Property slowdown in Dublin?

Cyrus

Zenify wrote: »

You're right, I should really put it into perspective for you. I am talking about the Dun Laoghaire, Goatstown and Blackrock areas which are very expensive. the high income earners I am talking about are on 50k+.

There are 3 bed selling for 850,000. From a limited sample that i have seen the people buying these have got inheritance (That's why I capitalised income).

But what you are talking about are some of the more desirable suburbs in Dublin to be fair . 50k isn't even close to a high income any more , accountants​ and solicitors just out of their training contracts in big firms so 24/25 in age will earn this

jamesthepeach

Zenify wrote: »

You're right, I should really put it into perspective for you. I am talking about the Dun Laoghaire, Goatstown and Blackrock areas which are very expensive. the high income earners I am talking about are on 50k+.

There are 3 bed selling for 850,000. From a limited sample that i have seen the people buying these have got inheritance (That's why I capitalised income).

That's not high income.
That's the lower end of the "squeezed middle" scale.

Tigerandahalf

According to an article in the Irish Times yesterday (based on cso) national housing prices are still 37% behind 2007 peak while Dublin prices are 31% behind. How crazy were they then. That means a €400,000 house in Dublin was €120,000 dearer then. Crazy stuff.

The fact that they are using the crazy prices of 2007 as a measure is worrying.

The article does mention that affordability is worse than 2007 which should be the thing really standing out. Wages haven't recovered to 2007 levels. Plus I wonder are they taking into account the increased indirect taxes on people - property charges, health insurance and the impending pension changes which will force people to pay into a pension.

Another thing the report probably doesn't take account of is family loans people might have got to buy a house. Some might have to repay these.

Earl _of _Sandwich

Tigerandahalf wrote: »

According to an article in the Irish Times yesterday (based on cso) national housing prices are still 37% behind 2007 peak while Dublin prices are 31% behind. How crazy were they then. That means a €400,000 house in Dublin was €120,000 dearer then. Crazy stuff.

The fact that they are using the crazy prices of 2007 as a measure is worrying.

The article does mention that affordability is worse than 2007 which should be the thing really standing out. Wages haven't recovered to 2007 levels. Plus I wonder are they taking into account the increased indirect taxes on people - property charges, health insurance and the impending pension changes which will force people to pay into a pension.

Another thing the report probably doesn't take account of is family loans people might have got to buy a house. Some might have to repay these.

That article was full of so many errors that I just gave up on it.

They claimed national housing was 31% behind the 2007 peak whereas Dublin housing was 31% behind the 2007 peak. It's the same bloody statistic.

They also suggested that a "norm" for affordability was a mortgage repayment of 1/3 of GROSS household income. They then went on to spout an array of wonderful statistics each measured against NET household income. Why bother mention gross then?

Hacks.

Tigerandahalf

Earl _of _Sandwich wrote: »

That article was full of so many errors that I just gave up on it.

They claimed national housing was 31% behind the 2007 peak whereas Dublin housing was 31% behind the 2007 peak. It's the same bloody statistic.

They also suggested that a "norm" for affordability was a mortgage repayment of 1/3 of GROSS household income. They then went on to spout an array of wonderful statistics each measured against NET household income. Why bother mention gross then?

Hacks.

It was 37% and 31%.

I think they are just regurgitating the cso report.

TimeToShine

Lumen wrote: »

Ooh, snarky. :pac:


OK, here's some data.

I'd expect mortgage approvals to be a leading indicator. Not seeing any slowdown here.

It's not Dublin-specific but that's a limitation of the data; I acknowledge the possibility that ex-Dublin growth is skewing the figures.

Source: https://www.bpfi.ie/publications/bpfi-mortgage-approvals-report/

Note: I've used average values, and included all types of approvals.

That's because mortgage approval criteria can (and has) been altered significantly over the last few years. The same way it was last time.

Cyrus

TimeToShine wrote: »

That's because mortgage approval criteria can (and has) been altered significantly over the last few years. The same way it was last time.

What's changed

Lumen

TimeToShine wrote: »

That's because mortgage approval criteria can (and has) been altered significantly over the last few years. The same way it was last time.

Except:

1. That's irrelevant to the question of whether there is a slowdown happening or coming soon.

2. I have observed no marked changes in mortgage approvals data from changes to the rules, but there is strong seasonal periodicity which makes the exercise a bit like reading the tealeaves.

The very real broad increases in sale and asking prices have fairly obviously been driven by the new system of tax credits piled on top of pent up demand.

A lot of the most terrifying price rises have been in close proximity to the city centre, but I've seen a step change in asking prices in my old hood in D15. 4 bed semi-D prices were creeping up very steadily from 2012-2016 from 250-350k (25k/year), but since I sold in July/Aug at least another 50k or so has gone on the asking prices.

LirW

Cyrus wrote: »

What's changed

The deposit rules changed from 20 to 10%, the HTB-scheme was introduced, there are ways having less than 10% of a deposit, also the 4.5 times of the annual salary in certain cases for X amount of applicants.

Lumen

I would really love it if anonymized approvals data was published at a fine-grained level.

It's not that I don't trust the banks to play by the rules, but...no wait, I don't.

LirW

A lot of the most terrifying price rises have been in close proximity to the city centre, but I've seen a step change in asking prices in my old hood in D15. 4 bed semi-D prices were creeping up very steadily from 2012-2016 from 250-350k (25k/year), but since I sold in July/Aug at least another 50k or so has gone on the asking prices.

The most terrifying price rises happen in the most undesirable parts. In certain areas that are real dumps prices went up over 200%.

jamesthepeach

LirW wrote: »

The most terrifying price rises happen in the most undesirable parts. In certain areas that are real dumps prices went up over 200%.

People were waiting for the property they wanted.
Prices ran away on them so they are stuck either not buying or lowering their expectations.
All they can afford at that stage are the places rising the least before, which are the properties in undesirable areas.

Same thing with apartments. Nobody wanted them. Now they can't afford the houses they were holding out for. So their choice is, go with an apartment or don't buy. More apartments selling, demand is up, prices up as others in the same boat bid against each other.

In all cases should have got in when you could instead of waiting and the market running away on you. Either stay out, or buy what you can afford today as tomorrow you'll only afford the next level down.

Cyrus

LirW wrote: »

The deposit rules changed from 20 to 10%, the HTB-scheme was introduced, there are ways having less than 10% of a deposit, also the 4.5 times of the annual salary in certain cases for X amount of applicants.

Deposit is still 20percent for most and salary multiple is 3.5x isn't it

machalla

I remember thinking prices were mad in 1998. I didn't buy a 2 bed apartment on Grand Canal Dock for £65k at the time. Prices were mad and it would surely all collapse!

Baby01032012

Cyrus wrote: »

LirW wrote: »

The deposit rules changed from 20 to 10%, the HTB-scheme was introduced, there are ways having less than 10% of a deposit, also the 4.5 times of the annual salary in certain cases for X amount of applicants.

Deposit is still 20percent for most and salary multiple is 3.5x isn't it

No its 10% now for all first time buyers...it was 10% up to €220k and 20% thereafter...20% applies to those trading up/down...30% to investors..

Cuddlesworth

Cyrus wrote: »

Deposit is still 20percent for most and salary multiple is 3.5x isn't it

Depends on how you look at it.

If the bank gives back 2-3% of the value in cash and offers things like 6 months moratorium in payments, is that really 20% of the value of the house? Or is it a way to try avoid LTV by allowing people to get loans/cash to meet the initial amount?

If the bank takes bonuses and other additional payments into account, is that really a 3.5 times multiple on income or is it straining to overcome the LTI rule? I was offered 20% more then my base due to OT I put in recently.

If a large number of people are taking very obvious personal loans from family but the bank choose to ignore it, is that adhering to the LTV rules or just pushing against them a little?

All I can see is the banks straining to exceed the central bank rules.

Baby01032012

Cyrus wrote: »

LirW wrote: »

The deposit rules changed from 20 to 10%, the HTB-scheme was introduced, there are ways having less than 10% of a deposit, also the 4.5 times of the annual salary in certain cases for X amount of applicants.

Deposit is still 20percent for most and salary multiple is 3.5x isn't it

No its 10% now for all first time buyers...it was 10% up to €220k and 20% thereafter...20% applies to those trading up/down...30% to investors..

Tigerandahalf

The problem is that the policy being pursued is to reinflate prices to keep the banks safe. People and their housing needs are just an afterthought.

Colm McCarthy has written about how proper zoning of land could free up building land but if that happened land banks held by developers would fall in value and screw up the banks.

McCarthy wrote about a parcel of land been bought in Dublin to build 17 semis lately and the price of land was €220,000 per unit ever before a sod was turned or a block layed. The houses would have to sell for close to €500,000 per unit to make a profit. Until people wake up and realise that they are being robbed nothing will change.

Centrist governments across the western world have brought about this. There will be a big sea change at some stage as young people won't put up with the bad deal they are getting.

srsly78

Tigerandahalf wrote: »

The problem is that the policy being pursued is to reinflate prices to keep the banks safe. People and their housing needs are just an afterthought.

This isn't correct. Policy does indeed think of people - the ones that own property. These people want prices to keep going up - to the detriment of those that do not own property.

Baby01032012

The whole opinion on whether were heading for a property bubble...OECD yesterday being the latest to add fuel to this...its low volume rather than credit that's driving potential bubble ...albeit dirt and tax refunds along with loosening of CBI rules have added to this...if government were to take any steps to cool demand..this would add to the rental crisis...keeping more people in the rental trap while driving down no. of units for rent (as a result of the rent caps. etc. introduced in January)...supply is the only thing that is going to help both tenants and buyers...and there is no serious amount of supply coming on board in the short term.

Cyrus

Baby01032012 wrote: »

No its 10% now for all first time buyers...it was 10% up to €220k and 20% thereafter...20% applies to those trading up/down...30% to investors..

So circa 20 percent for most then especially in Dublin

Baby01032012

Cyrus wrote: »

Baby01032012 wrote: »

No its 10% now for all first time buyers...it was 10% up to €220k and 20% thereafter...20% applies to those trading up/down...30% to investors..

So circa 20 percent for most then especially in Dublin

to be 20% for most...most would have to be trader uppers or investors with very little first time buyers...why do you think that?

Cyrus

Baby01032012 wrote: »

to be 20% for most...most would have to be trader uppers or investors with very little first time buyers...why do you think that?

What are people buying for 220k in Dublin or anything close or it

And it appears to be family houses that are most in demand so most are trader uppers

Baby01032012

You didnt read my post...the CBI rules were changed...there is no 220k limit anymore....you can pay €1m for a house and still only need 10% deposit...salary multiples would be something else though

Lumen

machalla wrote: »

I remember thinking prices were mad in 1998. I didn't buy a 2 bed apartment on Grand Canal Dock for £65k at the time. Prices were mad and it would surely all collapse!

And if you'd spent the £65k on Apple stock you'd now have €10m.

Hindsight is a wonderful thing.

jamesthepeach

machalla wrote: »

I remember thinking prices were mad in 1998. I didn't buy a 2 bed apartment on Grand Canal Dock for £65k at the time. Prices were mad and it would surely all collapse!

I remember thinking the same thing myself

Cyrus

Baby01032012 wrote: »

You didnt read my post...the CBI rules were changed...there is no 220k limit anymore....you can pay €1m for a house and still only need 10% deposit...salary multiples would be something else though

Didn't realise that,that's a bad move

Villa05

noodler wrote:

Impossible to prove.

TimeToShine wrote:

I don't think anyone denies that we're in a bubble. But if you are buying a home to live in for life then it really doesn't make that much of a difference, the sooner the better. If you're having notions about investments then definitely don't bother.

theboringfox wrote:

I don't think it's a bubble. Houses are being sold within metrics that are deemed affordable by central bank and there are stress tests to allow for interest rate rises. I don't know how people can say it's a bubble yet.

It's a demand/supply driven bubble. As time goes by your money buys less and less property. Eventually a basic necessity becomes an unaffordable luxury for the majority. This becomes unsustainable and leads to a potential crash

Note our banks net worth is predominantly determined by the value of property. They still have many bad loans from the previous bust. A bubble bursting could cast us back to 2010 situation very quickly

srsly78 wrote:

This isn't correct. Policy does indeed think of people - the ones that own property. These people want prices to keep going up - to the detriment of those that do not own property.

The majority of people would be Far better off with a stable market with small inflation linked increases. Rapidly rising prices are not for the benefit of the majority be they property owners or not

Currently we don't have a huge amount of folk working in retail and construction etc who are new (ish) to the country. The price rises are due as mentioned to supply and demand but not due to a huge influx of workers as was seen in the pre 2007 years.

As not much is being built and the economy isn't overheating (it's lukewarm at best I'd estimate) there isn't much chance of demand dropping hugely or of supply increasing hugely.

A couple with a combined income of €100k (professional folk) can afford a €400k property. A single person on €50k or a couple on a combined €50k can afford a €200k property.

I don't see the current "bubble" in 3 bed semis or flats/apartments bursting anytime soon (the next decade).

Also there are more than a few folk reckoning a €200k apartment earning €1200/month rent isn't a bad investment in these low interest days.

Highly priced property might not sell at the looney asking price but there are plenty of buyers hoping it was a bit cheaper.

SunSeeker101

Augeo wrote: »

Currently we don't have a huge amount of folk working in retail and construction etc who are new (ish) to the country. The price rises are due as mentioned to supply and demand but not due to a huge influx of workers as was seen in the pre 2007 years.

I think the above is partially true. Pre-2007 the vast majority of immigrants into Ireland were East European construction workers. When the collapse happened, they left for pastures new, vacating their rented accommodation. This was why we then had a glut of rental accommodation and landlords couldn't find tenants.

So what has happened since then? Why do we now have a shortage of rental accommodation.

I think the answer lies in Fine Gael's liberalisation of our visa requirements. I find it amazing at the sheer number of South Americans, Chinese, Indians etc. who have moved to Ireland. I have asked a number of Brazilians why they have moved to Ireland and 9 times out of 10 the response is "because it was easy to get a visa".

The majority of people moving to Ireland now are on student visa's. They are quite happy to share bedrooms to keep the rent down and because they know they will only have to do it temporarily.

Which makes me wonder, what will happen when the next recession hits. Will all the South Americans move on to pastures new if they lose their jobs. And what about all that student accommodation that is being built all over the city. Will we have a glut of vacant student accommodation along with vacant studios and flats. And what if the tech bubble 2.0 blows up, will we have jobs losses in the tech industry which also employs a lot of foreign nationals who rent and could leave Ireland if they lose their jobs. We could be in for an interesting time in a couple of years if the long overdue recession hits us. It won't be fun being a small, open economy then....