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

Jonnyc135

https://www.boards.ie/discussion/comment/119612293#Comment_119612293

That's not a good sign, like in January this year when I seen the front of the Irish Sun was captioned "Boom Is Back". Never ends well

growleaves

https://www.boards.ie/discussion/comment/119612336#Comment_119612336

No one can help you time a bear-market in property with any kind of precision. There are too many variables and unknowns.

wassie

https://www.independent.ie/business/personal-finance/property-mortgages/help-to-buy-scheme-did-not-cause-house-prices-to-rise-independent-report-says-41980894.html

• "The controversial Help to Buy scheme has not pushed up house prices, an independent report commissioned by the Government has found."
• "Despite damning research from the Oireachtas Parliamentary Budget Office in June which found it cost 43pc more than originally estimated and pushed up house prices"
• "It is understood Housing Minister Darragh O’Brien is in favour of extending the scheme with changes."

So Govt pays for its own 'independant report', that wont be released until budget day, to 'assist' the Govt's consideration on whether to extend the scheme, despite Civil servants finding otherwise. Call me cynical....

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119612336#Comment_119612336

There are a lot of new places being built, having been delayed during COVID, at a time when maybe demand is starting to drop off a bit certainly it is not a mania phase as it was the last two years.

Interest rates are moving in a direction a lot of us are unfamiliar with and where they end up is anyone's guess. While this will likely make your mortgage repayments higher if you wait longer, rate rises will almost certainly put downward pressure on prices.

Higher mortgage repayments but smaller mortgage and more supply. That's how I see the next 12-24 months.

https://www.boards.ie/discussion/comment/119612748#Comment_119612748

Cheers thanks for your reply. This is good feedback.

youngblood

https://www.boards.ie/discussion/comment/119612336#Comment_119612336

I think are few people are in this position, buying for the sake of buying right now which again feels wrong

Timing belt

https://www.boards.ie/discussion/comment/119612748#Comment_119612748

The number of commencements has been declining and the majority of it is BTR so wouldn’t be overly confident that supply of new houses will be anywhere sufficient to meet demand that will put downward pressure on prices in the near term.

https://www.housingagency.ie/data-hub/commencements

Between now and Jan a lot of properties by small landlords will hit the market. These will be people who took out mortgages on second homes at low rates in the 90’s as their pension and now they are hitting pensionable age and selling so you might see a short lived uptick on secondhand properties over the next 6-12 months.

I was listening to RTE1 in the car tonight and all political parties were saying that large numbers of people have been given notice and that the rental market will be totally crazy over the winter as the under supply is going to get way worse. This could easily drive renters that are in a position to buy to buy at any cost if they find there landlord is selling up because they won’t be able to find a replacement rental.

wages are going up across the board and this will be reinforced by increases in social payments and an increase in minimum wage. if everyone else is getting a 5-10% increase and a company doesn’t pay then people will move jobs as they will have to, to be able to pay the bills. I’m not saying people will be financially better off (they won’t) but the amount they can borrow will increase which will cause upward pressure on house prices.

if inflation hangs about you will see more investors going into housing as it’s a natural hedge against inflation because during periods of inflation house prices hold there value better than other investments because prices tend to rise.

https://www.forbes.com/sites/forbesbusinesscouncil/2022/04/14/why-income-generating-real-estate-is-the-best-hedge-against-inflation/amp/

Rate rises should put downward pressure on house prices but if people are paying more rent than they would on a mortgage this will counteract the downward pressure until the differential becomes smaller or negative.

These are my thoughts if they are any help to you.

The only other thing I would add is that it is a big investment and regardless of what people say here (including myself) you need to get the facts and come to your own decision and not be pressurised to make an instant decision. When you do that whatever decision you make will feel right for you.

Wishing you all the best with the future.

PommieBast

@Timing belt

I was listening to RTE1 in the car tonight and all political parties were saying that large numbers of people have been given notice and that the rental market will be totally crazy over the winter as the under supply is going to get way worse. This could easily drive renters that are in a position to buy to buy at any cost if they find there landlord is selling up because they won’t be able to find a replacement rental.

I don't see how the rental market could become more crazy than it already is. Last time someone posted availability figures a while back they already looked like being within statistical noise of zero..

combat14

https://www.boards.ie/discussion/comment/119615425#Comment_119615425

conversely on the demand side ..

More than seven out of 10 young Irish people want to move abroad

https://www.google.com/amp/s/www.joe.ie/amp/news/seven-10-young-irish-people-want-move-abroad-755157

once youngsters and not so young have enough they will start leaving in their droves

https://www.boards.ie/discussion/comment/119615382#Comment_119615382

Thanks for your reply, very interesting points. With the housing market decline in countries like Austrailia, NZ, USA etc, will the same not happen here. I get what you say when people will buy a house if the mortgage is cheaper or the same as their rent, but alot may not be able to afford much with the 3.5 times salary cap on borrowing?

GoldFour4

https://www.boards.ie/discussion/comment/119615700#Comment_119615700

The study was “considering” moving abroad - not “wanting” to go abroad. Most people that age consider moving abroad at some point. Obviously the outlook isn’t great for someone starting out right now but I think this study is just part of a classic pre budget submission piece of work from an NGO.

Villa05

https://www.boards.ie/discussion/comment/119610762#Comment_119610762

https://www.boards.ie/discussion/comment/119607489#Comment_119607489

Is there rentals available? Is there a pathway to homeownership? Yes to both from what I can see

My son is in London for the summer rental considerably less than Dublin?

Prices are starting to fall, taxes are less. Cheaper to get home than Dublin.

The longer people stay there the more likely they will stay

Leaving is a valid choice and increasingly more attractive especially for the highly skilled, well educated

Dav010

https://www.boards.ie/discussion/comment/119615929#Comment_119615929

Yes there is a pathway to ownership in London, if you are will to pay more then it costs for the same pathway in Ireland.

Did you read the gov.uk link? It points to the fact that it costs MORE to buy in London. If you offered that money here for a house in Dublin, you would own your home in Dublin.

So what point are you making? That there is a higher volume of more expensive houses in London, so there is an easier pathway to ownership?

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119615425#Comment_119615425

They are effectively at zero.

Our big MNCs cannot create new jobs as there is no housing available whatsoever. Funnily enough it has coincided with a general slowdown in big tech companies hiring but the data speaks for itself; a couple hundred rentals in the whole city of Dublin; MNC growth of headcount is quenched because of our housing emergency.

Edit: let's not forget Intel and the failure to secure the semiconductor plant recently; housing was a factor.

I own property in Dublin and I rent in London. Spend substantial amount of my time in London

so I speak with direct experience of London v Dublin, and I can say without question that the London property market now has far more to offer and is far easier to navigate for young people. I would not hesitate to recommend that young people give it a go.

Sure, prices are much the same (unless you want to live in Chelsea, Mayfair, Westminster or the City). But the quality of accommodation and its size is so so much better for your money. I don’t know anyone who lives in flats in London. Everyone I know lives in converted terraced houses, often split level, much better suited to houseshares, brighter, bigger etc. There are vast swathes of London covered in this style of housing. And, sure, you might commute from Clapham, or Islington, or Putney, or Wapping but nobody goes to the office every day any more anyway. And all these places are little towns in their own right and no need to go into the city on a night.

the way that Dublin had gone, it’s a no brainier in my view now as to which market is the more dysfunctional and can quite believe that more young people will leave in coming years

growleaves

https://www.boards.ie/discussion/comment/119616003#Comment_119616003

Isn't that what @Amadan Dubh predicted would happen?

Of course the need for new housing pre-supposes that these new MNC jobs won't be filled by already-housed natives.

Timing belt

https://www.boards.ie/discussion/comment/119615425#Comment_119615425

Of course it can get worse if supply is reduced further as you will have More people trying to find somewhere to rent with zero supply at a time when every Airbnb and hotel will be full.

People that we’re protected somewhat by RPZ now need to rent new builds at crazy money.

Timing belt

https://www.boards.ie/discussion/comment/119615746#Comment_119615746

I personally don’t think that the same will happen here due to the LTI limits because this has prevented mortgage repayments from being unmanageable even with increases due to rising rates. The same reason (LTI limits) that prevented house prices from rising will also ensure that there will be a smaller decline in house prices due to rising rates. This makes Ireland very different to the countries you mentioned.

e.g.

if a couple are renting at 2000 a month and mortgage repayments are 1750 a month and increase to 1900 a month due to rising rates you will still have people buying property.

People may not be able to find property in there price range due to LTI limit but with wage inflation the amount they can borrow will increase which will put upward pressure on prices. Say for example a couple both on 50k could borrow 350k today and they get a 5% wage increase (this is less than inflation so they are still financially worse off) then they are now able to borrow 367.5k when this happens across the board it means that a house priced at 350k will cost 367.5k in a few months.

Say inflation is running at 10% so the house that cost 350k a year ago should be worth 385k today but is selling for 367.5k that means that house prices have dropped 5% in Real terms yet house prices have increased by 5%.

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119616085#Comment_119616085

That was the account I used before I (finally) emigrated to Switzerland. Now I'm observing from a better functioning Zurich (and surrounds) housing market, but still making the same points; that we have looked the MNC gift horse in the mouth by failing to provide suitable, affordable and sustainable community focused housing for all these well paid, educated immigrants that flocked here since 2015. We are now at the point where me claiming that big companies cannot expand in the country any more because of housing is the less surprising statement as to argue against this is to have solved the housing crisis. The numbers don't lie; 222 rental ads in Dublin city! At least Patreon have cut jobs today so that should free up some rentals...

Fraud and corruption are evident in a bubble. The stories that have come out the last few weeks around undeclared rental properties and income from politicians, to your man in Bord Pleanala; these are the tiny minority making decisions for themselves, at the behest of the vast majority of participants in the market. Further, given the blatant corruption going on, it is so obvious that our housing market has not been managed properly during the last ten years of growth and therefore is totally unsustainable, given the very narrow focus of just getting negative equity homeowners back in the black.

https://www.thejournal.ie/td-register-interests-land-property-rental-foley-5864805-Sep2022/

Villa05

https://www.boards.ie/discussion/comment/119615746#Comment_119615746

You'll know fairly quickly as the rate hikes will be coming thick and fast over the coming months. Buying now would probably settling at prices before the rises and drawing down at mortgage after the rises. I'd be tempted to pause and wait till after the effect of the rate rises are priced in

https://www.newstalk.com/podcasts/highlights-from-the-pat-kenny-show/ask-the-expert-mortgages-3

While understanding that property has historically been an inflation hedge, I'd question it into the future as it has become a hyper financialised product and may lead to prices being as volatile as shares. You can, this morning, buy a reit containing premium new York property paying a dividend of 7%.

This will be offset in Ireland by the mortgage rules, but the effect will be felt. Prices will rise with wages, but they need to fall back to those wages first

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119610999#Comment_119610999

As I've said before, existing renters (now and before this year) are one of the more secure participants in the property market for the first time in a long time as they cannot be evicted and have security with rental increases (2% max p.a.). Further, SF are probably going to be in government in two years which will give even more protection to renters.

For instance I think even the current government have started to consider a rental credit or rebate for tenants in order to stem the tide of anger from tenants; that is good news to renters and I think it is fair to say we won't see some sort of mortgage relief credit or rebate brought in for those mortgage holders who are at the mercy of rising rates and declining property values.

So, yes, it is not as bad an outlook as it could be for sitting tenants.

growleaves

https://www.boards.ie/discussion/comment/119616328#Comment_119616328

Ah I see. Good luck with your move to Zurich, and good points as usual.

Jonnyc135

https://www.boards.ie/discussion/comment/119616328#Comment_119616328

I was wondering where Amadan had gone too, best of luck in Zurich. Hopefully its not as dysfunctional as over here

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119611006#Comment_119611006

People have short memories. 6 years ago we had a construction boom with cranes dotting the sky around Dublin once again. However, the focus was on commercial property which has now crashed and is continuing to fall (the canary in the coal mine for the wider property market). It is, quite simply, a question of will without politicians and they have no will to direct political resources and accompanying cash towards getting properties built. It is entirely a manipulated, not a free, market. The argument that it's too expensive to build is useless as it was much cheaper to build a few years ago and yet there is still building going on; people need to work and property is (apparently) still a stable investment. So it is a political stumbling block in the Irish case.

Timing belt

https://www.boards.ie/discussion/comment/119615700#Comment_119615700

There is a big difference between wanting to emigrate and needing to emigrate.

likewise wanting to emigrate will not translate on a 1:1 basis with actually emigrating. I would love to emigrate and live by a beach in a hot climate and have all the benefits I have from working in Ireland but will it happen…no for a variety of reasons.

Timing belt

https://www.boards.ie/discussion/comment/119616400#Comment_119616400

Can you share your source that shows commercial property has crashed!

Villa05

https://www.boards.ie/discussion/comment/119615989#Comment_119615989

If your looking for a rental, there available and affordable. New city, new people so your going to busy exploring and living. All you need is a place to rest your head.

Youth are restricted in how much they can raise to buy here as a result of the sins of the previous generation also the higher rate of tax kicks in much later

Higher rates, recession, and a reduction in Chinese and Russian investment should see prices cool into the future

Dav010

https://www.boards.ie/discussion/comment/119616048#Comment_119616048

I agree with this woody, renting in the UK is a different experience, due in no small part to the legislation which makes it easier to remove problem tenants, and the fact that renting is seen as a part of like there. As a result, LLs are more inclined to enter/stay in the market.

But it certainly is not cheaper to buy there.

Dav010

https://www.boards.ie/discussion/comment/119616529#Comment_119616529

So you are not saying there is an easier pathway to buying there than in Dublin? Unless of course you don’t mind paying more.

Timing belt

https://www.boards.ie/discussion/comment/119616369#Comment_119616369

How secure is a renter when the landlord sells the property and they are forced to rent a new build at 25%+ the rent they are currently paying or become homeless. Between now and spring next year this will be the headlines that we will see on the housing crisis.