Property Market 2015

gosplan

OfflerCrocGod wrote: »

It's great how they don't mention the possibility of price drops to make houses more affordable for trader-uppers? Such ideas aren't to be contemplated.

It's hilarious.

The headline may as well say

'Financially overextending yourself to buy overpriced property proving increasingly difficult'

Barely Hedged

Archaeoliz wrote: »

I think it's more complicated than that. As I think has been mentioned before the CB rules are designed to reduce risk to the banking sector. Any impact on the housing market is secondary.

Things that I do know are that 20% YOY growth is unsustainable. That level would need to be supported by similar inflation and salary rises. Therefore I think the housing market needs to be considered as a separate entity, affected but different to the wider economy. The whole economy is doing better but not 20% per annum! Given levels of inflation, interest rates and the level of growth sustainable would IMHO need to be closer to 1 or 2% increases YOY. That means there will need to be an adjustment from the large increase last year but that seems to be happening/have happened looking at the CSO data.

I believe that Seller/Landlord expectation is one of the biggest factors here. Why would you consider moving/selling if you think you can gain 10% + on your property in a year's time without doing a thing? For me a flat market, following inflation is the best possible outcome for everyone.

If you only expect 1% then it's not worth your while waiting. I also think it very interesting as independent.ie articles seem to be a litmus test for general opinion on the housing market (no matter what you think of their journalistic prowess *ahem*).

It's none more complicated than that.

Like any market, it experiences dips and surges. People just get emotionally charged about it because they could be transacting in the middle of a surge and can't do anything about it. They're right to be emotional about it - for the majority of people it's the largest financial transaction in their lives.

However, what you describe is nothing more than a utopia when looking at the property market over a period of time. Do you honestly believe what you're saying can be realised?

Barely Hedged

seamus wrote: »

"Never ascribe to malice that which is adequately explained by incompetence."
I think that's especially true in the case of Castles. How that agency survived the collapse I'll never know. They were a clueless bunch before the crash and still a clueless bunch now.

I think I'm right in saying they siginificantly under cut the commission other agents charge?

Cheaper price and inferior service. Not a foreign concept in any other business

Barely Hedged

gosplan wrote: »

People going on about long term economic fundamentals are either ignoring the fact that they've already started dropping or refusing to see the different sub-markets in the irish property market.

People dismissing positive long term economic fundamentals when combined with evidentiary growth in national house prices and an only recent flat market in Dublin - what are these people thinking?

gosplan

Barely Hedged wrote: »

People dismissing positive long term economic fundamentals when combined with evidentiary growth in national house prices and an only recent flat market in Dublin - what are these people thinking?

Maybe they're thinking short term?

Barely Hedged

slowjoe17 wrote: »

It's not just the 20%. If you have combined earning of 80k and 100k deposit, you can still only bid up to 380k. So the CB deposit requirement is 14%, but in fact, you are required to present a 26% deposit by the LTV rules.



The borrowing ability of the average buyer has just dropped by 4.5/3.5 = 27%. Even if cash buyers were 50% of the market, that has to play out. I have well-paid friends in the Facebooks and Googles, and they can't get a mortgage for a 3bed semi atm.

So, for the South Dublin market, just forget it. The market has to fall.



Respectfully, being long a multi-hundred thousand euro asset doesn't meet my definition of "no skin in the game". OTOH, no-one on this forum meets that definition IMO. I'm looking, so I have skin-in-the-game on the downside.

But I really wish that prolific posters who might be estate agents or BTL investors would identify themselves!



"Any drop" is clearly, provably wrong. Again, that assumes "they" have a deposit and income to meet current market prices at current market rules, the month that borrowing abiity has dropped by 28% (assuming the LTV rule changed from 4.5 to 3.5 times income.)

If "any drop" is 25%, yeah, totally, there will be a buying frenzy for the ages.

From an investment POV, anyone looking to buy has to factor in landlord-hostile rules currently in effect, and discount any future legislative stupidity "to solve the rental crisis" in the runup to the election.

There is so much subjectivity in this post its just short of summarising it to be: my friend told me this, so it must be right

Barely Hedged

gosplan wrote: »

Maybe they're thinking short term?

If you want "immediate economic counterbalances" I suggest you go to the CSO website and analyse the indicators that impact house prices and reasons why their consistent upward trajectory would cause house prices to "fall" - your word, not mine

gosplan

Barely Hedged wrote: »

If you want "immediate economic counterbalances" I suggest you go to the CSO website and analyse the indicators that impact house prices and reasons why their consistent upward trajectory would cause house prices to "fall" - your word, not mine

They all apply of course but none of them, nor all of them combined, are enough to overcome the fact that the market needs to adjust to new lending regulations right now.

Do you disagree with me when I say the Dublin mid prices 3-bed semi market will fall?

alastair

Archaeoliz wrote: »

I think it's more complicated than that. As I think has been mentioned before the CB rules are designed to reduce risk to the banking sector. Any impact on the housing market is secondary.

Things that I do know are that 20% YOY growth is unsustainable.

Agreed. The recent growth stemmed from an extremely constricted supply meeting increased demand. 20% YOY growth is neither achievable, nor desirable. Some level of growth (single digit) is to be expected in our context however - even with controlled lending.

Barely Hedged

gosplan wrote: »

They all apply of course but none of them, nor all of them combined, are enough to overcome the fact that the market needs to adjust to new lending regulations right now.

Do you disagree with me when I say the Dublin mid prices 3-bed semi market will fall?

The market needs to adjust! Have you not seen it adjust in the past 6/9 months. The steam is taken out of the market. Read as large increases removed, falls haven't happened.

People will just move about in the affordability brackets because of the new regulations. Why will prices of a 3 bed semi decrease?

So we've had on this forum in the past:

When cash buyers are gone, the market will fall. We're at 30% now, down from 50%.

When the CGT expires, the market will fall. Cheerio CGT 8 months ago.

When the central bank restrictions are implemented, prices will fall. We're now in the 8th month of the year and no price falls since its implementation in the 2nd month.

Is it not clear that even when the market was hit with all these events it's remained resilient. It's simply the performance of the Irish economy. Nothing else - it rules all other crap that can be thrown at property market .

gosplan

Barely Hedged wrote: »

The market needs to adjust! Have you not seen it adjust in the past 6/9 months. The steam is taken out of the market. Read as large increases removed, falls haven't happened.

People will just move about in the affordability brackets because of the new regulations. Why will prices of a 3 bed semi decrease?

They won't move 'about'.

They'll move down.

It won't affect the very wealthy so much and 220k houses will be more popular than ever.

Barely Hedged

gosplan wrote: »

They won't move 'about'.

They'll move down.

10 people can afford 350k houses before the regulations, 10 can afford 400k houses and 10 can afford 450k houses. Each group's affordability is reduced by 50k post regulations. What happens demand in the 300k, 350k and 400k brackets post regulations?

Why haven't we seen large scale drops in the past 6 months due to the regulations?

Also, did you know over the past 4/5 years very few people qualified for the 90/92% mortgage unless they had significant equity as a safe guard. What implications do you think this fact have on your thesis?

gosplan

Barely Hedged wrote: »

10 people can afford 350k houses before the regulations, 10 can afford 400k houses and 10 can afford 450k houses. Each group's affordability is reduced by 50k post regulations. What happens demand in the 300k, 350k and 400k brackets post regulations?

Why haven't we seen large scale drops in the past 6 months due to the regulations?

Also, did you know over the past 4/5 years very few people qualified for the 90/92% mortgage unless they had significant equity as a safe guard. What implications do you think this fact have on your thesis?

I guess we'll know by Christmas either way.

To confirm, you're saying mid-priced Dublin houses, say 350-500k will be unaffected?

Barely Hedged

gosplan wrote: »

I guess we'll know by Christmas either way.

To confirm, you're saying mid-priced Dublin houses, say 350-500k will be unaffected?

You could answer my questions before I respond to yours?

gosplan

Barely Hedged wrote: »

You could answer my questions before I respond to yours?

Fair enough. Thought it would be easier to agree to disagree.

gosplan

Barely Hedged wrote: »

10 people can afford 350k houses before the regulations, 10 can afford 400k houses and 10 can afford 450k houses. Each group's affordability is reduced by 50k post regulations. What happens demand in the 300k, 350k and 400k brackets post regulations?

Why haven't we seen large scale drops in the past 6 months due to the regulations?

Also, did you know over the past 4/5 years very few people qualified for the 90/92% mortgage unless they had significant equity as a safe guard. What implications do you think this fact have on your thesis?

1: Gain and lose 10 people. This is assuming there's an even spread of wages across the range as they wouldn't be grouped around a mean or something like that.

2: It's filtering through. If you focus close enough in on a curve you see a straight line.

3: OK, but there's a lot more at play than just equity, LTV, stock etc.

johnp001

Barely Hedged wrote: »

...
Also, did you know over the past 4/5 years very few people qualified for the 90/92% mortgage unless they had significant equity as a safe guard. What implications do you think this fact have on your thesis?

What does this mean?
Are you saying that you only qualify for a 90% mortgage if it is a large mortgage? I don't understand what you are saying here.
Also, do you have any figures that quantify how many is "very few" people?

Barely Hedged

gosplan wrote: »

1: Gain and lose 10 people. This is assuming there's an even spread of wages across the range as they wouldn't be grouped around a mean or something like that.

2: It's filtering through. If you focus close enough in on a curve you see a straight line.

3: OK, but there's a lot more at play than just equity, LTV, stock etc.

The criteria and affordability are the same for each grouping, its just reduced the amount they can afford to pay. There's no drop in demand and coupled with a performing economy...

Can your second answer be anymore obscure or maybe that's the point?

There's more at play? What exactly is at play that's more significant than the context to what you're arguing?

Barely Hedged

gosplan wrote: »

I guess we'll know by Christmas either way.

To confirm, you're saying mid-priced Dublin houses, say 350-500k will be unaffected?

What exactly do you coonsider a drop due to the "slashing" of the number of people in the 450k range?

To answer you're question, more of the same that we've seen this year

Michael D Not Higgins

gosplan wrote: »

I guess we'll know by Christmas either way.

To confirm, you're saying mid-priced Dublin houses, say 350-500k will be unaffected?

I'd call them high priced. There's 4300 Dublin properties on daft. The first third are below €250k, the next third below €375k, and everything above is the final third. Most of the band you mention is the highest third of property prices in Dubin.

gosplan

Barely Hedged wrote: »

The criteria and affordability are the same for each grouping, its just reduced the amount they can afford to pay. There's no drop in demand and coupled with a performing economy...

Can your second answer be anymore obscure or maybe that's the point?

There's more at play? What exactly is at play that's more significant than the context to what you're arguing?

The second point was that the flatline in mid priced Dublin houses is a mini peak.

Anyway like I said, we'll know by Christmas.

Now can you answer my question and we'll call it a day.

gosplan

Barely Hedged wrote: »

What exactly do you coonsider a drop due to the "slashing" of the number of people in the 450k range?

To answer you're question, more of the same that we've seen this year

Unsure. Maybe 5% or so. Maybe up to 10%.

Very shaky about calling a figure obviously.

Barely Hedged

gosplan wrote: »

The second point was that the flatline in mid priced Dublin houses is a mini peak.

Anyway like I said, we'll know by Christmas.

Now can you answer my question and we'll call it a day.

Where does the delusion of price drops end with people. As I said a few posts ago it was cash buyers, then CGT and now the CB even though most people needed to have a 15% to 20% deposit for the past 4/5 years to get a mortgage.

Ever clinging to the next outlier that might cause a price drop instead of using logic

Barely Hedged

gosplan wrote: »

Unsure. Maybe 5% or so. Maybe up to 10%.

Very shaky about calling a figure obviously.

If you're unsure or talking about a 5% drop, I'd steer clear of using emotive language such as "slashing". It's wrong as It's clearly not appropriate to the level of drops you're thinking we'll see and disingenuous

gaius c

Barely Hedged wrote: »

Also, did you know over the past 4/5 years very few people qualified for the 90/92% mortgage unless they had significant equity as a safe guard.

That's self-contradictory. If you have a 90-92% mortgage, there is no "significant equity safe guard".

gosplan

Barely Hedged wrote: »

Where does the delusion of price drops end with people. As I said a few posts ago it was cash buyers, then CGT and now the CB even though most people needed to have a 15% to 20% deposit for the past 4/5 years to get a mortgage.

Ever clinging to the next outlier that might cause a price drop instead of using logic

So there were no 90/92% mortgages, rather 80/85%?

I don't quite get what you're trying to say here.

Is it that the new rules more or less don't change anything?

gosplan

Barely Hedged wrote: »

If you're unsure or talking about a 5% drop, I'd steer clear of using emotive language such as "slashing". It's wrong as It's clearly not appropriate to the level of drops you're thinking we'll see and disingenuous

OK, I'll try not to use such emotive language. Thanks for advice.

gaius c

Good news for bulls anyway.
PPR is showing a massive spike for July so far. The July average for Dublin is €45k higher than the June average. Lots more data to be added yet but it will take some serious movement to bring that average to lower than June's figure.

What I'm watching though are the transaction volumes. Early days but it does look like things are starting to slow up.

Barely Hedged

gaius c wrote: »

That's self-contradictory. If you have a 90-92% mortgage, there is no "significant equity safe guard".

Not everybody spunks their entire cash savings on a property.

seamus

Barely Hedged wrote: »

Not everybody spunks their entire cash savings on a property.

Please tell me these banks who consider liquid assets to be an "equity safeguard" so I can remember not to keep any savings with them.