Media More price falls than price increases in Dublin devopments in the first half

The_Conductor

Looking at subsequent phases of pre-existing developments in 'prime Dublin areas' has uncovered an unusual picture- where there were more price falls than price rises in the first six months of 2018.

This is localised to 'prime Dublin developments' and is not replicated elsewhere nationally- though there is increased softness on display other than in the FTB market.

Link to IT article here. Note: This is behind the IT paywall- if you have exceeded your monthly article quota, you may be unable to read this article

Sarn

Hardly surprising. Some asking prices were aiming towards peak levels. From my experience the houses with a low asking price pull people in with hope and end up going for more than other recently sold properties. The high prices scare people off.

In one estate there is a house priced at €695k with another at €490k. The expensive one has some work done on it but not that much. Typically the houses go for about 510-540k. The €490k has gone for over €550k, whereas the other is languishing on the market.

Ultimately it is the sale price that matters, but it does show that sentiment in some areas is cooling.

The Student

The_Conductor wrote: »

Looking at subsequent phases of pre-existing developments in 'prime Dublin areas' has uncovered an unusual picture- where there were more price falls than price rises in the first six months of 2018.

This is localised to 'prime Dublin developments' and is not replicated elsewhere nationally- though there is increased softness on display other than in the FTB market.

Link to IT article here. Note: This is behind the IT paywall- if you have exceeded your monthly article quota, you may be unable to read this article

Was to be expected with the central bank rules. Eventually all of those with access to funds to purchase these properties was going to dry up.

I would expect those who would aspire to these property types will be pushed down to the properties at the next level down. Expect an increase in those property prices with some gentrification of those areas.

Eventually the above will continue to each level of the property sector with those who can only afford the lower levels being pushed out.

I suspect this is a short term situation ie 3 - 5 yrs max by which time Brexit will have happened and the fallout will be known at that point. I also see the Dublin market as a whole increasing with the influx of highly paid workers.

Here are two houses in Cork that are within a stone's throw of each other and pretty much identical apart from one being semi-d and the other being detached. They are priced at 430k and 580k respectively. Both are late 1970s and require plenty of work. I have seen numerous examples in this market of bizarre asking prices.

430k: https://www.daft.ie/cork/houses-for-sale/bishopstown/5-firgrove-park-bishopstown-cork-1761511/

580K: https://www.daft.ie/cork/houses-for-sale/bishopstown/11-firgrove-park-bishopstown-cork-1731410/

Lumen

Deleted User wrote: »

Here are two houses in Cork that are within a stone's throw of each other and pretty much identical apart from one being semi-d and the other being detached. They are priced at 430k and 580k respectively. Both are late 1970s and require plenty of work. I have seen numerous examples in this market of bizarre asking prices.

430k: https://www.daft.ie/cork/houses-for-sale/bishopstown/5-firgrove-park-bishopstown-cork-1761511/

580K: https://www.daft.ie/cork/houses-for-sale/bishopstown/11-firgrove-park-bishopstown-cork-1731410/

That is explained by the latter agent being SF.

Lumen

Lumen wrote: »

That is explained by the latter agent being SF.

Indeed, they have been responsible for most of the crazy asking prices in the area (none of which have been achieved) but some of the other EAs have followed their lead and have started chancing their arms now.

seamus

The Student wrote: »

Was to be expected with the central bank rules. Eventually all of those with access to funds to purchase these properties was going to dry up.

This is probably the main thing. My commute takes me past several "prestige" developments asking prices like €800k+ for a 3-bed detached house.

While it may be fair to say that plenty of people who bought in the late 90s/early 2000s are sitting pretty in equity terms and can get the funds to trade up, this a very small pool of people in real terms.

Even if someone has €400k in equity, you need serious earning power to cover the rest. So these are the kind of prices only the top 0.5% can routinely afford and sooner or later the pool of people who earn average salaries but have some equity or inheritance floating around to cover an expensive house, is going to dry up.

Sleeper12

I'm not keen on threads like this because some younger people just see the price fall part and not that it's only high end houses. Then they start to believe if I wait another 5 years houses will be half the price as now

super_furry

Not surprising there's a ceiling when the banks are rightly being forced to stick to the lending rules. That's what went so wrong the last time - people being given mortgages for six times their wages that they were never going to be able to manage once they hit a dip in the road.

Cuddlesworth

Deleted User wrote: »

Here are two houses in Cork that are within a stone's throw of each other and pretty much identical apart from one being semi-d and the other being detached. They are priced at 430k and 580k respectively. Both are late 1970s and require plenty of work. I have seen numerous examples in this market of bizarre asking prices.

430k: https://www.daft.ie/cork/houses-for-sale/bishopstown/5-firgrove-park-bishopstown-cork-1761511/

580K: https://www.daft.ie/cork/houses-for-sale/bishopstown/11-firgrove-park-bishopstown-cork-1731410/

Detached, conservatory and a large converted attic. I would say the floor size of the second house is considerably larger.

The Student

seamus wrote: »

This is probably the main thing. My commute takes me past several "prestige" developments asking prices like €800k+ for a 3-bed detached house.

While it may be fair to say that plenty of people who bought in the late 90s/early 2000s are sitting pretty in equity terms and can get the funds to trade up, this a very small pool of people in real terms.

Even if someone has €400k in equity, you need serious earning power to cover the rest. So these are the kind of prices only the top 0.5% can routinely afford and sooner or later the pool of people who earn average salaries but have some equity or inheritance floating around to cover an expensive house, is going to dry up.

Exactly so what happens? either (a) don't build anymore of these houses until spending power increases, (b) build smaller houses on the same land to make the same profit or (c) just sit on undeveloped land until things improve.

The above should not be taken as an indication of where the market is as the cohort of people who would be purchasing in this sector of the market is extremely small to say the least.

seamus

Sleeper12 wrote: »

I'm not keen on threads like this because some younger people just see the price fall part and not that it's only high end houses. Then they start to believe if I wait another 5 years houses will be half the price as now

Talking down the market?

At this stage, it wouldn't be a terrible thing for people to hold off, if they can afford to. Anything that can dampen demand means growth and affordability is improved in the medium term.

The Student wrote: »

Exactly so what happens? either (a) don't build anymore of these houses until spending power increases, (b) build smaller houses on the same land to make the same profit or (c) just sit on undeveloped land until things improve.

It really depends on the price the developer paid for the land. The labour and material cost of building a house is the same whether you build it in Foxrock or Jobstown. So the end price comes down to what the developer thinks he can get for it balanced against his total profit.

If he bought the land 30 years ago, then he might be willing to reduce his prices to meet the market, as he's still making a good profit. But if he bought the land recently then his margins even at €1m per property might be razor thin, so he'll just stop building.

Lux23

Sleeper12 wrote: »

I'm not keen on threads like this because some younger people just see the price fall part and not that it's only high end houses. Then they start to believe if I wait another 5 years houses will be half the price as now

I am probably not 'younger', but I hope to buy for the first time in a year or so. For me, this story just confirms that some asking prices are just messing. For example, I saw a house go up for €315,000 in Dublin 7, it was taken off the market and then went up at €455,000. There's no way that person really wanted to sell.

hmmm

Good to see - the Central Bank rules appear to be working. This is how it should work.

Personally I think this time really is different - the rules are capping prices, but there is still plenty of demand up to the capped level and supply is still a problem. It just means that eejits who would be happy borrowing 6 to 10 times their income have been stopped from driving prices to crazy levels.

Cuddlesworth

Cuddlesworth wrote: »

Detached, conservatory and a large converted attic. I would say the floor size of the second house is considerably larger.

A conservatory is more than likely going to cost you money to pull down. I've seen the attic rooms in these houses and it is very questionable as to whether they add any value as they are mostly just used for storage. The semi D has a better BER rating and has a more modern finish which means you could move in straight away.

Trust me, I know the area, the market and these particular houses very well and there is very little difference between the two except one is detached. I would predict that the semi d will make 455k and the detached will make 520k tops after it is put back up with a price drop to 550k in a few weeks.

Sleeper12

seamus wrote:

Talking down the market?

seamus wrote:

At this stage, it wouldn't be a terrible thing for people to hold off, if they can afford to. Anything that can dampen demand means growth and affordability is improved in the medium term.

Problem is there have been many threads by young people asking when the next crash will happen, as if its a regular thing in Ireland. I'm not saying that we will never have another crash but we've only had the one housing bubble in the last 100 years.

Waiting for the next crash isn't the best plan when buying your home though with Brexit anything can happen.

A drop in prices is a welcome development even if it is in the higher end of the market. Unfortunately the real demand is the lower end of the market and its unlikely that these will fall anytime soon. If they fell much from todays price we'll be back to it not being profitable to build them. Cost of land, at least in Dublin, and the high taxes are still a huge chunk of the asking price for a new home. The government hasn't addressed this yet

zl1whqvjs75cdy

Sleeper12 wrote: »

Problem is there have been many threads by young people asking when the next crash will happen, as if its a regular thing in Ireland. I'm not saying that we will never have another crash but we've only had the one housing bubble in the last 100 years.

Waiting for the next crash isn't the best plan when buying your home though with Brexit anything can happen.

A drop in prices is a welcome development even if it is in the higher end of the market. Unfortunately the real demand is the lower end of the market and its unlikely that these will fall anytime soon. If they fell much from todays price we'll be back to it not being profitable to build them. Cost of land, at least in Dublin, and the high taxes are still a huge chunk of the asking price for a new home. The government hasn't addressed this yet

I've literally just said the exact same thing in another thread. If there is a massive crash and prices fall to half the current levels no one is going to build anything and the whole country will be in negative equity and won't sell. Hence no houses for all these lads with their piles of cash to buy.

Sleeper12

donkeyoaty0099 wrote: »

I've literally just said the exact same thing in another thread. If there is a massive crash and prices fall to half the current levels no one is going to build anything and the whole country will be in negative equity and won't sell. Hence no houses for all these lads with their piles of cash to buy.

I live in the Dublin 5 area. Not far from me is Belmayne, Clongriffin, Balgriffin. These housing estates just stopped in 2008/2009. They sold the finished houses & left half built houses in some cases for close to 5 years before finishing them off. These developers haddn't gone out of business.. They just couldn't build & sell at a profit. Don't forget that the land was already paid for in these cases yet they still couldn't make a profit.


The governments fast track planning process seems to be a disaster to date. Granting permission for 500 homes close to St Annes park despite the objection of DCC & every single Councillor. Even if you believe that they should be built they are all higher end homes. There won't be too many first time buyers moving in there

lawred2

donkeyoaty0099 wrote: »

I've literally just said the exact same thing in another thread. If there is a massive crash and prices fall to half the current levels no one is going to build anything and the whole country will be in negative equity and won't sell. Hence no houses for all these lads with their piles of cash to buy.

and banks withholding credit in a dead/inert/panicked market

dudara

We're been house hunting for about 2-3 months now, in the areas described in the article, and the article describes exactly what we've been seeing. I've seen price drops of up to €100k on properties, although €25-50k is more common.

The price drops often seem to be on houses that require rennovation, because sellers are eventually coming to the realisation that buyers can't afford their inflated price, plus the cost of rennovations. I saw a house recently where the asking price was easily €100k above what I felt it should be given that the existing kitchen and garage would need to be pulled down and fully rebuilt. I've seen lots of red-bricks which are stunning, but will cost €200-300k to fully turn around into modern properties. Sellers appear to be starting to realise that they can't ask the same high prices for "project" properties.

On the other hand, turnkey houses are selling strongly in my experience. I saw one last Thursday, beautifully finished, and people were literally lining up to place bids.

lawred2

dudara wrote: »

We're been house hunting for about 2-3 months now, in the areas described in the article, and the article describes exactly what we've been seeing. I've seen price drops of up to €100k on properties, although €25-50k is more common.

The price drops often seem to be on houses that require rennovation, because sellers are eventually coming to the realisation that buyers can't afford their inflated price, plus the cost of rennovations. I saw a house recently where the asking price was easily €100k above what I felt it should be given that the existing kitchen and garage would need to be pulled down and fully rebuilt. I've seen lots of red-bricks which are stunning, but will cost €200-300k to fully turn around into modern properties. Sellers appear to be starting to realise that they can't ask the same high prices for "project" properties.

On the other hand, turnkey houses are selling strongly in my experience. I saw one last Thursday, beautifully finished, and people were literally lining up to place bids.

cost of building work is going in one direction and is doing so very fast

what might have been budgeted as a €100k renovation 2/3 years ago is €150k now. Allied to staggering increases in house prices it's easy to see how some agents might have jumped the gun a bit and over estimated what the market could bear..

Around where we are (Portmarnock/Malahide) - some of the house prices for aging properties badly in need of complete overhaul are completely aspirational.

dudara

dudara wrote: »

We're been house hunting for about 2-3 months now, in the areas described in the article, and the article describes exactly what we've been seeing. I've seen price drops of up to €100k on properties, although €25-50k is more common.

The price drops often seem to be on houses that require rennovation, because sellers are eventually coming to the realisation that buyers can't afford their inflated price, plus the cost of rennovations. I saw a house recently where the asking price was easily €100k above what I felt it should be given that the existing kitchen and garage would need to be pulled down and fully rebuilt. I've seen lots of red-bricks which are stunning, but will cost €200-300k to fully turn around into modern properties. Sellers appear to be starting to realise that they can't ask the same high prices for "project" properties.

On the other hand, turnkey houses are selling strongly in my experience. I saw one last Thursday, beautifully finished, and people were literally lining up to place bids.

This is exactly the experience I have had in Cork with "project" properties.

Edgware

Sellers can put up whatever asking price they want but it is no good unless someone is willing to pay

cruizer101

Big difference between inflated asking prices dropping back to what they should have been set at originally and actual house prices dropping.

zl1whqvjs75cdy

cruizer101 wrote: »

Big difference between inflated asking prices dropping back to what they should have been set at originally and actual house prices dropping.

Good point. Just cause I few developers chanced their arms and couldn't shift the high end new gafs doesn't mean that prices are falling. There is literally no possible way prices could be falling with the current demand.

theboringfox

[Deleted User] wrote: »

Here are two houses in Cork that are within a stone's throw of each other and pretty much identical apart from one being semi-d and the other being detached. They are priced at 430k and 580k respectively. Both are late 1970s and require plenty of work. I have seen numerous examples in this market of bizarre asking prices.

430k: https://www.daft.ie/cork/houses-for-sale/bishopstown/5-firgrove-park-bishopstown-cork-1761511/

580K: https://www.daft.ie/cork/houses-for-sale/bishopstown/11-firgrove-park-bishopstown-cork-1731410/

That's mad. I'd imagine sale prices will be much closer.

theboringfox

theboringfox wrote: »

That's mad. I'd imagine sale prices will be much closer.

Based on what similar properties are making in area, the cheaper one will just about make asking and the more expensive will be very lucky to make 510-520, and mostly because they used SF and had the balls to ask such a ludicrous amount for it. Both require a lot of investment to modernise them.

The_Conductor

donkeyoaty0099 wrote: »

Good point. Just cause I few developers chanced their arms and couldn't shift the high end new gafs doesn't mean that prices are falling. There is literally no possible way prices could be falling with the current demand.

The market has stratified.
Overall- demand may be off the Richter scale- however, when you look at particular price points in particular localities- despite the overall level of demand being incredible- people either don't accept that areas have gentrified to the extent that they support hypothetical prices or- in more expensive areas- there simply are a finite number of workers with the salaries to support mortgages for overpriced properties just on the basis of it being a D4 or D6 address............

Yes- demand is insatiable- however, not at any price.

blue note

dudara wrote: »

We're been house hunting for about 2-3 months now, in the areas described in the article, and the article describes exactly what we've been seeing. I've seen price drops of up to €100k on properties, although €25-50k is more common.

The price drops often seem to be on houses that require rennovation, because sellers are eventually coming to the realisation that buyers can't afford their inflated price, plus the cost of rennovations. I saw a house recently where the asking price was easily €100k above what I felt it should be given that the existing kitchen and garage would need to be pulled down and fully rebuilt. I've seen lots of red-bricks which are stunning, but will cost €200-300k to fully turn around into modern properties. Sellers appear to be starting to realise that they can't ask the same high prices for "project" properties.

On the other hand, turnkey houses are selling strongly in my experience. I saw one last Thursday, beautifully finished, and people were literally lining up to place bids.

I've been looking for about 4 months and initially we were interested in getting value in a place that requires work and being able to do it ourselves. But the more we investigated, the more we realised that getting work done is far more expensive than buying a place with the work done already.

I think the two properties that nailed that point home to us were two around the corner from each other in Killester. One was in awful condition and needed an immediate extension. The kitchen was so small it had no washing machine and no place to put one, there was a good bit of mould around the house. It needed to be gutted as well as the extension. That was listed for €380k. Around the corner from it was one which pretty much had all the work done that we were thinking of and was listed for €435k. From talking to someone who was trying to do an extension like the one we saw, he was looking at a cost of €150k for the extension on it's own. Even if you got the cheaper house for less than €380k, you'd be well over €550k before the house would be looking like the one listed for €435k.

The reason people want places they can walk into is because it's so expensive to buy a place you need to do work on.

dudara

I'm personally willing to rennovate/extend a property into the house that I want, rather than buying someone else's finished vision.

But this means that there is a balance to be struck between the house purchase price and the costs of rennovations. And right now, there is no balance. House listing prices do not reflect the additional money purchasers would have to sink in. So there is a decision to make - buy a project property or go for the finished article.

Cuddlesworth

The_Conductor wrote: »

The market has stratified.
Overall- demand may be off the Richter scale- however, when you look at particular price points in particular localities- despite the overall level of demand being incredible- people either don't accept that areas have gentrified to the extent that they support hypothetical prices or- in more expensive areas- there simply are a finite number of workers with the salaries to support mortgages for overpriced properties just on the basis of it being a D4 or D6 address............

Yes- demand is insatiable- however, not at any price.

I said last summer that 3/4 bed house viewings circa 400k were like a swarm of Locusts. This was in Dublin 18 in nicer estates. Meanwhile 450k plus had a reasonable number of people attending and not really much interest in comparision.

It was obvious back them where the majority of peoples budgets were.