Property Market 2019

Bigmac1euro

Lumen wrote: »

Predictions are pointless unless they're specific enough to be testable, otherwise who is to say whether they proved
right or wrong?

And research is useless unless it's conducted openly, and therefore checkable and reproducible. "Because AI" is really weak.

This is basic stuff.

What ?
What’s basic stuff ?

Lumen

Bigmac1euro wrote: »

What ? What’s basic stuff ?

Making specific, testable predictions, and/or publishing research openly so that others can review the models and methodology.

Like real economists do.

Lumen

Incidentally, w.r.t. comments about "micro-crashes" and demand for/pricing of larger houses, IMO there are several factors at play:

1. Price compression caused by credit controls and lack of equity available to the buyers of family-sized properties (i.e. people aged 30-50), which means properties priced at >700k in 2013 haven't budged that much.

2. The quite astonishing amount of money it takes to properly renovate the fabric of a large house (see quotes received under the deep retrofit scheme).

3. Related to (2) possibly unrealistic assumptions about the value to buyers of larger gardens vs new build structures, i.e. how many younger people would prefer an old, cold, house with a larger garden over a new build with just enough space for a BBQ, trampoline and bit of garden furniture.

4. A growing intolerance for suburban living, evidenced by people choosing to live in (and "gentrify") "crappy" areas close to Dublin city centre in preference to living further out.

But none of these factors are enough to trigger a "crash", since they represent long-term changes in the housing stock, credit availability and buyer preferences.

L1011

Lumen wrote: »

4. A growing intolerance for suburban living, evidenced by people choosing to live in (and "gentrify") "crappy" areas close to Dublin city centre in preference to living further out.

A number of middle-distance suburbs are potentially going to get what's referred to as the "sparks effect" of making commuting more attractive due to improvements to speed/noise/vibration/frequency with the DART expansion; which could counter this a bit - for those areas alone.

beauf

Lumen wrote: »

...

2. The quite astonishing amount of money it takes to properly renovate the fabric of a large house (see quotes received under the deep retrofit scheme).

3. Related to (2) possibly unrealistic assumptions about the value to buyers of larger gardens vs new build structures, i.e. how many younger people would prefer an old, cold, house with a larger garden over a new build with just enough space for a BBQ, trampoline and bit of garden furniture.

..

Couldn't agree more. With all of what you posted.

Where do you see these quotes?

Personally I think the new houses gardens are too small. Out door storage or even a little shed to work in is not existent.

Bigmac1euro

I noticed people talking about interest rates earlier in the thread, If they do rise a couple of % this could spell trouble for a lot of people, I know people (a lot) who bought new builds and appear to be almost out of their depth in repayments. 1400 euro a month on a combined 80k salary. Does anyone else see a risk here ? Could this be contributory to a "Crash" if people cant meet their mortgage repayments due to interest rates ? Are interest rates at risk of rising ?

awec

Bigmac1euro wrote: »

I noticed people talking about interest rates earlier in the thread, If they do rise a couple of % this could spell trouble for a lot of people, I know people (a lot) who bought new builds and appear to be almost out of their depth in repayments. 1400 euro a month on a combined 80k salary. Does anyone else see a risk here ? Could this be contributory to a "Crash" if people cant meet their mortgage repayments due to interest rates ? Are interest rates at risk of rising ?

Banks will stress test people so that an increase in rates doesn't affect their ability to repay. A rise of multiple percentage points would be a fairly huge rise.

There was a lot of talk of rate rises last year by the ECB, but they were talking of rises of a fraction of a percent, and they delayed it due to market concerns.

1400 a month would be borrowing ~ 350,000 over 30 years @2.8%. Someone with combined 80k can borrow a max of 280,000. If they paid a 20% deposit, they're bang on the 3.5 ratio.

cruizer101

awec wrote: »

1400 euro mortgage on salaries of 80k is not a huge mortgage.

Its pretty big @3.5% on 30 year 1,400 monthly would mean 310k mortgage, thats near 4 times multiple.

edit: I see you've updated your op

Dolbhad

beauf wrote: »

Couldn't agree more. With all of what you posted.

Where do you see these quotes?

Personally I think the new houses gardens are too small. Out door storage or even a little shed to work in is not existent.

I agree. I had a deposit down for a new build. Have rough estimates of a garden. When we went up to look it was actually half the size and was completely sloped so couldn’t even use it as builder refused to flatten it out. There was a detached house next to us which had a sunroom (which we didn’t have) which meant their back garden was non existent over it. Maybe just enough for a shed and a clothes line. It turned us off. Especially had new builds don’t have front gardens either - you do need some private space for kids. So we had to weight up a new build at A3 rating vs no outside space. And it’s not that we could buy a bigger house in the estate and get a better garden.

Lumen

beauf wrote: »

Where do you see these quotes [for deep retrofit scheme]?

Construction and Planning forum, and also talking to friends who've had quotes and suppliers in the scheme.

I reckon ballpark is €800/sqm with a lot of variation, for a non-period property without any fancy finishes. There are houses near me built in the 1970s and 1980s of around 320-350sqm on 1 acre asking maybe 850k, so that's another third of the asking price to bring it up to a spec that's even close to a new build.

The number of possible buyers drops off a cliff once you get past 750k, I haven't checked the PPR recently but I'd make a wild guess that the drop in transaction volume between 850k and 1.1m is something over 80%.

SirGerryAdams

Philip Lane speaking:

"Prices (of homes) are stabilising here in Dublin, but it is not the case that these rises are being driven by excessive credit - that’s something we can do as the Central Bank, to not add fuel to the fire.

Surely the problem in 2008 was that people lost their jobs, not that they had borrowed too much?

How do people pay their mortgage if they have no job?


And I think prices are inflated due to a shortage. Let's say a couple on 80k combined want to buy. They can afford 280k and let's say a deposit of 30k..

Sure in 2008 they might have taken a bigger mortgage but I don't think the problem was the repayments, the problem was them losing their jobs.

Now let's say the couple on 80k combined are looking at a house worth 310k, their max. They bid 310k and then get outbid by a couple on combined 90k. Fine.

So then the 80k couple have to drop down to a house worth say, 250k and there's still lots of competition. So they outbid someone with 260k because they want the house and can afford it. The lower end of the market is well inflated. It has to be.

beauf

SirGerryAdams wrote: »

Philip Lane speaking:



Surely the problem in 2008 was that people lost their jobs, not that they had borrowed too much?

How do people pay their mortgage if they have no job?

The reason the lending rules are in place is because in life unexpected things happen. people get sick, they loose their job, get injuries, have a dependant child or partner or parent that require your care etc. This tends to happen less often when you are young, and more often when you are old say 30+.

if you over extend your borrowing, you have no spare capacity if anything unexpected happens. In fact you should expect these. You should have a financial cushion/rainy day fund specifically for these scenarios.

SirGerryAdams wrote: »

And I think prices are inflated due to a shortage. Let's say a couple on 80k combined want to buy. They can afford 280k and let's say a deposit of 30k..

Sure in 2008 they might have taken a bigger mortgage but I don't think the problem was the repayments, the problem was them losing their jobs.

Now let's say the couple on 80k combined are looking at a house worth 310k, their max. They bid 310k and then get outbid by a couple on combined 90k. Fine.

So then the 80k couple have to drop down to a house worth say, 250k and there's still lots of competition. So they outbid someone with 260k because they want the house and can afford it. The lower end of the market is well inflated. It has to be.

I don't think there is much margin at the lower end. I don't think they are inflated by that much as your suggesting. One of the reason for the shortage at the lower end is that there not enough profit in it for the developer/builder.

Lumen

One more thing on the old vs new pricing issue.

There is a proposal to extend the deep retrofit scheme to be funded by a surcharge on the electricity bill for 20 years or whatever.

Now this is being mooted as a way to bring up the energy efficiency of old stock, but a cynic might say that it's really a debt secured on the property which circumvents the CBI LTI limits.

Can't borrow enough for a 700k new build? Buy a 500k wreck and then add a 200k retrofit financed through your electricity company.

End result: inflation of used property prices, cash in the pocket of the grey voters who can then trade down to....expensive purpose built OAP apartments.

beauf

Lumen wrote: »

... cash in the pocket of the grey voters who can then trade down to....expensive purpose built OAP apartments.

I've yet to meet an oap who wants this. Even if such apartments existed. Surrounded by grumpy neighbours and paying huge service charges. No where for family to stay over.

Lumen

beauf wrote: »

I've yet to meet an oap who wants this. Even if such apartments existed. Surrounded by grumpy neighbours and paying huge service charges. No where for family to stay over.

Ah now, just wait until they wheel out Michael Noonan to talk to his peers about how exciting this is.

hmmm

beauf wrote: »

I've yet to meet an oap who wants this. Even if such apartments existed. Surrounded by grumpy neighbours and paying huge service charges. No where for family to stay over.

We live in an apartment block with lots of owner-occupier greyhaired neighbours who like the lack of maintenance, security & heat. All I've talked to have traded down. Most would have 2 or 3 bed apartments, so there's a spare room if needed.

It's a very realistic choice, and one I'm sure a lot of people will take in the future. It's the usual old ****e giving out about apartments - you pay your service charge, you don't have to worry about gardens, roofs, bins, insurance etc.

beauf

I know older people who moved into high end apartments didn't like it and move back to a house.

Some people like apartment living some don't.
If someone wanted to live in an apartment and has money (Especially if they are down sizing) they can do this.
So if someone hasn't its very likely they don't want to.

Its a bit of a leap that an extension of the deep retrofit scheme is a means to inflate property prices for the elderly who live in houses.

OwlsZat

beauf wrote: »

I know older people who moved into high end apartments didn't like it and move back to a house.

Some people like apartment living some don't.
If someone wanted to live in an apartment and has money (Especially if they are down sizing) they can do this.
So if someone hasn't its very likely they don't want to.

Its a bit of a leap that an extension of the deep retrofit scheme is a means to inflate property prices for the elderly who live in houses.

What didn't they like? Also have family that sold the family home and bought an upmarket apartment with some outside space. They love it. It's a super development so it's easy to like.

Cuddlesworth

OwlsZat wrote: »

What didn't they like? Also have family that sold the family home and bought an upmarket apartment with some outside space. They love it. It's a super development so it's easy to like.

Its usually because they are surrounded by rentals, with lots more noise then they are used too and a lack of community.

Lumen

beauf wrote: »

Its a bit of a leap that an extension of the deep retrofit scheme is a means to inflate property prices for the elderly who live in houses.

Yeah, I was only messing with the conspiracy theory.

Nonetheless, it is a possible unintended consequence.

OwlsZat

Cuddlesworth wrote: »

Its usually because they are surrounded by rentals, with lots more noise then they are used too and a lack of community.

Noise only exists if the building standard is Celtic Tiger, which in this one it's quite the opposite. Anyways, if the building standard is bad it's a valid point the community isn't though. People who move are now surrounded by couples of similar age. Empty nesters who want to be social and enjoy themselves.

Zenify

Cuddlesworth wrote: »

Its usually because they are surrounded by rentals, with lots more noise then they are used too and a lack of community.

I suppose it depends on where you go. My mother moved into an apt and it has been absolutely great for her.

The worst thing is letting go of the old family home. After a while she got over that and it's a way better set up. No gardening or other maintenance jobs. It's a new apt and it is so much more quiet than the 3 bed semi we used to live in which was next to a "rental". Theres a bigger sense of community as she shares a hall with 3 other apartments. Theres no stairs to climb as she starts getting older and it's very energy efficient for heating.

I honestly believe there should be an incentive for older people to move out of their homes. They just need a little push as there is emotional attachment.

SirGerryAdams

Maybe it's different in cities but I know in rural Ireland people have a strong connection to the family home. It's where you've spent all your life, raised your kids, created memories, know your neighbours and are in a routine.

beauf

OwlsZat wrote: »

Noise only exists if the building standard is Celtic Tiger, which in this one it's quite the opposite. Anyways, if the building standard is bad it's a valid point the community isn't though. People who move are now surrounded by couples of similar age. Empty nesters who want to be social and enjoy themselves.

You have no way of controlling who you live beside. You might have a load of young families moving in, as you would in a new estate vs an older mature estate.

OwlsZat

beauf wrote: »

You have no way of controlling who you live beside. You might have a load of young families moving in, as you would in a new estate vs an older mature estate.

Ya we generally don't do this very well in Ireland but on the continent they seem to have no trouble building these retirement apartment blocks. From a personal point of view have to say they look far better as you've now a ready made community to be bringing in people to entertain to teach various bits and bobs. The one I saw dancing and tennis were most popular.

jam_mac_jam

SirGerryAdams wrote: »

Maybe it's different in cities but I know in rural Ireland people have a strong connection to the family home. It's where you've spent all your life, raised your kids, created memories, know your neighbours and are in a routine.

No, my parents are urban and are just as attached to their home. I dread to think in a few years with mobility issues trying to maintain a huge house they don't need. I would love to see them sell and actually enjoy their money while they can instead of it sitting in a too big house.

airportgirl83

I'm curious to know what people think....

Would it better to buy a smaller, modest 3 bed house outside of Dublin and have a small mortgage, maybe work less, stay with the kids at home for a few years etc. instead of a house in a location closer to Dublin but with a higher mortgage. I know a lot of people will mention location, location, location and I get that but what about better lifestyle that comes with having small repayments, being mortgage free quicker or not being tied to your job forever even if it means living in a modest house in the suburbia? Is the house a status symbol in a way for many?

I have friends in Holland who decided when they were buying a house that they both want to work 4 days a week to spend more time with the kids and to not stress about money. They budgeted for that and picked a house at a certain price. It is a lovely house but it is not fancy or anything like that. None of my friends in Ireland incl. myself suggested doing sth similar. My partner on the other hand thinks it's a great idea.

Twenty Grand

What does having a bigger fancier house give you that your smaller modest house doesnt?

Draw up pros and cons.

Eric Cartman

Twenty Grand wrote: »

What does having a bigger fancier house give you that your smaller modest house doesnt?

Draw up pros and cons.

a better lump sum to leave your kids due to usually higher values
more comfort and the ability to convert a room to an amenity you may want (gym, storage, bar etc..)
bigger kitchens generally , less feeling cramped or having to have smaller appliances.
bigger gardens with more leisure space and privacy.
if its detached over a semi detached/terraces/apartment then infinitely more comfort space and freedom from other peoples annoying habits.

Humour Me

Would the savings from the further out house be used to cover your commuting costs? Personally location needs to be balanced between cost of accommodation, cost of commuting to work 5 days a week and commuting time.