Property Market 2016

SarahMollie

^+1

I really can't fathom the logic of people who expect landlords to behave like charities. Any commercial entity as only one objective; profit maximization.

Also, there were times a few years ago when many Landlords werent making enough to stay in business. It is only normal for those that survived, to seek to profit now to hedge against possible future losses/offset negative equity that they may still be burdened with.

In a well functioning market, when profits rise beyond whats considered the necessary rate of return to stay in business, its called supernormal profits. Economic theory says that these are only possible in the short term (in the property market, the short term can be a few years) as these profits will attract new entrants. The difficulty with property is that there are plenty of barriers to entry at the moments, namely the CB rules (which I'm in favour of by the way), lack of supply (lack of credit for developers, landbank owners reluctant to crystalise their losses etc).

Until the supply side issues are addressed, its likely that rents will continue to remain high.

Bob24

SarahMollie wrote: »

^+1

I really can't fathom the logic of people who expect landlords to behave like charities. Any commercial entity as only one objective; profit maximization.

Also, there were times a few years ago when many Landlords werent making enough to stay in business. It is only normal for those that survived, to seek to profit now to hedge against possible future losses/offset negative equity that they may still be burdened with.

In a well functioning market, when profits rise beyond whats considered the necessary rate of return to stay in business, its called supernormal profits. Economic theory says that these are only possible in the short term (in the property market, the short term can be a few years) as these profits will attract new entrants. The difficulty with property is that there are plenty of barriers to entry at the moments, namely the CB rules (which I'm in favour of by the way), lack of supply (lack of credit for developers, landbank owners reluctant to crystalise their losses etc).

Until the supply side issues are addressed, its likely that rents will continue to remain high.

All this makes sense, and I would add that expenses for landlords have increased especially due to the fiscal environment (various taxes introduced or increased in the past few years, removal of tax relief from mortgage interest repayments, etc). Not crying for them, but this will obviously also increasing the minimum rents chargeable for their business to be viable (even though at the moment I definitely agree wit the above to say the main driver for increases is the lack of supply rather than increasing running costs, but this will provide extra motivation for landlords to get as much as they can from their properties).

brownbeard

CSO February figures released:

National: unchanged 0.0% month on month
Dublin: down -0.1% month on month

http://www.cso.ie/en/releasesandpublications/er/rppi/residentialpropertypriceindexfebruary2016/

The_Conductor

brownbeard wrote: »

CSO February figures released:

National: unchanged 0.0% month on month
Dublin: down -0.1% month on month

http://www.cso.ie/en/releasesandpublications/er/rppi/residentialpropertypriceindexfebruary2016/

It looks a bit strange that the annual price increase went from 7.6% to 8.0% from Jan to Feb- though this appears to be driven by low volumes- and markets wholly outside of the greater Dublin area.......

Its a pity there isn't any indication of the volumes (other than a throw away comment about apartment sales being thin on the ground)- as most casual observers would have to assume volumes have fallen off a cliff..........

Bob24

brownbeard wrote: »

CSO February figures released:

National: unchanged 0.0% month on month
Dublin: down -0.1% month on month

http://www.cso.ie/en/releasesandpublications/er/rppi/residentialpropertypriceindexfebruary2016/

Still a 4% increase YoY though (Dublin), which is respectable but nothing near the 21.4 YoY we were seeing at the same time last year.

2015 - 12month%

January 21.6
February 21.4

2016 - 12month%

January 3.4
February 4.0

SarahMollie

Personally I'm happy to see slow and steady increase, even a plateau.

It will discourage speculation, bring certainty to the market and make it easier for people to trade up when necessary.

MayBea

Bob24 wrote: »

Still a 4% increase YoY though, which is respectable but nothing near the 21.4 YoY we were seeing at the same time last year.

2015 - 12month%

January 21.6
February 21.4

2016 - 12month%

January 3.4
February 4.0

I'd be interested to the YoY closer to end of summer'16, the price rise has practically stopped/lowered significantly in the 3rd quarter of 2015.

Gandalph

Does anyone know how accurate the Property Price Register is in terms of actual sales in a given area? Is it driven from daft/myhome or do they garner their results from the register itself?

Bob24

Gandalph wrote: »

Does anyone know how accurate the Property Price Register is in terms of actual sales in a given area? Is it driven from daft/myhome or do they garner their results from the register itself?

PPR will list all the transaction and give the actual selling price. So it is much more accurate than any figures Daft might have.

There are many caveats though:
- There is a long lag between the purchase and the time it shows up in the PPR
- Often the addresses have typos or are incomplete which makes it difficult to sort transactions per area
- It will not tell you what type of property was sold (size, condition, etc) so unless you have seen the particular property listed it is not necessarily useful to compare prices with another property you are interested in

SarahMollie

Gandalph wrote: »

Does anyone know how accurate the Property Price Register is in terms of actual sales in a given area? Is it driven from daft/myhome or do they garner their results from the register itself?

Its totally accurate. Its published by the state and based on the purchase prices provided by solicitors on which stamp duty must be paid.

It can take a few months for a property to be added to the register once the sale has completed, but it is accurate.

SarahMollie

Bob24 wrote: »

PPR will list all the transaction and give the actual selling price. So it is much more accurate than any figures Daft might have.

There are many caveats though:
- There is a long lag between the purchase and the time it shows up in the PPR
- Often the addresses have typos or are incomplete which makes it difficult to sort transactions per area
- It will not tell you what type of property was sold (size, condition, etc) so unless you have seen the particular property listed it is not necessarily useful to compare prices with another property you are interested in

Sorry Bob, didnt see you'd got there before me.

I've highlighted your last point as its very relevant IMO. You nearly need to take a note of the prices of the properties that you think might be comparable and take a drive around so you can maybe estimate their condition - although this is hardly foolproof as the new owner may have already undertaken works by the time you can do this.

It can be worthwhile googling the property as sometimes a cashed copy of the estate agents original listing will still be online, but only sometimes.

Gandalph

Thanks guys.
So PPR will cover both private treaty and auctioned property correct?

SarahMollie

Gandalph wrote: »

Thanks guys.
So PPR will cover both private treaty and auctioned property correct?

Yes, anything registered with the land registry and attracting stamp duty. The type of sale really isnt an issue.

Bob24

Also there is a column telling you if a property wasn't sold at full market prices (I assume it means it was sold though some specific scheme, but not to sure what is included in there).

And if my memory is correct, prices quoted for new builds don't include the VAT amount, so you need to add 13.5% to know what buyers actually paid (there is a column on the register telling you if the sold property was new).

Canadel

SarahMollie wrote: »

^+1

I really can't fathom the logic of people who expect landlords to behave like charities. Any commercial entity as only one objective; profit maximization.

Also, there were times a few years ago when many Landlords werent making enough to stay in business. It is only normal for those that survived, to seek to profit now to hedge against possible future losses/offset negative equity that they may still be burdened with.

Most people don't expect that. Many people do view housing as something that should not be entirely subject to the whims of the market however, as opposed to the actual rental market which should be left alone.

My point is that, as income inequality grows, combined with a massive shortage in housing, the rental market not only benefits private profit making individuals and groups, but because the rental market is the main source of housing for more and more people, housing itself becomes almost a luxury, and at the very least extortionate.

As you say, the solution is supply i.e. more housing. And social housing at that, for the increasing numbers of people and families in this society on less than the industrial wage who are being entirely screwed by all of this.

Bob24

Canadel wrote: »

Most people don't expect that. Many people do view housing as something that should not be entirely subject to the whims of the market however, as opposed to the actual rental market which should be left alone.

My point is that, as income inequality grows, combined with a massive shortage in housing, the rental market not only benefits private profit making individuals and groups, but because the rental market is the main source of housing for more and more people, housing itself becomes almost a luxury, and at the very least extortionate.

As you say, the solution is supply i.e. more housing. And social housing at that, for the increasing numbers of people and families in this society on less than the industrial wage who are being entirely screwed by all of this.

I'm not in favour of massive creation of social housing. The outcome of these policies in other large European cities is that only the rich and the poor can live in the cities and the middle class is being evicted because it neither qualifies for social housing not can afford to buy/rent in the cities. Plus it tends to create ghettos as these two groups usually don't mix.

Providing enough supply in the private market and working on the income inequality issue you are mentioning are much better long term solutions IMO.

Canadel

Bob24 wrote: »

I'm not in favour of massive creation of social housing. The outcome of these policies in other large European cities is that only the rich and the poor can live in the cities and the middle class is being evicted because it neither qualifies for social housing not can afford to buy/rent in the cities. Plus it tends to create ghettos as these two groups usually don't mix.

Providing enough supply in the private market and working on the income inequality issue you are mentioning are much better long term solutions IMO.

Ok, good points.

Regarding the middle class, I suppose in the long term you would hope we will see some kind of rental market reform, and most likely them moving to suburbs and satellite towns. Nothing wrong with that if public transport and infrastructure is prioritised.

Ghettos can be avoided. Especially now that planners can learn from previous mistakes.

Supply and income inequality are the long term solutions. The former should be a relatively easy fix at least. The latter I can't see being remedied in any way under current Irish governments unfortunately.

handlemaster

http://m.independent.ie/irish-news/apartment-prices-rise-as-investors-swoop-in-34586485.html

House prices dropping in Dublin ... will it continue like this for a while ?

mirrorwall14

That headline is hilarious, nothing in the article figures to justify it

The_Conductor

handlemaster wrote: »

http://m.independent.ie/irish-news/apartment-prices-rise-as-investors-swoop-in-34586485.html

House prices dropping in Dublin ... will it continue like this for a while ?

Its a drop of 0.1% - aka its within the range of statistical error, and also, it only relates to mortgages drawn down.........

The volume of properties of properties being sold- has fallen off a cliff- and margins are now viewed as better in London of all places- than in Dublin- so the pool of prospective purchasers has dropped........

Its more a stagnation than a definitive fall- and its far from unusual at this time of the year- have a look at the early months of the year in previous years........

Its indicative of a trend- however, its more indicative than definitive- and I'd not make a song and dance about a 0.1% rise or fall- its a holding position.........

mirrorwall14

mirrorwall14 wrote: »

That headline is hilarious, nothing in the article figures to justify it

Tis his beliefs

Tough Central Bank lending rules mean that many families cannot afford to buy homes in Dublin. Some are turning to apartment living, but the rising prices are also believed to be linked to investors swooping to take advantage of rising rents.

handlemaster

There was alot of posters claiming last year or even before cash buyers would be finished within a short period of time. How wrong they were

SarahMollie

handlemaster wrote: »

There was alot of posters claiming last year or even before cash buyers would be finished within a short period of time. How wrong they were

I still believe there is a lot of money under mattresses/in quality street tins in this country.

handlemaster

SarahMollie wrote: »

I still believe there is a lot of money under mattresses/in quality street tins in this country.

Hopefully they spend it . It's no good there

El_Dangeroso

SarahMollie wrote: »

I still believe there is a lot of money under mattresses/in quality street tins in this country.

I've a friend working in a bank who says she's constantly surprised with the cash otherwise modest-living people have tucked away.

She said there's much more cash than debt around in her experience.

I'm sure most people who deal with people in banks can tell you there's plenty of money lying around unused.

SarahMollie

El_Dangeroso wrote: »

I've a friend working in a bank who says she's constantly surprised with the cash otherwise modest-living people have tucked away.

She said there's much more cash than debt around in her experience.

I think its a generational thing. I know my granddad was like that before he died (irrational fear of bank, taxman etc) and some of my bachelor uncles have followed suit - according to my mother anyway.

They all live/d extremely modestly, never really spent any money on themselves.

Rew

Last word piece that really over covered the EA and Builders side of the story:

http://www.todayfm.com/The-days-of-the-long-commute-are-back-due-to-house-prices

Bob24

Rew wrote: »

Last word piece that really over covered the EA and Builders side of the story:

http://www.todayfm.com/The-days-of-the-long-commute-are-back-due-to-house-prices

"The Construction Industry Federation has said the cost of a €300,000 house could be cut to €200,000 if the next Government reduces tax levels."

Talk about giving unrealistic expectations ...

zl1whqvjs75cdy

Bob24 wrote: »

"The Construction Industry Federation has said the cost of a €300,000 house could be cut to €200,000 if the next Government reduces tax levels."

Talk about giving unrealistic expectations ...

Give us a rest. If the house cost a euro to build they'd still charge 300 k. If the boom taught us anything it's that developers are even more greedy than bankers.