Will house prices ever stop growing?

Blacktie.

exaisle wrote: »

Explain please...

Tracker mortages where very low interest rates. If the interest rates now become the what tracker mortgages are viewed as you'd be looking at 6-7% APR :eek:

Graham

Samuel T. Cogley wrote: »

If we see a significant spike in interest rates (which I doubt but a slow gradual increase seems inevitable) we really are going to be fecked.

Unless there's a bump in inflation before any significant interest rate rises, I suspect there would be a few people who's eyes water each month when the mortgage is due.

mloc123

Graham wrote: »

Unless there's a bump in inflation before any significant interest rate rises, I suspect there would be a few people who's eyes water each month when the mortgage is due.

Banks should be stress testing to +2% at the moment.. afaik they have to as part of the ICB rules? Which would be to around 6%.

Samuel T. Cogley

mloc123 wrote: »

Banks should be stress testing to +2% at the moment.. afaik they have to as part of the ICB rules? Which would be to around 6%.

Thankfully were were stress tested to +2%. +2% would be a lifestyle change for us I reckon but doable. +3 or 4% would not be pleasant!

seamus

Incredible how quickly history can repeat itself.

http://www.boards.ie/vbulletin/showthread.php?p=51396734

Also
http://www.boards.ie/vbulletin/showthread.php?p=3532881
http://www.boards.ie/vbulletin/showthread.php?p=2721124
http://www.boards.ie/vbulletin/showthread.php?p=51459086

mloc123

Houses will stop rising and will likely fall again... But banks will also stop lending like the last time.

Is the current rise a bubble? Probably, will it be as severe as the last time? Probably not.

Easy lending was the biggest factor 10 years ago, people argue that banks are lending too easily now.. maybe that is true but it is nowhere near the free for all from 10 years ago.

Graham

I think that sums it up perfectly, most mortgage applicants would have been stress tested recently. Increased interest rates would still make life uncomfortable.

rsynnott

Speaking of rising interest rates, Ulster Bank is to introduce a 4 year fixed product at 2.6%: https://www.thetimes.co.uk/edition/ireland/banks-head-for-mortgage-price-war-pqsvc77pp

That would put it close to the European average. Irish interest rates are still a fair bit higher than European ones; while the ECB rate will presumably rise eventually, there's actually a fair bit of room for current Irish rates to fall.

Samuel T. Cogley

rsynnott wrote: »

Speaking of rising interest rates, Ulster Bank is to introduce a 4 year fixed product at 2.6%: https://www.thetimes.co.uk/edition/ireland/banks-head-for-mortgage-price-war-pqsvc77pp

That would put it close to the European average. Irish interest rates are still a fair bit higher than European ones; while the ECB rate will presumably rise eventually, there's actually a fair bit of room for current Irish rates to fall.

One would hope they would at least 'absorb' part of the increases.

Hang on... Sorry just saw a pig fly past the window.

Graham

Samuel T. Cogley wrote: »

One would hope they would at least 'absorb' part of the increases.

Hang on... Sorry just saw a pig fly past the window.

In the face of political and competitive pressure, I actually do expect the banks would absorb some of the increase. Time will tell I guess.

andekwarhola

Samuel T. Cogley wrote: »

I'm not sure it's ever been put that well by anyone - this is a huge issue. It's not that many can't afford a house, it's that they can't afford a 4 bed semi on the Howth Road or in a some leafy SoCo Dublin suburb.

That's not to detract from the people that genuinely can't buy but even semi-skilled workers like myself have options.

A lot of people in these forums have trouble grasping the fact that houses in the most desirable areas of a capital city are generally always going to be out of reach for all but a few buyers.

But hey, the market will eventually return to 'normality' and two teachers can buy a house in Rathgar.

Funnily enough, they only object to the property market rising, not wages and the economy.

Bob24

andekwarhola wrote: »

But hey, the market will eventually return to 'normality' and two teachers can buy a house in Rathgar.

If you'd said Ballsbridge, Blackrock, or Dalkey I would be with you. But Rathgar?

Not so great public transport and nice but not exactly luxury location. Where do you want to send the teachers? The don't deserve a Southside postcode besides Tallaght? (no offence to Tallaght! And full disclosure: I am not a teacher and don't know any)

Graham

Bob24 wrote: »

If you'd said Ballsbridge, Blackrock, or Dalkey I would be with you. But Rathgar?

Probably safe to say it's out of reach for most average salaries:

http://www.daft.ie/price-register/dublin/rathgar/

mloc123

Graham wrote: »

Probably safe to say it's out of reach for most average salaries:

http://www.daft.ie/price-register/dublin/rathgar/

700k for a basement flat... I assume they are much nicer than the name would imply.

Bob24

Graham wrote: »

Probably safe to say it's out of reach for most average salaries:

http://www.daft.ie/price-register/dublin/rathgar/

What I meant is: I get it that every capital city will have exclusive areas which are out of reach for most people. But while I don't know Rathgar that well, the few times I went there it didn't look that exclusive to me. Just a nice enough average suburb with poor transportation links.

rsynnott

Bob24 wrote: »

If you'd said Ballsbridge, Blackrock, or Dalkey I would be with you. But Rathgar?

Not so great public transport and nice but not exactly luxury location. Where do you want to send the teachers? The don't deserve a Southside postcode besides Tallaght? (no offence to Tallaght! And full disclosure: I am not a teacher and don't know any)

Rathgar is very expensive, I'd have thought in the same range as Blackrock.

andekwarhola

Bob24 wrote: »

If you'd said Ballsbridge, Blackrock, or Dalkey I would be with you. But Rathgar?

Not so great public transport and nice but not exactly luxury location. Where do you want to send the teachers? The don't deserve a Southside postcode besides Tallaght? (no offence to Tallaght! And full disclosure: I am not a teacher and don't know any)

You missed my point completely

punisher5112

Sure it has been mentioned but the crisis isn't helped with so much sold of in batches to investor's and nama offloading for buttons.


Seriously when will our government work for those that put them there.

I have no hope of buying thanks to their rubbish and revenue and rents just rising.

Having property tax on top of all the other crap that they have done is only making it worse.

If one pays €2500 or more they are liable for property tax.

Rent being taxed on LL side just made things even worse as they need to increase to break even or get their return.

Nama should be working with the Irish not all these hedge funds and vulture funds and huge corporate bodies.

Its sad to see so much being lost and this then also means there is less housing stock so prices go one way up up up.

LiamoSail

punisher5112 wrote: »

Sure it has been mentioned but the crisis isn't helped with so much sold of in batches to investor's and nama offloading for buttons.


Seriously when will our government work for those that put them there.

I have no hope of buying thanks to their rubbish and revenue and rents just rising.

Having property tax on top of all the other crap that they have done is only making it worse.

If one pays €2500 or more they are liable for property tax.

Rent being taxed on LL side just made things even worse as they need to increase to break even or get their return.

Nama should be working with the Irish not all these hedge funds and vulture funds and huge corporate bodies.

Its sad to see so much being lost and this then also means there is less housing stock so prices go one way up up up.

NAMA isn't an estate agent or developer. They don't have the resources or expertise to sell to individuals. It's not their purpose

Yourself isit

Bob24 wrote: »

What I meant is: I get it that every capital city will have exclusive areas which are out of reach for most people. But while I don't know Rathgar that well, the few times I went there it didn't look that exclusive to me. Just a nice enough average suburb with poor transportation links.

A lot of supposedly posh Dublin is like that. Not all. Just a name. Conversely killbarrack et al are under estimated.

Right2Write

KyussBeeshop wrote: »

OP, read up on the number of new house builds that are required to meet demand every year, and then compare that to the number of actual new house builds. House prices will not stop growing, until those numbers are matched.

There is truth in that but I don't think it's the full picture. The value of anything is determined by how much a buyer is prepared to pay for it. And there will come a tipping point, even in an under supplied market, where people will say 'No, this is crazy debt'. Confidence falters and the whole edifice starts to crash. Speculators rush to sell, lenders get wary, credit gets squeezed etc., prices fall and so on. The question at that point, is will the savvy and patient saver be able to gain some advantage? Or if as happened last time, enough stupid people are in the same sinking boat, will the State assist them to avoid the consequences of their foolhardy financial decisions??

Arthur Daley wrote: »

Not too long ago - 4/5 years - since people were wondering if prices would ever recover. Living through the last 20 years I really wonder if most people, most public/media comment anyway is operating at the intellectual level of a goldfish.

It's mad isn't it. Journalists and 'economic experts' all seem to live in the moment are incapable and/or unwilling to look more than their next salary cheque.

KyussBeeshop

The prices will grow to match the money available (through savings + debt) for the limited supply - the previous crisis shows that the tipping point is only the availability of money/debt, not the buyers late-onset rationality about it being overpriced.

If the average person wont buy at the inflated prices, there are a lot of other investors looking to take advantage of the high rents, who'll snap property up at whatever price, and add it to their portfolio.

Essentially we have a property market whose purpose is heavily distorted towards investment rather than living, right now - these two purposes rarely ever mix well.

Graham

Right2Write wrote: »

There is truth in that but I don't think it's the full picture. The value of anything is determined by how much a buyer is prepared to pay for it. And there will come a tipping point, even in an under supplied market, where people will say 'No, this is crazy debt'.

People are more constrained by the amount they can borrow rather than the amount they are prepared to pay. I can't see prices increasing significantly while the central bank keeps lending multiples in check and salary increases remain in line with inflation.

BrianD3

I see the "we're millionaires" type stories have started appearing again in the media.
https://www.rte.ie/news/business/2017/0718/891093-ireland-has-3-821-property-millionaires-daft-wealth-r/

What next, the return of "I'm an adult, get me out of here".

Personally, I bought a detached house in 2005 well outside Dublin, far enough away that it would have been considered a "crazy" commute to Dublin 20 years ago but somewhat "normal" now. I estimate that the property is currently worth:
about 30% less than I paid for it in 2005
about 40% less than what it was worth in early 2007
about the same as it was worth in 2010

However I see some estate agents in the area now listing similar properties in the area for 2005 prices.

Idbatterim

I would highly recommend watching the below, real estate for ransom, australian documentary, but exactly the same as is happening here...

https://www.youtube.com/watch?v=XL3n59wC8kk

also another gooda rticle

http://www.euronews.com/2017/07/17/view-why-cities-are-cities-getting-so-unaffordable

an extract from it below. What our politicians and councillors are at and I have said it for years, they are morally corrupt!

But, more often, a city with a high housing-price-to-income ratio is less a “great city” than a supply-constrained one lacking in empathy, humanitarian impulse, and, increasingly, diversity. And that creates fertile ground for dangerous animosities.

the thing is, you cant really blame people or developers, for what is going to benefit them most financially, we all do it. The failure is at local and national level government here...

Wanderer78

Idbatterim wrote:

I would highly recommend watching the below, real estate for ransom, australian documentary, but exactly the same as is happening here...

Australian economist Steve keen is expecting a property crash there soon enough, sounds like it could be a nasty one

Idbatterim

the banks already already have altered the rules on lending, due to political pressure (oh sorry they are meant to be independent) :rolleyes:

They should leave them as are and force the government to reduce their take or increase densities and revise apartment building standards. Its just way too expensive to build and this buy...

knipex

Yes

Yes they will.



Unless they come down..

And go up again.

Or stabilize

so..

Maybe..

dubrov

Let's face it.
This is Ireland, they will never stabilize.

Graham

Wanderer78 wrote: »

Australian economist Steve keen is expecting a property crash there soon enough, sounds like it could be a nasty one

I don't think the Australian market is a great comparison. Their economy is getting hit by the slow-down in demand from China for mined products and their house prices have been inflated significantly by Chinese investors.