Property Market 2018

M.Cribben

Augeo wrote: »

Were fundamentals right last year and the year before too?
Because I can't really reconcile the staggering increase in prices over 24 months tbh.

It's accepted that during the recession, prices overshot the bottom (as they overshot the top in Celtic tiger years). A large % of the increase since 2013-2014 is a correction to reflect improved economic conditions imo.


It's very difficult to determine what the actual value of a house should be. Banks and EAs will tell you a house is worth what someone is willing to pay for it. The money available for someone to buy is determined by too many factors to accurately calculate the 'real' value (e.g. unemployment rates, wage inflation, minimum wage, cost of construction, cost of land, interest rates, availability of credit, even cost of food, education, transport, healthcare all have an impact).



Hypothetical scenarios- if everyones wages doubled overnight - house prices would shoot up. If interest rates doubled overnight - house prices would drop. Likewise if cost of land fell. If unemployment doubled. If cost of food tripled. And so on.


Fundamentals are stronger now imo in that house prices today are mostly impacted by the chronic supply shortage, the rising employment rates and wages, and low interest rates. There's no speculative credit fueled bubble that can collapse overnight.


-We cannot suddenly churn out 100,000+ affordable units a year in urban areas.

-We cannot force builders/carpenters/electricians/plumbers to take a 50% paycut in order to decrease cost of building significantly.

-There's nothing to indicate unemployment rates will sharply rise, the opposite is happening - we're heading for effective full employment.

-Interest rate rises are probably on the horizon, but too sharp an ECB hike would cause an earthquake in the Eurozone economy - far more likely it will rise slowly over a number of years to let economies adjust to new rate.


Just my opinion, but current property prices are based mostly on the fundamentals (supply shortage, employment rates, cost of construction, low interest rates) which stronger than the fundamentals of 2006 (credit fuelled speculation).

Samuel T. Cogley

Just watched 'The Big Short' again...

draiochtanois

This post has been deleted.

Bob24

M.Cribben wrote: »

It's accepted that during the recession, prices overshot the bottom (as they overshot the top in Celtic tiger years). A large % of the increase since 2013-2014 is a correction to reflect improved economic conditions imo.


It's very difficult to determine what the actual value of a house should be. Banks and EAs will tell you a house is worth what someone is willing to pay for it. The money available for someone to buy is determined by too many factors to accurately calculate the 'real' value (e.g. unemployment rates, wage inflation, minimum wage, cost of construction, cost of land, interest rates, availability of credit, even cost of food, education, transport, healthcare all have an impact).



Hypothetical scenarios- if everyones wages doubled overnight - house prices would shoot up. If interest rates doubled overnight - house prices would drop. Likewise if cost of land fell. If unemployment doubled. If cost of food tripled. And so on.


Fundamentals are stronger now imo in that house prices today are mostly impacted by the chronic supply shortage, the rising employment rates and wages, and low interest rates. There's no speculative credit fueled bubble that can collapse overnight.


-We cannot suddenly churn out 100,000+ affordable units a year in urban areas.

-We cannot force builders/carpenters/electricians/plumbers to take a 50% paycut in order to decrease cost of building significantly.

-There's nothing to indicate unemployment rates will sharply rise, the opposite is happening - we're heading for effective full employment.

-Interest rate rises are probably on the horizon, but too sharp an ECB hike would cause an earthquake in the Eurozone economy - far more likely it will rise slowly over a number of years to let economies adjust to new rate.


Just my opinion, but current property prices are based mostly on the fundamentals (supply shortage, employment rates, cost of construction, low interest rates) which stronger than the fundamentals of 2006 (credit fuelled speculation).

I agree with alll of this ... but at the same time I can’t help thinking some of what is called the fundamentals is badly named as it gives people an impression it’s a solid fundation for prices while some of it could change completely within a few months. So while I definitely agree we are not in a 2006 situation with reckless borrowing and construction, I have to say I still can’t help being afraid of an external economic shock collapsing the market once again in the coming few years (maybe not to the same extend).

MayoSalmon

Augeo wrote: »

Were fundamentals right last year and the year before too?
Because I can't really reconcile the staggering increase in prices over 24 months tbh.

Yes even more so

Cuddlesworth

Bob24 wrote: »

I agree with alll of this ... but at the same time I can’t help thinking some of what is called the fundamentals is badly named as it gives people an impression it’s a solid fundstion for prices while some of it could change completely within a few months. So while I definitely agree we are not in a 2006 situation with reckless borrowing and construction, I have to say I still can’t help being afraid of an external economic shock collapsing the market once again in the coming few years (maybe not to the same extend).

Because its silly to say that a economic knock couldn't affect the property market. The second it starts to dip down(in market terms, so like a financial quarter), cash buyers will disappear. 90% mortgages will disappear. The pool of potential purchasers will shrink overnight. And the spiral downwards kicks off.

MayoSalmon

MayoSalmon wrote: »

Yes even more so

So the change is prices (drastic) all fits fundamentally? That's some variation being acceptable. How much more price growth is fundamentally OK do you reckon?

Two years ago what would you have said?

MayoSalmon

Augeo wrote: »

So the change is prices (drastic) all fits fundamentally? That's some variation being acceptable. How much more price growth is fundamentally OK do you reckon?

Two years ago what would you have said?

Prices are largely irrelevant once the fundamentals of the market are sound.

This market is being accurately priced by supply and demand.

But in anyways buy smart...would I be buying a 4 bed gaff in Balbriggan for €410k...No.

http://www.daft.ie/dublin/houses-for-sale/balbriggan/126b-hampton-cove-balbriggan-dublin-1698217/

Would I be buying a brand new 4 bed gaff for €430k in Skerries...Yes.

http://www.daft.ie/dublin/houses-for-sale/skerries/4-bed-hamilton-hill-at-barnageeragh-cove-skerries-dublin-1070411/

manniot2

I wonder sometimes is this housing crises a myth. For example at the below link is a number of properties located in a nice area with decent rail links to the city centre, priced around 400k. Taking a 10% deposit a couple with a combined salary of 100k approx could borrow to purchase these. This would be the typical salary range of a guard/nurse/teacher with a decent few years served (ie 30 something year olds).
http://www.daft.ie/dublin-city/property-for-sale/castleknock/?s%5Bmxp%5D=450000&s%5Bsort_by%5D=date&s%5Bsort_type%5D=d
Im not suggesting everyone is on that type of money and obviously there is a social housing crises but its just makes me wonder when I see headlines in the paper saying that an entire generation is going to be lost due to this "housing crises", is it all a load of media waffle?

zl1whqvjs75cdy

Nah I don't think it's waffle. The house above is 430 k, so you'd need the guts of 50 k to get it to allow for stamp duty and legal fees. Leaves a mortgage of 387 k. Combined earnings of 110 k each then needed. And that house will need expensive work done to it. Windows, doors, some form of insulation and decorative updates. Obviously not needed right away but it has to be factored in. While not huge money, 55 k each is still a pretty decent wedge to be earning (in my opinion anyway!). And that assumes it'll go for 430 which it probably won't.

manniot2

hi donkeyoaty0099...I wasn't referring to one house in particular on that link. There are a number in the area around 400k, and many have been on the website for months so wont go too far over asking.
Again, in not saying 50k is bad money and its obviously difficult if you are single, im just saying that for all the talk of crises there are still a lot of areas in Dublin that seem affordable.
I also realise getting the 50k deposit is not easy but over a number of years with a certain amount of sacrifice, it is achievable.

Carlos Orange

manniot2 wrote: »

I wonder sometimes is this housing crises a myth. For example at the below link is a number of properties located in a nice area with decent rail links to the city centre, priced around 400k. Taking a 10% deposit a couple with a combined salary of 100k approx could borrow to purchase these. This would be the typical salary range of a guard/nurse/teacher with a decent few years served (ie 30 something year olds).

2 people earning 50K each is the top 20% of the household income distribution.
People in the top 20% being able to buy houses doesn't make the housing crisis a myth.

manniot2

Yes and Castleknock is by far not the cheapest place in Dublin, so you may be missing my point!

LirW

manniot2 wrote: »

hi donkeyoaty0099...I wasn't referring to one house in particular on that link. There are a number in the area around 400k, and many have been on the website for months so wont go too far over asking.
Again, in not saying 50k is bad money and its obviously difficult if you are single, im just saying that for all the talk of crises there are still a lot of areas in Dublin that seem affordable.
I also realise getting the 50k deposit is not easy but over a number of years with a certain amount of sacrifice, it is achievable.

Throw a few kids into the mix (don't forget, a generation had little access to credit for the better part of a decade, but life goes on) and it all changes. Yes, the houses shown are of course ideal and achievable for a young, ambitious professional couple but it doesn't solve the problem for people that would have only half of that combined income for whatever reason.

Carlos Orange

manniot2 wrote: »

Yes and Castleknock is by far not the cheapest place in Dublin, so you may be missing my point!

It is a very missable point when you illustrate it with people in the top quintile of income.
Also I wonder if Kirkpatrick Drive counts as Castleknock since it isn't really where I think of when I think of Castleknock so there may be some address inflation going on.

LirW

LirW wrote: »

Throw a few kids into the mix (don't forget, a generation had little access to credit for the better part of a decade, but life goes on) and it all changes. Yes, the houses shown are of course ideal and achievable for a young, ambitious professional couple but it doesn't solve the problem for people that would have only half of that combined income for whatever reason.

A couple earning a total of €50k and who have 3 kids would always struggle to purchase a house, I'd be very slow to borrow over €150k if I was in that position myself.

LirW

Augeo wrote: »

A couple earning a total of €50k and who have 3 kids would always struggle to purchase a house, I'd be very slow to borrow over €150k if I was in that position myself.

It is a quite realistic representation though because people during the downturn still had to move on with their lives, not everyone landed on the bright side unfortunately. There are plenty of people that work in Dublin and can't afford anywhere near Dublin. There is such a dysfunction that these people have the choice to rent for exorbitant prices (and you'll struggle to find something with children because of more wear and tear) or move further out.

It is a bit of a kick in the face to say "there's no housing crisis, simply earn 100k together" when there are so many people in different situations that genuinely struggle to find a property to buy close to where they live.

M.Cribben

I don't think a €100k combined income for a married couple is that unusual these days. It's very achieveable with any career, possibly a degree and 5 years experience.

The average industrial wage according to CSO was €45,611 in 2016 and probably higher now as the economy continues to recover.
https://www.irishexaminer.com/breakingnews/ireland/this-is-the-average-full-time-wage-in-ireland-795670.html

The average public sector salary is €47,400 according to this. https://www.businessworld.ie/financial-news/Average-public-sector-wages-are-47-400-in-Ireland--567926.html

Most people finish college or professional training around 21-22. With 5-7 years postgraduate experience (even in careers which don't require 3rd level qualifications like gardai, fire brigade, retail management), above salaries are very common. I'd estimate a lot would be on even higher salaries with that level of education/experience.

The likes of PBP/AAA/Shinners would have you believe most of the country is penniless and living hand to mouth, but they represent a minority of the population as seen every election. Typically their voters are the ones shouting the loudest and demanding everything for free (housing, social welfare, education, healthcare, etc).

TLDR; I don't think a combined salary of €100k is unusual in Ireland 2018 so €400k houses in the capital close to good schools, hospitals, amenities (phoenix park, national aquatic centre, blanchardstown shopping centre, etc.) m50, Dublin Bus routes, and rail links to city centre actually sounds about right.

If people start paying those amounts for 2-bed apartments in Longford again, then I'd be worried.

draiochtanois

This post has been deleted.

I have a degree, a masters and over 10 years experience and I haven't made it near to 50k. Partner is the same. It's not easy for everyone to get to that salary.

M.Cribben

Flying Fox wrote: »

I have a degree, a masters and over 10 years experience and I haven't made it near to 50k. Partner is the same. It's not easy for everyone to get to that salary.

I never said it was easy, just that it's achievable and more common than people might think as observed by the CSO stats.
Do you mind me asking what general line of work you're involved in?

LirW

LirW wrote: »

It is a quite realistic representation though because people during the downturn still had to move on with their lives, not everyone landed on the bright side unfortunately. There are plenty of people that work in Dublin and can't afford anywhere near Dublin. There is such a dysfunction that these people have the choice to rent for exorbitant prices (and you'll struggle to find something with children because of more wear and tear) or move further out.

It is a bit of a kick in the face to say "there's no housing crisis, simply earn 100k together" when there are so many people in different situations that genuinely struggle to find a property to buy close to where they live.

I kicked no one in the face, I simply said......

Augeo wrote: »

A couple earning a total of €50k and who have 3 kids would always struggle to purchase a house, I'd be very slow to borrow over €150k if I was in that position myself.

Bob24

M.Cribben wrote: »

I never said it was easy, just that it's achievable and more common than people might think as observed by the CSO stats.
Do you mind me asking what general line of work you're involved in?

Just a note that if you want to see what someone in the middle of the pack is making, keep in mind you should look at median figures rather than averages. Averages can be greatly misleading because of extreme values.

For exemple if you have a small business with a general manager making 100k and 4 employees making 25k each the average salary is 40k but it’s absolutely not representative of the purchasing power of a “typical” employee of that company. And if you translate it to the property market it doesn’t mean that company creates a large market for houses targeted at people making 40k as just looking at the average would lead to believe. The market it is creating is for 4 cheap houses for people making 25k and one expensive house for people making 100k.

This is obviously a simplistic exemple to make the problem obvious, but while figures get more complex the same reasoning can be extended to the Irish job market as a whole.

Carlos Orange

M.Cribben wrote: »

I don't think a €100k combined income for a married couple is that unusual these days. It's very achieveable with any career, possibly a degree and 5 years experience.

TLDR; I don't think a combined salary of €100k is unusual in Ireland 2018

It's neither massively unusual or typical. It is the top 20% of household income. People tend to live in their own little bubble. Pretty much everyone I have known my age has a degree but a little under half of people in their 30s have one.

draiochtanois

draiochtanois wrote: »

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How many area managers do Aldi have?
The turnover in those jobs is horrific and they expectation is that you do a 60+ hour week (driving time included).

Cyrus

Augeo wrote: »

How many area managers do Aldi have?
The turnover in those jobs is horrific and they expectation is that you do a 60+ hour week (driving time included).

not many 6 figure jobs where thats not expected at least at times

draiochtanois

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draiochtanois

draiochtanois wrote: »

This post has been deleted.

Who is work shy?

What are the other examples of high paying regular jobs?

Cyrus wrote: »

not many 6 figure jobs where thats not expected at least at times

No doubt, they wouldn't have the turnover that Aldi are known for though. Also, most 6 figure jobs require decent level of skills, or highly qualified folk (big 4 trained in your book iirc for example). The Aldi roles are essentially highly paid as the 60 hour week is basically a required minimum to perform the role.

zl1whqvjs75cdy

Think a lot depends on your sector. Parma, It etc your pretty sorted. Shop manager, self employed, farming etc maybe not so good.

zom

Flying Fox wrote: »

I have a degree, a masters and over 10 years experience and I haven't made it near to 50k. Partner is the same. It's not easy for everyone to get to that salary.

Join FG (or their mates from FF / Labor) would be my advise...

M.Cribben wrote: »

Do you mind me asking what general line of work you're involved in?

Experienced people in engineering are offered 25k in Dublin: https://ie.indeed.com/cmp/BP-Multipage/jobs/Electronic-Technician-2c1a8472d76f2d4c?q=Electronics+Engineer&vjs=3

Electronic Technician
BP Multipage - Dublin
€25,000 - €27,000 a year - Full-time, Permanent