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

L1011

https://www.boards.ie/discussion/comment/120768996#Comment_120768996

Realistically there shouldnt be any further houses built within Dublin City limits. Dublin needs to densify. So it's a given that any houses within city limits will be dearer and any new ones will be premium.

newmember2

Where are daft getting their report numbers from? PPR numbers for June would be for what went sale agreed possibly months earlier, and they're hardly going on asking prices??

Personally, I have seen a huge increase in both buyers at viewings and subsequent bidders in bidding wars that are going to anything up to 25% over the asking price since the beginning of this month. So far it appears there's a Summer madness in effect and prices are reflected in this. I'm also seeing asking prices for various properties having risen in the last month or so compared to similar houses in the months previous where prices were dropping.

DataDude

https://www.boards.ie/discussion/comment/120769072#Comment_120769072

Daft published that prices are down yoy but up quite significantly (over 2%) in the last 3 months. It’s based on live asking prices.

Seems to be following this site.

https://blocks.roadtolarissa.com/pinsterdev/raw/b52f2a466477d05576bc/?s=commuter

Prices down steadily from half way through last year to Q1 this year but now moving up quite sharply again. Seasonality is definitely a factor in this

PommieBast

https://www.boards.ie/discussion/comment/120767964#Comment_120767964

Not much that can really be added to that. Unaffordable accomodation is a problem all over the world but there is something uniquely dysfunctional in the way the Irish market operates.

Blut2

https://www.boards.ie/discussion/comment/120768948#Comment_120768948

You're very wrong.

The median household income in Ireland in 2022 was 47k per year. [1]

A household earning 90k per year, across all age ranges, is in the top 10% of households in Ireland[2]. I don't have the figure for households aged under 40 (ie most FTBs) but you can bet its even rarer given their early career point - more like top 5%.

And a household earning 130k is obviously even more rare again.

If 95%+ of potential households can't afford something its very much beyond the reach of "the vast majority". Very few households are earning almost 300% of the median income.

[1]https://www.cso.ie/en/releasesandpublications/ep/p-silc/surveyonincomeandlivingconditionssilc2022/householdincome/

[2]https://www.irishtimes.com/opinion/2023/05/31/kathy-sheridan-fine-gaels-squeezed-middle-are-actually-the-countrys-top-one-third/

awec

https://www.boards.ie/discussion/comment/120769965#Comment_120769965

That is Ireland, not Dublin. Rural areas will always drag the national average down significantly.

Think about it for a second. Who do you think is buying all the 3 bed semi D's if it's not FTBs?

Blut2

https://www.boards.ie/discussion/comment/120769969#Comment_120769969

And how much higher exactly do you think household income is in Dublin vs Ireland as a whole? Please do share some statistics.

Do you think the median household income is 300% higher in Dublin than the rest of the country? Because thats what would literally be required to make 500k affordable for the majority of households.

awec

https://www.boards.ie/discussion/comment/120769987#Comment_120769987

Think about it for a second. Who do you think is buying all the 3 bed semi Ds in Dublin, if they are too expensive for the majority of FTBs as you claim?

If the FTBs in Dublin can't afford the 3 bed semi Ds, what are they buying?

Median household income includes all workers. Minimum wage workers, people on zero hours contracts, household with only 1 earner, households with no earners, etc etc etc. It is not the statistic you are looking for.

Blut2

https://www.boards.ie/discussion/comment/120769991#Comment_120769991

I asked you for some statistics to back up your statement, not an attempt to move the goal posts. Do you have any statistics to do so? Or will you just reply with another vague, completely unsubstantiated theory?

awec

https://www.irishtimes.com/business/2023/05/24/typical-income-of-first-time-buyers-of-new-homes-in-state-above-90000/

The median income of first-time buyers of new homes in Dublin was €103,000.

The median household (i.e. people bang smack in the middle of the affordability range) can buy a house worth 450k (103 x 4 + 10% deposit).

The suggestion that a 500k house, which would require earnings only 9k a year above the average is beyond the affordability of the vast majority does not stand up to scrutiny.

There are plenty of FTBs buying these houses in Dublin. In fact, I would imagine that the overwhelming majority of 3 bed, semi Ds sold in the city are bought by FTBs. They are literally the target market.

FernandoTorres

I think the bank of Mum and Dad is a huge factor that's hard to assess. There's a lot of FTBs getting very large gifts to buy houses. There's over €159bn household deposits in Irish banks earning no interest so people are happy to give to their kids to have them live nearby.

Sierra Oscar

https://www.boards.ie/discussion/comment/120770234#Comment_120770234

This is a fair point that many people don't take into account - and the trend towards smaller family sizes compounds its impact when it comes to the sharing of inheritance and whatnot.

hometruths

It's not often you see an opinion piece in the Irish Times (or anywhere else tbh) that questions the sacred narrative, so this is a welcome contribution from Dr. John McCartney, director of research at BNP Paribas Real Estate Ireland - "Ireland has many housing problems. But lack of supply isn’t one of them"

Unfortunately it is paywalled as it deserves as wide an audience as possible but here are a few highlights:

Ireland’s housing problem is wrongly characterised as one of undersupply. There will be no solution until this misdiagnosis is corrected.

In economic terms, two features define an undersupplied property market: vacancy rates will be low and real prices and rents will be rising. Neither condition appears to pertain in Ireland.

Real house price inflation in Dublin has averaged just 1 per cent a year since March 2019, and negative inflation has been recorded 23 times in the last 50 months, including in each of the last seven. Real property prices are currently falling by 5.8 per cent a year (3.4 per cent nationally), and a similar pattern is evident in the rental market, where there has been negative real inflation since the second quarter of 2022.

Housing output rose by 45 per cent last year, to a level 6.5 times higher than a decade ago. This continued into 2023 with the strongest ever first-quarter completions. The economic signals are telling us that this has been sufficient to meet demand, despite the inflow of Ukrainian refugees and increased Government spending on subsidies for house buyers and renters.

Confronted by this evidence, why is there such a widely-held conviction that Ireland’s property market is undersupplied?

The reason is that our national housing debate has been dominated by sectional interests which benefit from the chronic undersupply narrative. From a commercial perspective, undersupply makes development funding easier to obtain. It also provides leverage for industry representatives to lobby for occupier subsidies that draw out supply by supporting higher prices and rents. Examples include Help to Buy, the First Home Scheme, the Local Authority Home Loan and the Rent Tax Credit, all of which have been introduced, extended or enhanced in the last six months, while mortgage restrictions have been relaxed.

The case that Ireland’s housing market is undersupplied now rests entirely on claims that measured housing output falls short of long-term housing demand forecasts. This is flimsy evidence because such forecasts are entirely notional, relying as they must on assumptions about things that are inherently hard to predict. 

Therefore, to reconcile its conflicting objectives of increasing supply and preserving property values, the Government will have to channel ever-increasing resources into demand-side supports such as the schemes listed above. In specific terms, this represents an onerous and unnecessary long-term fiscal commitment.

https://www.irishtimes.com/opinion/2023/06/27/ireland-has-many-housing-problems-but-lack-of-supply-isnt-one-of-them/

timmyntc

https://www.boards.ie/discussion/comment/120771347#Comment_120771347

How does that opinion piece reconcile with the chronic rental shortage, or the very low volume of houses for sale?

Author mimust be very out of touch to chalk the whole thing up to vested interests creating a false narrative to increase demand for housing. Almost like a conspiracy theory

AdamD

https://www.boards.ie/discussion/comment/120771382#Comment_120771382

He also is ignoring that last year was skewed for house competitions due to covid delays, they look like they're going to decrease this year.

'The case that Ireland’s housing market is undersupplied now rests entirely on claims that measured housing output falls short of long-term housing demand forecasts. This is flimsy evidence because such forecasts are entirely notional, relying as they must on assumptions about things that are inherently hard to predict. '

This is an absolutely wild claim, ask the author to try buy or rent a home in the next few months and see if that changes their mind on supply

Villa05

https://www.boards.ie/discussion/comment/120771422#Comment_120771422

This is an absolutely wild claim, ask the author to try buy or rent a home in the next few months and see if that changes their mind on supply

Not really, think of the progress that was made during covid when many of the air bnbs were flushed out

Consider what also could be achieved if the state placed a cost on leaving a property empty. The rental rules plus 0 interest rates have encouraged this practice,

RichardAnd

https://www.boards.ie/discussion/comment/120770234#Comment_120770234

Good point. I myself received only a pittance from my parents thanks to my father's litany of terrible decisions in the last decade, but the amount of cash out there is simply gruesome. As a personal anecdote, my grandmother's house was bought in cash for 800k last November. Apparently, a woman in her 80s bought it for her nephew and his family. A decade of rampant money printing is paying dividends, for some at least.

AdamD

https://www.boards.ie/discussion/comment/120771574#Comment_120771574

What progress? The rental market is worse than its ever been

JohnnyChimpo

That article is ludicrous on its face - just lol if you buy into that kind of economist-brained supposition, that reasons backwards to a desired conclusion via flimsy assumptions that don't withstand a moment's scrutiny.

FernandoTorres

Funny that he mentions vested interests. Him working for BNP Paribas Real Estate makes him fully independent of course.

Villa05

Double post..

Villa05

https://www.boards.ie/discussion/comment/120771605#Comment_120771605

Exactly because we reverted to homes being used for hotels, hotels being used for homes.

Homes being used as a deposit account substitute, home left idle for fair deal scheme, cumbersome probate process etc

Homes left idle for 2 years to get around rent controls

RichardAnd

https://www.boards.ie/discussion/comment/120771611#Comment_120771611

It rather reminds me of the wild kind of articles that used to come up back after the crash of '08. One of my favourites was the suggestion that the state could achieve full employment through unpaid internships.

timmyntc

https://www.boards.ie/discussion/comment/120771611#Comment_120771611

Exactly - the author makes a total strawman argument and then proceeds to attempt to dismantle it.

The entire premise of that piece is absurd

The case that Ireland’s housing market is undersupplied now rests entirely on claims that measured housing output falls short of long-term housing demand forecasts. This is flimsy evidence because such forecasts are entirely notional, relying as they must on assumptions about things that are inherently hard to predict. 

Eh? Volume of trading is at record lows (a symptom of low supply) and forget about forward forecasts - past and current demand shows we have a huge pent up demand for housing we arent close to meeting. Population growth and decreasing family sizes mean we need way more houses than we did in 2012, and the rate of building since then has been very low on average.

hometruths

https://www.boards.ie/discussion/comment/120771382#Comment_120771382

How does that opinion piece reconcile with the chronic rental shortage, or the very low volume of houses for sale?

If you're looking to rent or buy today and there is no stock available, that is an indication that there is undersupply of stock currently available.

It does not necessarily mean there is an undersupply of total housing stock relative to the population size, which is what is constantly claimed, hence the calls to build 50/60/70k houses a year.

His argument is the data does not back this narrative up.

https://www.boards.ie/discussion/comment/120771422#Comment_120771422

This is an absolutely wild claim, ask the author to try buy or rent a home in the next few months and see if that changes their mind on supply

See above.

lordleitrim

https://www.boards.ie/discussion/comment/120771648#Comment_120771648

Although interestingly, he goes against and challenges the typical real estate vested interest narrative of not enough supply and that prices will only go upwards. It would be interesting if you had BNP as your real estate agent and then cite this article from their Director of Research stating that prices are actually falling and lack of supply is not an issue so why pay or expect a sale at prices over the odds for any property using that logic.....?

hometruths

https://www.boards.ie/discussion/comment/120771670#Comment_120771670

Volume of trading is at record lows (a symptom of low supply) and forget about forward forecasts - past and current demand shows we have a huge pent up demand for housing we arent close to meeting. Population growth and decreasing family sizes mean we need way more houses than we did in 2012, and the rate of building since then has been very low on average.

There are a number of different future housing demand forecasts knocking around, ranging from something like 20k a year to 70k.

Which of these forecasts do you think is the most accurate?

Villa05

Ominous

A record number of first-time buyers were approved for a mortgage in May despite property prices hitting new highs.

More than 3,000 first-time buyers were approved for a mortgage last month. That represents 64pc of all the home-loan approvals for the month.

This is the highest number of approvals for first-time buyers since the Banking and Payments Federation Ireland (BPFI) started recording data on mortgage approvals 12 years ago.

It comes after the Central Bank eased lending restrictions for first-time buyers at the start of the year, while new buyers are also availing of the State’s Help-To-Buy and First Home schemes in large numbers

https://www.independent.ie/business/personal-finance/mortgage-approval-granted-to-a-record-3100-first-time-buyers-in-may/a1170567758.html

Maybe Makhlouf should heed his own advice

http://www.rte.ie/news/business/2023/0623/1390848-central-bank-governor-warns-govt-not-to-stoke-inflation/

RichardAnd

https://www.boards.ie/discussion/comment/120771761#Comment_120771761

Hmm, where was that inflationary advice at the start of 2020?

DataDude

https://www.boards.ie/discussion/comment/120771761#Comment_120771761

To try to put some positivity to this. Generally I think all would agree we want more people owning their own homes. By necessity this will need more people getting mortgages approved.

The concern of course is that more people getting approved + higher approval values will just equal higher prices? Thus far this doesn’t seem to be the case (although who knows going forward)

Just yesterday we had a report that house prices are down nominally yoy and by 7%+ in real terms year on year

So we have more FTBs getting mortgages for bigger values and yet house prices have fallen very significantly. I think this is a good news story. What are people hoping to see?

‘FTB mortgages crater as banks stop lending to young buyers’??