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

C14N

https://www.boards.ie/discussion/comment/118086426#Comment_118086426

You're saying it makes sense to tell someone else they cannot build something on their own property, because you don't want it there. You can say people will have preferences about what they want to live beside, but that's a risk you take when owning any property and you don't really have a strong case for stopping other people from building what they want and living there just because it's against your personal preferences. If I decided decided I didn't want to live near any foreigners, and then a Spanish family moved in 3 houses down, I wouldn't have much of a right to protest just because I wouldn't have bought it if I'd known they would move in.

My guess is that if you asked most people who own a house if they were happy with where they lived, they would say yes. Most would not think of it in terms of "no, I don't, I'd much rather be in a more affluent area, but I had to settle for this because the market was tough, and I can't wait to get out", even though almost everyone could probably think of somewhere that would be objectively more desirable.

fliball123

https://www.boards.ie/discussion/comment/118086600#Comment_118086600

NO I am saying it would make sense that if I had worked my hole off for a house paid for out of after tax monies and someone wanted to build a sh1t of apartments beside me I wouldn't be happy about it. I think the majority of home owners would be the same regardless of where they are living. I never said I had a strong case if someone wants to build where I live its up to them to go through the process and if it interferes with the house I have bought I would be objecting to it. Its that simple so in that scenario I do have a strong case as to where people build. As for bringing the Spanish into this once they are living and looking after themselves and not interfering with me in any derogatory way and not just Spanish people but Irish, English any nationality, sex, race or religious preference I say live and let live once they are not doing any harm I don't see any issues with that. There is a difference between something like a block of apartments being built beside you as apposed to a Spanish family moving in the neighborhood?

As for you last paragraph it proves my point that there has always been an affordability issue with regards to certain areas in the country. People settle for what they can get as apposed to what they want and this has always been the way with the Irish property market its not just a new phenomenon

hometruths

https://www.boards.ie/discussion/comment/118086454#Comment_118086454

Typo is stretching it a bit given you repeated the error six times, even saying "meaning a house under your rules for a couple on the average household income can afford is 272485 which is still above the average price a house has been selling for this year. 272485 > 208708" and "the amount they have to play with drops to 220220 and this is still allowing for the average house price of 208708 so its still greater than the average house price".

DataDude makes a very fair point - if you look at income levels there is very little real demand to buy houses.

I made similiar point a while back looking at the Threshold survey of renters and what private tenants are actually earning. It is very clear that at current price levels there is almost zero demand for buying houses.

So if we're building 30/40/50k new builds a year, and the people who are in private rented tenancies are not going to buy them, who is?

Marius34

https://www.boards.ie/discussion/comment/118087017#Comment_118087017

There were 6,047 FTB mortgage drawdowns alone in Q3 2021. Highest Q3 result for FTB, since 2008. Even after 10% increase in property price, there are still apparently high demands.

fliball123

https://www.boards.ie/discussion/comment/118087017#Comment_118087017

In fairness it was one error which was repeated and my calculations still worked for the median and average wage with no way to prove average household income due to out of date data. So just to update this.

The amount a couple can the average wage can using the rules get a house up to the value of 343179

The amount a couple on the median wage can using the rules get a house up the value of 339450

Average house price = 287704 so both are about 40/50k above this.

I cant find any up to date data on household incomes but there are stats that show the average wage has gone up in the last 5/6 years which would suggest household incomes have too.

https://www.statista.com/statistics/416212/average-annual-wages-ireland-y-on-y-in-euros/

So I will wait for the CSO data on household incomes but by that time we could see prices continue to rise or fall. So both of the metrics I used which have valid data sets show that people can afford to buy a house at the average price of Irish property. So when people talking bubbles and affordability they need to put a bit of substance or math behind it. When you look under the covers at the data both of these metrics show that properties are affordable. I also believe we have a supply issue which some people are saying is a bubble.

So you believe there is zero demand for buying a house at the moment ok have you any proof? As mortgage draw downs and mortgage approvals would beg to differ

Mortgage draw downs

https://bpfi.ie/publications/bpfi-mortgage-drawdowns-q2-2021/

Mortgage approvals

https://www.independent.ie/business/personal-finance/property-mortgages/numbers-receiving-mortgage-approval-hit-new-high-as-5000-given-the-green-light-last-month-40792184.html

https://www.thejournal.ie/mortgage-approvals-for-may-2021-5479779-Jun2021/

https://www.irishexaminer.com/news/arid-40303151.html

hometruths

https://www.boards.ie/discussion/comment/118087084#Comment_118087084

Sure, but the Threshold post, (which annoyingly I can't find that easily thanks to the new search function), pointed out that there was a small number of people earning enough to buy, and from memory I think it worked out at pretty close to FTB mortgage draw down figures. Thus current prices depend on consistently more would be FTBers entering that wage bracket, than FTBers in that bracket completing a purchase.

That may happen enough to clear current build rates, but a lot less likely to create demand for 30/40/50k build rates. So who is going to buy the rest? Are we pinning the market on the bank of mum and dad or the funds?

hometruths

https://www.boards.ie/discussion/comment/118087129#Comment_118087129

So you believe there is zero demand for buying a house at the moment ok have you any proof? As mortgage draw downs and mortgage approvals would beg to differ

Zero was a typo. What I meant was there is a bit more than zero FTB demand but not enough to sell 30/40/50k houses.

fliball123

https://www.boards.ie/discussion/comment/118087149#Comment_118087149

https://www.boards.ie/discussion/comment/118087149#Comment_118087149

Well we have more mortgage draw downs in the first 2 quarters of 2021 than in 2020. Already about 18.5k mortgage draw downs so if we keep on at that pace mortgage draw downs will be 37k for 2021. Also there is not a lot of selection out there will be some people holding off till the right property comes along and this can be seen by the amount of mortgage approvals. Just to put that in context in the same 2 quarters only 8250 houses have been completed meaning current building is not even keeping up with half the demand for buying property.

https://www.cso.ie/en/statistics/construction/newdwellingcompletions/

Welcome back by the way I hadnt seen you post on here for some time

Marius34

https://www.boards.ie/discussion/comment/118087131#Comment_118087131

If they start to build much larger volumes there maybe drop in the price to balance demand/supply. But currently it's still along way to go, and currently there are demands in all sectors, not only FTB and STB, but social/council, Rental market.

Marius34

https://www.boards.ie/discussion/comment/118087202#Comment_118087202

there is data for Q3 2021. It will be over 42K drawdowns in 2021, and over 22K FTB drawdowns alone.

https://bpfi.ie/publications/bpfi-mortgage-drawdowns-q3-2021/

hometruths

https://www.boards.ie/discussion/comment/118087207#Comment_118087207

Sure that takes us back to the social/council propping up the market point as the marginal buyer point. Hopefully that is showing signs of change finally. I read somewhere over the last few days, (maybe in this thread), that councils have already pulled up the drawbridge on leasing.

In any market, once the marginal buyer realises they're being taken for a mug, and steps back or bids less, prices fall.

That's a slightly different discussion though, my point was I don't think the stats show a massive pent up demand for FTBs and 300k houses.

If they are out there, where are they currently living? threshold's latest survey suggests they're not currently in private rented accommodation. That's the only point I was making.

Ozark707

https://www.boards.ie/discussion/comment/118087017#Comment_118087017

Councils/charities are going to hoover up many places coming on stream.

fliball123

https://www.boards.ie/discussion/comment/118087242#Comment_118087242

I think going forward we are going to need a lot more social houses and council houses.

hometruths

https://www.boards.ie/discussion/comment/118087202#Comment_118087202

I just found the various threshold posts and realised we had pretty much exactly the same argument back in July! I said "Look at the PRS figures, if only 6% of people living in PRS earn over 45k, it doesn't seem like a lot of private renters are forming this anticipated demand", you (and others) said "Nonsense, look at the drawdown figures".

We'll leave it there so!

Welcome back by the way I hadnt seen you post on here for some time

Cheers, my interest was waning a little, then found the new site a bit clunky and annoying. Been lurking nonetheless.

DataDude

On the supply side. 21.5k new commencements in the last 6 months alone. Astonishing numbers. Interesting to see if it can be sustained, would have us blowing by all government/CBI targets by 2023 if it does!

https://www.gov.ie/en/publication/a5cb1-construction-activity-starts/

https://www.boards.ie/discussion/comment/118086502#Comment_118086502

It won’t bite straight away given the proportion of people on fixed rates. I’ve only a couple of months short of 5 years before I feel the direct impact on interest rates on my mortgage payment.

Zenify

https://www.boards.ie/discussion/comment/118084661#Comment_118084661

Bubbles are caused by FOMO! Tulips, .com, 07 property, and bitcoin. It wouldn't be a bubble from supply and demand. Then it would be normal justified market forces that would sustain. The reason why bubbles burst is people no longer have FOMO and the normal supply and demand are out of kilter.

https://www.boards.ie/discussion/comment/118088202#Comment_118088202

And what does FOMO come from other than an imbalance in supply and demand? FOMO is the manifestation of scarcity

Villa05

https://www.boards.ie/discussion/comment/118085462#Comment_118085462

The link to the 2016 figures states that two thirds of households earn less than 63k, while in the podcast broadcast last week and posted here yesterday, the chief exec of the land development agency said the middle third earned between 45 and 80k.

The LDA must have the most up to date figures as this is the demographic they have been tasked with providing housing solutions for.

The typical 2person average salary couple appear to be in the top 20% of household income earners

Villa05

https://www.boards.ie/discussion/comment/118088202#Comment_118088202

Do you think the fear of being stuck in the Irish rental market is greater than the fear of missing out.

For the vast majority of Irish people housing is a home not an investment opportunity.

The stick is a far greater weapon than the carrot when influencing human behaviour and super charging bubbles.

Zenify

https://www.boards.ie/discussion/comment/118088810#Comment_118088810

Yeah, I agree. I would include your example in FOMO. Fear Of Missing Out of both investment and getting a home etc.

Timing belt

https://www.boards.ie/discussion/comment/118088061#Comment_118088061

I wonder how many of the commencements are a over spill of projects that were delayed during the lockdowns when builders concentrated on finishing projects rather than starting new ones.

Timing belt

https://www.boards.ie/discussion/comment/118088138#Comment_118088138

Banks stress test for ability to repay if rates rise so there should be a buffer.

The real risk is when fixed rates expire if your in a rising rates environment for 5 years as the new rate could be significantly higher at the end of the five years. (E.g. five years of rate rises in one go)

DataDude

https://www.boards.ie/discussion/comment/118089401#Comment_118089401

Yeah difficult to know, will take a year or so before it all shakes out I guess. Interestingly, Davy seem to be getting increasingly bullish on a monthly basis now around building activity. Time will tell.

Number of housing starts passes 30,000 as construction hits its fastest pace since 2008 - Independent.ie

hometruths

https://www.boards.ie/discussion/comment/118089495#Comment_118089495

In all our previous exchanges re inflation and potential of higher rates you've been adamant I was wrong to predict inflation would be a concern; you were of the view any inflation would not be meaningful or longlasting - i.e transitory.

Is this still your view? Not asking to score points, genuinely interested, as plenty of others had that view, just wondering if they're reassessing things now.

rocjohn

Large building site for residential 3 and 4 bedroomed houses in Dublin closed since Thursday evening of last week. Its hardly due to a Covid outbreak or extended Halloween break.?

I do not know the reason but am wondering if this could be a consequence of supply problems. The builder has an excellent reputation for quality builds and running a well organised site.

I wont identify the building site .

Timing belt

https://www.boards.ie/discussion/comment/118090285#Comment_118090285

I still think that the inflation won’t be long lasting unless we see wage inflation as people won’t be able to pay.

A lot of the inflation we have seen have been for specific items that are in short supply e.g. second hand cars etc. or have been energy related as oil prices returned to pre covid prices.

The one area that does concern me is the blackouts in China as that is where most of the manufacturing of products take place and if they are producing less prices will rise across the board. If they try to devalue the currency to combat it they run into issues with debt in foreign currencies.

I also think we will hear a lot in coming months that raising rates won’t dampen inflation as people still need oil and gas for transport and heating.

Saying all that I will say that The longer we see inflation the more likely it will grab hold as there will be an expectation of inflation and business will raise prices wherever they can.

Timing belt

https://www.boards.ie/discussion/comment/118089864#Comment_118089864

There is definitely an increase even allowing for the spillover from lockdowns.

hometruths

https://www.boards.ie/discussion/comment/118091750#Comment_118091750

I think wage inflation has kicked off already. Once the inflation ball gets rolling it will be difficult to stop, it looks to me to be already rolling, and will gather speed whilst CBs dither about raising rates.

ittakestwo

https://www.boards.ie/discussion/comment/118091833#Comment_118091833

But by Masstrict the ECB have to keep it below 2% long term. Today's figures show it is over 4%. I think if it were any other time the ECB would be raising rates. It wont be long before the Germans are demanding rates be raised. We could see it sooner rather than later given today's figures. The ECB have been saying they only believe it to be temporary but core inflation which excludes volatile inputs like Energy has also risen above the ECB's target.