Property price bubble - when will prices peak / decline / crash ?

spaceHopper · 07-09-2017 11:37am

PokeHerKing wrote: »

I know of 3 couples who bought houses in mid/late 2012 via mortgages. Average enough earnings and between 10-20% deposits each.

Obviously a very small sample but I'm intrigued at how often it's stated on these threads that the "banks wouldn't lend in the recession".

Is this from first hand experience or from data detailing a higher proportion of mortgage applications being denied?

We bought in 2012, we had a 20% deposit so bank where happy, we were never told we had to have 20% but they where much happier that we did and I understood it was necessary as at the time prices were still falling.

riclad · 07-09-2017 11:53am

Prices will stop rising in dublin at some point,when you buy a house its a long term deal.
if prices go up by 20 per cent or fall by 20 per cent it won,t make much difference to you.
Banks lend based on the current value of the house, and your earnings and how much you have saved up.
Its a pretty simple formula.
They are in theory also regulated by the central bank and dept of finance as regard how much they can lend.
i see no signs of a price crash in dublin.

sk8board · 07-09-2017 12:13pm

spaceHopper wrote: »

In the 2004 they got rid of the first time buyers grant and instead abolished stamp duty for FTB’s on properties under 3175000, that a rush to buy and any property in places like Crumlin which was going for 260K jumped to 317K, then kept going.

I was about to comment the same thing. we bought a 3-bed in Dublin for €255k in Oct 2003. Within 12 months, the next phase was €317k precisely and they climbed to about €400k before it crashed.

A few weeks ago, my neighbours house, in the same condition as ours, sold for .... €255k.

In the coming years I don't see any stupid incentives (I stress the word stupid) for buyers or builders which would:

a) improve house builds to the needed 50k pa level (never mind 90k)
b) would have banks forego the checks on buyers to enable them borrow more than they could afford with stress-tests
c) low interest rates will eventually rise, putting pressure on new & existing borrowings

Its very difficult to describe whats currently happening as a bubble, considering so many people are still in trouble with their borrowings from the last property cycle.
There are fewer 2nd hand houses to buy; there are also reduced numbers of buyers, due to restrictions - with cash being used more; there are also hardly any new builds.

We're still a while off being a bubble, but Dublin is the epicenter and is again setting the upward trend for the rest of the country

07-09-2017 12:14pm

Mickiemcfist wrote: »

...........The way it is at the moment for me anyway it's more cost effective to buy than rent, as long as that remains the case for the majority there will be an upside to property prices.

Indeed, however it's quite likely that won't be the case continuously for the next 10/20/30 years

07-09-2017 12:17pm

sk8board wrote: »

I was about to comment the same thing. we bought a 3-bed in Dublin for €255k in Oct 2003. Within 12 months, the next phase was €317k precisely and they climbed to about €400k before it crashed.

A few weeks ago, my neighbours house, in the same condition as ours, sold for .... €255k.

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

We're still a while off being a bubble, but Dublin is the epicenter and is again setting the upward trend for the rest of the country

Indeed.
I mentioned a few days ago in conversation that we aren't back to 2007 prices yet and the folks I was chatting to informed me that Dublin prices were. (I live in Kildare so wouldn't be in the know like :pac: )

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Carlos Orange · 07-09-2017 12:44pm

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Maybe I'm wrong and prices are booming in Kerry and Donegal but I imagine most of those houses are still empty. Supply around Dublin looks pretty tight in the map.

mloc123 · 07-09-2017 1:33pm

Augeo wrote: »

Indeed.
I mentioned a few days ago in conversation that we aren't back to 2007 prices yet and the folks I was chatting to informed me that Dublin prices were. (I live in Kildare so wouldn't be in the know like :pac: )

I would say that prices in Kildare (Maynooth, Celbridge, Leixlip) are around 90-95% of peak prices currently... at least on FTB houses.

07-09-2017 1:39pm

mloc123 wrote: »

I would say that prices in Kildare (Maynooth, Celbridge, Leixlip) are around 90-95% of peak prices currently... at least on FTB houses.

I dunno, have no actual examples to be honest.
The following is guiding at €295K
http://www.daft.ie/kildare/houses-for-sale/maynooth/83-silken-vale-maynooth-co-kildare-maynooth-kildare-1508467/

I know someone in Clane who paid €285 for a 2 bedroom flat in 2006 so I'd be fairly sure 3 bed sem d in Maynooth would have been going for €400k ish in 2007.

I'd say 90/95% of peak would be a tad high tbh ......... the peak was looney in most areas like. I don't think we're at 90% peak in Maynooth, Celbridge, Leixlip

mloc123 · 07-09-2017 1:48pm

Augeo wrote: »

I dunno, have no actual examples to be honest.
The following is guiding at €295K
http://www.daft.ie/kildare/houses-for-sale/maynooth/83-silken-vale-maynooth-co-kildare-maynooth-kildare-1508467/

I know someone in Clane who paid €285 for a 2 bedroom flat in 2006 so I'd be fairly sure 3 bed sem d in Maynooth would have been going for €400k ish in 2007.

I'd say 90/95% of peak would be a tad high tbh ......... the peak was looney in most areas like. I don't think we're at 90% peak in Maynooth, Celbridge, Leixlip

I would have said 3 bed semi was about 350? Although maybe that was a few months after the 2007 peak. I am basing my estimates on that and the same houses now going for 310-320 (advertised around 295-300).

PokeHerKing · 07-09-2017 1:55pm

Dublin is routinely quoted as being between 40/45% off peak.

If true, Kildare be 50+% I'd say.

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mloc123 · 07-09-2017 2:05pm

PokeHerKing wrote: »

Dublin is routinely quoted as being between 40/45% off peak.

If true, Kildare be 50+% I'd say.

Was the peak really that high? I guess they are average figures... but saying that prices are currently 50% of what they were in peak would mean that the examples I listed (3 beds in Kildare) were selling for 600k at peak...?

karenalot · 07-09-2017 2:06pm

mloc123 wrote: »

I would say that prices in Kildare (Maynooth, Celbridge, Leixlip) are around 90-95% of peak prices currently... at least on FTB houses.

I bought in Kildare in 2006. Neighbours identical house recently sold for 12% less than what I paid for mine.

A friend in Celbridge sold his apt last month for 8% less than what he paid for in 2006.

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mloc123 · 07-09-2017 2:14pm

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Pity the PPR was not around back then.

Ohmeha · 07-09-2017 3:07pm

This is a supply bubble, not a credit bubble as peaked in 2007/08

Property prices can keep going up as long as the government and the vested interests keep up their idiotic policy to engineer a return to the unsustainable prices of 2007/08.

Like with the credit bubble 10 years, this supply bubble will also suck money away from the real growth productive sectors of the economy and ensure the few purchasers and the rapidly growing cohort of renters are forced to over extend themselves as is already happening.

We are already seeing the social consequences of this bubble, the economic consequences will happen at some point and like 10 years ago the damage won't become apparent until it's too late.

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Hollister11 · 07-09-2017 3:50pm

It's still not a bad time to buy imo.

Ok prices aren't as good as they were 3/4 years ago, but banks weren't approving the same amount of mortgages.

I honestly believe prices will increase for the next 2-3 years at least, so if you buy a house now, you will have equity in a year or so.

Anyone who bought a property in the last year even has a more expensive assets than what they paid.

professore · 07-09-2017 3:57pm

spit_baller wrote: »

the big jump was from 2003 to the very beginning of 2007

Ah yes I remember that time. My house was making more every year than I was. Something had to give.

07-09-2017 3:58pm

Hollister11 wrote: »

.............
I honestly believe prices will increase for the next 2-3 years at least, so if you buy a house now, you will have equity in a year or so..............

Having equity is largely meaningless.
Plenty folk had it in 2006 and haven't had it since

Graham · 07-09-2017 4:04pm

Augeo wrote: »

Having equity is largely meaningless.
Plenty folk had it in 2006 and haven't had it since

So they had equity and now they don't.

I'd imagine they find that fairly meaningful.

07-09-2017 4:10pm

Graham wrote: »

So they had equity and now they don't.

I'd imagine they find that fairly meaningful.

Only meaningful if you want to sell.

If you view your house as an asset negative equity is a temporary loss at worst unless you sell.

Bob24 · 07-09-2017 9:26pm

long_legs wrote: »

anyone who thinks dublin is 40% off peak is completely out of touch with the market as of today , its at most 15% off peak

a two up two down 700 sqr foot terraced house could be bought fully refurbished in stoneybatter for around 210 k in summer of 2012 , your talking at least 375 k today , most of dublin has seen a 90% rise since the floor which was late spring 2012

I don't know about 15% (very hard to tell exactly where we are), but yeah it's more than 40% for sure.

Things have gotten especially bad in the past few months, I do see some sense of panic and sharp increases in prices in some areas.

And one thing to keep in mind is that since people buying today won't get a tracker mortgage, if you look at mortgage repayments now it is not really better than a similar property purchased during the boom (as interested will be higher). Wages have probably recovered the same level for many, but not sure they are higher so in terms of affordability we are probably back to where we were.

zweton · 07-09-2017 10:15pm

How true is the below lads? Read in another post earlier.

Nothing can be done about it until the 7 years Capital Gains Relief from 2012 expires, as it makes zero sense to sell property until then.

From 7 December 2018 onwards you'll see a ton of new development. Until then, it'll be nothing, otherwise you hand over 33% of any capital gains.

Strangely enough the politicians never mention this fact that absolutely nothing can change until 2019. Anyone in the building industry understands it very well.

davindub · 07-09-2017 10:51pm

zweton wrote: »

How true is the below lads? Read in another post earlier.

Nothing can be done about it until the 7 years Capital Gains Relief from 2012 expires, as it makes zero sense to sell property until then.

From 7 December 2018 onwards you'll see a ton of new development. Until then, it'll be nothing, otherwise you hand over 33% of any capital gains.

Strangely enough the politicians never mention this fact that absolutely nothing can change until 2019. Anyone in the building industry understands it very well.

It will be 2022 before any possibility of change happens in Dublin/ Dun Laoghaire areas (dev plan 2016-2022). I don't think the CGT relief is the main driver, more to control the market tightly, sell at peak prices, then dump remaining stock to depress prices and buy land cheaply. In Dublin anyway, land holding companies and the bigger developers control the majority of residential zoned development land, same companies operate in the UK too, same result.

Two things have really enabled this, the Government scrapped the windfall tax (80% of windfall from changing zoning from Agri to residential) and NAMA selling in bulk. But then at the time they wanted house prices to grow, only for the central bank we would be in another recession by now.

OwlsZat · 07-09-2017 11:03pm

zweton wrote: »

How true is the below lads? Read in another post earlier.

Nothing can be done about it until the 7 years Capital Gains Relief from 2012 expires, as it makes zero sense to sell property until then.

From 7 December 2018 onwards you'll see a ton of new development. Until then, it'll be nothing, otherwise you hand over 33% of any capital gains.

Strangely enough the politicians never mention this fact that absolutely nothing can change until 2019. Anyone in the building industry understands it very well.

This is probably true. A pile of accidental landlord will be looking to sell and cash in on substantial profit. On top of that all the pension funds and foreign investors will be looking to do the very same. There's about a 20k mortgage approval surplus in Dublin so there will be a large normalizing period. These sales will also have to complete with a quickening new supply. As a result I'm expecting there will be a stampede to cash in the chips.

OwlsZat · 07-09-2017 11:04pm

Does anyone know how many units are in progress around the Greater Dublin area?

The Mulk · 08-09-2017 7:56am

karenalot wrote: »

I bought in Kildare in 2006. Neighbours identical house recently sold for 12% less than what I paid for mine.

A friend in Celbridge sold his apt last month for 8% less than what he paid for in 2006.

I went to sell in my house, 3-bed semi in Celbridge in 07. Went sale agreed at 380k.Decided it against it at the time, but sold it in August '16 for 300k.
Neighbours house went sale agreed Aug '17 for 320K, so currently approx 85% of peak in that area(If my maths are correct).

Property price bubble - when will prices peak / decline / crash ?

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