q4 that we've seen for the last 3 years. If we don't, that's a fairly clear sign that we are in a correction.

Greyian

The_Conductor wrote: »

250 properties over the last week (since the 23rd of July) in Dublin? Something seems a bit odd? 250 properties new to the market in Dublin in a week seems a bit improbably high to me? Its the end of July- but even at peak selling- it would still seem a bit improbable.

According to PPR, there were 13775 properties sold in Dublin in 2014, so that would be over 260 per week, so 250 doesn't seem out of the ordinary to me.

iguana

johnp001 wrote: »

Limerick is performing well.

Limerick only bottomed out a year ago, so what's largely happening here is an upswell of purchases as houses finally fell to affordability. Properties are selling much faster and most of those which have been on the market for 12-24 months+ (with numerous price drops) have finally sold. Asking prices are still falling in many areas, though rising in others.

I don't know if we'll see much by way of price rises and if we do how long they will continue. The CB rules will definitely have an effect as the well of cash buyers will have been reduced by the last year of purchases. And if we start hearing news of prices in Dublin dropping again, buyers will lose confidence and won't want to waste their hard earned and saved 20%+ deposits unless they feel very sure they are getting value.

johnp001

iguana wrote: »

Limerick only bottomed out a year ago, so what's largely happening here is an upswell of purchases as houses finally fell to affordability. Properties are selling much faster and most of those which have been on the market for 12-24 months+ (with numerous price drops) have finally sold. Asking prices are still falling in many areas, though rising in others.

I don't know if we'll see much by way of price rises and if we do how long they will continue. The CB rules will definitely have an effect as the well of cash buyers will have been reduced by the last year of purchases. And if we start hearing news of prices in Dublin dropping again, buyers will lose confidence and won't want to waste their hard earned and saved 20%+ deposits unless they feel very sure they are getting value.

I was only referring to PPR figures as graphed here

Thanks for the further local information.
Median and average house values for 2015 seem to be slightly ahead of 2014 according to that graph which is why I picked it out as an example of an urban or urban adjacent area that was faring better than purely rural property.

The point I was making was in reply to

The_Conductor wrote: »

...Price rises in rural areas- are masking definite trends downwards in the Dublin market- and if/when rural prices follow Dublin prices- the masking effect will turn to a multiplying effect instead. ...

and it is that it is not "rural" property prices which are propping up nationwide CSO figures while Dublin figures drop but rather GDA and Cork. Rural prices are falling.

iguana

johnp001 wrote: »

I was only referring to PPR figures as graphed here

Thanks for the further local information.
Median and average house values for 2015 seem to be slightly ahead of 2014 according to that graph which is why I picked it out as an example of an urban or urban adjacent area that was faring better than purely rural property.

Limerick is definitely in an upswing but it's only a recent upswing as it seems to have been one of the very last places in the country to stop falling, certainly close to the last urban area. I was buying a house through Nama last year which is a very long process and I wasn't worried when we went sale agreed as I had over 20 back-up properties on my list if mine fell through. By the time my purchase completed all but one was sold. It was pretty worrying at the time as my options were growing limited, but since then I've looked at each purchase on the PPR and while sales were happening the sales prices achieved weren't rising. The last house that had been on my list went SA in early June after 2 more price drops and the house nextdoor to that, which I was renting last year, came on the market for €20k less almost immediately after.

That said it makes sense that prices are rising overall as falling prices meant that people could buy a 3 bed semi for not too much more than they could have bought a 2 bed terraced 2 years ago. And had an extra 2 years of saving under their belt to afford to stretch higher for a permanent home.

alastair

The_Conductor wrote: »

The Dublin market is now being fed with vastly higher volumes of property- than previously- however, the volumes of sales- has not increased.

According the the last myhome.ie report, 12 month sales volume was up 48% in the first four months of this year. I wouldn't be so sure that volumes of sales won't increase over the entire year - again it would require quite a dramatic shift.

Floodzie

At the risk of being a tad off-topic... the video on this page is like Dublin in 2007. The guy talking up the Australian property market is from Domain, a property website - quelle suprise: http://www.smh.com.au/comment/sydney-youre-boring-quit-talking-about-property-prices-20150723-giis1z.html Depressing stuff.

Anyhoo - back to Ireland. Once we start seeing people pull back from purchasing - which seems to already be the case at least in Dublin - it snowballs pretty quickly (as happened last time). My money's still on 2015 prices being lower than 2014.

alastair

Floodzie wrote: »

My money's still on 2015 prices being lower than 2014.

Which would require an 11% drop in five months. I wouldn't put my money on that punt.

Floodzie

alastair wrote: »

Which would require an 11% drop in five months. I wouldn't put my money on that punt.

I would - only Paddy Power have stopped taking bets! http://www.paddypower.com/bet/novelty-betting/current-affairs/house-prices/-2348874.html

alastair

Floodzie wrote: »

I would - only Paddy Power have stopped taking bets! http://www.paddypower.com/bet/novelty-betting/current-affairs/house-prices/-2348874.html

They're saving you from yourself then!

Floodzie

alastair wrote: »

They're saving you from yourself then!

I'm doing a better job saving myself, by putting off a house purchase until next year at least. :-)

johnp001

alastair wrote: »

Which would require an 11% drop in five months. I wouldn't put my money on that punt.

This is not true it requires that the CSO figures for 2015 are overall negative.
Nearly all the positive movement in the 11% increase over 12 months to date was in 2014 which will be out of frame of the rolling average by next year.

As a matter of interest shortest odds were on drops for the year before the book was withdrawn.
Odds had lengthened considerably on increases compared to what PP were offering at the start of the year.

alastair

johnp001 wrote: »

This is not true it requires that the CSO figures for 2015 are overall negative.

Indeed. From a current position of +10.7% - so a requirement for an 11% drop.

johnp001 wrote: »

Nearly all the positive movement in the 11% increase over 12 months to date was in 2014 which will be out of frame of the rolling average by next year.

That's the nature of a 12 month change alright. There's still not any reasonable expectation that theres an 11% drop in the remaining positive 2014 months and whatever the rest of 2015 brings.

koheim

For those hoping for a "correction" and prediction a drop. Have you taken these factors in to account, and what effect this could have ?

The economy is growing!

More people employed, salaries are up for people in permanent employment. Most people are working and have good, secure jobs. There is no point looking at average household income, look at how many household make 70K+, how many make 100K+ and how many make 150K+

Income taxes can only be reduced in the next few budgets

Look for reduction in interest rates. Ireland has the highest rates in Europe. This will have to be reduced and there is no point in stress testing at 6% for the foreseeable future. We will not see ECB rates above 2% in at least 10 years, my 4.5% interest rate can only be reduced. To borrow new money will become cheaper.

Based on these points buying power will have to increase in the next few years, but there is indeed very little value in the Irish property market..
I predict flat growth for a couple of years, but rents will continue to increase.

johnp001

johnp001 wrote: »

This is not true it requires that the CSO figures for 2015 are overall negative.
Nearly all the positive movement in the 11% increase over 12 months to date was in 2014 which will be out of frame of the rolling average by next year.

As a matter of interest shortest odds were on drops for the year before the book was withdrawn.
Odds had lengthened considerably on increases compared to what PP were offering at the start of the year.

alastair wrote: »

Indeed. From a current position of +10.7% - so a requirement for an 11% drop.


That's the nature of a 12 month change alright. There's still not any reasonable expectation that theres an 11% drop in the remaining positive 2014 months and whatever the rest of 2015 brings.

Please check your figures on this one as your statement is fundamentally incorrect.

alastair

johnp001 wrote: »

Please check your figures on this one as your statement is fundamentally incorrect.

Nope - it's correct. Current status is 10.7% increase on 12 months. That leaves a need to lose 11% over the next five months to end in negative territory by end of Dec. Unless you're quibbling about the .2% wriggle room?

Michael D Not Higgins

alastair wrote: »

Nope - it's correct. Current status is 10.7% increase on 12 months. That leaves a need to lose 11% over the next five months to end in negative territory by end of Dec. Unless you're quibbling about the .2% wriggle room?

I think he's saying that if the end of 2014 is heavily weighting those figures positive, that only a small dip in the end of 2015 will depress the whole years figures.

Consider it this way, the second half of 2014 goes gangbusters, 20% increase all around, the first half of 2015 is pretty flat, 0% change, overall, 10% increase year on year. If the end of 2015 is -0.1%, the whole year will be negative.

gaius c

alastair wrote: »

Nope - it's correct. Current status is 10.7% increase on 12 months. That leaves a need to lose 11% over the next five months to end in negative territory by end of Dec. Unless you're quibbling about the .2% wriggle room?

You maths is off there. To reverse a gain of 10.7, you only need to lose 9.7%.

If a house drops in value by 40%, it needs to gain 67% to get back where it was before.