Are we heading for another property bubble?

evolving_doors

You also have to factor in the 'moving on' time OP.. you might wind up in your thirties and ready to move on (family/job) but only a dent in your first mortgage if youve waited (say 20k , so in the heel of the hunt you sell and get the 20k. You still need the deposit for a new gaffe then consider youll be starting over again on a new mortgage.

Could you get in early and start chipping away at the mortgage to give you more deposit leverage at the other end when the time comes?

Could you keep yer gaff and rent it out while you get a new gaffe (if the rent covers the mortgage on property 1 thats a sweet position to be in so it would make sense to get the mortgage paid off ASAP to get a better ratio)?

Then again the cost of monthly mortgage now verses the rent youre paying now is important. If theres say a difference of say 300pm even then calculate would that be just as much as the difference yould get from selling a house in 10 yrs time (30k)?

But then again the possibility of having a gaffe to rent out is gone if youve been renting and waiting (or just kicked down the road by ten years).

Do you think a house might be a better option than throwing money into a pension. (I would be considering my current house as a pension because I personally dont see any value in putting much money into costly pension schemes myself).

I spse though it all depends on the totality of your finances and planing for future (family etc!)

But to the substantive question , will prices go down in the capital? I would say no given the strong rental demand. Even in times of recession people flock to capital centres and this has largely happened with dublin.

I think value for money is predominately based around the rental value. Dont forget there is a baby boom still to filter through the system in about 15-20 years. So the demand for family houses/college rentals will definitely be there then.

Panda_Turtle

Gebgbegb wrote: »

Dont forget there is a baby boom still to filter through the system in about 15-20 years. So the demand for family houses/college rentals will definitely be there then.

Baby boom? Aren't people having less kids these days?

goz83

The Spider wrote: »

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.

I don't think that's exactly right. Banks are driven by profit, rather than the needs of society. Just when you think a lesson has been learned, they feed the greed. Soon enough, that greed turns into a monster and breaks loose, destroying everything around it. Sorry for the melodram, but I don't think the banks will ever have societies best intentions in mind, even if it meant stability for the banks. They chase the money, that is their nature.

It is only a matter of time before we have another booming construction sector. In the last year alone, I have seen foundation developments turn into homes and they are probably already sold (belmayne/parkedge). Vacant apartment blocks are now filled after years of being practically empty. Demand is beating supply and rather quickly too....here in Dublin anyway. The tight grips on the banks are loosening, as currencly flows through them, massaging the hands of an empty minded puppet government. There will be a crash. It is the belief that we are stronger and wiser that will guarantee the crash hits us harder than the last. As a society, we have just stepped outside after our stay in hospital. if we are not very careful, we will be mowed down by a speeding brinks van, as we cross the road to order a brand new bmw.....paddy spec of course

Panda_Turtle wrote: »

Baby boom? Aren't people having less kids these days?

Perhaps some are, but not from what I have seen. I'm one of the squeezed middle, i'm in my early 30s and baby number 5 is on the way

My sister in her mid twenties is expecting baby number 4 :eek:

My sister in law is pregnant on her first and she is late twenties, but in general, i think the average is still high.

Duckjob

Gebgbegb wrote: »

You also have to factor in the 'moving on' time OP.. you might wind up in your thirties and ready to move on (family/job) but only a dent in your first mortgage if youve waited (say 20k , so in the heel of the hunt you sell and get the 20k. You still need the deposit for a new gaffe then consider youll be starting over again on a new mortgage.

You seem to be assuming the OP plans to buy something that he'll grow out in the new few years. That sounds suspiciously like the "property ladder / starter home" horsesh*t that EAs had everyone buying into 10 yrs ago.

What if the OP buys something now that can meet his future needs for family etc ?

gaius c

To answer the question in the OP, we may already be past the top of the peak and in the downward phase.

Barely Hedged

goz83 wrote: »

I don't think that's exactly right. Banks are driven by profit, rather than the needs of society. Just when you think a lesson has been learned, they feed the greed. Soon enough, that greed turns into a monster and breaks loose, destroying everything around it. Sorry for the melodram, but I don't think the banks will ever have societies best intentions in mind, even if it meant stability for the banks. They chase the money, that is their nature.

It is only a matter of time before we have another booming construction sector. In the last year alone, I have seen foundation developments turn into homes and they are probably already sold (belmayne/parkedge). Vacant apartment blocks are now filled after years of being practically empty. Demand is beating supply and rather quickly too....here in Dublin anyway. The tight grips on the banks are loosening, as currencly flows through them, massaging the hands of an empty minded puppet government. There will be a crash. It is the belief that we are stronger and wiser that will guarantee the crash hits us harder than the last. As a society, we have just stepped outside after our stay in hospital. if we are not very careful, we will be mowed down by a speeding brinks van, as we cross the road to order a brand new bmw.....paddy spec of course
.

To be honest, this post is just meandering waffle of the highest order.

The original poster will be well advised to ignore everything in it

goz83

Barely Hedged wrote: »

To be honest, this post is just meandering waffle of the highest order.

The original poster will be well advised to ignore everything in it

To be honest, i think your own posts are full of fictitious shîte.

Yeah, my above post was a bit colourful. Let me tell you a little secret though......it was meant to be!

Still plenty of truth in it, even if there is a little intended waffle.

Barely Hedged

goz83 wrote: »

To be honest, i think your own posts are full of fictitious shîte.

Yeah, my above post was a bit colourful. Let me tell you a little secret though......it was meant to be!

Still plenty of truth in it, even if there is a little intended waffle.

What posts would they be that are full of fictitious ****e?

Ill let you in on another little secret. Theres no way of establishing tone from a post on an internet forum unless it's very specific. There was nothing specific about your post just rambling nonsense.

The_Morrigan

Barely Hedged wrote: »

To be honest, this post is just meandering waffle of the highest order.

The original poster will be well advised to ignore everything in it

goz83 wrote: »

To be honest, i think your own posts are full of fictitious shîte.

Yeah, my above post was a bit colourful. Let me tell you a little secret though......it was meant to be!

Still plenty of truth in it, even if there is a little intended waffle.

Barely Hedged wrote: »

What posts would they be that are full of fictitious ****e?

Ill let you in on another little secret. Theres no way of establishing tone from a post on an internet forum unless it's very specific. There was nothing specific about your post just rambling nonsense.

Cut it out the two of you.

Panda_Turtle

goz83 wrote: »

Perhaps some are, but not from what I have seen. I'm one of the squeezed middle, i'm in my early 30s and baby number 5 is on the way

My sister in her mid twenties is expecting baby number 4 :eek:

My sister in law is pregnant on her first and she is late twenties, but in general, i think the average is still high.

Jeeze, you and your sister in law are busy, still plenty of time to pop out another ten between ya's

Not the average as far as I can see

Eric Cartman

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 your looking at a 3 bed semi or smaller then id wait. New mortgage rules especially for FTB will have a deflating effect on prices for these type properties, especially apartments. If your looking for something larger and planning to stay for a decade then yeah by all means go for it while interest rates are in the pan, those will track inflation and if you can even get 5 years of eroding the principal youll be better off even if values sink a little again.

* ofcourse the apartments and 3bsemi rules dont apply to dublin 2,4,6,6w - those apartments and semi's arent ever going to be ftb pricing

bluemartin

Eric Cartman wrote: »

If your looking at a 3 bed semi or smaller then id wait. New mortgage rules especially for FTB will have a deflating effect on prices for these type properties, especially apartments.

Why do you say that?

You will be paying it for 20 or 30 years. Interest rates can only go one way in that period - up!. Factor in what interest rates of 10% to 15% (perfectly usual historically) would do to your repayments and the property market...

The tax system in Ireland is strongly geared towards supporting the housing market. If you just wanted to invest a windfall, you should be better off investing in blue chip stocks and shares long term, and your money would be more accessible, but these are penalised in Ireland compared to many other countries.

The_Conductor

Deleted User wrote: »

You will be paying it for 20 or 30 years. Interest rates can only go one way in that period - up!. Factor in what interest rates of 10% to 15% (perfectly usual historically) would do to your repayments and the property market...

While interest rates are at a historically low level, Europewide- and can only go in one direction- to point your finger at a point in the 80s when we were going it alone and somehow suggest that its a useful historical comparitor- is nonsense. The ECB is a composite of a basket of currencies- the only useful historical comparitor- would be to graph how the combined interest rates of the constituent currencies moved over-time- in the same proportional weight each is assigned in the Euro. Our historical max of 18% would only be 2% of the basket. Ireland was, in fact, the only EMS currency which did not move in tandem with German interest rates between 1979 and 1988. Mairead Devine wrote a very interesting paper on this a few years back- I'll see if I can find you a link..........

Edit- link to Máiréad's report here

Deleted User wrote: »

The tax system in Ireland is strongly geared towards supporting the housing market. If you just wanted to invest a windfall, you should be better off investing in blue chip stocks and shares long term, and your money would be more accessible, but these are penalised in Ireland compared to many other countries.

The taxsystem-and political interventions in the market place- may have traditionally supported the housing market. Present policies are however the flipside of the coin.

Interest, as an allowable deduction for investors, has been cut to 75% and stated policy is to remove it.

Deposits for FTBs @ 80% are prudent- and arguably 60% for investors, are also prudent. These are new policies.

MIS and other rental and supports for tenants and owners have stagnated and/or reduced.

FIS- has been restructured to remove an emphasis on ignoring property ownership, and also all childcare costs are out of the equation (i.e. if you're on a good wage- but its all going on childcare- tough cookies......)

Arguably- individualisation of the tax bands itself- a fundamental policy of McCreevy and one he has stated is part of his proud legacy- has itself- undermined the traditional family unit- and made dual income households a necessity for anyone who intends to buy (wholly independently of any talk of income muliples for property prices etc).

Since 1997-1998- government policy, and more recently, Central Bank intervention (albeit at the instigation of the ECB)- has been to implement policies that supported the employment market- which was welcome after the abusive ecomonic policies of most of our governments since independence. Since 1994- this improved cashflow- provided income to people- who hitherto would have been unable to imagine buying their own property- and as a consequence- stayed in Ireland to work and bring up their families here- where they would otherwise have emigrated.

I grew up in an Ireland of the 70s and 80s. Many people imagine the last 5-6 years of emigration to be a new thing. Well- its not. Its been a traditional pressure valve for the Irish government- if they can't provide jobs for people- hell, we'll export them instead.........

Any support the property market got- aside from schemes for first time buyers- of questionable value- as they encouraged short-term-ism, and people to view a box sized apartment as 'getting on the property ladder' with the intention of trading up- was coincidental, rather than intentional.

The biggest travesty in our economic independence- was the manner in which the government gorged itself on stamp duty.......... This was an incidental income stream that no-one had imagined would turn into the torrent it did. Once the government had this income- by god they would do nothing to jeopardise it. Their policies were geared towards protecting their income though- and once again- the housing market itself was an incidental beneficiary of all of this.

The original Bacon reports- go through this- step by step in the mid-to-latter 90s. It got ignored- it wasn't politically acceptable to acknowledge it- despite the fact that it was a commissioned report.........

People seem to think that there is a master road-map somewhere, that economists, central banks and governments adhere to. Well- there isn't. They stumble from emergency to emergency. They have unexpected windfalls. They have financial ruins. Political decisions of today are locked away from examination for decades- and when they're finally opened- politicians assume that history may view their shortcomings in a kinder light than the harsh criticisms they would face were they to be debated by the people of the day.

If there is another bubble- its not that it was foreseeable, on unforeseeable- its because of a lack of will to take actions- good or bad- and the expediency of sitting back and allowing whatever is coming down the road, to arrive- and sure, if its providential- we're grand, and if its not- we'll deal with it- when we have to deal with it, and not a minute before.

Firefighting- should be left for the unforeseen- and not be used as an everyday mechanism for dealing with entirely probable courses of events. Unfortunately, in an Irish context- we have forgotten this salient point.

Crumbs868

Eric Cartman wrote: »

If your looking at a 3 bed semi or smaller then id wait. New mortgage rules especially for FTB will have a deflating effect on prices for these type properties, especially apartments. If your looking for something larger and planning to stay for a decade then yeah by all means go for it while interest rates are in the pan, those will track inflation and if you can even get 5 years of eroding the principal youll be better off even if values sink a little again.

* ofcourse the apartments and 3bsemi rules dont apply to dublin 2,4,6,6w - those apartments and semi's arent ever going to be ftb pricing

To put a different spin on falling houses

Say we have another dip in prices (3bed semi falls €25k/10%). For a lot of owners in negative equity they are only willing to accept a certain price(otherwise it's not worth their while / they have nowhere to go / bank won't let them) so this €25k may be the difference between them putting their house on the market and not. So I believe another fall in house prices will actually reduce available stock further.

My point is everyone has a theory (including both my own and yours) and they really are just people's predictions / best guesses with lots of holes in them.

The_Conductor

The_Conductor wrote: »

The taxsystem-and political interventions in the market place- may have traditionally supported the housing market. Present policies are however the flipside of the coin.

Policies to support the housing market may be less than in the past. However the fact that the OP is considering housing as a suitable place to invest a windfall illustrates that other, logically better, investments such as stocks and shares are still considerably disadvantaged from a tax perspective in Ireland compared to property.

For comparison, in Belgium dirt tax is 30% and this meets the liability regardless of the marginal tax rate and there is no cgt on investment gains.

Barely Hedged

Crumbs868 wrote: »

To put a different spin on falling houses

Say we have another dip in prices (3bed semi falls €25k/10%). For a lot of owners in negative equity they are only willing to accept a certain price(otherwise it's not worth their while / they have nowhere to go / bank won't let them) so this €25k may be the difference between them putting their house on the market and not. So I believe another fall in house prices will actually reduce available stock further.

My point is everyone has a theory (including both my own and yours) and they really are just people's predictions / best guesses with lots of holes in them.

All the banks offer negative equity mortgages. How would this affect your example above?

Eric Cartman

bluemartin wrote: »

Why do you say that?

With the 220k ftb limit coming a lot of stock will move from 250k-275k into the 220k bracket, apartments will decrease to make them seem attractive compared to it , larger homes will be mostly unaffected by it though

Villa05

The_Conductor wrote:

The original Bacon reports- go through this- step by step in the mid-to-latter 90s. It got ignored- it wasn't politically acceptable to acknowledge it- despite the fact that it was a commissioned report.........

The_Conductor wrote:

While interest rates are at a historically low level, Europewide- and can only go in one direction- to point your finger at a point in the 80s when we were going it alone and somehow suggest that its a useful historical comparitor- is nonsense. The ECB is a composite of a basket of currencies- the only useful historical comparitor- would be to graph how the combined interest rates of the constituent currencies moved over-time- in the same proportional weight each is assigned in the Euro. Our historical max of 18% would only be 2% of the basket. Ireland was, in fact, the only EMS currency which did not move in tandem with German interest rates between 1979 and 1988. Mairead Devine wrote a very interesting paper on this a few years back- I'll see if I can find you a link..........

Would it be fair to assume that our mortgage rates will be the same as the eu average going forward, when our current rates are more than double the eu average.
Everywhere in this country we have to pay for someone else's mistakes.
We show very little sign of learning from those mistakes, so comparing with normal markets is unfair when we are incapable of providing a normal functioning market.

evolving_doors

Panda_Turtle wrote: »

Baby boom? Aren't people having less kids these days?

maybe this year I dont know, but in the last few years yes, definite boom in kids. See news reports today about increasing class sizes etc

even if the numbers are dropping there is still a current housing shortage to deal with... and no way is that going to improve enough.

evolving_doors

Duckjob wrote: »

You seem to be assuming the OP plans to buy something that he'll grow out in the new few years. That sounds suspiciously like the "property ladder / starter home" horsesh*t that EAs had everyone buying into 10 yrs ago.

What if the OP buys something now that can meet his future needs for family etc ?

I dont know what the OP is planning in terms of family job. I was just throwing out some questions to consider.

If you dont believe in the property ladder then good on ya. Youve obviously bought/inherited the perfect situation that will do till you kick the bucket. If the OP doesn't have an unlimited budget then he may have to consider some type of ''moving up the ladder' plan, (even if that involves an exit strategy to another county/country.... esp if kids come along and he wants to be near family to help out).

Maybe the OP is going to buy the dream 3-4 bed semi-d in the perfect spot in dublin with 'good schools' and community etc. But that comes at a nice price and we dont know the OP's budget/job situation/other finances/relationship status etc.

Put it like this : if I hadnt bought and waited till now I would have 'saved' about 70k in terms of the house price. But then again I would have spent about 90k in rent waiting. In my case my monthly rent amount was the same as the monthly mortgage. For the OP I dont know if his situation is the same, or would he be intending on buying the 'perfect family house' even though he might be single, and then think about sub-renting the rooms until he starts a family.

goz83

Panda_Turtle wrote: »

Jeeze, you and your sister in law are busy, still plenty of time to pop out another ten between ya's

Not the average as far as I can see

Have another look at my post. Maybe the second time reading will show you that:

1) my sister in law is pregnant on her 1st (hardly busy).
2) I never alluded to the average being circa 5, but I did say it was "still high".
3) your post is crude and attributable to an ignorant pleb.

Anyway.......There is a baby boom and Ireland, afaik, we also have the youngest population in Europe. We are still very much a traditional, family based, home owning society. A high rent society, from what I can see, usually means less home security, smaller families and an ageing society, as so many people are focused on their careers and renting for life is the norm. That's just my observation.

gaius c

Eric Cartman wrote: »

With the 220k ftb limit coming a lot of stock will move from 250k-275k into the 220k bracket, apartments will decrease to make them seem attractive compared to it , larger homes will be mostly unaffected by it though

Nah, it'll be the opposite. More expensive homes are bought by folk trading up with equity from their first house and that is about to get more difficult because they will need 20% of the new house price in cash and they'll have already blown the inheritance or parental gift on their starter home. There's also the LTI ratios that will absolutely kill trader uppers.

Meanwhile, an FTB will only need to come up with a 10% deposit.

Previously, it was easier to buy a second house than for an FTB to buy their first. That's been completely turned on it's head by the new rules.
Short to medium term, the more expensive houses will probably drop in price while the less expensive houses will stay stable.

riclad

Its a good time to buy ,prices are going up in dublin,
not so much in rural area,s .
IF you buy a house now its not likely to lose value,
remember you buy a house for 20 years ,
IT,S a long term investment .
You ,d need a large deposit to buy any house in dublin.
WE were in a bubble when the banks were giving mortgages to anyone
even if you were on a low wage .
Houses in the middle of nowwhere were valued at 100k plus .
if the value goes up or down by 5 per cent in 3 years time it should be irrelevant to you .
Factor in how much you pay in rent per year.

Theboinkmaster

riclad wrote: »

Its a good time to buy ,prices are going up in dublin,

Not according to the latest CSO stats - prices dropped in Jan & Feb.

baldbear

I'm in North Dublin and went to view a few places.

They seemed overpriced and have not sold yet, some are up 3-4 months which gives me hope that people have some sense and aren't paying silly money.

Michael D Not Higgins

johnp001 wrote: »

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.

Where is your supply inflow and stock info coming from? The daft.ie reports all show decreasing stock and inflow

johnp001

Michael D Not Higgins wrote: »

Where is your supply inflow and stock info coming from? The daft.ie reports all show decreasing stock and inflow

My post stated "Dublin" stock and inflow, source is Daft listings.

johnp001 wrote: »

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.

Daft Q1 2015 report states:
"Nearly 3,600 properties were listed for sale in Dublin on March 1 Significantly more than the 2,300 on the same date a year previously."

Daft Q4 2014 report stated:
"More than 3,500 properties were listed for sale in Dublin on December 1, a third more than on the same date a year previously."

So YoY increases in stock have gone from +33% to +54% in the last quarter.

riclad

riclad wrote: »

IF you buy a house now its not likely to lose value,
remember you buy a house for 20 years ,

Interest rates are at historically low levels. It is absolutely possible, even likely that they could double or even treble, and this in the absence of inflation. With repayments spread out to 30 years this would effectively double or treble the monthly mortgage payment. How would this not crash the market?

Eric Cartman

Deleted User wrote: »

Interest rates are at historically low levels. It is absolutely possible, even likely that they could double or even treble, and this in the absence of inflation. With repayments spread out to 30 years this would effectively double or treble the monthly mortgage payment. How would this not crash the market?

wage inflation

interest rates will go up, so will wages, with the EU's terrible quantitive easing plan get ready for 2 euro cans of coke , 2 euro a litre diesel and the night link costing a 10er, on the other hand your 220k home won't seem so expensive anymore.