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

DataDude

https://www.boards.ie/discussion/comment/120545495#Comment_120545495

Yes I think you might be right. Irish mortgages are still ‘too cheap’ and will rise at least another 1%.

So if you can lock in a 5 year fixed now at 1% below what they’ll be next year - even a 5% drop in prices would leave you in the same place. Only thing is general economic literacy in Ireland is quite low so not sure people think too deeply about things like that?

Bakharwaldog

https://www.boards.ie/discussion/comment/120545149#Comment_120545149

Price declines in Dublin for the last 5 months. Highest home completions since before the crash.

timmyntc

https://www.boards.ie/discussion/comment/120545512#Comment_120545512

Yes, I think people just hear the chatter of "rates are going to keep rising, fix your mortgage now ASAP" and then the panic sets in. Buy now or risk being frozen out in a high rates environment for years*

*Anyone familiar with the Euro markets will be confident that current high rates will not last very long, but these arent the kind of people to panic buy an expensive house

DownByTheGarden

https://www.boards.ie/discussion/comment/120545433#Comment_120545433

When we moved the house was going up in increments of 5k for about 3 rounds. In the end there were 2 other bidders besides ourselves.

We took a time out for about 2 weeks to think about a new strategy. And we decided we could be messing around for weeks driving the price up. The other bidders are probably like us. Why dont we just take the view that if we dont get this house it will probably cost us 50k more next year the way prices are increasing. Sure if we had bought it the year before we would feel good now having got it for 50k less and here we are bidding at 50k more than it would have been last year and thinking we are spending more than its worth.

So we pretended it was next year and house price had increased by 50K. We called the EA. The other couples were still going and it was 10k more than we last heard.Said to the estate agent - last go, Current bid plus 50k and you get back to us in an hour wil a yes or no. They phoned back half an hour later and said yes.

One of those other bidders was a cousin of our new neighbors. They told us one day that their cousin was bidding on it and thought the EA was messing when a bid of 50k over came in so they dropped out. Im sure the other bidder thought the same.

Similar house around the corner went on the PPR for 100k more than we paid not too long ago. Even if the price had gone down, we still locked the mortgage in at 2.2%.

So even though everyone, including us, thought we were mad paying way over the current bids, we are happy we did the right thing now. Wouldnt like to be trying to buy the same house today, about 2 years down the road.

50k seems a cheap price to pay for the peace of mind and security it brought us.

DataDude

https://www.boards.ie/discussion/comment/120545552#Comment_120545552

Glad it worked out for you.

I guess it’s hindsight bias but given there was a time not too long ago that you could lock in a 30 year fixed rate with Avant at 2.5% that could move properties with you when you sold…we all should have been willing to pay any price to get a house.

Even if prices fell 25%+, you would still be laughing with that mortgage. Didn’t resonate with people (me included) just how valuable those super low, super long fixed rate mortgages truly were.

DownByTheGarden

https://www.boards.ie/discussion/comment/120545584#Comment_120545584

Its not even the rate. That was just a fluke tbh. The main thing that helped us was realizing that prices go up more for longer than they go down and that next year we would probably be delighted to bid on a property at a higher point than we were this year.

Guildenstern

https://www.boards.ie/discussion/comment/120536790#Comment_120536790

Beginning to see the start of that, the only query is if it's 20%. Could be 10, might be 30. Hard to guage where it will settle. I've noticed something close to 5% over the last 6 months and would confidently now see last summer/autumn as the high point. It won't stop some agents trying to do everything possible to keep bidding wars going, particularly in south after areas, south county Dublin being the obvious one.

A recognition also out there that the market has topped out, another reason landlords are selling?

pinksoir

The problem with trying to squeeze in before the interest rates go up is the amount of time it takes to close a sale on a property. 12 weeks is average so the coming triple whammy hike in May, June, July won't be avoided even if you go sale agreed in the next week.

So overbidding can result in major affordability issues if you're banking on the interest rates being what they currently are.

The other thing is, rates go up and down. They won't always be high, they won't always be low. With higher rates comes a potential reduction in house price as affordability hits.

Villa05

https://www.boards.ie/discussion/comment/120545360#Comment_120545360

I think this is BS

It goes like this

Cant afford, here is a ftb grant, prices go up.

More people fall into social housing need, state buys and leases existing stock. Rent and prices go up

Invite investment funds in with tax free status. Prices and rents balloon as investors chase yield in a 0 rate environment. Market is adjusted to suit investment fund and large developers resulting in exit of small developers and landlords.

Prices continue to rise, here's shared ownership, ftb grant, relaxed lending rules, go out and buy. Prices rise

Inflation and interest rates rise. Investment funds and developers pull the plug on new developments and purchase existing stock instead. Prices rise.

Suddenly there is little room left in the balloon..........

Its naive to think people refused to buy in a low interest rate environment, while paying double the mortgage repayments in rent. Most were priced out by measures sold as affordability measures

DownByTheGarden

https://www.boards.ie/discussion/comment/120545879#Comment_120545879

You are totally wrong though.

Boards, as a small example, is full of real people ovet the years, even in this thread, who are waiting for prices to come down or waiting for the big recession before they buy. We all think our own opinions are right right ones.

Nearly everyone buying this year could have bought last year or the year before, except that they thought they werent getting value for money. Anyone looking back a few years from any point (most of the time) would think they got a total bargain if they could buy a house for that price now. Yet a few years ago it was a ripoff. Humans are like that.

SwimClub

https://www.boards.ie/discussion/comment/120545959#Comment_120545959

That hasn't always been the case but what is driving it here is demographics, population growth. It's huge.

Ireland has a population much lower than greater London.

Beigepaint

https://www.boards.ie/discussion/comment/120545959#Comment_120545959

I wouldn't agree with your assessment that most people could have bought earlier but chose not to.

Obviously we run in different circles but anyone I know is buying as soon as they can - and thats people in a decent state job - early thirties.

We're not timing the market and we don't have access to another 50k.

combat14

https://www.boards.ie/discussion/comment/120546088#Comment_120546088

most people don't have an extra 50k just lying about

banks are sure to up their stress testing of would be borrowers with another 3 rate rises on the way

affordability is dropping all the time in this current environment

Villa05

https://www.boards.ie/discussion/comment/120545959#Comment_120545959

So the queues at viewings and bidding wars for the last 6 to 7 years were imaginary and people were comfortable paying double in rent than they would be paying a mortgage.

There may be some element of truth during the early stages of Covid, but that quickly evaporated as it was quickly realised that the money printing done over covid was a potential disaster that had to be averted by raising rates and reversing QE

Guildenstern

It's also spring into summer, the normal time of the year for good solid activity in the sale market. It is no surprise that things have picked up in recent weeks, on top of other issues such as landlords selling up, the market having reached its peak a few months back. It's a good thing and a sign, however small, of a more functional sale market.

DownByTheGarden

https://www.boards.ie/discussion/comment/120546137#Comment_120546137

Ther were always queues. Even when people werent buying houses. But I dont belive at all that you can say that many people didnt hold off buying the last few years bcause they thought the property wasnt worth the price it was bid up to. Read the currently buying thread. Full of examples. So is this thread. There have been many tangents in this thread of people who are buying but poisted proerty details and said "Its not worth that, i am going to wait til things calm down."

Villa05

https://www.boards.ie/discussion/comment/120546699#Comment_120546699

The people you describe were the people blamed by enda kenny at Davos for the 08 crash. "we all went mad" if they followed your advise

Its not a crime to choose to live within your means. Bank of Mum & Dad has never been more active and many can't keep up with that. House buyers can't compete against entities that pay no tax, while extracting potential homebuyers taxes though long term leases, hap and other such schemes.

Homebuyers cant compete against the state with unlimited funds pursuing the most expensive social housing provision in the world

Your claims are way off the mark

theboringfox

Irish people love seeing their home values rise. They wont say that in public but they do. As such government does very little that might impact that. They left housing crisis get worse than needed to because they were too concerned too much supply would affect prices. Interest rate rises have cooled things in Cork in my limited experience this year. More houses also being relisted. But not seeing any big correction down either.

PommieBast

https://www.boards.ie/discussion/comment/120547652#Comment_120547652

Pretty much. Down to earth the priority was to reobtain the bubble prices people paid in the 2000s, and doing that required supply to be squished to virtually zero. Housing policy has amounted to a half-arsed attempt at alleviating the side-effeccts.

DataDude

https://www.boards.ie/discussion/comment/120547265#Comment_120547265

Some of this is definitely true and we will always look back at people who bought at ‘the peak’ and call them fools (but we should all admit the peak is very hard to call).

But there is a fundamental difference to people buying now and those in 2007.

Nobody buying a house today is buying a house they can’t afford because of lending rules. A lot of people buying in celtic tiger thought it was the negative equity that got them, but in reality many had loans they could never ever have serviced even if prices had kept going up. So in that sense people buying now are not ‘going mad’ in the same way as those described by Kenny.

Beigepaint

"We all went mad" is a bullshit post hoc over simplified narrative.

There's still empty brownfield sites in every city and town centre in the country - where there should be six story blocks of apartments.

There's still people commuting two hours every day - when sprawly ribbon developments don't benefit anyone - and cost everyone in air pollution, carbon taxes, car culture, obesity, time wastage, stress, road rage, isolation and loneliness in rural dwellers, destruction of public transport viability, increased water costs, increased electricity costs, increased fibre optic costs...

Irish culture and planning incompetence caused the 08 crash and the current perma-crisis.

Find the lie in this statement from german planning expert.

https://www.irishtimes.com/ireland/2023/05/02/galway-looks-like-a-mouth-full-of-broken-teeth-says-one-of-worlds-leading-planners/

Bakharwaldog

100%

OEP

https://www.boards.ie/discussion/comment/120547761#Comment_120547761

As someone who is buying a house now, I am definitely not going mad. What are else are we to do, there's literally nothing to rent in the town I'm buying. I can't start a family with my wife in the 1 bed flat I'm currently renting in Dublin for 1800 a month. And I'm not going to move in with my parents and start a family. I know I'm buying at what is probably, or very close to, the top of the market. As long as I stay employed, I'll be fine - I can't control anything else.

combat14

Mortgage holders could be hit with a bumper rate rise – the seventh increase since last summer

The European Central Bank (ECB) is expected to push up its lending rates by at least 0.25 percentage points tomorrow, with some economists now warning of a 0.5 percentage point rate hike.

https://m.independent.ie/business/personal-finance/mortgage-holders-could-be-hit-with-a-bumper-rate-rise-the-seventh-increase-since-last-summer/a1050118898.html

Villa05

https://www.boards.ie/discussion/comment/120547761#Comment_120547761

I don't think fools is appropriate, most people that purchased in noughties purchased for their families accomodation needs. They were victims not fools.

When we turn housing (a basic need) into a highly speculative market on speed, your playing russian roulette, it's only natural that there will be blood on the streets.

We are seeing the same behaviour now. New builds used to be the ftb market, now less than a third make it to ftb's. We then create a shared ownership where up to 30% + 10% ftb grant is covered by the state. What happens when all ftb are soaked up at these terms. Does the state go to 60% ownership with the occupant @40suppleat 40%.

Who does the buyer sell to, should the need arise, when the next buyer has to come up with 90% of the value?

The balloon is being stretched, it may not pop tomorrow, but, it will. That's guaranteed on current policies

hometruths

https://www.boards.ie/discussion/comment/120549479#Comment_120549479

No matter, the government has their back.

This year’s budget could include measures to help people who have had increased mortgage costs due to interest rate rises, Minister for Housing Darragh O’Brien has said.

His remarks come ahead of an expected further increase in interest rates after a meeting of the European Central Bank (ECB) on Thursday.

In recent weeks Sinn Féin has been putting pressure on the Government to bring back mortgage interest relief to aid households with the increased costs.

Mr O’Brien did not say what measures the Government is looking at introducing, but he signalled that help for mortgage holders could be forthcoming in October’s budget. He said the Minister for Finance Michael McGrath set out the Government’s view on the ECB last week suggesting it would “have to take into account the effect that the interest rate increases are having on normal people out there.

Presumably any support to cushion the impact of rate rises will also be offered to people who do not already have mortgages.

So anybody who wondered how rising mortgage interest rate rises might impact house prices has their answer.

Prices will rise.

Because you know, demand exceeds supply. Economics 101 innit?

https://www.irishtimes.com/politics/2023/05/03/obrien-says-budget-could-include-measures-to-help-mortgage-holders-hit-by-rising-interest-rates/

timmyntc

https://www.boards.ie/discussion/comment/120552354#Comment_120552354

Are all TDs economically illiterate or what?

hometruths

https://www.boards.ie/discussion/comment/120553073#Comment_120553073

Some definitely are! But the idea that consecutive cabinets as well as all entire body policy wonks in the dept of housing/finance are economically illiterate is a stretch I think.

The most likely explanation is they are politically literate, and the logic behind the never ending measures to turbo charge demand is down to votes.

It's a clear strategy that treats the property owning vote preferentially.

The trouble with that is if another party enters government who decides to treat this demographic less preferentially, there is potential for total carnage.

And yet people still wonder why SF are surging in the polls at FF/FG's expense.

Beigepaint

It’s really interesting from a game theory perspective. Currently, the voting majority are FF/FG voters, but our demographics will flip in the next few years as the younger population become adults and a critical mass of under forties see how unachievable it is to buy their own home. So at some point in the next decade or so FF/FG will have to perform a complete 180 on elderly enrichment house value inflation policies. But not yet.

hometruths

https://www.boards.ie/discussion/comment/120553275#Comment_120553275

Totally agree. Inevitably at some stage the voting demographics favours the exact opposite strategy.

But the more that government juice demand in the meantime the more difficult it will be for a future government to turn the ship.