Property Market 2017

The_Conductor

Ray Palmer wrote: »

Let us look at somebody who bought to let in 2006. Th property cost them €300k and after cost and mortgage they have 10% their mortgage. All looks well until the crash suddenly you are getting less rent and you are subsiding the tenants and then there are new taxes.
Eventually rents rise and you can raise you rent but the tenants have been good and you are just breaking even and they are moving on soon. Then rent caps put in place and you have to give this preferential rate to the new tenant. It will take another 3 years to get to 10% and you hope they don't up the interest rate the whole time.
Still no capital appreciation and it has costed money the whole time

Lots of people in this boat.
Also- lots of people who bought in the late 90s/early 00s- apartments/townhouses in West Dublin- still worth less than was original paid for them in 2000- however, not in negative equity, by the skin of their teeth- after 17-18 years of mortgage repayments. This is also far more common that anyone wants to acknowledge.

quadrifoglio verde

The_Conductor wrote: »

Lots of people in this boat.
Also- lots of people who bought in the late 90s/early 00s- apartments/townhouses in West Dublin- still worth less than was original paid for them in 2000- however, not in negative equity, by the skin of their teeth- after 17-18 years of mortgage repayments. This is also far more common that anyone wants to acknowledge.

What property in West Dublin bought in the late 90s/early 00s is worth less still?
Ok its north Kildare but 4beds in Leixlip for 150K in 1999 are now asking 350?
Id be surprised if theres 4 beds anywhere in west Dublin that were 150K in 1999 going for 150K today?

The_Conductor

quadrifoglio verde wrote: »

What property in West Dublin bought in the late 90s/early 00s is worth less still?
Ok its north Kildare but 4beds in Leixlip for 150K in 1999 are now asking 350?
Id be surprised if theres 4 beds anywhere in west Dublin that were 150K in 1999 going for 150K today?

I know its only a single example- but this sold for £235k Irish in 1999. It sold for 249k Euro- a 2-3 weeks ago.

If I spent some time- I'm sure I could find an entire compilation for you.

kippy

thirtythirty wrote: »

Did you take the full 380k? Because I can't see how your payments are lower than 1400! Even at 30 years at 3%, payments would be €1600..

To me, interest rate risk is the biggest risk to housing currently. Nobody is pricing in 5, 6, or 7% rates when they say "it's cheaper to buy!"

You reckon rents will fall if interest rates get higher?

Baby01032012

The_Conductor wrote: »

I know its only a single example- but this sold for £235k Irish in 1999. It sold for 249k Euro- a 2-3 weeks ago.

If I spent some time- I'm sure I could find an entire compilation for you.

That link is dead when I click on it

However my own situation backs up your point. I bought a 3 bed terraced in west Dublin in 2002 for 225k....those same houses are around the same money now maybe a little bit less. We're 330 or more in2007 and one I remember on my road sold for 135 in2011.

The_Conductor

The_Conductor wrote: »

Lots of people in this boat.
Also- lots of people who bought in the late 90s/early 00s- apartments/townhouses in West Dublin- still worth less than was original paid for them in 2000- however, not in negative equity, by the skin of their teeth- after 17-18 years of mortgage repayments. This is also far more common that anyone wants to acknowledge.

The_Conductor wrote: »

I know its only a single example- but this sold for £235k Irish in 1999. It sold for 249k Euro- a 2-3 weeks ago.

If I spent some time- I'm sure I could find an entire compilation for you.

After 18 years of mortgage payments a fair whack is paid..... unless they defaulted or remortgaged.

They're well out of negative equity anyway.... and you'll struggle to build a compilation representative of anything more a ting percentage of homeowners.

thirtythirty

Lumen wrote: »

7% rates would require base rates of something like 4.5%.

I'm not saying that can't happen, but nobody thinks that will happen. The Irish govt issued 20 year bonds in January 2017 at 1.7%.

Well fool they who bought 20 year bonds at that! 20 years is an insane timeline - what could happen; euro currency devolvement, uncontrolled (or even just high) inflation, a bankrupt government!? My guess is little to no retail investors bought these.

kippy wrote: »

You reckon rents will fall if interest rates get higher?

If interest rates get higher, this second wave of BTL rental investors could start struggling and might try and raise rents. Equally if deposits give a better return less people might be so inclined to dabble in property, so you might see less small private rental landlords.

Baby01032012

See article in Indo today where 1 In 7 houses sold since January 2016 have been to non occupiers.

I can't link to article but have copied a section of it below.

The analysis also shows between January last year and April 2017, some 3,546 new homes have been sold. Of these, 548 were by non-occupiers.

When all sales across the 16 months are taken into account, the data reveals that 44,979 existing houses and apartments traded hands, of which 10,713 were snapped up by investors - almost 24pc.

The_Conductor

Baby01032012 wrote: »

See article in Indo today where 1 In 7 houses sold since January 2016 have been to non occupiers.

I can't link to article but have copied a section of it below.

The analysis also shows between January last year and April 2017, some 3,546 new homes have been sold. Of these, 548 were by non-occupiers.

When all sales across the 16 months are taken into account, the data reveals that 44,979 existing houses and apartments traded hands, of which 10,713 were snapped up by investors - almost 24pc.

Or to flip this on its head- traditionally investors have comprised in the region of 40% of the market, this has now fallen to 14%.

I.e. the regulatory conditions are such that potential investors are looking elsewhere, other than the residential letting market, for investment opportunities.

Baby01032012

True...and im sure if you broke it down further you would see that majority of these investors are a handful of REITS rather than small time landlords. The mount argus mil development Dublin 6 which im familar with (184 new apartments) complete development sold off to a REIT even before construction started.

astrofool

thirtythirty wrote: »

Did you take the full 380k? Because I can't see how your payments are lower than 1400! Even at 30 years at 3%, payments would be €1600..

To me, interest rate risk is the biggest risk to housing currently. Nobody is pricing in 5, 6, or 7% rates when they say "it's cheaper to buy!"

The bank will stress test at those rates,

However, so many people have mortgages, that if the rates reach that level, wages/inflation will also be much higher than it is now, or the government will intervene to help the mortgage payer.

Historically, I don't think anyone has lost if they had stayed on variable for the whole mortgage vs. fixing every few years (over the lifetime of the mortgage).

thirtythirty

astrofool wrote: »

The bank will stress test at those rates,

However, so many people have mortgages, that if the rates reach that level, wages/inflation will also be much higher than it is now, or the government will intervene to help the mortgage payer.

Historically, I don't think anyone has lost if they had stayed on variable for the whole mortgage vs. fixing every few years (over the lifetime of the mortgage).

"The government will save us from our private debt". Our astronomically publicly indebted government whose own interest payments will have risen :pac:

I still think people aren't truly looking at lifetime cost;
"I bought a 420k house". No you didn't, if you bought it on a 30 year mortgage @3%, you bought a 600k house. If that goes up an additional 2%, which is extremely feasible, you bought a 700k house, because that's what you're going to pay!

There's nothing necessarily wrong with that in principle, but perhaps if people looked at it in lifetime terms there wouldnt be the mad scramble we're seeing now again

jamesthepeach

thirtythirty wrote: »

"The government will save us from our private debt". Our astronomically publicly indebted government whose own interest payments will have risen :pac:

I still think people aren't truly looking at lifetime cost;
"I bought a 420k house". No you didn't, if you bought it on a 30 year mortgage @3%, you bought a 600k house. If that goes up an additional 2%, which is extremely feasible, you bought a 700k house, because that's what you're going to pay!

There's nothing necessarily wrong with that in principle, but perhaps if people looked at it in lifetime terms there wouldnt be the mad scramble we're seeing now again

Surprisingly, people are actually aware of how much they are paying on mortgages.
I find the only people usually who do the believe that are those who don't have a mortgage.

Cyrus

thirtythirty wrote: »

"The government will save us from our private debt". Our astronomically publicly indebted government whose own interest payments will have risen :pac:

I still think people aren't truly looking at lifetime cost;
"I bought a 420k house". No you didn't, if you bought it on a 30 year mortgage @3%, you bought a 600k house. If that goes up an additional 2%, which is extremely feasible, you bought a 700k house, because that's what you're going to pay!

There's nothing necessarily wrong with that in principle, but perhaps if people looked at it in lifetime terms there wouldnt be the mad scramble we're seeing now again

i think you are also forgetting about the impact of inflation over those 30 years as well

thirtythirty

thirtythirty wrote: »

...............

I still think people aren't truly looking at lifetime cost;
"I bought a 420k house". No you didn't, if you bought it on a 30 year mortgage @3%, you bought a 600k house. If that goes up an additional 2%, which is extremely feasible, you bought a 700k house, because that's what you're going to pay!..............

Cyrus wrote: »

i think you are also forgetting about the impact of inflation over those 30 years as well

Indeed, he's also forgetting you can overpay whenever suits you on a variable rate.

rsynnott

dubrov wrote: »

More like 6-8% plus capital appreciation.

Try and find anything close to that in any other asset class

A not-quite-bluechip stock? Bit of a gamble, of course, but then so is the property market.

Cuddlesworth

The_Conductor wrote: »

I know its only a single example- but this sold for ?235k Irish in 1999. It sold for 249k Euro- a 2-3 weeks ago.

If I spent some time- I'm sure I could find an entire compilation for you.

Were we not already in a boom then though. Isn't that a few years into price far exceeding inflation?

Lumen

thirtythirty wrote: »

I still think people aren't truly looking at lifetime cost;
"I bought a 420k house". No you didn't, if you bought it on a 30 year mortgage @3%, you bought a 600k house. If that goes up an additional 2%, which is extremely feasible, you bought a 700k house, because that's what you're going to pay!

There's nothing necessarily wrong with that in principle, but perhaps if people looked at it in lifetime terms there wouldnt be the mad scramble we're seeing now again

This ignores the time value of money - you are repaying it with money that's easier to come by due to wage inflation (assuming there is wage inflation).

thirtythirty

Cyrus wrote: »

i think you are also forgetting about the impact of inflation over those 30 years as well

though not always the case, real (edit: "mortgage") interest rates usually lead inflation rates, so proportionately you pay the same (unless you're a market-timing fixing samurai).

Anyway, I've said my piece!

cnocbui

Lumen wrote: »

This ignores the time value of money - you are repaying it with money that's easier to come by due to wage inflation (assuming there is wage inflation).

I remember wage inflation, think we had a bit a decade ago.

astrofool

cnocbui wrote: »

I remember wage inflation, think we had a bit a decade ago.

We had a decade of it that ended about a decade ago. A decade before that we had high inflation rates over 2 decades that also raised wage levels (but didn't increase quality of life).

The Public service will get pay "restoration" of 10%+ starting this year if Lansdowne 2 gets accepted. It's easy to be facetious, but it's worth looking back at historical averages as well.

The_Conductor

astrofool wrote: »

We had a decade of it that ended about a decade ago. A decade before that we had high inflation rates over 2 decades that also raised wage levels (but didn't increase quality of life).

The Public service will get pay "restoration" of 10%+ starting this year if Lansdowne 2 gets accepted. It's easy to be facetious, but it's worth looking back at historical averages as well.

This is not the appropriate place to start a public sector versus a private sector argument.

As for your contention that the public sector will get pay 'restoration' of 10%+ starting this year- the proposal is to have an average of a 1.8% per annum pay increase (in today's terms) over each of the next 3 years- and to change the pension deduction into a formalised permanent feature. If you're actually interested in it- read the document. Its estimated that if inflation trends (towards 2%) as it is doing- that the net result of the 'pay restoration' for pre-2013 public sector staff, is a deterioration of perhaps 2.1-2.2% in todays terms within 4 years. Post 2013 staff- will be about 6.5% better off- as a result of changes in their pension deductions.

The media have sold 'pay restoration' as something it patently is not. Three unions have already advised their members to reject the offer.

A poll of 24,000 public sector employees advised they would rather have their 30 minutes extra unpaid every day reduced/removed- than the pay restoration proposals on the table- the ending of the unpaid overtime is viewed as being worth more to staff than the pay 'restoration'.

Samuel T. Cogley

Haven't been keeping up with the thread - where are we lads (and lasses). I heard there's some stalling going on. Is my dream of dumping my city centre pad at 250K fading again?

jamesthepeach

Samuel T. Cogley wrote: »

Haven't been keeping up with the thread - where are we lads (and lasses). I heard there's some stalling going on. Is my dream of dumping my city centre pad at 250K fading again?

I think you might be getting close to your dream coming true tbh

Samuel T. Cogley

jamesthepeach wrote: »

I think you might be getting close to your dream coming true tbh

It was only at 210ish there a few weeks back, might have another look September time. TBH I'm thinking of trying to shift it to one of the 'investors' who pop up weekly on this very forum! :pac:

jamesthepeach

Samuel T. Cogley wrote: »

It was only at 210ish there a few weeks back, might have another look September time. TBH I'm thinking of trying to shift it to one of the 'investors' who pop up weekly on this very forum! :pac:

LOL.
I sold one recently and on the one hand think I went too early. On the other hand I'm afraid I might miss the boat on the other one and am tempted to just sell it now too instead of my original.plan to hold it using airbnb til next year at least.
Decisions, decisions.

LirW

Samuel T. Cogley wrote: »

It was only at 210ish there a few weeks back, might have another look September time. TBH I'm thinking of trying to shift it to one of the 'investors' who pop up weekly on this very forum! :pac:

Shift it after holiday season when the young professionals go hunting again with a fresh Ibiza tan :pac:

The_Conductor

I'd suggest prices have pretty much peaked- you might have small upside yet, but there is too much uncertainty out there. Looks like Dublin isn't favour of the month for London financiers either- so I'd say- just shift it. 210-220 sounds pretty ok.

LirW

Are there actually any dates when Cherrywood will be done? Also will it have a huge price influence on rental and residental unit prices? I had a look at the masterplan and I'm quite sceptical what's happening down there.

jamesthepeach

LirW wrote: »

Are there actually any dates when Cherrywood will be done? Also will it have a huge price influence on rental and residental unit prices? I had a look at the masterplan and I'm quite sceptical what's happening down there.

It won't be all done at the same time.
And if there is an economic bomb in the meantime before finish it will be left half finished
for God knows how long.

Looks like it will be nice when finished though.