Are we heading for another property bubble?

bingowings2015

I came into a little money recently and find myself with the deposit for a house. I'm confident of getting a mortgage but not sure if to go for it, or not?

Should I wait or bite the bullet?

SCOOP 64

Were you buying, Dublin ?

bingowings2015

Yes, Dublin. Although I am open to anything within commuting distance

goz83

I would speculate and say yes. The question is when? I think we will have another pop inside 5 years. Prices are reasonable enough at the moment. Nothing like a place to call home, rather than a place to argue with your landlord about.

johnp001

bingowings2015 wrote: »

I came into a little money recently and find myself with the deposit for a house. I'm confident of getting a mortgage but not sure if to go for it, or not?

Should I wait or bite the bullet?

Are we heading for another property bubble?
Just ask an estate agent! http://www.independent.ie/business/irish/banking-inquiry/were-facing-new-property-bubble-bank-inquiry-told-31115352.html
Under oath even they say yes :eek:

Irish house price inflation (national mind, dublin is far more extreme) has been running at 15% which is 6 times EU average against a backdrop of CPI deflation.
http://www.irishtimes.com/business/economy/irish-house-price-inflation-six-times-higher-than-eu-average-1.2073984

Supply inflow in Dublin up 60% year on year
Stock on market (Dublin as measured by Daft listings) up 54% year on year
Sharp inflow and supply rises are leading indicators of downward price movements.

Dog of Tears

The current prices are being driven primarily by lack of supply which is unlikely to alleviate in the medium term.

househero

johnp001 wrote: »

Irish house price inflation (national mind, dublin is far more extreme) has been running at 15% which is 6 times EU average against a backdrop of CPI deflation.

Ireland is not an average EU country. Our economy is a net exporter we have a very young population and an unnaturally high tax take. Comparing Ireland to 'EU averages' makes no sense economically.

The UK, France, Germany and Italy face completely different problems to us over the next 20 to 30 years as Asia and south America become the dominant economic areas.

House prices rose so fast because they fell too far in Ireland... Too many idiots reading English owned Irish newspapers spooked the market. Dublin has been a wealthy and stable property market for over 200 years. Its not built on sand.

The market will be stable for the next 5 years seeing moderate gains before another fall (nowhere near as extreme as what we have seen)

johnp001

Dog of Tears wrote: »

The current prices are being driven primarily by lack of supply which is unlikely to alleviate in the medium term.

Please could you share the sources for your property market supply prediction as it is so far at odds with my own figures (which are taken from Daft listings)?

househero wrote: »

Ireland is not an average EU country. Our economy is a net exporter we have a very young population and an unnaturally high tax take. Comparing Ireland to 'EU averages' makes no sense economically.

The only reference I could find for Ireland's relative tax take put it as very low within the EU (bottom in EU15, fifth from bottom in EU27), do you have an alternative reference?
http://www.eapn.ie/eapn/policy/resources-on-taxation/tax-in-ireland-and-europe

househero wrote: »

...

House prices rose so fast because they fell too far in Ireland... Too many idiots reading English owned Irish newspapers spooked the market. Dublin has been a wealthy and stable property market for over 200 years. Its not built on sand.

Whatever wealth and stability the Dublin property market built up over the last 200 years was wiped out in the crash after the last bubble.
The bubble inflated prices were entirely dependent on money that our banks borrowed from Europe and were unable to pay back. Since the bailout this wealth is no longer in Ireland.

househero wrote: »

The market will be stable for the next 5 years seeing moderate gains before another fall (nowhere near as extreme as what we have seen)

I don't agree with this conclusion but am interested to hear what you think the catalyst for falls in 5 years time will be?

hfallada

A bubble is generally built on unsustainable levels of borrowing eg 100% mortgages. We now have mortgage restrictions to stop another bubble. Dublin will be a solid investment. Its the heart of our industry and services industries. There will always be jobs in Dublin and life moves on when a massive employer closes, where as a small town is almost destroyed when a factory closes.

Ireland has the youngest population in Europe. We now have a very solid economy compared to most of Europe. We have 10% unemployment and yet we dont have a working banking system and we dont have enough construction at the moment. Once these issues are slowly resolved, the economy will grow faster.

I cant see how people would think prices will fall significantly in Dublin the next 10 years. But a SF Government might scare some FDI and their taxation polices if implemented, will cause people to emigrate.

quadrifoglio verde

househero wrote: »

Ireland is not an average EU country. Our economy is a net exporter we have a very young population and an unnaturally high tax take. Comparing Ireland to 'EU averages' makes no sense economically.

The UK, France, Germany and Italy face completely different problems to us over the next 20 to 30 years as Asia and south America become the dominant economic areas.

House prices rose so fast because they fell too far in Ireland... Too many idiots reading English owned Irish newspapers spooked the market. Dublin has been a wealthy and stable property market for over 200 years. Its not built on sand.

The market will be stable for the next 5 years seeing moderate gains before another fall (nowhere near as extreme as what we have seen)

Dublin has been a wealthy and stable property market for over 200 years?
I beg to differ.
Well Irish Times has done the research for me
http://www.irishtimes.com/life-and-style/homes-and-property/300-years-of-property-booms-and-busts-1.2111375

There is no such thing as a long term stable market. Bitcoins, oil, gold, hogs, wheat, Apple shares, they all go through booms and busts , nothing that can be speculated on is stable.

To the op,you want to buy a home, you think you'll get the mortgage, if it's somewhere you're happy to live in for the forseable future then there's no risk I'm buying. People who bought at the peak of the boom with a long term view of living there aren't affected by negative equity, it's those who bought with the plan to trade up after a few years that got bit in the ass and end up married with kids and renting a house and paying a mortgage on a 1 bed apartment.

ted1

bingowings2015 wrote: »

I came into a little money recently and find myself with the deposit for a house. I'm confident of getting a mortgage but not sure if to go for it, or not?

Should I wait or bite the bullet?

If you see a place you picture yourself in for years then buy it. If you see a place to get you in the property ladder then don't

househero

johnp001 wrote: »

I don't agree with this conclusion but am interested to hear what you think the catalyst for falls in 5 years time will be?

Too many questions John. If you want an answer ask me just one at a time please mate.

Housing is not a supply and demand market. In fact the whole supply and demand theory is misused and over simplified.

We are talking about two different types of tax. Your stats are labour related costs, I was referring to irelands corporation tax take, which is far higher than it should be. For reasons publicised recently.

Do not take my 5 years as a hard figure, I stopped saying medium term as people got confused. I'm assuming you didn't take it as a hard number anyway as you were looking for indicators for another fall. Macro economic conditions will dictate the speed of the next fall but we will see rises before this happens and unless the housing regulations are reversed, the fall will be nowhere as bad. As a timeline... Oil rises, end of EU QE, bank refinancing (higher interest rates) EU govs collectively softening economic policy to increase inflation to reduce gov debt in real terms is a cycle that has been activly pushed by western gives for over a century. Money is moving east and we will cycle through this for the next 30 years or so. The EU won't see any significant growth (in real terms) allowing for further deflation if the west and the reduced growth of the BRICS due to increased regulation.

This is based on the now. Now in 5 years might be different hahahaha

Just so you are aware. A flat in a crappy bit of town in an Indian or Chinese city, that lists plumbed water as a 'feature' and comes with a load of crap you don't get in the west. would as of right now, cost you at least 200k. In a country where you would be earning around 3 times less. Suddenly the west looks cheap and we have to wait for the eadts collapse.

Money moves from east to west and back. It always has done and will continue to. Its economic manufactured growth, bubbles and busts.

FYI I sold in 06, seeing the crash, spent 2 years wondering wtf was still going on before the poop hit the fan. I rebought at the end of 2013, which looks a lit like the bottom of this cycle.

If depreciation takes hold, all bets are off.

househero

quadrifoglio verde wrote: »

Dublin has been a wealthy and stable property market for over 200 years?
I beg to differ.
Well Irish Times has done the research for me
http://www.irishtimes.com/life-and-style/homes-and-property/300-years-of-property-booms-and-busts-1.2111375

There is no such thing as a long term stable market. Bitcoins, oil, gold, hogs, wheat, Apple shares, they all go through booms and busts , nothing that can be speculated on is stable.

Don't quote a newspaper hahaha

If you bother to read the actual study that the journalist is writing about, you will see prices have risen in real terms with the exception of a 30 year period immediately preceding when we kicked the bjaysus out of the English (local instability).

In economic terms a stable market does NOT mean prices will be the same one year to the next. This is where I think you may have got confused. It means it will follow economic growth and asset appreciation in the medium term (averages basically). A 200 year history of rising prices is as stable as it gets.

You explained exactly this point very well to the OP. In the end as long as your looking at the medium to long term, short term market changes are unimportant to a family.

The big exception is Japan and deflation

househero

bingowings2015 wrote: »

I came into a little money recently and find myself with the deposit for a house. I'm confident of getting a mortgage but not sure if to go for it, or not?

Should I wait or bite the bullet?

If you need a house buy it. They are cheap enough. Don't buy an over valued property in a select pocket of Dub and you'll be grand lad.

ted1

househero wrote: »

If you need a house buy it. They are cheap enough. Don't buy an over valued property in a select pocket of Dub and you'll be grand lad.

That's very poor advice, dublin properties will ALWAYS. Be more desirable than rural properties, you need to pad out your advice. Maybe you simply meant to say " don't buy over valued properties "

househero

ted1 wrote: »

That's very poor advice, dublin properties will ALWAYS. Be more desirable than rural properties, you need to pad out your advice. Maybe you simply meant to say " don't buy over valued properties "

No I meant what i said. You misread it. Don't buy in overpriced select pockets of dub...

Buy in dub. Don't buy an overpriced house in dub as there are still many good value properties to be snapped up.

mickman

househero wrote: »

No I meant what i said. You misread it. Don't buy in overpriced select pockets of dub...

Buy in dub. Don't buy an overpriced house in dub as there are still many good value properties to be snapped up.

Going by your handle , sounds like you got lucky when you sold in 2006 and now you reckon you can time the market :-)

Henry Ford III

From another thread nearby.

househero wrote: »

We payed (a rental deposit in) cash. The arsehole claimed we didn't pay when we left. We couldn't do anything about it. I wrecked his house before I left.

Might be a good idea to factor this in when considering househeros opinion on all matters property.

kuntboy

goz83 wrote: »

Nothing like a place to call home, rather than a place to argue with your landlord about.

Except you don't really "own" it do you? You effectively "rent" it off the government via property tax.

In the UK people's assets (including their home) are routinely seized and sold to pay council tax if they are in arrears.

mickman

Henry Ford III wrote: »

From another thread nearby.



Might be a good idea to factor this in when considering househeros opinion on all matters property.

Sounds like a decent guy :-)

Atlantic Dawn

If you can afford a house now and your plan is to live in the house go ahead and buy it. If your looking to buy as an investment to make money don't go buying for atleast 5 years.

ezra_pound

kuntboy wrote: »

Except you don't really "own" it do you? You effectively "rent" it off the government via property tax.

In the UK people's assets (including their home) are routinely seized and sold to pay council tax if they are in arrears.

Of course you own it. I pay 7e lpt a week. Is this the rent for my house?

stringed theory

househero wrote: »

Just so you are aware. A flat in a crappy bit of town in an Indian or Chinese city, that lists plumbed water as a 'feature' and comes with a load of crap you don't get in the west. would as of right now, cost you at least 200k. In a country where you would be earning around 3 times less. Suddenly the west looks cheap and we have to wait for the eadts collapse.

Typical definition of India middle class: income of over €3000 per annum.

So a tiny minority can afford 200k for an apartment, and, actually, they are quite stuck for choice. There are very few places in Indian cities where you can escape the appalling Indian environment. China is better, but there is still the same problem of limited demand for an even more limited supply of desirable accommodation.

In contrast, western countries have an enormous range of attractive and desirable places to live in, and city prices will increasingly be underpinned by immigration from Asia.
Investment funds may swing between East and West, but actual immigration is almost entirely a one way street, and likely to remain so.

Archaeoliz

johnp001 wrote: »

The only reference I could find for Ireland's relative tax take put it as very low within the EU (bottom in EU15, fifth from bottom in EU27), do you have an alternative reference?

Those figures quoted are from 2007-2008.

There is a publication "Debunking Irish Income Tax Myths" available online in pdf format published in September 2014. It states "Ireland is not a low income tax country... Since 2010 Ireland has experienced a sharp jump in taxation of personal incomes... The rise has seen Ireland become the 5th highest tax jurisdiction for personal incomes in the EU".

Can't seem to link to the pdf but a Google search will bring it up if you're interested.

Sala

OP I think if you have a decent deposit, can comfortably afford the mortgage, are not buying to get on the ladder (ie a one bed that you only intend to keep for a couple years), and find something you like in location you like, go ahead and buy. If prices go down you may well be annoyed but that's the worst you'll be provided you have bought something suitable you can afford. If prices goes up, similarly it won't affect you, unless you have bought the wrong property for you and need to sell.

I think the worst thing you can do, which seems to be happening now with the AIP situation, is panic buy. You may make a costly error

alastair

Archaeoliz wrote: »

Those figures quoted are from 2007-2008.

There is a publication "Debunking Irish Income Tax Myths" available online in pdf format published in September 2014. It states "Ireland is not a low income tax country... Since 2010 Ireland has experienced a sharp jump in taxation of personal incomes... The rise has seen Ireland become the 5th highest tax jurisdiction for personal incomes in the EU".

Can't seem to link to the pdf but a Google search will bring it up if you're interested.

Ahh - IBEC's rather strange interpretation of how to read the taxation stats. And from a body well known for it's considered position on taxation of any kind.
Right.

http://www.irishleftreview.org/2014/09/30/ibecs-myth-debunking-bunk/
http://www.tasc.ie/download/pdf/tasc_response_to_ibec_tax_analysis.pdf

goz83

kuntboy wrote: »

Except you don't really "own" it do you? You effectively "rent" it off the government via property tax.

In the UK people's assets (including their home) are routinely seized and sold to pay council tax if they are in arrears.

I think you might have posted before you drank your coffee.

Villa05

mickman wrote:

Going by your handle , sounds like you got lucky when you sold in 2006 and now you reckon you can time the market :-)

It's not that terribly difficult. Many saw the crash coming well up to a year in advance.

The Spider

Villa05 wrote: »

It's not that terribly difficult. Many saw the crash coming well up to a year in advance.

They did, and I'll count myself among them, however people are now applying the same criteria against this rise rise in prices, which is a mistake, we don't have 100 percent mortgages or trackers any more. We also don't have an economy based on building, but we do have the fastest growing economy in Europe.

We also have no supply because of the building industry collapse. Banks aren't going to collapse again.

Nope things are different this time around, and applying the logic that led to the last crash is a fools game, different circumstances.

bluemartin

bingowings2015 wrote: »

I came into a little money recently and find myself with the deposit for a house. I'm confident of getting a mortgage but not sure if to go for it, or not?

Should I wait or bite the bullet?

How wonderful for you, many have to save and scrimp for years before they have the much needed house deposit so you are very lucky.

Every one needs a place to live in, why squander it on rent when you could have your own place. Some say its better to rent but I can honestly that when you retire, you have far far more security in your old age when you have your own little teacht.
Don't worry about house prices rising or falling that's not relevant when you looking for a home to live in. Lots of people waited and waited for the right time to buy in Dublin but unfortunately in doing so they missed the boat.

mickman

Villa05 wrote: »

It's not that terribly difficult. Many saw the crash coming well up to a year in advance.

Maybe some people spotted it the first time but getting it right once doesn't mean people will be right again