Irish Property Market chat II - *read mod note post #1 before posting*

Villa05

https://www.boards.ie/discussion/comment/117983416#Comment_117983416

That's why I included the names of the commentators as they are quiet balanced in their assesments as opposed to consistent bears

fliball123

https://www.boards.ie/discussion/comment/117983519#Comment_117983519

Once again almost all other commentators stating prices were going to fall seemed to have a balanced argument and in the face of prices going up, covid and brexit they seemed to have some reason to why prices would drop in the period of 2016 to 2021 and yet it still has not happened. As i say until the supply problem is an issue prices will not be dropping anytime soon.

Murph85

massively rising material and labour costs already and the CB want to further hike prices by allowing people to spend more? This is nearly like the tiger boom again! It will no doubt end in tears, in several years. One thing is clear, there is so much going on, so many moving pieces. Its also clear that these busts are like volcanoes, it takes years and years for them to build and blow. What do you do now if looking to buy and want to settle in Ireland?

Well given rip off rents, the fact that the housing crisis if anything is just going to get worse. If you are hell bent on staying in ireland or have too. Buying might make sense, unless you are renting at well below market rent etc...

https://www.boards.ie/discussion/comment/117982291#Comment_117982291

Which is very easy, if you have a reasonably priced place to live while sitting it out.

not so easy when you have to pay 2500/3000 euro a month rent. What can they do!

Villa05

https://www.boards.ie/discussion/comment/117983547#Comment_117983547

Cormac Lucey is a former Government advisor.

Chris Jones and Jim power are former long serving banking economists

Their opinion is as valid as anyone posting here

mcsean2163

https://www.boards.ie/discussion/comment/117982291#Comment_117982291

People know how to add, €2,500 per month for three bed in Dublin is €30k per year and €150k over 5 years that goes nowhere except into the landlords pocket. That's why the cost is so high and people willing to pay extortionate amounts.

However, in your instance, sounds like your advice helped them dodge a bullet.

Villa05

https://www.boards.ie/discussion/comment/117983736#Comment_117983736

Every Ponzi/pyramid scheme needs a carrot or stick to drive submission

Carrot- promise of riches

Stick - suffering if you don't

Scheme continues until found out

rob316

https://www.boards.ie/discussion/comment/117983667#Comment_117983667

But sure everyone is an expert, when really there is too many factors at play here to give any answer into the future.

WFH has had an impact on the market but how long lasting will it be? Once all restrictions are gone, how many will be back in the offices? I'm of the strong opinion we will see salaries fall for 100% WFH roles going forward.

There is massive supply chain problems leading to ridiculous costs of materials and shortages. That will be corrected

Buyers with larger than normal cash deposits saved during the pandemic, aren't going to last forever. Salaries are just not matching up with this market, double digit property growth is not sustainable against salaries that are rising around 2%.

I got approved the other day for what I wanted but I'm taking a calculated and I suppose optimistic decision to sit this out until 2023. I'll be tight for space in current accommodation but I have the luxury of been able to do it, so I judge no one with a gun to their head and contributing to this bubble.

The 3.5 times rule is the one thing stopping this from getting far worse so the CB are right to resist any pressure. However I feel telling someone you can afford to rent somewhere for 2,000 a month but cant afford a 1,000 a month mortgage is bit a galling. There could be more flexibility but I just don't know how you would control it.

rob316

One more thing the councils need a fire lit under their asses fast to bring vacant council properties back to use and I'm not talking derelict homes. I live in a mixed council/bought out development. There is 2 currently vacant 3 bed homes, 1 is absolutely immaculate, decorated and furnished to a high spec by the previous tenant and has been empty for 2.5 years. The other is vacant over a year as the previous tenants were evicted for been scum but the house is fine.

That's 2 houses out of 12, 2 families on HAP that are in a private rental. This must be the same all over the country.

Yes we need to build a hell of a lot of homes but it isn't the only answer to this question of how you fix this housing crisis. Where there is a will there is a way but is there really a will?

MacronvFrugals

https://www.boards.ie/discussion/comment/117984007#Comment_117984007

With this carry on is it any wonder the supply situation is so bad...

Why hundreds of finished homes lie empty across the country

https://www.rte.ie/news/primetime/2021/1005/1250924-housing-crisis-irish-water-delays/

Castle View, a brand-new housing estate with 100 residential units in Lucan, Co Dublin, was completed in May. Pristine and picture perfect, the houses are energy-efficient, and the development also comes with a playing field for children and a huge playground.

Primarily due to delays in connecting the water mains and the main sewer, it was only this week that three new tenants got their keys, five long months after the estate was finished.

Respond, the housing charity that manages the estate, told Prime Time that there was a three-and-a-half-month delay connecting the homes to the mains water supply, and a five-and-a-half-month delay connecting them to the main sewer.

Irish Water said there were complications with the connection to the sewer, which required a "complete redesign".

mcsean2163

https://www.boards.ie/discussion/comment/117983835#Comment_117983835

I don't deny the wisdom of your statements but difficult for many especially those with kids to put their lives on hold.

Timing belt

https://www.boards.ie/discussion/comment/117983835#Comment_117983835

The majority of people buy a property to live in not for the promise of riches.

The majority will live in the property for most of their lives and the ones that do change property don't benefit from the value of the property increasing unless they sell up and move to a country with cheaper housing as the value of the new property will also have increased.

At the end of the day the value of a property is dictated by the price that an individual is willing to pay. It is the underlying factors that makes an individual pay more where they are able to do so.

e.g.

High rent

living at home with parents

Lack of Supply

desire to live in a specific location

Property inflation/FOMO

Perception of cost of building

Of all of these the 2 that are the easiest to change by the government are: supply and cost of building

increase supply and people wont feel pressured to pay such a high price or will be able to look for cheaper rent else where.

The cost of building can be addressed by heavily taxing profits (80+%) taken when land gets rezoned to residential and in turn lowering tax on building materials or using the tax intake to build social houses to reduce future HAP.

yagan

https://www.boards.ie/discussion/comment/117984064#Comment_117984064

Thanks, this actually may answer my wondering about all the new estates I've recently seen around Cork that look ready to move into but they've remained behind harris fencing for months.

It's been an eye opener helping my relative house hunt this year, there is definitely supply heading for the market and we can already see that the offers have massively improved since June, even if sellers expectations haven't caught up yet.

Timing belt

Practically every new house that is being built in cork has already been sold. Most of the new supply that will be hitting the market will be apartments which will be bought by investors no doubt if they ever get to the stage of building them.

jill_valentine

https://www.boards.ie/discussion/comment/117983464#Comment_117983464

My entire department is work from home permanently and was since before the pandemic. We have a general email from the head advising of such, but I was told this would not be sufficient, I'd need a personalised letter from HR advising I, personally, was full time WFH "from now on", as the broker had experienced issues with it before.

It might not have been an issue for some people, but in my case it would have been because it was a cheap one bed apartment - so the loan would have been either below what banks want to mortgage or else above the LTV they wanted to offer. It was a weird one. Also it would have been easier to get a letter like that from the Soviet government than my HR department.

I didn't see how it would have worked out in the end because I'm going another way, but the broker was vehement, so anybody going that route, be careful and make enquiries.

wassie

Australia & NZ regulators have both taken steps today to address rising property prices. They would outwardly appear modest in their increases, but send very clear signals to the market over concerns with the rate of housing prices increases.

Australia's regulator APRA has announced an increase of 0.5% in the serviceability buffer assessment by lenders to “at least 3.0 percentage points over the loan interest rate”.

The Conversation reports:

APRA says it is not trying to target the level of housing prices, and it looks as if it isn’t (yet) concerned that lending standards are lax, but it wants to ensure “borrowers are well-equipped to service their debts under a range of scenarios”.

Its announcement says increases in the share of heavily indebted borrowers mean “medium-term risks to financial stability are building”. More than one in five new loans approved in the June quarter were at more than six times the borrowers’ income. As prices have surged, borrowers have pushed themselves deeper into debt in order to get a foothold in the market.

Meanwhile NZ is taking the sledgehammer approach over inflation concerns more broadly by raising the official cash rate. This comes after after tightening LVRs last month. The Reserve Bank of New Zealand is lifting its benchmark from a record low 0.25 per cent to 0.5 per cent.

The Committee noted the Reserve Bank’s assessment is that the level of house prices is currently unsustainable. Members noted that a number of factors are expected to constrain house prices over the medium term. These include a high rate of house building, slower population growth, changes to tax settings, and tighter bank lending rules.

Rising mortgage interest rates, as monetary stimulus is reduced, would also constrain house prices to a more sustainable level. Members noted a risk that any continued near-term price growth could lead to sharper falls in house prices in the future.

DataDude

https://www.boards.ie/discussion/comment/117959621#Comment_117959621

Dragged to see this by my other half. Was in a sour mood arriving, ready to hate it…to my surprise, having viewed a lot of houses over the last 2 years (and many more pricey than this), internally this is the best I’ve seen. If I had a blank canvas and was building a house, I’d hand the builders the plans and say build that! For me it answered a question discussed earlier in this thread around what’s the ‘ideal size’ house. 240m2 it seems!

Wont be bidding as the Eden Gate is too big and awkward to get to, but would highly recommend having a look if it’s of even a slight interest. Will sell quickly, and (probably) above asking. The 650 one you mentioned wasn’t arms length. Others on the road were going for 750 back in the beginning of 2018.

Timing belt

https://www.boards.ie/discussion/comment/117985835#Comment_117985835

You can add Poland to that list....they raised rates today to battle inflation

mcsean2163

https://www.boards.ie/discussion/comment/117986029#Comment_117986029

Interesting, what do you mean wasn't arms length?

DataDude

https://www.boards.ie/discussion/comment/117986331#Comment_117986331

I don’t believe €650k represented the market value at that time. Whether it was intra-family or some tax games going on, I have no idea. But there are several other identical houses sold in early 2018 (and 2018 saw strong price increases) for 805,810,785 etc.

Also as pointed out by another poster, they were making 600 all the way back in 2011.

One selling randomly for €650k in 2020 looks out of whack to me so wouldn’t be using it as an indicator of prices up 50% in a year if that one makes €1m

Amadan Dubh

https://www.boards.ie/discussion/comment/117983547#Comment_117983547

I think a sudden demand shock could render a supply increase less important. There is an assumption that demand is strong and will continue to stay strong but there are increased risks to the projected demand figures.

For example, Brexit (which is only recently starting to have a noticeable impact on the British economy), global corporate tax reform, interest rate increases, QE easing, Big Tech (in particular Facebook) companies growing more slowly/reducing headcount in Ireland etc.

It's not just "increased supply" which would bring down prices but I think a hit to demand, which is possible, could also do it. Now of course wider economic issues would follow in such a scenario.

Villa05

https://www.boards.ie/discussion/comment/117984289#Comment_117984289

People are much wiser to the promise of riches in ponzi schemes. Housing very much works off the stick approach. We know that we are most likely doomed to the not fit for purpose more expensive rental market if we do not buy. There is no other option over the private market in housing for the majority of working people

The lack of supply is the single biggest determinant of price. In the most underdeveloped nation in Europe, Lack of supply would appear to be a choice by those in power by creating barriers to supply. People in power change and one day we may choose to remove these barriers and allow demand and supply meet

It's the byproduct of commoditised housing. The process makes buying a home like walking into a betting shop with your life savings and much of your future life earnings in a system that is rigged against you

There are surely better systems out tgere

LeeroyJ.

https://www.boards.ie/discussion/comment/117983736#Comment_117983736

This is exactly it, I took out a mortgage this year and even at a relatively high loan on an ambitious repayment schedule, my monthly mortgage is a little over 30% less than my previous rent. Over the next 25 years, that is a significant saving in addition to an investment. As long as renting is completely broken in Ireland, buying will always be the better option, no matter how high the prices of property are.

fliball123

https://www.boards.ie/discussion/comment/117983667#Comment_117983667

They are entitled to their opinion but until they can do something about the supply issue their words mean diddlysquat and how many of the so called experts foreseen property price increases during Brexit or Covid? The fact is until the supply tap is turned on and can catch up with demand their opinion means diddlysquat same as anyone spouting what way prices will go. You can only look at the factors that are there in front of us. The 3 main factors are

Supply - Way too low and no plan to build the houses needed, Ability to build severely hampered by lack of workers and material costs sky rocketing.

Demand - Way too high we have pent up demand from Brexit and Covid, We have also 1/2 million more people in the country then 10 years ago. We have seen year on year births vs death rates on the birth side since recordings started and we have had 8 years of nett immigration inwards to Ireland meaning more bodies to house. Add in dropping the time from 8 years to 4 months for people who are seeking asylum in this country to be processed will mean an even high migration figure inwards in the coming years.

Access to Credit - People have record savings, tax take recovering better than expected, banks still lending even during and after brexit/pandemic.

I dont pretend to be an economist but all 3 factors that make up the price of property would suggest to me that prices are not dropping any time soon, they may level off if wages lag behind inflation.

wassie

All your points are valid and make a lot of sense, but I'd agree with @Amadan Dubh point that a sudden demand shock could alter things very quickly. If people suddenly lose confidence in their job security, they are unlikely to saddle themselves with a big mortgage, especially if its an existing house with a lot to be desired.

Before the pandemic there was a lot of fear about the level of corporate debt and the risks that posed to the global economy. We hear very little of this now but the issue hasn't gone away. IMF boss Kristalina Georgieva spoke only 2 days ago of the risks associated with debt, inflation and divergent economic trends after the pandemic. If China is not able to contain the Evergande implosion we could see a serious hit to global demand if their economy goes south.

pkvader

Just a quick question about Auctioneera,when you put in an offer that matches the asking price it triggers a 15 day count down?,yeah?.What happens when you put in a bid less than the asking price and there are no other bidders?.Do Auctioneera contact you to tell you the offer has been accepted or rejected?.Is that how it works?;would appreciate any opinions if any of you have experience with the Auctioneera process.Thanks.

Timing belt

https://www.boards.ie/discussion/comment/117986747#Comment_117986747

If there was a demand shock such as a global recession brought about by a black swan event we would be in pretty much the same situation in the housing market as we are today because the response by the central banks would be to undertake more QE which would lower rates and keep them lower for longer driving more investors into the housing market as they chase yields.

The only way demand in housing in Ireland would reduce is if we saw less people migrating to Ireland or an increase in emigration as people leave Ireland. As long as the population stays the same the demand will be there. People will need to be housed regardless of economic conditions.

Villa05

Anyone thinking that recent developments in China with evergrande and the authorities taking the heat out of the property market there will lead to a reversal in inflation in building raw materials.

I read that building activities account for 40% of GDP in China. At the height of our boom it was circa 20%.

Eye watering figures

fliball123

https://www.boards.ie/discussion/comment/117987855#Comment_117987855

Demand shock ? If people cant afford to buy they still have to live somewhere? What is the alternative pay sky high rents ?

Villa05

https://www.boards.ie/discussion/comment/117987339#Comment_117987339

All valid and fair points in a stable economy, however we have an incredibly transient workforce. Many Irish are leaving while being replaced by a greater number of foreign nationals. This leaves us extremely vulnerable to boom bust policies coupled with our huge debtq

20k leave Ireland every year while 40k come in. How would a sudden economic shock affect these numbers.

Can't imagine the state paying over 1billion and rising plus the multiple schemes that prop up prices and rents in such a scenario.

Would our bailout friends be as helping if we get in trouble yet again because of a property bubble

Timing belt

https://www.boards.ie/discussion/comment/117986820#Comment_117986820

I agree that lack of supply is the biggest determinant of price but regardless of who is in power their are barriers to increasing supply.

There is no shortage of land that could be built on to increase supply. The issue is that the land is either not zoned for residential or is being horded by developers. If there was more land zoned for residential this would lower the value of land being horded by developers and reduce the cost of new houses. But it's not as simple as just increasing the amount of residential zoned land because doing so without a strategic plan would only lead to more problems and more land being horded.

The changes that I would like to see are:

• A use it or lose it policy with the rezoning of land that is residential land that is horded back to non-residential if not being used within a specific time period.
• Heavily Tax profits on rezoning of land - This would prevent people from buying non-residential land and sitting on it waiting for it to be rezoned to make a profit in the future.
• Compulsory purchase orders by the state of land that was previously zoned as residential and is now non-residential due to the use it or lose policy.
• The state would then rezone the land back to residential and build affordable housing on it. (It would be affordable due to the reduced land cost)

Villa05

https://www.boards.ie/discussion/comment/117988388#Comment_117988388

The only barrier is the willingness to remove them. All explained by McWilliams far better than I ever could.

https://play.acast.com/s/the-david-mcwilliams-podcast/174-theproblemwithhousingzoning

Timing belt

https://www.boards.ie/discussion/comment/117987855#Comment_117987855

The level of corporate debt has increased during the pandemic along with the risks associated with it.

The act of fed stepping in buying pretty much any debt in early 2020 (including junk) provides investors with comfort that in the event of a crisis in the debt market central banks would step in to prevent a crisis.

The Evergrande implosion is challenging this assumption because China is not stepping in and allowing it to play out.

Villa05

Another barrier is regulation. In the north regulation is handled by a private company therefore independent and accountable as opposed to our taxpayer covers everything at great expense. The larger builders pay more while smaller builder pays a little less therefore while here expensive architects etc have to be paid for compliance. This gives a competitive advantage to large builders while being a barrier to entry for smaller builders

The regulation in the north is much cheaper and fit for purpose unlike our cumbersome expensive and inadequate system.

This is by choice

Bass Reeves

https://www.boards.ie/discussion/comment/117987893#Comment_117987893

No seller on a private treaty sale needs accept any offer even if it's at or above the asking price

Amadan Dubh

https://www.boards.ie/discussion/comment/117988173#Comment_117988173

Interesting to think about the type of population growth which will feed into demand; a lot of immigrants won't be able/intend to buy housing in Ireland and the eye watering rents won't be paid by those coming here for all but the top jobs but we won't be able to sustain growth in population from people taking on top jobs alone without accompanying lower paid jobs to service the economy. This has been the case pre-covid but I do feel we are close to the peak with rents, unless salaries can significantly increase (20%+).

fliball123

https://www.boards.ie/discussion/comment/117989356#Comment_117989356

immigrants some may not be able to buy but they will have to be housed as this is the nature of our lift leaning political sphere in this country throw in Sinn Fein will probably be in power an even more left wing alternative to the current political structure. The eye watering rents will be paid by billy and bobby the tax payer.

Timing belt

https://www.boards.ie/discussion/comment/117989356#Comment_117989356

Regardless of whether they rent or buy they will need housing. If the cost of housing is to high they will end up in overcrowded rented accommodation but this still adds to pressure on housing cost and supports the high rents.

https://www.boards.ie/discussion/comment/117989519#Comment_117989519

You assume immigrants will not pay their own rent?

Amadan Dubh

https://www.boards.ie/discussion/comment/117989539#Comment_117989539

They need housing but you can't get blood from a stone and quite simply people won't be able to afford rents increasing much further without salaries significantly going up as well. It also means the government is totally snookered with trying to introduce tax increases so long as housing costs do not plummet, as it will push even more people towards alternative parties which the government cannot afford to do. It's a slow motion car crash as I see it and I know there is no orderly exit from the volatile price movements in the property market.

Hubertj

https://www.boards.ie/discussion/comment/117988598#Comment_117988598

you make an interesting point about regulation, especially considering your love of conspiracy theories linking political parties to construction. Here’s 1 for you - what influence will Tom McFeely have on building regs in the Republic if Sinn Fein get into government?

Villa05

https://www.boards.ie/discussion/comment/117991322#Comment_117991322

The implementation of the much better system in the north would greatly reduce a reoccurrence, while the self certifying system in the Republic does nothing to alleviate such issues.

Welcome back

Villa05

https://www.boards.ie/discussion/comment/117989539#Comment_117989539

Rents were rising substantially partly because prices of most other basics were stable or falling. Property saw the opportunity, marched in and hovered up spare available cash

Do you think these rents will be sustainable when their is significant inflation and added taxation on essential consumer goods and services.

Bargain_Hound

In Co Dublin, 2-bed terrace house neighboring us just went sale agreed at 335k from asking price 285k. It sold in 2016 for 200k. Crazy prices.

pkvader

https://www.boards.ie/discussion/comment/117988916#Comment_117988916

I know that,im just curious what the process is when you put in a bid less than the asking price,do Auctioneera contact you and let you know if the seller is interested etc..

Bass Reeves

https://www.boards.ie/discussion/comment/117992071#Comment_117992071

Auctioneer will generally ring you back to let you know the state of play with your bid. If it's a property they expect significant interest in they wait for the natural bidding process come into play.

If it is a property where there is not a lot of interest they will see if they can get the bidder and vendor to come to an agreement. This may or may not be possible

Villa05

Interesting theroies from Jeremy Grantham in an interview with Moneyweek.

Hollowing out of the economies by a focus on capital as opposed to labour, leading to a population that are unable to afford the basics.

Jeremy believes we are in a bubble of historic proportions. Interestingly they discuss what bubbles have left us after everything has blown over and the mention how Ireland, USA and Spain had a huge overhang of housing which they see as a positive.

Amazing to think where we are now in a housing crisis from where we have come from

https://moneyweek.com/jeremy-grantham-podcast

mcsean2163

Amadan Dubh,

Have you seen this yet?

https://www.myhome.ie/residential/brochure/1-mount-pleasant-villas-upper-dargle-road-bray-wicklow/4534247

Ticks a lot of boxes, it's the best I've seen for a while and although a high price for Bray is not as shocking as some of the others IMHO...

pkvader

https://www.boards.ie/discussion/comment/117992261#Comment_117992261

Cheers,the property we are interested in has been bid on numerous times over the past 10 months.Been on and off Auctioneeras site,so theres something up behind the scenes with it.We've a viewing booked so hopefully that will reveal more.We're are only in a position very recently to start looking as our own house has sold.The house is one we really want,but not getting our hopes up as there must be something off when it ,that it still hasn't sold.

https://www.boards.ie/discussion/comment/117992430#Comment_117992430

thats a lovely house. And pretty central i think.