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

Timing belt

Ace2007 wrote: »

And divide that by number of households in Ireland, and your probably looking on average at 300k, which well below the 1m that you spoke about.

If you think that a large number of those over 65 will have 6 figure savings in the bank - they aren't the clientele that are going to be buying property.

It’s 1m today...750k in a few months 500k in a year... banks are drowning in cash and it is costing them. As we only will have 2 banks in the future they won’t be able to introduce a cap on deposits so the only tool they have is negative rates which they will use to pass on costs. This isn’t just an Irish thing it’s in most economies at the moment.

mcsean2163

Timing belt wrote: »

It’s 1m today...750k in a few months 500k in a year... banks are drowning in cash and it is costing them. As we only will have 2 banks in the future they won’t be able to introduce a cap on deposits so the only tool they have is negative rates which they will use to pass on costs. This isn’t just an Irish thing it’s in most economies at the moment.

I expect the opposite. I expect rates to increase shortly due to inflation...

Graham

Mod Note

some posts moved to the thread EA Requesting an Inappropriate Level of Information

Timing belt

mcsean2163 wrote: »

I expect the opposite. I expect rates to increase shortly due to inflation...

They can tapper the QE and not raise ECB rate to cool inflation but all that will do is increase rates on gov bonds which will have investors buying bonds chasing yields which in turn will drive down rates.

It is a very fine line that central banks will need to walk as if they raise rates to fast they will crash all asset values and at the same time make gov borrowing more expensive.. even if governments didn’t borrow more they would be impacted as the existing debt rolls over. Either way negative rates will be around for a long time yet IMO and at the same time inflation will drive up house prices more because the building cost will rise and developers won’t build because the new properties will be to expensive to sell and we will see a continuation of a shortage in supply.

Balluba

Timing belt wrote: »

It’s 1m today...750k in a few months 500k in a year... banks are drowning in cash and it is costing them. As we only will have 2 banks in the future they won’t be able to introduce a cap on deposits so the only tool they have is negative rates which they will use to pass on costs. This isn’t just an Irish thing it’s in most economies at the moment.

Why will banks not be able to put a cap on deposits?
Some building societies have caps of €500,000 for deposits.

mcsean2163

Timing belt wrote: »

They can tapper the QE and not raise ECB rate to cool inflation but all that will do is increase rates on gov bonds which will have investors buying bonds chasing yields which in turn will drive down rates.

It is a very fine line that central banks will need to walk as if they raise rates to fast they will crash all asset values and at the same time make gov borrowing more expensive.. even if governments didn’t borrow more they would be impacted as the existing debt rolls over. Either way negative rates will be around for a long time yet IMO and at the same time inflation will drive up house prices more because the building cost will rise and developers won’t build because the new properties will be to expensive to sell and we will see a continuation of a shortage in supply.

I don't follow what you're saying at all. If government bonds go up the banks could buy those with deposits thus reducing the interest they would have to charge.

Secondly, we have the highest debt per capita in EU

https://www.irishtimes.com/business/economy/ireland-to-have-highest-debt-per-head-in-europe-this-year-1.4503652

In real terms, every other country in the EU is less indebted than us and especially so in Eastern Europe. They may have a different opinion to continually bailing out Ireland considering they are actually poorer than us.

The Devoted Friend, Oscar Wilde

I wrote about how we are spending like no tomorrow here. https://seanmcm.medium.com/how-strict-have-the-covid-19-lockdown-restrictions-been-in-ireland-22c80ea06222

I expect the EU will not consider us very much when raising rates. We're a nuisance both politically and financially. If all of the EU behaved like the PIIGS, the EU would be a basketcase.

Czech and Hungary talking about rate increases.
https://www.bloomberg.com/news/articles/2021-06-14/rate-hawks-urge-start-of-hikes-in-eu-s-east-to-tame-inflation

We have a fiscal timebomb between HAP, PUP and CGT

Rates to go up, funds to divest from low yield property. That's my guess. It's incredible to see the level of fund activity at the top but they have form. I'd love to know the current population of Ireland as the amount of apartments being built around Dublin seems incredible.

Contrary to PropQuery, I think August is early. We may still escape but in order to do so we'd need to be firing on all cylinders....

mcsean2163

This is interesting:

https://www.independent.ie/irish-news/house-prices-have-risen-68pc-and-wages-just-9pc-but-worst-is-yet-to-come-40534492.html

The timeframe is very selective but it illustrates our unsustainable trajectory.

Timing belt

mcsean2163 wrote: »

I don't follow what you're saying at all. If government bonds go up the banks could buy those with deposits thus reducing the interest they would have to charge.

Secondly, we have the highest debt per capita in EU

https://www.irishtimes.com/business/economy/ireland-to-have-highest-debt-per-head-in-europe-this-year-1.4503652

In real terms, every other country in the EU is less indebted than us and especially so in Eastern Europe. They may have a different opinion to continually bailing out Ireland considering they are actually poorer than us.

The Devoted Friend, Oscar Wilde

I wrote about how we are spending like no tomorrow here. https://seanmcm.medium.com/how-strict-have-the-covid-19-lockdown-restrictions-been-in-ireland-22c80ea06222

I expect the EU will not consider us very much when raising rates. We're a nuisance both politically and financially. If all of the EU behaved like the PIIGS, the EU would be a basketcase.

Czech and Hungary talking about rate increases.
https://www.bloomberg.com/news/articles/2021-06-14/rate-hawks-urge-start-of-hikes-in-eu-s-east-to-tame-inflation

We have a fiscal timebomb between HAP, PUP and CGT

Rates to go up, funds to divest from low yield property. That's my guess. It's incredible to see the level of fund activity at the top but they have form. I'd love to know the current population of Ireland as the amount of apartments being built around Dublin seems incredible.

Contrary to PropQuery, I think August is early. We may still escape but in order to do so we'd need to be firing on all cylinders....

My point is that if rates rise due to tapering of QE (and not a ECB rate change) and investors start buying bonds this will pull cash from equities before property and in turn put downward pressure on yields on government bonds making them less attractive to investors over time.

If the ECB was to increase its rate as opposed to tapering QE then yes it would provide a floor for a higher rates on government bonds but it is more likely that the ECB won’t do this and instead tapper QE to fight inflation. If they do then it will be the tech stocks that will see a drop in value due to future profits being lower due to inflation eroding there value as opposed to property that is a hedge for inflation.


In my opinion we are more likely to see tech companies cut costs (jobs) because of this in an effort to prop up share prices than investors selling property. Maybe this will dampen demand for property due to lower migration levels into Ireland and purchasing power of people employed in IT companies. But the inflation will put off developers building more property which will constrain the supply side further.

The Eastern European countries will naturally not want to see inflation as it’s not that long ago that inflation crippled these countries due to loans in foreign currencies. It will be Germany France and Spain that will dictate the ECB response as these are the big economies and not the Eastern European countries.

Wanderer78

The only way out of our current property mess is to keep the bulk of the debts on the public books, this would be fine, as long as the debts are serviced and serviceable. but since we continually keep electing fiscal conservatives, this probably won't happen any time soon, so our housing issues are here to stay, making the next ge a blood bath

Hubertj

mcsean2163 wrote: »

I don't follow what you're saying at all. If government bonds go up the banks could buy those with deposits thus reducing the interest they would have to charge.

Secondly, we have the highest debt per capita in EU

https://www.irishtimes.com/business/economy/ireland-to-have-highest-debt-per-head-in-europe-this-year-1.4503652

In real terms, every other country in the EU is less indebted than us and especially so in Eastern Europe. They may have a different opinion to continually bailing out Ireland considering they are actually poorer than us.

The Devoted Friend, Oscar Wilde

I wrote about how we are spending like no tomorrow here. https://seanmcm.medium.com/how-strict-have-the-covid-19-lockdown-restrictions-been-in-ireland-22c80ea06222

I expect the EU will not consider us very much when raising rates. We're a nuisance both politically and financially. If all of the EU behaved like the PIIGS, the EU would be a basketcase.

Czech and Hungary talking about rate increases.
https://www.bloomberg.com/news/articles/2021-06-14/rate-hawks-urge-start-of-hikes-in-eu-s-east-to-tame-inflation

We have a fiscal timebomb between HAP, PUP and CGT

Rates to go up, funds to divest from low yield property. That's my guess. It's incredible to see the level of fund activity at the top but they have form. I'd love to know the current population of Ireland as the amount of apartments being built around Dublin seems incredible.

Contrary to PropQuery, I think August is early. We may still escape but in order to do so we'd need to be firing on all cylinders....

Some real rabbit hole stuff here. As another poster said the most that will happen is QE will be tapered. I would also expect property prices to level off and possibly fall in some segments as supply increases over the coming 12 months. The way I see it at present is the chain is broken for many. There is not anywhere to trade up or down to so they are staying put.

Bass Reeves

mcsean2163 wrote: »

This is interesting:

https://www.independent.ie/irish-news/house-prices-have-risen-68pc-and-wages-just-9pc-but-worst-is-yet-to-come-40534492.html

The timeframe is very selective but it illustrates our unsustainable trajectory.

A bit of tabloid journalism. They picked when house prices were at an artificial low after the biggest property bust in history world wide.

They did a nine year trajectory just to make it look woeful. If they did a 15 year trajectory wages might have rose 15% and house prices fallen 3% or even 10%

Amadan Dubh

Bass Reeves wrote: »

A bit of tabloid journalism. They picked when house prices were at an artificial low after the biggest property bust in history world wide.

They did a nine year trajectory just to make it look woeful. If they did a 15 year trajectory wages might have rose 15% and house prices fallen 3% or even 10%

On the "artificial low" point; would you say that Celtic Tiger prices were artificial highs? If yes, then what would be a more appropriate level?

Amadan Dubh

A brilliant article in The Currency this morning (obviously it's a subscription so I'll just quote extracts for the purpose of commenting on the Irish property market), from Constantin Gurgdiev. It's not that it is particularly shocking or frightening, it is just an interesting read.

What is happening in the US is mirroring what we are experiencing in Ireland, in terms of the hollowing out of large cities as people head for the hills. Some of the things listed in the article which are happening in the US that are likely also going to happen (if they haven't already happened) in Ireland; people bidding for homes they haven't even seen; most people who buy are upsizing, not downsizing (so are moving out of the cities to the suburbs or further); even accounting for cost of living, taxes etc. disposable income is working out higher after relocating; 90% of those on high salaries expect to have flexibility with their job post-pandemic while 10% of those earning below $40,000 expect to have flexibility (the high earners are the mobile ones meaning they will continue to move out); house prices up 24% year-on-year; shortage of construction workers.

All points to "donut" cities emerging in the US for the likes of NYC and San Fran, which means that the city centres are empty of residents while the suburbs and beyond benefit. He sees this happening in Dublin (but not Cork or Galway as they are seen as more regional than city-like I think).

https://thecurrency.news/articles/50085/the-year-of-the-doughnut-city-how-the-pandemic-is-changing-settlement-patterns/

A trend in the US housing market has been accelerated by the pandemic: the move from city centres to the suburban ring. Now, it's making its way to Ireland.

We need to focus more resources not on increasing density in the core city centre of Dublin, but on:

1. Increasing supply of quality housing in secondary cities,
2. Improving, simultaneously, connectivity between secondary and primary cities,
3. Increasing town densities in Dublin and Cork suburbs,
4. Drastically moving to modernized housing large stocks of abandoned and derelict lower density properties that pepper Dublin, Cork, Galway and Limerick urban cores, and
5. Filling in vacant city lands not with high-rise apartments, but with moderate density family homes.

Demographically, we have a lag to the U.S. of some 10 years – just about enough time to start investing in high-quality public transport connectivity (hint: fewer bus routes, more light rail and local transports systems, such as bike lanes and trails) and quality community services (hint: fewer pubs, more schools and better access to natural amenities). We have an acute housing crisis requiring radically improved use of derelict, abandoned and under-utilized buildings and lands. Economically, we are likely to face the same (if not more acute) changes in the balance between traditional and hybrid office jobs distribution than the U.S. as a whole. None of these factors or trends requires 20-story towers of apartment blocks to be set into Dublin's streets. All suggest taking a more nuanced, more distributed approach to building new homes.

Villa05

Timing belt wrote:

It is a very fine line that central banks will need to walk as if they raise rates to fast they will crash all asset values and at the same time make gov borrowing more expensive.. even if governments didn’t borrow more they would be impacted as the existing debt rolls over. Either way negative rates will be around for a long time yet IMO and at the same time inflation will drive up house prices more because the building cost will rise and developers won’t build because the new properties will be to expensive to sell and we will see a continuation of a shortage in supply.

With wealth concentrated at the upper age groups and the lower age groups trapped renting, how does inflation spread from assets over the last 10 years to general inflation for the next 10

Wage inflation will be kept in check in wealthier nations by competition from Asia, eastern Europe.

Alll we are doing really is handicapping the next generation in providing the revenue to help bring our debt levels to sustainable levels.

Is stagflation far more likely than inflation?

AdamD

Amadan Dubh wrote: »

A brilliant article in The Currency this morning (obviously it's a subscription so I'll just quote extracts for the purpose of commenting on the Irish property market), from Constantin Gurgdiev. It's not that it is particularly shocking or frightening, it is just an interesting read.

What is happening in the US is mirroring what we are experiencing in Ireland, in terms of the hollowing out of large cities as people head for the hills. Some of the things listed in the article which are happening in the US that are likely also going to happen (if they haven't already happened) in Ireland; people bidding for homes they haven't even seen; most people who buy are upsizing, not downsizing (so are moving out of the cities to the suburbs or further); even accounting for cost of living, taxes etc. disposable income is working out higher after relocating; 90% of those on high salaries expect to have flexibility with their job post-pandemic while 10% of those earning below $40,000 expect to have flexibility (the high earners are the mobile ones meaning they will continue to move out); house prices up 24% year-on-year; shortage of construction workers.

All points to "donut" cities emerging in the US for the likes of NYC and San Fran, which means that the city centres are empty of residents while the suburbs and beyond benefit. He sees this happening in Dublin (but not Cork or Galway as they are seen as more regional than city-like I think).

https://thecurrency.news/articles/50085/the-year-of-the-doughnut-city-how-the-pandemic-is-changing-settlement-patterns/

The property market hasn't reflected this whatsoever. Still bidding wars going on in Dublin City Center.

Hubertj

Amadan Dubh wrote: »

A brilliant article in The Currency this morning (obviously it's a subscription so I'll just quote extracts for the purpose of commenting on the Irish property market), from Constantin Gurgdiev. It's not that it is particularly shocking or frightening, it is just an interesting read.

What is happening in the US is mirroring what we are experiencing in Ireland, in terms of the hollowing out of large cities as people head for the hills. Some of the things listed in the article which are happening in the US that are likely also going to happen (if they haven't already happened) in Ireland; people bidding for homes they haven't even seen; most people who buy are upsizing, not downsizing (so are moving out of the cities to the suburbs or further); even accounting for cost of living, taxes etc. disposable income is working out higher after relocating; 90% of those on high salaries expect to have flexibility with their job post-pandemic while 10% of those earning below $40,000 expect to have flexibility (the high earners are the mobile ones meaning they will continue to move out); house prices up 24% year-on-year; shortage of construction workers.

All points to "donut" cities emerging in the US for the likes of NYC and San Fran, which means that the city centres are empty of residents while the suburbs and beyond benefit. He sees this happening in Dublin (but not Cork or Galway as they are seen as more regional than city-like I think).

https://thecurrency.news/articles/50085/the-year-of-the-doughnut-city-how-the-pandemic-is-changing-settlement-patterns/

Why do we need fewer pubs? Is that in the article or is that your opinion?

Amadan Dubh

Hubertj wrote: »

Why do we need fewer pubs? Is that in the article or is that your opinion?

That's in the article. To be fair, we're already losing pubs the last couple of decades anyway and that decline will continue once the fallout from the pandemic happens. I'm not sure what he really means anyway as schools and amenities are supported by the local councils while pubs are clearly just the market doing its thing. Like it's not as if local councils support the developments of pubs at the expense of schools.

Ozark707

Hubertj wrote: »

The way I see it at present is the chain is broken for many. There is not anywhere to trade up or down to so they are staying put.

I would have thought with the amount of new builds (apts) in D2/4 there was a decent amount to trade down to? I agree on the trading up front.

Timing belt

Villa05 wrote: »

With wealth concentrated at the upper age groups and the lower age groups trapped renting, how does inflation spread from assets over the last 10 years to general inflation for the next 10

Wage inflation will be kept in check in wealthier nations by competition from Asia, eastern Europe.

Alll we are doing really is handicapping the next generation in providing the revenue to help bring our debt levels to sustainable levels.

Is stagflation far more likely than inflation?

Stagflation is always a risk if the economy does not grow or shrinks.

The big question is what will be the driver for inflation? If it is because of a shortage of supplies because all economies are chasing the same resources (Lumber, concrete, steal, copper, oil etc.) and because of the cost of transporting goods has gone through the roof (due to ships being scrapped for steal last year as China were paying for steal to use in their stimulus efforts by investing in infrastructure) then it will be imported inflation and not driven by growth in the Irish economy then there is a very high chance of stagflation.. If it is due to a growth in the domestic economy then that should bring with it wage inflation.

Lets not also forget that this will not just impact young people as it will be older people on a fixed income (Pension) that will suffer most.

The biggest risk I see from inflation is that developments will be mothballed due to rising costs and we will see less new property enter the market.

Graham

Timing belt wrote: »

The biggest risk I see from inflation is that developments will be mothballed due to rising costs and we will see less new property enter the market.

I'd expect the opposite as more people pile into property.

MacronvFrugals

Graham wrote: »

I'd expect the opposite as more people pile into property.

Combined with the shared-equity scheme and the worrying murmurs of LTI ratios being adjusted!

Timing belt

Graham wrote: »

I'd expect the opposite as more people pile into property.

There will be no shortage of demand I 100% agree there.... but if building costs increase by say 25% will the developer be able to pass this on to the buyer or be able to increase rents to still make the development profitable. Where they can't they will mothball the development.

Bass Reeves

Timing belt wrote: »

There will be no shortage of demand I 100% agree there.... but if building costs increase by say 25% will the developer be able to pass this on to the buyer or be able to increase rents to still make the development profitable. Where they can't they will mothball the development.

I hear some smaller builders are walking away from project's ( extensions, one off houses, revamps etc) where clients are not willing to allow for extra costs of materials which are gone up by 30%.

Bass Reeves

Amadan Dubh wrote: »

On the "artificial low" point; would you say that Celtic Tiger prices were artificial highs? If yes, then what would be a more appropriate level?

I am just point out that an 8 year timescale is unusual to use as a judging point. Prices peaked in 2007. However generally when you look at timescales of property, shares or an asset you judge it over 1, 5, 10, 15, 20 years etc.

To pick a moment in time which suits a narrative is not balanced journalism. Choosing a low point in a property crash is similar to a pension advisor or stockbroker picking a stock market collapse and say that they make returns if 10%+/ year

Ace2007

Bass Reeves wrote: »

I am just point out that an 8 year timescale is unusual to use as a judging point. Prices peaked in 2007. However generally when you look at timescales of property, shares or an asset you judge it over 1, 5, 10, 15, 20 years etc.

To pick a moment in time which suits a narrative is not balanced journalism. Choosing a low point in a property crash is similar to a pension advisor or stockbroker picking a stock market collapse and say that they make returns if 10%+/ year

For example the year 1 year from 31 March 2020 to 31 March 2021 showed equities funds up 40/50%. It's easy to spin anything, and as you say it's while multiple time frames are given in investments so you can understand and have the full story.

Journalism however aren't going to do that as will void their story really.

DataDude

Bass Reeves wrote: »

I hear some smaller builders are walking away from project's ( extensions, one off houses, revamps etc) where clients are not willing to allow for extra costs of materials which are gone up by 30%.

Had heard a while back from one person (i.e. not reliable) that said they heard from a builder that the current material price inflation was largely transitory and should return closer to normalcy once supply chains get moving again. Any idea if this is true?

I know it's only one material, but Lumber for example is starting to tumble back from the heady heights set a couple weeks back.

https://www.wsj.com/articles/lumber-prices-are-falling-fast-turning-hoarders-into-sellers-11623749401

Graham

DataDude wrote: »

Had heard a while back from one person (i.e. not reliable) that said they heard from a builder that the current material price inflation was largely transitory and should return closer to normalcy once supply chains get moving again. Any idea if this is true?

I'd wonder how the builder knows what his builders merchants costs are. I'd wonder how the builder knows how what his builders merchants suppliers costs are. Then I'd wonder how he knows the advance costs of the raw materials suppliers to the suppliers of his builders merchants.

I doubt your friends builder knows much more than any of us. There's a global backlog due to covid (and brexit to some extent) and it's not unreasonable to guess that things will settle as supply/demand return to normal levels.

DataDude

Graham wrote: »

I'd wonder how the builder knows what his builders merchants costs are. I'd wonder how the builder knows how what his builders merchants suppliers costs are. Then I'd wonder how he knows the advance costs of the raw materials suppliers to the suppliers of his builders merchants.

I doubt your friends builder knows much more than any of us. There's a global backlog due to covid (and brexit to some extent) and it's not unreasonable to guess that things will settle as supply/demand return to normal levels.

Well I guess that, given futures prices are trading at over a 30% discount on cash prices then it's pretty much certain that Lumber prices are going to fall in the coming months. So I guess in some ways he is right - but it's a known thing if you are in the business (but I'd guess most people not in the business aren't checking the price of lumber futures daily).

Just wondering if the same holds true for other materials in house building. Not sure what the key raw material costs are and whether cash vs futures markets are likely to exist.

Mad_maxx

Timmyr wrote: »

Live in it for 3-5 years then rent it out and buy another, at least thats the plan

seems to be a rite of passage in NZ ?

cnocbui

Mad_maxx wrote: »

seems to be a rite of passage in NZ ?

The government recently made it less attractive to those borrowing funds to do this as the interest on the mortgage on a rental property is no longer allowable as a deduction to offset against the rental income.

fergus1001

DataDude wrote:

Well I guess that, given futures prices are trading at over a 30% discount on cash prices then it's pretty much certain that Lumber prices are going to fall in the coming months. So I guess in some ways he is right - but it's a known thing if you are in the business (but I'd guess most people not in the business aren't checking the price of lumber futures daily).

timber prices have collapsed in the USA so it will affect prices here too

fergus1001

DataDude wrote:

Well I guess that, given futures prices are trading at over a 30% discount on cash prices then it's pretty much certain that Lumber prices are going to fall in the coming months. So I guess in some ways he is right - but it's a known thing if you are in the business (but I'd guess most people not in the business aren't checking the price of lumber futures daily).

timber prices have collapsed in the USA so it will affect prices here too

Timing belt

DataDude wrote: »

Well I guess that, given futures prices are trading at over a 30% discount on cash prices then it's pretty much certain that Lumber prices are going to fall in the coming months. So I guess in some ways he is right - but it's a known thing if you are in the business (but I'd guess most people not in the business aren't checking the price of lumber futures daily).

Just wondering if the same holds true for other materials in house building. Not sure what the key raw material costs are and whether cash vs futures markets are likely to exist.

It’s a good question however I think lumber has tarrifs for importing into USA which are due to expire soon so that may be the reason for lower futures. What is concerning is the transport costs to move a container has increased by a multiple of 10 since the start of Covid. So if you need to import goods to build then there will be a price increase. I have read in a few places that the reason for the increase is because a lot of container ships were scrapped for metal because the price of metal went through the roof with China’s stimulus focusing on infrastructure development. I suppose the same will apply for building supplies if countries are building in an effort to stimulate their economies then we heave a significant demand increase which will push up prices.

Ace2007

fergus1001 wrote: »

timber prices have collapsed in the USA so it will affect prices here too

You can say that again

theboringfox

Timber prices falling from massive high but still really high versus historic norms. Still really expensive.

fergus1001

theboringfox wrote:

Timber prices falling from massive high but still really high versus historic norms. Still really expensive.

trust me I'm a forester I know how it works

the large demand for everyone getting back going has passed so it's back to normal now

wassie

Rising steel costs and shortages on the other hand are causing a lot of headaches for new commercial projects, particularly larger developments.

Estimators are struggling to firm tender prices, whilst new starts are being impacted on where orders for steel haven't yet been placed. Significant issue given a large portion of all commercial developments in Ireland these days are steel frame structures.

Timmyr

Mad_maxx wrote: »

seems to be a rite of passage in NZ ?

Yea its quite different than Ireland, I'm from Mayo where you generally live in one house for your entire life.
Here houses are just treated as commodities, "getting on the ladder" is really the aim.

Since I've been here (5ish years), my girlfriends parents have lived in 3 separate "homes"

JDD

There has to be some kind of algorithm that can calculate average/median salary for a particular area, and then calculates the average size family home, and then works out how much the market value is above or below that affordability point? That way were not constantly using 2007 or 2012 as marker points.

Like, if the average family is two adults, two kids, you might say that a terraced house with two and a half beds and a modest back garden should reasonably accommodate that family.

Then we work out the average price of that modest house within the major areas of Dublin (West/East/Commuter towns etc) and we can then say how much over or under the average wage for that area a family must earn in order to afford a house in that area.

Doing this thing where we say the average three bed across Dublin costs €370k is useless because it's vastly different buying a three bed in Darndale than it is in Blackrock. And saying the average salary is €47k and therefore a couple earning the average is able to afford the average priced house under the 3.5 times mortgage rules is also next to useless as a statistic.

If we took the suburbs along the Dart Line, and worked out the average salary of those both living and renting there, I'm sure it would be higher than €47k. But would it be high enough to actually buy a modestly sized house? Of course just because you rent an apartment in Blackrock shouldn't mean that you should be able to afford to buy a three bed house there, but it should give a good indicator of affordability and whether cash buyers/REITs are artificially pushing prices high in that area.

Marius34

JDD wrote: »

There has to be some kind of algorithm that can calculate average/median salary for a particular area, and then calculates the average size family home, and then works out how much the market value is above or below that affordability point? That way were not constantly using 2007 or 2012 as marker points.

Like, if the average family is two adults, two kids, you might say that a terraced house with two and a half beds and a modest back garden should reasonably accommodate that family.

Then we work out the average price of that modest house within the major areas of Dublin (West/East/Commuter towns etc) and we can then say how much over or under the average wage for that area a family must earn in order to afford a house in that area.

Doing this thing where we say the average three bed across Dublin costs €370k is useless because it's vastly different buying a three bed in Darndale than it is in Blackrock. And saying the average salary is €47k and therefore a couple earning the average is able to afford the average priced house under the 3.5 times mortgage rules is also next to useless as a statistic.

If we took the suburbs along the Dart Line, and worked out the average salary of those both living and renting there, I'm sure it would be higher than €47k. But would it be high enough to actually buy a modestly sized house? Of course just because you rent an apartment in Blackrock shouldn't mean that you should be able to afford to buy a three bed house there, but it should give a good indicator of affordability and whether cash buyers/REITs are artificially pushing prices high in that area.

What is "affordability point"? If its 3.5 income, I guess all areas in Dublin would be above affordability point. So not sure what you would achieve with it.

Villa05

The Late Debate from 10 June 2021


Orla Hegarty, Killian Woods, Eoin O Brion and a FF Councillor Fitzpatrick


Alot of political spoofing but interesting points by Killian and Orla. aprtment developments in DCC have little private demand and are effectively being built for people who cant afford them - Risk of being the ghost estates of the future. IMO these will increase the poverty trap as the recipients would need an extraordinary income to match what is being received by the state, so the incentive to work is completely removed



alot of spoofing on shared ownership FF claim all the criticism was prior to measures being put in to alleviate concerns, yet the plan is to have it up and running later this year while supply is hovering around record lows. FF are surely aware of this and as result the scheme will be extremely inflationary.


There does not appear to be discounted state land for building housing, as this land sits as an asset on state entities and it would appear that compensation linked to market value will be forthcoming.


FF when asked why not buy rather than lease in relation to an apartment development in Stoneybatter. FF claimed they were not for sale. A prime time program on investment funds stated the opposite and specifically referenced the Stoneybatter development



Social housing provided by the private sector appears to be dependent on their being demand for the private houses in the development (in relation to Poolbeg and O Devany gardens development). This would be questionable at the prices



Killian Woods on a number of occasions had to call out FF on Factually incorrect statements

Amadan Dubh

Not unexpected to anyone that prices have risen YoY, this Celtic Phoenix just continues to soar! "House price growth accelerates" has such Celtic Tiger, euphoric connotations, I hate the way they describe house prices rising.

It will be interesting to see if there ends up being any economic fallout from covid and if that affects the property market. But we won't know this until supports and restrictions are eased, which looks like end of 2021, meaning we probably won't see any sort of economic fallout until next year. Property market usually lags the economy.

https://www.irishtimes.com/business/economy/house-price-growth-accelerates-to-4-5-as-covid-boom-continues-1.4594912?mode=amp

House price growth accelerates to 4.5% as Covid boom continues

Prices in Dublin rose by 3.5 per cent over the 12-month period to the end of April while prices outside Dublin rose by 5.4 per cent.

Existing dwellings accounted for 85 per cent of the homes purchased, while the balance of 14.7 per cent were new dwellings.

The figures show households paid a median or middle-range price of €265,000 for a home in the Republic over the past year. The Dublin region had the highest median price at €390,000.

A separate CSO report showed the median age of home buyers here has risen from 35 in 2010 to 38 in 2019. The report also found the proportion of properties purchased jointly increased from 47 per cent in 2010 to just over 62 per cent in 2019.

JDD

Marius34 wrote: »

What is "affordability point"? If its 3.5 income, I guess all areas in Dublin would be above affordability point. So not sure what you would achieve with it.

Well, it would be an objective measure. Rather than saying "oh but prices in this area are still under what houses were being sold for in 2007, so we can't say that this area is overheating", or "prices in this area have increased 60% since 2012, so this area is definitely overheating".

Price means nothing unless it is tied into what average people can afford to spend.

If prices are increasing much faster than wages, and banks have not loosened their lending rules, then something else is skewing the market price. If cash buyers and REITs are severely skewing market price, or if cost to build is doing it, then this objective measure of affordability should show that.

It also might be a reality check for some first time buyer savers, who think that they can buy a semi-d in Dundrum or Stillorgan when in fact the affordability index shows them - pretty early on - that certain areas are going to be out of their price bracket. It might stop the "wait/hope/bid/fail" circle that so many of those in their 30's are in.

Marius34

JDD wrote: »

Well, it would be an objective measure. Rather than saying "oh but prices in this area are still under what houses were being sold for in 2007, so we can't say that this area is overheating", or "prices in this area have increased 60% since 2012, so this area is definitely overheating".

Price means nothing unless it is tied into what average people can afford to spend.

If prices are increasing much faster than wages, and banks have not loosened their lending rules, then something else is skewing the market price. If cash buyers and REITs are severely skewing market price, or if cost to build is doing it, then this objective measure of affordability should show that.

It also might be a reality check for some first time buyer savers, who think that they can buy a semi-d in Dundrum or Stillorgan when in fact the affordability index shows them - pretty early on - that certain areas are going to be out of their price bracket. It might stop the "wait/hope/bid/fail" circle that so many of those in their 30's are in.

But if its 3.5, all areas will show above affordability level, not just Dublin, but any capitals around the world. So we know it already, whats the difference will it make. Regarding if prices go faster than income, you still will need to go back to choose historical point of time.

Hubertj

Villa05 wrote: »

The Late Debate from 10 June 2021


Orla Hegarty, Killian Woods, Eoin O Brion and a FF Councillor Fitzpatrick


Alot of political spoofing but interesting points by Killian and Orla. aprtment developments in DCC have little private demand and are effectively being built for people who cant afford them - Risk of being the ghost estates of the future. IMO these will increase the poverty trap as the recipients would need an extraordinary income to match what is being received by the state, so the incentive to work is completely removed



alot of spoofing on shared ownership FF claim all the criticism was prior to measures being put in to alleviate concerns, yet the plan is to have it up and running later this year while supply is hovering around record lows. FF are surely aware of this and as result the scheme will be extremely inflationary.


There does not appear to be discounted state land for building housing, as this land sits as an asset on state entities and it would appear that compensation linked to market value will be forthcoming.


FF when asked why not buy rather than lease in relation to an apartment development in Stoneybatter. FF claimed they were not for sale. A prime time program on investment funds stated the opposite and specifically referenced the Stoneybatter development



Social housing provided by the private sector appears to be dependent on their being demand for the private houses in the development (in relation to Poolbeg and O Devany gardens development). This would be questionable at the prices



Killian Woods on a number of occasions had to call out FF on Factually incorrect statements

Any commentary on the OBrion’s spoofing or was it solely a red tinted discussion on current/existing policy?

jill_valentine

"Average age of a solo first-time buyer rises to 43"

https://www.irishexaminer.com/news/arid-40315109.html

"The median age for a sole purchaser increased from 34 years in 2010 to 43 in 2019, the CSO found."

This is just such an obvious disaster on the way. A very sizeable number of these people are going to wind up trying to pay off their mortgage with a state pension.

I suppose on the flipside, for many others, once they've actually been able to get a mortgage, they may well be able to pay off quicker than agreed because Imho on an individual basis actually getting the mortgage sum for a property is the barrier, rather than repayment capacity.

Sheeps

Villa05 wrote: »

The Late Debate from 10 June 2021


Orla Hegarty, Killian Woods, Eoin O Brion and a FF Councillor Fitzpatrick


Alot of political spoofing but interesting points by Killian and Orla. aprtment developments in DCC have little private demand and are effectively being built for people who cant afford them - Risk of being the ghost estates of the future. IMO these will increase the poverty trap as the recipients would need an extraordinary income to match what is being received by the state, so the incentive to work is completely removed



alot of spoofing on shared ownership FF claim all the criticism was prior to measures being put in to alleviate concerns, yet the plan is to have it up and running later this year while supply is hovering around record lows. FF are surely aware of this and as result the scheme will be extremely inflationary.


There does not appear to be discounted state land for building housing, as this land sits as an asset on state entities and it would appear that compensation linked to market value will be forthcoming.


FF when asked why not buy rather than lease in relation to an apartment development in Stoneybatter. FF claimed they were not for sale. A prime time program on investment funds stated the opposite and specifically referenced the Stoneybatter development



Social housing provided by the private sector appears to be dependent on their being demand for the private houses in the development (in relation to Poolbeg and O Devany gardens development). This would be questionable at the prices



Killian Woods on a number of occasions had to call out FF on Factually incorrect statements

Orla Hegarty is an urban sprawl activist masquerading as an expert. She routinely defeats her own arguments about how supply isn't a solution to the housing crisis when she responds to people who point out obvious holes in her reasoning and logic. I'd discard anything that comes out of her mouth as complete and utter gibberish. I genuinely don't understand why she continuously gets airtime regarding housing.


https://twitter.com/ronanlyons/status/1403679096031387648

Villa05

Hubertj wrote:

Any commentary on the OBrion’s spoofing or was it solely a red tinted discussion on current/existing policy?

What I found interesting is that FF were talking SF policy. I know she is not senior FF but she seemed under severe pressure which may have impacted her many slips.
Eoin is a highly skilled communicator and you could see how he was complimenting the crazy house prices creator that there was very smart politicking going on

I have little thrust in Irish politics, were they in power and making things worse I won't be shy in calling them out

Cyrus

Villa05 wrote: »

Eoin is a highly skilled communicator and you could see how he was complimenting the crazy house prices creator that there was very smart politicking going on

crazy house prices FFS :rolleyes: a school teacher trying to make a few quid out of the property 'crisis' with special content for his patreon subscribers,

any politician referencing him tells you all you need to know.

genericgoon

JDD wrote: »

There has to be some kind of algorithm that can calculate average/median salary for a particular area, and then calculates the average size family home, and then works out how much the market value is above or below that affordability point? That way were not constantly using 2007 or 2012 as marker points.

Like, if the average family is two adults, two kids, you might say that a terraced house with two and a half beds and a modest back garden should reasonably accommodate that family.

Then we work out the average price of that modest house within the major areas of Dublin (West/East/Commuter towns etc) and we can then say how much over or under the average wage for that area a family must earn in order to afford a house in that area.

Doing this thing where we say the average three bed across Dublin costs €370k is useless because it's vastly different buying a three bed in Darndale than it is in Blackrock. And saying the average salary is €47k and therefore a couple earning the average is able to afford the average priced house under the 3.5 times mortgage rules is also next to useless as a statistic.

If we took the suburbs along the Dart Line, and worked out the average salary of those both living and renting there, I'm sure it would be higher than €47k. But would it be high enough to actually buy a modestly sized house? Of course just because you rent an apartment in Blackrock shouldn't mean that you should be able to afford to buy a three bed house there, but it should give a good indicator of affordability and whether cash buyers/REITs are artificially pushing prices high in that area.

While it would be difficult to do this at granularity suggested, it is possible to compare median house prices (Residential Property Price Index) versus median household gross income (Census + income inflation estimate from SILC) for each local authority area. If the idea is that the average household should be able to buy the average house, this broadly makes sense.

Using Central Bank rules (3.5 times income, deposit of 15% (splitting difference between FTB and other buyers)) as a "target" price for the median household, a basic analysis suggests that house prices would need to fall ~45% in Dún Laoghaire-Rathdown LEA (target: 305k, actual: 540k) and by at least 15% in all the Dublin LEA, Dublin commuter belt (Wicklow, Meath, Kildare) and cites with a distinct LEA (Cork, Galway). Note that housing inflation is quite aggressive so this is likely getting worse rather than better. Table here: https://ibb.co/X5RTVbM

Though house prices could increase by 100% in Roscommon and Longford and only be slightly above the "target".