Property Market 2018

Bob24

Augeo wrote: »

True.
However look what happened when there were loads of property developers spitting out properties back in 2006/2007.

Nothing is ever perfect.

Correct. An issue back then though is that banks where throwing money at people for them to buy new “investment” properties in places they had never heard of and where no one wanted to live.

Luckily we are not back there (yet).

The_Conductor

Bob24 wrote: »

Correct. An issue back then though is that banks where throwing money at people for them to buy new “investment” properties in places they had never heard of and where no one wanted to live.

Luckily we are not back there (yet).

We still have a shedload of those properties- NAMA offered to hand over 3k fully completed units, gratis, to local authorities to take a large lump out of the homeless crisis- they were turned down- as homeless people didn't want to live where there are available houses.......... Sigh..........

AlmightyCushion

CalRobert wrote: »

Imagine a thousand people want to buy a car.
Now imagine there are only 500 cars for sale.
Cars will, of course, get very expensive! About as much as the richest 500 can afford.
Because cars are expensive, other companies will say "there's a lot of profit to be made there, let's build some more cars", so they do, and there are now more cars, and they get cheaper because now the potential car buyer is competing with fewer people.


Now, If I said you could only sell cars for 500 Euro, two things would happen.
1) Nobody would build more cars, because it turns out they're a lot more expensive than that to make
2) Because you can't offer more money for a car, anyone who isn't the absolute best positive car buyer gets screwed. To be honest I'm one of a couple in our thirties with stable jobs and good incomes. I even fix stuff myself and don't complain.
We're dream renters - which is why we could get a place in 2016. (I rented from the same landlord in 2013 and he knew us well). If we were students, or god forbid, self-employed, we'd just be screwed.

Normally, if another group - say, three students - wanted to rent our two bedroom city centre flat, they could at least offer the landlord more money, but they can't, because that's against the law.


OK, the anology isn't perfect, but basically if you make life horrible for anyone trying to build a home, you're not going to get homes built, which means the existing ones will be really expensive. It's not complicated.

Except new builds aren't subject to any cap so you can still build houses/apartments and charge what ever you like for rent on them.

Bob24

AlmightyCushion wrote: »

Except new builds aren't subject to any cap so you can still build houses/apartments and charge what ever you like for rent on them.

OP is talking about rental prices, not about purchase prices (which means their analogy is not perfect but the idea makes sense).

keane2097

Bob24 wrote: »

OP is talking about rental prices, not about purchase prices (which means their analogy is not perfect but the idea makes sense).

I'm not sure it's any more enlightening than just explaining the situation using houses tbh.

theboringfox

The latest daft report for Q1 interesting. Cork city prices only 1.7% higher year on year. The report seems to show very strong growth in City in 1 bed and some growth in 2 and 3 bed but 4 and 5 bed actually seen a slight decline. Would imply that affordability may be capping upper end of market and that the central bank rules are working. Hopefully not a blip and sign of more normalised price growth in Cork city.

Dublin city seems to be roaring ahead again though!

oceanman

The_Conductor wrote: »

We still have a shedload of those properties- NAMA offered to hand over 3k fully completed units, gratis, to local authorities to take a large lump out of the homeless crisis- they were turned down- as homeless people didn't want to live where there are available houses.......... Sigh..........

available houses but no work or amenities ect......these houses were built in the wrong place to start with.

AlmightyCushion

Bob24 wrote: »

OP is talking about rental prices, not about purchase prices (which means their analogy is not perfect but the idea makes sense).

He said nobody would build new cars because the cost to build a car is higher then the cap implying that the rent cap will prevent property building. The analogy makes no sense because new property builds aren't subject to any cap. You can sell or rent a new property for whatever you want. The rent cap only applies to properties already rented.

Goose Reckoning

AlmightyCushion wrote: »

He said nobody would build new cars because the cost to build a car is higher then the cap implying that the rent cap will prevent property building. The analogy makes no sense because new property builds aren't subject to any cap. You can sell or rent a new property for whatever you want. The rent cap only applies to properties already rented.

Rental Pressure Zones are to the rental market what Central Bank 10% deposit/3.5x salary rules are to the sales market.

Both are designed to put the brakes on rising property prices, whether renting or buying.

The result is similar to his original point,
Example: If it costs a builder 400k to purchase land for and build a single house in Dublin (and including a small profit) but a couple on average salary (€45,075 x 2) can only borrow 3.5x their combined income (mortgage of €315,525) + 10% deposit saved up, they can afford a property up to €347,077. So builders don't bother, because most people can't afford what they're building.
Builders not building the properties people want in the right areas = further constricting supply.
There is an argument for temporarily relaxing the Central Bank rules a little, maybe 4.5 or 5x income - to incentivize builders. Nothing crazy like Celtic tiger years (10x income and 100% mortgage,etc..) just enough to encourage developers to build and solve this crisis.

oceanman

Goose Reckoning wrote: »

Rental Pressure Zones are to the rental market what Central Bank 10% deposit/3.5x salary rules are to the sales market.

Both are designed to put the brakes on rising property prices, whether renting or buying.

The result is similar to his original point,
Example: If it costs a builder 400k to purchase land for and build a single house in Dublin (and including a small profit) but a couple on average salary (€45,075 x 2) can only borrow 3.5x their combined income (mortgage of €315,525) + 10% deposit saved up, they can afford a property up to €347,077. So builders don't bother, because most people can't afford what they're building.
Builders not building the properties people want in the right areas = further constricting supply.
There is an argument for temporarily relaxing the Central Bank rules a little, maybe 4.5 or 5x income - to incentivize builders. Nothing crazy like Celtic tiger years (10x income and 100% mortgage,etc..) just enough to encourage developers to build and solve this crisis.

I think at 400k you are talking about a bit more than a "small profit" how much are you estimating is costs a builder to build an average 3 bed house?

The_Conductor

oceanman wrote: »

available houses but no work or amenities ect......these houses were built in the wrong place to start with.

Given, however, if they're homeless, surely a house is a house?

Zenify

Goose Reckoning wrote: »

There is an argument for temporarily relaxing the Central Bank rules a little, maybe 4.5 or 5x income - to incentivize builders. Nothing crazy like Celtic tiger years (10x income and 100% mortgage,etc..) just enough to encourage developers to build and solve this crisis.

There is most defitinly not an argument for any sensible or sane person. Maybe an argument for those looking to make more money from the property market.

The_Conductor

Zenify wrote: »

There is most defitinly not an argument for any sensible or sane person. Maybe an argument for those looking to make more money from the property market.

+1
The reason for the bubble in our houseprices (and don't kid yourself that its not a bubble, that its somehow sustainable)- is because we have excess demand for housing units- with limited supply.

However- prices are now flat-lining in both Dublin City Council and Cork City administrative areas (according to the CSO)- based on affordability levels having been reached- thanks to the constraint of the Central Bank income multiples.

If you relax those income multiples- all you have- is a rapid jump- to reflect the prospective purchasers new found access to additional credit- to which there is still no increase in supply.

Mechanisms to make construction cheaper- where people want to live (predominantly in our main urban areas)- such as a relaxation in building height regulations etc- would be far more effective in increasing availability- than an ill-thought-out scheme to simply shovel more credit out the door.

A further issue on the cooker at the moment- is we relaxed apartment size and other rules- to allow the construction of significantly smaller apartments (remember all the shrill cries about how they can't make them compliant with rules for disabled people any longer- because the room sizes are too small!!!). You have all of the people who bought these shoeboxes- in the expectation that they could move up to a 2-3 bed or shock horror- a house- down the road, when they have kids, or meet their significant other- or whatever.......... But- we're not building them- so we're adding to the condemned generation- who are owner occupiers- but living in conditions that breach local authority guidelines- which means HAP and other tenants would be entitled to significantly better conditions than owner occupiers.........?

We need more supply. We do not need higher prices. The supply we need- has to reflect the future needs of our society. It is not sufficient to simply build shoeboxes.

As soon as interest rates start to go up- there are going to be a lot of very unhappy people out there...........

Arthur Daley

In Russia they have 3d printed a house for $10,000, in a bit over a day. Built to withstand the Russian winter. They look perfectly serviceable.

So that just leaves the Government to justify the various taxes and levies they charge. Plus the land cost charged by whoever they sold the development land banks to. Via Nama for 40 to 50 cents in the euro or maybe even less.

CalRobert

Zenify wrote: »

There is most defitinly not an argument for any sensible or sane person. Maybe an argument for those looking to make more money from the property market.

For somebody whose rent could cover a 450,000 mortgage it's pretty depressing to hear the government thinks you're not good enough for a 300k mortgage.

Eventually the only buyers left will be cash (landlords) and everyone in the country will be a tenant, courtesy of infantilising lending rules.

Bob24

CalRobert wrote: »

For somebody whose rent could cover a 450,000 mortgage it's pretty depressing to hear the government thinks you're not good enough for a 300k mortgage.

Eventually the only buyers left will be cash (landlords) and everyone in the country will be a tenant, courtesy of infantilising lending rules.

Sorry to say it so directly, but this is an extremely short sighted view of the situation.

1) If lending rules were to be relaxed as you describe and all other things beeing equal, that house you could buy with a 300k mortgage today would shot up in value and require a 450+k mortgage within a few months/years due to everyone in the country having a higher budget. So it wouldn’t help people on that income bracket buying such properties, it would just make the purchases more expensive for people on higher brackets (forcing them to take up larger mortgages based on the relaxed rules).

2) It is all nice and easy now to complain that rules are too restrictive and should be relaxed. But if they were to be relaxed this would most certainly inflate the bubble which is starting to emmerge while increasing some households debt to unsustainable levels, and eventually cause the same crash and stories of negative equity / defaults we’ve have since 2008. And then? People who had been campagning for relaxation will quickly change tune and blame the government and the central bank for allowing a repeat of the mess. That is a big NO for me.

Zenify

CalRobert wrote: »

For somebody whose rent could cover a 450,000 mortgage it's pretty depressing to hear the government thinks you're not good enough for a 300k mortgage.

Eventually the only buyers left will be cash (landlords) and everyone in the country will be a tenant, courtesy of infantilising lending rules.

What happens if you lose your job when you are paying a high rent vs a high mortgage?

I understand your argument completely but there are far better solutions. The Conductor mentioned above that any increase in the mortgage ratio would only result in an increase in price so essential you still wouldn't be able to afford a mortgage.

There are cash buyers who are usually investors in the market. They are not restricted by these rules, but any relaxation would encourage them to bid more due to a higher future return (IMO).

NyOmnishambles

Henbabani wrote: »

the stories about hundreds of people outside apartments are no longer true, i've been this week in more than 6 viewings in Rathgar, Rathmines, ballsbridge, and IFSC - maximum people were there - 15.

it depends on how the viewings are arranged

If a place is cheap and is set up as an open viewing you will get hundreds turning up

If the agent/landlord takes the times to sort through applications then they will sensibly only take up to 20 or so people through the place

To back up the thread quoted earlier, when I was renting a small apartment out recently we had 300 email contacts requesting a viewing within an hour of the ad going up, we then took the ad down and brought 30 people/couples for viewings at staggered times so there were only ever 4-6 people in the place at the one time
Some of them did think we hadn't much interest in the place based on this

Cyrus

CalRobert wrote: »

For somebody whose rent could cover a 450,000 mortgage it's pretty depressing to hear the government thinks you're not good enough for a 300k mortgage.

Eventually the only buyers left will be cash (landlords) and everyone in the country will be a tenant, courtesy of infantilising lending rules.

classic case of wanting a change in a decent policy because it doesnt meet your needs.

the caps on mortgage lending are the only hope we have against run away property inflation again, which you have evidenced

Arthur Daley

CalRobert wrote: »

courtesy of infantilising lending rules.

Well. You do realise hundreds of thousands of people in this country claim to have been mis sold properties and mortgage deals within the last 20 years. Despite signing the contracts and being over the age of 21.These claims are a huge cost to the state, in the billions.

So we cannot have this situation again less than 10 years after the event. If the borrowers cannot assume responsability, or claim diminished responsability, then someone has to step in to protect them from themselves. So the Central Bank are correct to step in as guardians in this environment.

CalRobert

Bob24 wrote: »

Sorry to say it so directly, but this is an extremely short sighted view of the situation.

1) If lending rules were to be relaxed as you describe, that house you could buy with a 300k mortgage today would shot up in value and require a 450+k mortgage within a few months/years due to everyone in the country having a higher budget. So it wouldn’t help people on that income bracket buying such properties, it would just make the purchases more expensive for people on higher brackets (forcing them to take up larger mortgages based on the relaxed rules).

2) It is all nice and easy now to complain that rules are too restrictive and should be relaxed. But if they were to be relaxed this would most certainly inflate the bubble which is starting to emmerge while increasing some households debt to unsustainable levels, and eventually cause the same crash and stories of negative equity / defaults we’ve have since 2008. And then? People who had been campagning for relaxation will quickly change tune and blame the government and the central bank for allowing a repeat of the mess. That is a big NO for me.

No need to be sorry! We actually agree. There's a logic to the policy but it's still frustrating.

I think the core of this stupidity is that apparently nobody here has the ability to build a house for the same price people manage to do it in (Germany/Japan/Name your country).

Also, the majority of the population are homeowners, meaning that a housing crisis is a good thing in the view of many voters. If you were underwater after paying too much in 2006 then all this talk of homes going for 70k over asking is probably fantastic. The government know this and as a result do nothing of any real value to address the issue (Help to Buy was a great way to increase the price of new homes by 20k, after all).

Regardless, though, it's a bit frustrating to know that the only hope of ever getting a home, _even if you could /easily/ make the mortgage payments_ is another economic catastrophe, because the thought of someone having a mortgage payment that's 40% of their take-home (and maybe having a place to live in retirement) is scarier to the folks in charge than the current situation of someone paying 70% of their take-home in rent and being able to feck off to Australia when they can't take it anymore.

Also the numbers I quoted weren't for myself. They're meant to be illustrative. As for myself I currently spend 36% of my net income on rent which isn't too bad, but the bank would approve a mortgage for around 30%, which turns out to make a pretty big difference.

CalRobert

Cyrus wrote: »

classic case of wanting a change in a decent policy because it doesnt meet your needs.

the caps on mortgage lending are the only hope we have against run away property inflation again, which you have evidenced

Eh, the funny thing is that I'm not sure we even disagree. I think the problem, ultimately, is that homes are too expensive, there's not enough of them, and the ones we're building are godawful sprawling suburban hellscape in the middle of nowhere, so we're going to be blocked from making the city nicer (new Luas lines etc) by people who now are doomed to drive to the city for the rest of their days and will complain loudly about anything that affects subsidized motoring convenience.

Even so, it's frustrating. We could have a 1x multiple rule and I doubt it would make houses cheaper. It would just mean 100% cash buyers, most of them buying to let, and more people stuck renting forever when they really could afford to service the debt on a mortgage.

6541

So anyone willing to stare into the future and predict what is going to happen to the property market ?

CalRobert

6541 wrote: »

So anyone willing to stare into the future and predict what is going to happen to the property market ?

Sure -

Rising seas will swallow East wall and North Strand, and most areas near the Liffey. These people will be desperate for a bailout because after all they couldn't have known this will happen (despite decades of scientists screaming this is exactly what will happen). They get a massive buyout from the government because they're homeowners (or they were at least), so their vote actually matters. Homes more than 20 meters over sea level will fetch a premium.

Antibiotic resistance creates a new worldwide plague, forcing an island-wide quarantine. All shipping and air traffic are stopped on pain of death. Rural Ireland sees a resurgence of interest as a small plot of land that can feed your family without contacting other humans becomes a huge asset.

Climate change means that desperate winemakers from the now-parched south of France come to Ireland and snap up rural land so they can continue their craft, for a few decades at least, when the burgeoning Norwegian wine industry replaces our own.

On March 31 2019 the first yacht of emaciated, weak bankers wearing nothing but rags arrives from the East, signifying the start of a refugee crisis that will cause chaos and dysfunction and the eventual downfall of the FG government. Because they're bankers, they're directly provisioned with cash.

Or, you know, somebody builds a few flats in the middle of this European capital and 2 people on median incomes can actually afford to buy a home and still have a reasonable commute. (Obviously some fantasy in that one!!)

zl1whqvjs75cdy

6541 wrote: »

So anyone willing to stare into the future and predict what is going to happen to the property market ?

I'll take a stab. Dublin to continue to flat line but not decline unless there is a major house building initiative. The current attempt doesn't count.

Immediate commuter counties to increase modestly this year before flat lining similar to Dublin. Peripheral commuting counties to increase rapidly this year and next as people are pushed further and further out. Traffic and commuting to become even worse than it is now.

Rent to continue steadily increasing, within rpz limits but will continue to increase. The supply/demand problem won't be solved in the next 3 to 4 years (or possibly ever) as it doesn't suit the government. Most voters are home owners, home owners like to see their asset increase in value.

I would also disagree that we're in a bubble. We don't have enough houses and people need to live somewhere. With Dublin in particular and all the new investment prices in the capital and surrounds will not be dropping any time soon, barring a major international event like a war or brexit going completely off the rails.

Or I could be totally wrong and that could all be total horse****. Who knows.

OwlsZat

donkeyoaty0099 wrote: »

6541 wrote: »

Most voters are home owners, home owners like to see their asset increase in value.

Is this an Ireland only problem?

zl1whqvjs75cdy

OwlsZat wrote: »

Is this an Ireland only problem?

Wouldn't know, I haven't lived anywhere else. The Irish so seem to have a strange relationship with property though.

draiochtanois

This post has been deleted.

Colonel Claptrap

If a house is worth 100k today but triples in price to 300k next year, it's not all that beneficial for the homeowner if it's their primary residence.

They can't sell at 300k and buy another house for 100k. Other houses in the area will also have tripppled in price.

They could benefit from reduced interest payments as their LTV falls, but this is neglible in the short term.

Rising house prices are not welcomed by most homeowners. They are however welcomed by landlords. It's important to distinguish the two.

Samuel T. Cogley

draiochtanois wrote: »

This post has been deleted.

Ireland rates fairly highly for quality of life and property isn't nearly as expensive as say the SE of England.