What happens to Dublin house prices

trobbin

What happens if people as a collective start thinking prices have risen too high and stop bidding?

What happens if house prices keep rising. They're already unaffordable for many, will wages rise? Will multinationals stay if wages rise to high?

What happens when the rates go up?

rsynnott

trobbin wrote: »

What happens if people as a collective start thinking prices have risen too high and stop bidding?

What happens if house prices keep rising. They're already unaffordable for many, will wages rise? Will multinationals stay if wages rise to high?

What happens when the rates go up?

I don't think it's a foregone conclusion that SVRs will go up anytime soon. Even if the ECB rate does go up, that likely actually makes the banks more profitable due to legacy ECB trackers, giving them, if anything, more space to compete on SVRs. Our SVR rates remain far above the eurozone average. Fixed rates remain below SVR rates in most cases; this makes little sense if SVR increases are expected soon.

That said, the central bank rules are likely to continue braking house price increases in the cities, especially on the mid to high end.

trobbin

The government currently own AIB, EBS, PTSB they also own 14% of BOI They are due too sell this year. Once privately owed, you're right, it's hard to predict. However, SVR's have historically been a lot higher than base rates.

I do agree that CB rules are stalling higher priced homes. I've noticed through PPR that areas like Darndale and finglas have seen 300% increases in last four years. That's crazy. Anyway back to question

1991 pmaC epacS

trobbin wrote: »

What happens if house prices keep rising. They're already unaffordable for many, will wages rise?
Will multinationals stay if wages rise to high?

Based on what I've seen happening to other capital cities around the world for the last few decades (and I'm hoping this doesn't happen to Dublin) if house prices keep rising then people gradually get pushed further and further outside the city to where they can afford, and as a result face longer commutes to work. In places like London and San Francisco where property is completely unaffordable for the majority, a 2 hour drive to work in the morning is not unusual.

Multinationals do generally stay (easier to attract skilled people in capital cities) and pay higher wages in these cities but sadly it doesn't mean their staff can afford to live in them.

trobbin

1991 pmaC epacS wrote: »

Based on what I've seen happening to other capital cities around the world for the last few decades (and I'm hoping this doesn't happen to Dublin) if house prices keep rising then people gradually get pushed further and further outside the city to where they can afford, and as a result face longer commutes to work. In places like London and San Francisco where property is completely unaffordable for the majority, a 2 hour drive to work in the morning is not unusual.

Multinationals do generally stay (easier to attract skilled people in capital cities) and pay higher wages in these cities but sadly it doesn't mean their staff can afford to live in them.

Based on what I seen in Dublin a few years ago, and also now, that's already happening. Multinationals are renowned for relocating to cheaper countries, that's how they ended up here. Many already have left. London and San Francisco are at a stand still and actually dropping in price. Plus income to mortgage ratio figures look a lot better.

JP 1800

I have been keeping an eye on the market myself and have noticed in some areas prices have stalled over the last few months, keenly priced houses I.E affordable for FTBs sell very quickly but houses that are outside the FTB range take longer to move. I have also noticed a lot more apartments are coming up for sale ( maybe landlords leaving the market or investors cashing in their investments). A lot of new builds are coming online and it makes some of the older built houses seem like very bad value when you consider the energy ratings and HTB scheme, the wife and I were looking at two houses this weekend, one 120 sq meter new build and an older 90sq meter 1970s house (slightly bigger garden though), both were the same price and within 3 mins drive from one another. The agent who priced the 1970s house needs to re-evaluate their pricing, but this is not the first instance I have seen of this type of comparison.
In summary, the market is changing with more new builds, landlords selling up, the possibility of rate increases and more pertinently the pricing in general has reached a point that it is no longer viable for FTBs to enter the market. Without fresh money coming in the market will stall.

Samuel T. Cogley

Put it this way. In 2006 I bought an apartment around 40Sq.M 1 bed for almost 300K within shouting distance of Oliver Bond. Do you think we've ever reached a point where the prices are too high? What stopped it the last time wasn't high prices but the availability of credit. This is why the CB rules are so very, very important.

BTW that flat would currently rent at €1400 per month.

Victor

trobbin wrote: »

What happens if people as a collective start thinking prices have risen too high and stop bidding?

It doesn't really happen - there will always be someone who thinks something is good value. The only brake on them is the banks' (un)willingness to give them money.

What happens if house prices keep rising.

Owners will try to hoard. Buyers will bid more. Government will try to interfere in the market.

They're already unaffordable for many, will wages rise?

Construction wages will rise. Ordinary wages will not - these are dependent on wages in their own industry.

Will multinationals stay if wages rise to high?

That will depend on their business model. Aldi, Intel and Apple are here to stay. Random manufacturer of low value products, not so much.

What happens when the rates go up?

Prices would tend to go down.

trobbin

JP 1800 wrote: »

I have been keeping an eye on the market myself and have noticed in some areas prices have stalled over the last few months, keenly priced houses I.E affordable for FTBs sell very quickly but houses that are outside the FTB range take longer to move. I have also noticed a lot more apartments are coming up for sale ( maybe landlords leaving the market or investors cashing in their investments). A lot of new builds are coming online and it makes some of the older built houses seem like very bad value when you consider the energy ratings and HTB scheme, the wife and I were looking at two houses this weekend, one 120 sq meter new build and an older 90sq meter 1970s house (slightly bigger garden though), both were the same price and within 3 mins drive from one another. The agent who priced the 1970s house needs to re-evaluate their pricing, but this is not the first instance I have seen of this type of comparison.
In summary, the market is changing with more new builds, landlords selling up, the possibility of rate increases and more pertinently the pricing in general has reached a point that it is no longer viable for FTBs to enter the market. Without fresh money coming in the market will stall.

I feel very similar in my own views. The fresh money you talk of, I can't see where from. This is why HTB was introduced, plus the new deposit rule making it easier for FTB, but essentially, if it's not FTB'ers it's not really happening.

Days of BTL mortgages that fuelled last boom no longer exist, and if they come back, everyone should worry. Real cash investors have gone, as prices are now to high to get the ROI in the time period expected.

I genuinely think we're in a boom at the moment, and that's not good for anyone, even home owners. Unless they're emigrating.

Samuel T. Cogley

If there's a bubble or any gains to be made there will be investors.

What fueled the last boom was not BLT mortgages - which are alive and kicking - but lack of credit controls which would have included BTL mortgages.

trobbin

Victor wrote: »

It doesn't really happen - there will always be someone who thinks something is good value. The only brake on them is the banks' (un)willingness to give them money.

Owners will try to hoard. Buyers will bid more. Government will try to interfere in the market.

Construction wages will rise. Ordinary wages will not - these are dependent on wages in their own industry.

That will depend on their business model. Aldi, Intel and Apple are here to stay. Random manufacturer of low value products, not so much.

Prices would tend to go down.

If the construction wages rise, it will drive prices up massively. Although they've started to pay better already.

Agree with your answers. I feel government already heavily interfered, they own the banks, they starved the country of houses, have forced prices back up to make their balance sheets look good, now they'll sell the banks.

trobbin

Samuel T. Cogley wrote: »

If there's a bubble or any gains to be made there will be investors.

What fueled the last boom was not BLT mortgages - which are alive and kicking - but lack of credit controls which would have included BTL mortgages.

It was BTL mortgages. The 100% BTL mortgages ruined the country. They're certainly not alive and kicking, they're buried. You'll need a big deposit to get one now

trobbin

Samuel T. Cogley wrote: »

Put it this way. In 2006 I bought an apartment around 40Sq.M 1 bed for almost 300K within shouting distance of Oliver Bond. Do you think we've ever reached a point where the prices are too high? What stopped it the last time wasn't high prices but the availability of credit. This is why the CB rules are so very, very important.

BTW that flat would currently rent at €1400 per month.

So you made a huge mistake and think it wasn't a bad buy regarding price, only that credit dried up? That's worrying, making a mistake is one thing, but not learning from it is another.

Is the fact that it could rent for 1400 now in an unsustainable market a good thing? Does that further your thought trail that you actually didn't make a bad buy? For a €300000 investment property you'll need a minimum of €2000 PM to make it a good buy. And that would €600 per €100000 over 20 years equalling €1800 a month plus €200 for expenses. Anything else wouldn't even be considered by a serious investor

rsynnott

trobbin wrote: »

It was BTL mortgages. The 100% BTL mortgages ruined the country. They're certainly not alive and kicking, they're buried. You'll need a big deposit to get one now

Though they're showing signs of coming back. A worrying new product was announced recently; you still need a big deposit, but it's interest only for the full term. Those should really have been banned.

Lumen

rsynnott wrote: »

Though they're showing signs of coming back. A worrying new product was announced recently; you still need a big deposit, but it's interest only for the full term. Those should really have been banned.

What's wrong with them? It's a pure investment risk vs reward thing. How is it different from any other secured business loan?

Samuel T. Cogley

trobbin wrote: »

It was BTL mortgages. The 100% BTL mortgages ruined the country. They're certainly not alive and kicking, they're buried. You'll need a big deposit to get one now

It really wasn't, but if you have an immovable view on that being the problem fair enough. The issue was a complete lack of control on credit, hence my first post that you responded to below.

trobbin wrote: »

So you made a huge mistake and think it wasn't a bad buy regarding price, only that credit dried up? That's worrying, making a mistake is one thing, but not learning from it is another.

No I'm saying myself and many, many others looked at the 'affordability' and did silly things. The difference has been that our go round had trackers and low mortgages, and renters at the top of the market to help us offset. The next round of mugs will not.

trobbin wrote: »

Is the fact that it could rent for 1400 now in an unsustainable market a good thing? Does that further your thought trail that you actually didn't make a bad buy? For a €300000 investment property you'll need a minimum of €2000 PM to make it a good buy. And that would €600 per €100000 over 20 years equalling €1800 a month plus €200 for expenses. Anything else wouldn't even be considered by a serious investor

There in lies the problem with your first premise, most people aren't serious investors. The serious investors aren't taking BTL mortgages and buying one or two properties they're buying blocks from NAMA.

Again the €1400 figure was pointing out the madness of the current market. If someone can rent that apartment at €1400 eventually some nutter is going to make the leap it's better to buy it at that price. That would put it back at the 300K range in value.

trobbin

Samuel T. Cogley wrote: »

It really wasn't, but if you have an immovable view on that being the problem fair enough. The issue was a complete lack of control on credit, hence my first post that you responded to below.



No I'm saying myself and many, many others looked at the 'affordability' and did silly things. The difference has been that our go round had trackers and low mortgages, and renters at the top of the market to help us offset. The next round of mugs will not.



There in lies the problem with your first premise, most people aren't serious investors. The serious investors aren't taking BTL mortgages and buying one or two properties they're buying blocks from NAMA.

Again the €1400 figure was pointing out the madness of the current market. If someone can rent that apartment at €1400 eventually some nutter is going to make the leap it's better to buy it at that price. That would put it back at the 300K range in value.

Fair enough. Those investors you speak of have been allowed to pull our pants down as a nation. When you actually think about it. Nama was set up to help the property market, funded by the Irish tax payer. Yet, when they sold properties it was in huge chunks like you mention, to closed circles of people. Many apartment blocks sold equalling €20/30k per apartment. That's a disgrace that they weren't offered to the people that where desperate for a home.

Complete cronyism. They're no making a killing from people that have very low quality of life just to afford rent. I might be a bit extreme in my views, but that's very wrong.

On my original questions, have you any views on our current and future Dublin housing housing issues?

Samuel T. Cogley

trobbin wrote: »

Fair enough. Those investors you speak of have been allowed to pull our pants down as a nation. When you actually think about it. Nama was set up to help the property market, funded by the Irish tax payer. Yet, when they sold properties it was in huge chunks like you mention, to closed circles of people. Many apartment blocks sold equalling €20/30k per apartment. That's a disgrace that they weren't offered to the people that where desperate for a home.

Complete cronyism. They're no making a killing from people that have very low quality of life just to afford rent. I might be a bit extreme in my views, but that's very wrong.

On my original questions, have you any views on our current and future Dublin housing housing issues?

Prices are going to continue to rise until supply comes on stream. Central Dublin prices will continue to rise anyway, hopefully at a slow and sustained rate. God only knows what's going to happen to rents.

The only way to keep this is check are robust credit controls. I'm not so worried about the deposit requirements in all honesty LTI is enough in my view.

trobbin

Samuel T. Cogley wrote: »

Prices are going to continue to rise until supply comes on stream. Central Dublin prices will continue to rise anyway, hopefully at a slow and sustained rate. God only knows what's going to happen to rents.

The only way to keep this is check are robust credit controls. I'm not so worried about the deposit requirements in all honesty LTI is enough in my view.

Regarding rents. We're in a bad way in Dublin, we probably need a modern day Micheal Davitt to invent a new land league. I actually think renters will start to default and create huge problems for landlords, public demonstrations for cheaper rents could be on the cards. Much of the rental income is leaving the country also. Rents have peaked, I know many people who where very happy renting and living an independent life, that are know back in Mammys. You can't get blood from a stone

rsynnott

Lumen wrote: »

What's wrong with them? It's a pure investment risk vs reward thing. How is it different from any other secured business loan?

Typically, landlords don't make a huge profit on the actual rent. With a repayment mortgage, it's at least an investment; they're paying off the principal, and at the end of it they have an asset. With a non-repayment mortgage, it's getting closer to speculation; it's kind of dependent on house prices rising. This encourages more reckless behaviour that can go very badly wrong when the market drops and the mortgage comes due; you had plenty of people with cross-secured interest-only mortgages on tens of properties in the bubble, and realistically they're never going to be able to pay those off if they bought near peak.

antoinolachtnai

trobbin wrote: »

Regarding rents. We're in a bad way in Dublin, we probably need a modern day Micheal Davitt to invent a new land league. I actually think renters will start to default and create huge problems for landlords, public demonstrations for cheaper rents could be on the cards. Much of the rental income is leaving the country also. Rents have peaked, I know many people who where very happy renting and living an independent life, that are know back in Mammys. You can't get blood from a stone

The landlords aren't increasing the rent offered, the market is. More specifically, the tenants are. The reason is that Dublin is a good product. There are good jobs and a good lifestyle and we have not decided to leave the European Union either. That isn't to say that Dublin accommodation is a good product of course.

I hope rents have peaked, but I don't know if they actually have. For technical reasons, the mean (average) rent paid will continue to rise for at least another eight months, because of the effect of the rent freeze.

The only thing that will get prices to come down is adding more supply.