Property Market 2015

nicnac

Sooooo, the impression I am getting is that it is not a good time to put a 2 bed in Dublin up for sale. Prices are likely to go down again?

alastair

nicnac wrote: »

Sooooo, the impression I am getting is that it is not a good time to put a 2 bed in Dublin up for sale. Prices are likely to go down again?

Prices are currently holding their own. Speculative cheeky asking prices on the back of last year's rapid price increases have been reduced by vendors, but sensibly priced property is pretty much the same as last year. If your place is in decent nick, there's no real reason to hold off selling. If you are waiting for rapid price inflation like last year, you'll probably be waiting a while.

nicnac

alastair wrote: »

Prices are currently holding their own. Speculative cheeky asking prices on the back of last year's rapid price increases have been reduced by vendors, but sensibly priced property is pretty much the same as last year. If your place is in decent nick, there's no real reason to hold off selling. If you are waiting for rapid price inflation like last year, you'll probably be waiting a while.

Thanks Alastair. But are the banks lending now?

johnp001

Glas2016 wrote: »

Conductor, you are completely correct in terms of your mathematical analysis.

Back to the big picture. Some on here focus on individual examples to illustrate their point of view i.e. J Bloggs used to be able to borrow x, now can only borrow x-y due to CB rules therefore prices must drop. This is a classic pitfall of those without a background in economics and fails to recognise the dynamic nature of all economies and the fact that economies are an aggregate of all j bloggs. As some on here have alluded to there are a multitude of factors that feed into house prices in any market ( I don't need to rehash them all here but economic growth,credit,supply,demographics to name a few). The key point is this, just because every J blogs in the country can now borrow less than last year is not necessarily decisive in determining prices. With the economy growing at 3-5%,tax cuts and wage increases on the way and people already at various stages in terms of gathering their deposits, there are plenty of factors pushing the other way that at least match impact of CB rules. Put simply there are now more j blogs "on the pitch" - 100,000 more in employment + the multiplier effect. The aggregate + here more than matches the -, even though an analysis on an individual basis could suggest otherwise. A little nuanced for some maybe.

To date there has been no meaningful wage growth as shown in my post above linking CSO earnings statistics.

Glas2016 wrote: »

I think there is a lot of hope on here from prospective buyers hoping for a big crash. Most people don't get involved in forums or discussions, they just play the game in front of them.

I contend that many who were homeowners in the 2000s and had some macro-economic awareness of the consequences of massive increases in debt and property bubbles would happily have foregone their chance to be paper millionaires briefly while their home value reached bubble peaks if it would have prevented a narrowly avoided bank run, bailout, austerity, USC etc.

Glas2016 wrote: »

Most people don't get involved in forums or discussions, they just play the game in front of them.

Most posts here argue the case on the evidence rather than impugning the motives of posters that don't agree with their viewpoint.

gaius c

Glas2016 wrote: »

Conductor, you are completely correct in terms of your mathematical analysis.

Back to the big picture. Some on here focus on individual examples to illustrate their point of view i.e. J Bloggs used to be able to borrow x, now can only borrow x-y due to CB rules therefore prices must drop. This is a classic pitfall of those without a background in economics and fails to recognise the dynamic nature of all economies and the fact that economies are an aggregate of all j bloggs. As some on here have alluded to there are a multitude of factors that feed into house prices in any market ( I don't need to rehash them all here but economic growth,credit,supply,demographics to name a few). The key point is this, just because every J blogs in the country can now borrow less than last year is not necessarily decisive in determining prices. With the economy growing at 3-5%,tax cuts and wage increases on the way and people already at various stages in terms of gathering their deposits, there are plenty of factors pushing the other way that at least match impact of CB rules. Put simply there are now more j blogs "on the pitch" - 100,000 more in employment + the multiplier effect. The aggregate + here more than matches the -, even though an analysis on an individual basis could suggest otherwise. A little nuanced for some maybe.

I think there is a lot of hope on here from prospective buyers hoping for a big crash. Most people don't get involved in forums or discussions, they just play the game in front of them.

A wage increase in the pocket is worth two in the bush.
I.e. I'll believe that when I see it. Wages have been static/falling for quite a few years now.

alastair

nicnac wrote: »

Thanks Alastair. But are the banks lending now?

No idea. The ratio of cash buyers to mortgage buyers is falling, but it's still high.

The_Conductor

alastair wrote: »

No idea. The ratio of cash buyers to mortgage buyers is falling, but it's still high.

At last count- the ratio of cash buyers was still just over 30%- which is considerably higher than many people thought it would be at this time.
The big difference- is buy-to-let landlords have by-and-large exited the market- its a combination of factors- the 30% deposit requirement, the tax treatment of landlords, increasingly onerous regulatory requirements- and a perception that the legislation as it stands, and in particular, the length of time for the PRTB to hear cases and enforce findings- which is actively discouraging both current and prospective landlords.

Banks are lending- yes, however, they are applying the new rules. There was a spike in pre-approvals between the beginning of last Nov- and mid Feb when the new rules came in- which have been working their way through the system year-to-date. The last of these pre-approvals, all of which were being honoured- expires under Central Bank instruction- on the 11th of August (after which lenders are wholly applying the new rules- with the exception of the leeway they have (e.g. up to 10% of exceptional borrowers do not have to meet the new rules). Many current buyers- are trying to see how they can ensure they are part of this cohort to whom the new deposit rules are waived- however, as its being monitored closely- individual lenders are more inclined to play safe, than take a chance.

Any changes (up or down) in prices year to date- has by and large- been independent of the new rules- however, the effect of the new rules- is going to increasingly come to the fore from here on in.......

Lenders are lending- and have significant funds ringfenced specifically for this purpose. Various trading statements however- most recently from Bank of Ireland- are highlighting an industry perceived lack of lending opportunities in Ireland- BOI have stated they are going to try to re-enter the UK market,and may look at acquisitions there to complement their tie-up with Post Offices and the AA there- for example.

Times- they are a-changing........ It would be very hard to try and call what is going to happen next. Personally- I think I'm lucky I'm not working in the banking sector here- I'd be seriously worried.....

OfflerCrocGod

Speaking of cycles 2008 was the last dip, it's getting on 8 years now. Normally the cycles are 7 to 10 years. The Fed raising rates might be the instigator?

The_Conductor

OfflerCrocGod wrote: »

Speaking of cycles 2008 was the last dip, it's getting on 8 years now. Normally the cycles are 7 to 10 years. The Fed raising rates might be the instigator?

Q1 was revised from neg to +0.6% and Q2 came in a respectable, but slightly below expected 2.3% on Wednesday (even this is subject to future revisions). The last Fed notes did not rule out a Sept increase in US rates- though consensus is for later in the year. However- its also presumed that an increase in US rates- has already been factored into market expectations- so its entirely possible it may not be the catalyst that many people imagine it may be.

starbaby2003

Why are people assuming that prior to the new lending restrictions everyone was maximising the amount they could get. Also AIB was 15% over €400,000 for the last few years so that would probably amount to the same for a first time buyer if their mortgage was with them. Massive jumps are gone IMO but I don't see a crash. If everyone is sitting at home waiting for it fall whilst saving their extra deposits Jan / Feb of next year should be interesting.

johnp001

starbaby2003 wrote: »

Why are people assuming that prior to the new lending restrictions everyone was maximising the amount they could get. Also AIB was 15% over €400,000 for the last few years so that would probably amount to the same for a first time buyer if their mortgage was with them. Massive jumps are gone IMO but I don't see a crash. If everyone is sitting at home waiting for it fall whilst saving their extra deposits Jan / Feb of next year should be interesting.

Not everybody sure.
Over the period from late 2013 until relatively recently supply in Dublin has been extremely restricted.
It only requires one bidder for a property to be willing to leverage themselves to the hilt in order to buy it for the price to be driven up until it reaches the maximum that the bank will lend to the prospective buyers of that property.
In a constricted market each bidder who is willing to indebt themselves as much as the bank allows can drive up the prices on many, many properties by bidding across multiple properties or bidding up prices against another buyer and then moving on to bid up elsewhere when their limit is reached.
In this constricted market where there are a small cohort of bidders willing to leverage beyond affordability then prices rise such that other buyers are not able to buy without doing the same.
This is a positive feedback loop which drove up prices over 25% in 18 months in Dublin driven by the dual factors of constricted supply and unregulated lending.
This feedback loop is broken by the addition of additional supply to the market as has happened recently.
It will be interesting to see what impacts the significant changes in both borrowing limits and supply levels will have now.

starbaby2003

johnp001 wrote: »

Not everybody sure.
Over the period from late 2013 until relatively recently supply in Dublin has been extremely restricted.
It only requires one bidder for a property to be willing to leverage themselves to the hilt in order to buy it for the price to be driven up until it reaches the maximum that the bank will lend to the prospective buyers of that property.
In a constricted market each bidder who is willing to indebt themselves as much as the bank allows can drive up the prices on many, many properties by bidding across multiple properties or bidding up prices against another buyer and then moving on to bid up elsewhere when there limit is reached.
In this constricted market where there are a small cohort of bidders willing to leverage beyond affordability then prices rise such that other buyers are not able to buy without doing the same.
This is a positive feedback loop which drove up prices over 25% in 18 months in Dublin driven by the dual factors of constricted supply and unregulated lending.
This feedback loop is broken by the addition of additional supply to the market as has happened recently.
It will be interesting to see what impacts the significant changes in both borrowing limits and supply levels will have now.

Certainly we were outbid on many occasions with people upping their bids by outrageous amounts but we also bid what we felt a property was worth and pulled out as soon as crazy bids were received. I'm confident a lot of people would have done the same. But I 100% agree that it only takes a small few making silly bids to unsettle the waters. How will EAs police it though I wonder. I feel people like that will still bid above what they can afford and then hope to negotiate down when sale is agreed but prior to deposit being paid. Surely no one would give an EA a letter of offer that hasn't been redacted.

dollar_king

Ive no vested interest here , don't own a BTL anywhere

I strong disagree with those who think we are at the top of the market and for a number of reasons

from a purely technical standpoint , most property cycles from bottom to top last much longer than three years , Dublin south bottomed around the end of 2011 , Dublin north around the middle of 2012 , the rest of the country didn't bottom until around two years ago, overall we are less than three years into the current cycle

the economy is improving as has been pointed out , the level of wealth in the country now exceeds where we were prior to the crash , contrast with the uk or Germany , houses in those country are far higher than was the case around 2007

lending rates are likely to go down as irish banks charge way above the Eurozone average , with banks health improving , reasons to maintain such high rates diminish

the returning irish , its not been mentioned but Australia is looking very bearish , china has slowed and the commodities sector is in awful shape , the returning irish will do two things

1. return with cash earned

2. need a place to live and pretty quickly realise that property in Dublin ( let alone Ireland ) is still even today far cheaper than in Australia


all these things taken into account and the bullish signs far outweight negative signals

mariaalice

Will 7 years of mortgage payments ( as prices started to drop form 2008/9) plus the some what of a rebound in prices have wiped out negative equity for most people.

snubbleste

mariaalice wrote: »

Will 7 years of mortgage payments ( as prices started to drop form 2008/9) plus the some what of a rebound in prices have wiped out negative equity for most people.

No.
source: radio talk shows

Floodzie

dollar_king wrote: »

its not been mentioned but Australia is looking very bearish

To be fair, Australia has been looking very bearish for several years now. The property market over there is seriously overvalued, but I have no idea whether it will collapse this year or in 5 years.

dollar_king

Floodzie wrote: »

To be fair, Australia has been looking very bearish for several years now. The property market over there is seriously overvalued, but I have no idea whether it will collapse this year or in 5 years.

my point was not about whether Australian property collapses , it was that a weakening aussie economy ( weakening aussie dollar alone makes it less attractive to stay there ) combined with a strengthening irish economy will send plenty of irish back home , irish people have for centuries returned back with money in hand to buy property and like I said , houses in Ireland are still far cheaper than in Australia

they are cheaper than in new Zealand which is less wealthy than Ireland by a significant margin

Floodzie

dollar_king wrote: »

it was that a weakening aussie economy ( weakening aussie dollar alone makes it less attractive to stay there ) combined with a strengthening irish economy will send plenty of irish back home , irish people have for centuries returned back with money in hand to buy property

Hopefully they haven't bought any Australian property lately! :-) But otherwise fair point.

OfflerCrocGod

I think property cycles are for the most part dead with the new CB rules. At the very least they won't be as pronounced. With the local market having restricted credit access speculative bubbles are harder to sustain. We are no longer in the same league as the UK and we should be thankful for that.

MarkAnthony

OfflerCrocGod wrote: »

I think property cycles are for the most part dead with the new CB rules. At the very least they won't be as pronounced. With the local market having restricted credit access speculative bubbles are harder to sustain. We are no longer in the same league as the UK and we should be thankful for that.

Similar rules have been in force in the UK for quite soe time I thought. No sign of boom bust stopping there. Even outside of the Russian Mafia in London.

dollar_king

OfflerCrocGod wrote: »

I think property cycles are for the most part dead with the new CB rules. At the very least they won't be as pronounced. With the local market having restricted credit access speculative bubbles are harder to sustain. We are no longer in the same league as the UK and we should be thankful for that.

history teaches us much about cycles in many assets and the patterns are often quite predictable

we had a run up from around 1996 to 2006 , then a fall from 2007 to 2012 , five years is longer than the average bear period for property so we overshot the bottom here due to a perfect storm of bad economic conditions

the equity markets have been on a run since early 2009 and are much frothier than any property market , beit in the usa or most of Europe

the energy and commodity markets had their bull run from the beginning of the last decade to around the end of 2011 , they are now likely at the bottom of the cycle


I often wonder are the conspiracy theorists correct and the rothchilds are controlling it all

Roger McAllen

To the person who mentioned returning migrants with loads of foreign currency, taking advantage of the weak euro. If they were doing so well abroad to save either a deposit or more to buy property in Ireland, why would they return at all?

slowjoe17

dollar_king wrote: »

my point was not about whether Australian property collapses , it was that a weakening aussie economy ( weakening aussie dollar alone makes it less attractive to stay there ) combined with a strengthening irish economy will send plenty of irish back home , irish people have for centuries returned back with money in hand to buy property and like I said , houses in Ireland are still far cheaper than in Australia

they are cheaper than in new Zealand which is less wealthy than Ireland by a significant margin

You get far more house in New Zealand or Australia for your money than you get in Dublin.

And exactly how many returning expats a year are we talking about? Not enough to replace the first time buyers who will be delayed multiple years trying to save the new deposit requirement.

Someone else clutched at the straw of the equity of existing home owners as deposit fodder. For that equity to be released, someone has to "go long" (buy an extra) house. That role of starting a chain is traditionally the role of a first time buyer. Now, that equity can't flbe spent till someone buys the first house.

If the first time buyer doesn't exist, that equity cannot be spent.

BTW, I smell panic from the bulls. They.seem to be talking the market up at a time that no deals happen.

markpb

Roger McAllen wrote: »

To the person who mentioned returning migrants with loads of foreign currency, taking advantage of the weak euro. If they were doing so well abroad to save either a deposit or more to buy property in Ireland, why would they return at all?

Many will be happy to live abroad for a few years but want to come home to raise family here. Others just want to travel for a few years but never saw it as a long term plan. Others are on temporary transfer with their employers.

dollar_king

Roger McAllen wrote: »

To the person who mentioned returning migrants with loads of foreign currency, taking advantage of the weak euro. If they were doing so well abroad to save either a deposit or more to buy property in Ireland, why would they return at all?

because we are talking about irish people who went to Australia due to the recession in Ireland and the multiple opportunities in Australia , Australia is slowing and about to get much worse where as Ireland is in an upturn , add to that property is much cheaper in Ireland

most immigrants like to eventually return

dollar_king

slowjoe17 wrote: »

You get far more house in New Zealand or Australia for your money than you get in Dublin.

And exactly how many returning expats a year are we talking about? Not enough to replace the first time buyers who will be delayed multiple years trying to save the new deposit requirement.

Someone else clutched at the straw of the equity of existing home owners as deposit fodder. For that equity to be released, someone has to "go long" (buy an extra) house. That role of starting a chain is traditionally the role of a first time buyer. Now, that equity can't flbe spent till someone buys the first house.

If the first time buyer doesn't exist, that equity cannot be spent.

BTW, I smell panic from the bulls. They.seem to be talking the market up at a time that no deals happen.

ive lived and worked in new Zealand , construction standards are appalling


by every measure , property in Australia is much more expensive than here unless you are talking about way outside the major aussie cities

dollar_king

slowjoe17 wrote: »

You get far more house in New Zealand or Australia for your money than you get in Dublin.

And exactly how many returning expats a year are we talking about? Not enough to replace the first time buyers who will be delayed multiple years trying to save the new deposit requirement.

Someone else clutched at the straw of the equity of existing home owners as deposit fodder. For that equity to be released, someone has to "go long" (buy an extra) house. That role of starting a chain is traditionally the role of a first time buyer. Now, that equity can't flbe spent till someone buys the first house.

If the first time buyer doesn't exist, that equity cannot be spent.

BTW, I smell panic from the bulls. They.seem to be talking the market up at a time that no deals happen.

panic ?

I own a house in rural Ireland which I bought in 2012 along with some farm land , its worth about the same today (or less as land has gone nowhere since then ) , ive no vested interest in property going up , if it goes down , sure I might try and buy a BTL in Dublin but every indicator tells me there will be no major pull back

slowjoe17

dollar_king wrote: »

panic ?

I own a house in rural Ireland which I bought in 2012 along with some farm land , its worth about the same today (or less as land has gone nowhere since then ) , ive no vested interest in property going up , if it goes down , sure I might try and buy a BTL in Dublin but every indicator tells me there will be no major pull back

You aren't the bull I am thinking of.

But even with you, some people would think you are kidding yourself saying "no vested interest".

Anyone who does not own property has an interest in price drops. That includes me.

Anyone who owns, works in construction, estate agents or journalism has a vested interest in prices going up.

Journalists are the funniest. Over the 7 year crash in the UK in the 90s, there was an article EVERY MONTH predicting a rise that month. Today its probably tougher. How many papers in Ireland could afford to lose their property advertising?

Archaeoliz

Personal opinion of what's happening right now is that there isn't enough data to say what the market is actually doing.

Too many variables IMHO, of which the CB rules are only one. I do believe though that the housing marking has become somewhat disassociated with the wider economy; still impacted by it, but I think it is quite a different marketplace.

So the bears are being bearish and the bulls are being bullish in the absence of concrete data.

I am naturally bearish about the market, especially as I'm a buyer not a seller (at the moment).

MyHome are going for a Bear Market backed by Standards and Poor:
http://blog.myhome.ie/2015/07/31/irish-house-prices-predicted-to-rise-the-fastest-in-the-eurozone/

I'm still thinking on Prof. Ahearne's comments here and would plump for a big Bull market on his evidence here:
https://inquiries.oireachtas.ie/banking/hearings/alan-ahearne-early-warnings-divergent-contrarian-views/

dollar_king

slowjoe17 wrote: »

You aren't the bull I am thinking of.

But even with you, some people would think you are kidding yourself saying "no vested interest".

Anyone who does not own property has an interest in price drops. That includes me.

Anyone who owns, works in construction, estate agents or journalism has a vested interest in prices going up.

Journalists are the funniest. Over the 7 year crash in the UK in the 90s, there was an article EVERY MONTH predicting a rise that month. Today its probably tougher. How many papers in Ireland could afford to lose their property advertising?

ive no mortgage on my house and I plan to stay here for the rest of my life

as for journalists , they have a herd mentality and that goes double for journalists in this country , the narrative up until 2006 was ultra bullish , then the crash happened and the pendulum completely swung , you would think an atomic bomb had been dropped on us and any kind of price recovery was impossible , the media missed the start of the property recovery here by a good twelve months , the bottom was hit in the wealthy parts of south Dublin around nine months after the current government took office , all the bad stuff had happened ( bank bailout , IMF coming in etc , FF being booted out ) so like all cycles , the bottom was reached

ive no truck with journalists whatsoever but I also have none with neurotic permabears of the kind who inhabit the likes of the property pin website , those idiots were predicting that the average 950 sqr foot three bed semi in Dublin would reach 120 k and have refused to accept the recovery even to this day