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

Marius34

https://www.boards.ie/discussion/comment/117779707#Comment_117779707

What does it mean "main player"? if in the sense how much properties it controls, it's always was the case. This is the case for most of the countries.

Bass Reeves

I think the market is stabilizing price wise. Supply is the issue. Because of income multiple limits set by the Central Bank builders have found resistance to price increases. It's the same down the country and is slightly noticeable in one off builds. Builders were pricing with increased labour and material costs and are finding that people planning to build cannot afford it.

In the first half of the year all the exemptions to the income multiples were used up. This I believe was as much of an issue in price increases as savings and extra funds from parents. At the end of the year the reducing of the tax back from 10-5% will prevent any increases prices. If the market stabilises the panic to buy should slow down and stabilise the market further

This is it

https://www.boards.ie/discussion/comment/117779931#Comment_117779931

By tax back from 10 to 5% are you referring to help to buy?

Bass Reeves

https://www.boards.ie/discussion/comment/117780055#Comment_117780055

yes the HTB tax relief is being reset in December to 5%

PommieBast

https://www.boards.ie/discussion/comment/117777774#Comment_117777774

Oops yes. Meant supply ramping up to match demand but things got flipped in my mind.. 😅

https://www.boards.ie/discussion/comment/117779055#Comment_117779055

That is more or less why I have now left Ireland. I've ended up spending a good portion of the last 18 months stuck overseas and like many other non-Irish this sort of dysfunction is something I did not want as part of my post-Covid life.

Amadan Dubh

https://www.boards.ie/discussion/comment/117778054#Comment_117778054

Firstly, if that was the case then you would also claim that Celtic Tiger prices/rents were not bubble prices/rents.

Quite simply, strip away QE, low interest rates and State sponsored rentals (approximately one third of rentals in the State receive some form of State assistance is the recent statistic in the media) and the housing market would falter or even crash. Even just extracting half of the current State-sponsored tenants in the private market and putting them in State-built and owned housing would have a noticeable impact.

However, the main point is that, if everything was so stable in the economy and the housing market, why is there such a gigantic QE programme and sustained low interest rate environment as well as the State needing to go in and buy up/take on the entire leasehold of developments in direct competition with individual buyers? We have had low levels of unemployment for years and consistent, strong GDP, so why is the State helping so many people to put a roof over their head and why are QE and low interest rates still necessary? Our economic prosperity of the 10s is almost a con and I feel strongly about that, that is like in the soviet union or 1984 where the serfs are told they have never had it so good. As such, the only way for property to remain as expensive as it is (rents in particular, but the bubble which arose in the rental market has also spilled into the purchasing market), is for the State to prop the whole thing up with continued supports.

Importantly, we are not out of the covid dead-cat bounce/euphoria as of yet and will not be for some time. So of course so long as the music is playing and the State/central banks are throwing money at the problems, there is less likely to be a crash. As such, we need to see the last of the covid supports withdrawn and restrictions eased before a fallout or a correction will occur. The latest guidance would indicate that we will still have some form of restrictions until spring 2022 so I don't think things will change other than to maybe get a bit worse before then.

That's not even to touch on some other things like the impact of Housing For All which may result in the delivery of 30000+ homes per year from the next couple of years onwards; SF/Labour/PBP government in 4 years and the impact this would have on the property market (I would suspect plenty of sellers will fear a drop in their home values so may look to sell before SF do damage to the market); necessity for increased property taxes; increases in interest rates (e.g. to combat inflation); Brexit; the predictions for tougher growth conditions for the big tech employers in the State; or even the impact of losing the €2bn in corporate tax per year (together with the accompanying loss in employment taxes and demand for rentals which would follow the corporate tax losses).

This is it

https://www.boards.ie/discussion/comment/117780091#Comment_117780091

Is that confirmed? I was looking earlier but couldn't see anything definitive.

Sierra Oscar

Interestingly I've been keeping an eye on the market in north Dublin and there is still frenzied activity in the 300 - 450'ish bracket, but then I've inquired with a few estage agents regarding properties in the 520'ish and above range and one in particular that caught my eye hasn't even had any bids despite being on the market a couple of weeks. Affordability ceiling being reached?

MacronvFrugals

Cant get over how much of a graveyard Boards has been since the update!

Interesting story in the IT today, DCC reject lease deal because of excessive rents

Council’s lease deal for Dublin apartments collapses over ‘excessive rents’

https://www.irishtimes.com/news/social-affairs/council-s-lease-deal-for-dublin-apartments-collapses-over-excessive-rents-1.4651302?auth-failed=1&mode=sample&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fnews%2Fsocial-affairs%2Fcouncil-s-lease-deal-for-dublin-apartments-collapses-over-excessive-rents-1.4651302&utm_source=pocket_mylist

popeyed2

https://www.boards.ie/discussion/comment/117781220#Comment_117781220

Is anyone else having an issue with the app? I can only post replies on the browser version so don't post from my phone at all.

Amadan Dubh

https://www.boards.ie/discussion/comment/117781220#Comment_117781220

I would love to know what the "few hundred euro" extra per month involved that made it unaffordable to the council.

Sarn

https://www.boards.ie/discussion/comment/117781239#Comment_117781239

The app hasn’t been supported in years and doesn’t work with the new site.

The councils locking in near premium rents for 25 years needs to stop. I’d also like to know what their cut off is. No doubt this will be revisited in a few months and a deal at ‘not quite exorbitant’ rents will be agreed.

Marius34

https://www.boards.ie/discussion/comment/117780834#Comment_117780834

"However, the main point is that, if everything was so stable in the economy and the housing market?"

Irish Housing market wasn't really very stable for decades I'd say. It wasn't stable even 9 years ago when the prices were much lower, by this logic you can say that prices where always in Bubble, even in 2012.

timmyntc

https://www.boards.ie/discussion/comment/117781488#Comment_117781488

Stupid "creative accounting" is to blame - they cant afford capital costs to buy new homes, so just lease and spread the cost out. Only in the end they have nothing - and they are on the hook for rents for the length of the lease.

Such a monumentally stupid policy - very FGesque though. The public-private partnership exploited to its fullest.

MacronvFrugals

https://www.boards.ie/discussion/comment/117781553#Comment_117781553

Even Eurostat advised against it,

"Eurostat said the practice of leasing social homes, as opposed to buying them outright, has almost completely de-risked development costs and funds “enjoy most of the rewards” of the deals."

https://www.businesspost.ie/houses/bulk-leasing-of-social-homes-has-no-substantial-economic-benefit-08149a9f

PommieBast

https://www.boards.ie/discussion/comment/117781152#Comment_117781152

Assuming they have the minimum 20% deposit and the 3.5x salary limit of mortgages, a buy price of €450k means a couple on about €52k each. Pretty certain such salaries are about average for Dublin, and they will be above median..

popeyed2

https://www.boards.ie/discussion/comment/117781488#Comment_117781488

Thanks, new user here.

Amadan Dubh

https://www.boards.ie/discussion/comment/117781533#Comment_117781533

In 2012 house prices were the lowest they had been since 2000. Again, I think it is fair to see that the 00s Celtic Tiger prices were outrageous and caused by excessive and reckless credit in the housing market, which really took off in the 00s (obviously the 1990s was also quite explosive). Without the excessive leverage it is probable that we would have not had such a horrific crash from the highs of 2006/2007, but we did due to the leverage in the market. Fast forward to post-2012, prices today are nearly back to where they were in 2006/2007, yet it appears the underlying contributory factors to the bust are corrected (i.e. no excessive lending to individuals and no oversupply of property in the market), so something else has caused prices to rocket up once again. I look at salaries and credit available to individuals via mortgages and cannot see these things as a factor in the house price increases post-2012; demand looks solid therefore the market looks better insulated from a crash on the face of it.

However I, of course (different to you Marius34 and other posters), don't really think it is better insulated from a crash and think it is due to something unstable and unsustainable. Others disagree; but I don't think it is absurd to think that prices could correct to something close to what they were in 2000 or 2012 (without salaries soaring).

Marius34

https://www.boards.ie/discussion/comment/117782068#Comment_117782068

Many things can happen, prices can crash, prices can double. But just because unknown things can happen, it's not argument to tell that we are in a bubble.

If you don't understand why prices went up from 2012, i would advice you to first look at the demand/supply. and as part of demand as well credit availability, unemployment and population increase.

Timing belt

https://www.boards.ie/discussion/comment/117780834#Comment_117780834

Inflation hasn’t hit its target of 2% for a sustained period yet so don’t see any rate rises in the short term.

QE is not being undertaken to prop up house prices and doesn’t look like it will go away any time soon...if anything it more will be undertaken to provide a green infrastructure just look at USA with the 1 trillion announcement last week.

ber84101

Can I ask some advice please?

I'm a first time buyer and I seen a new development in Dundalk. I'm not from the area, 30 mins commute, I have paid the booking deposit but I'm having my doubts about the area, im wondering if anyone knows the area and could recommend or avoid, the development is called Dundoogan dundalk.

Many thanks for taking the time to read, I just don't want to make the wrong decision.

Thanks

cnocbui

https://www.boards.ie/discussion/comment/117781220#Comment_117781220

My goodness, that means DCC employ at least one person who passed ordinary math in the leaving. Maybe they should have a scrounge and see if they can find a couple more.

cnocbui

https://www.boards.ie/discussion/comment/117782068#Comment_117782068

I think you are out of touch with reality. Prices in 2012 were not normal, they were utterly crazy, being well under the cost of supply. I valued my property purchased in 2000 in 2011 and it was 28% less than the basic cost of constructing the building alone, so adding in the cost of land and external infrastructure costs and improvements, it was more like 40% percent undervalued. Prices only recovered to parity with supply cost in around 2019.

I am hoping to sell that same house soonish. I doubt that even at current prices I will make any profit, factoring in inflation and opportunity costs of the capital, I suspect a loss is more likely after 22 years of 'investment'.

yagan

https://www.boards.ie/discussion/comment/117784768#Comment_117784768

You still will have had a habitat and security of tenure over that time, which is the primary value of the shelter.

I hated seeing an essential social requirement becoming primarily a speculation vehicle in the Bertie years and now again recently.

cnocbui

https://www.boards.ie/discussion/comment/117784948#Comment_117784948

I should blo​ody well hope so, I paid a considerable amount of money for those, they weren't freebies.

Amadan Dubh

https://www.boards.ie/discussion/comment/117783863#Comment_117783863

Inflation not hitting 2% is only due to the peculiar way it is measured. Housing is the biggest cost typically for people to pay from their salaries and it has soared well beyond 2% per year for nearly a decade. Yet it is excluded or altered when included in the inflation index. The central banks are fighting the last war, in my view, and it is either corruption or incompetence to claim the barometer used for measuring inflation is appropriate when it does not give a reading of more than 2% each year for the last few years. As a separate point, I do not have much faith in our own central bank and my experience with them and how they operate in one of the areas they regulate is that they are very much in the dark on a lot of the issues and end up trying to close the stable door after the horse has bolted. In particular, they are only very recently trying to gather more granular and holistic information on the shadow banking industry in Ireland and how it plays a part in the global financial system - this is despite the shadow banking industry in Ireland being around €5tn per annum,up from €1.3tn in 2013. The fact finding as to what is going on only began properly in the last couple of years, the regulator doesn't have much insight into who is investing in the sector and in what assets the money is ending up!

https://www.irishtimes.com/business/financial-services/state-s-5tn-shadow-banking-world-will-be-in-the-spotlight-after-covid-19-1.4440755

On the QE point, I feel it is directly correlated to the "everything bubble" being experienced in assets, which includes property. However, the Federal Reserve is directly purchasing mortgage backed securities, for example, as part of its QE programme. The Irish government is pouring money into the property market with its various supports (eg councils entering social housing leases, help-the-brickie scheme, funding to housing charities) so the ECB is indirectly printing money to fuel the fire of our property market as well when we "borrow" from them.

Eclectic Econometrics

https://www.boards.ie/discussion/comment/117784768#Comment_117784768

Hello cnocbui,

Are you taking into account the money you put into the mortgage payments, too, when you say you will make no profit. So let's say for example 1,000 a month for 22 years 264,000 is a figure you are also taking off the final sales price figure? If it is too personal no need to answer, it just seems wild that after 22 years there's no equity.

On Amadan's last point, is there anyone on here that thinks house prices would've risen, or recovered, without the various QE programs?

Marius34

https://www.boards.ie/discussion/comment/117788124#Comment_117788124

It's hard to predict, what could have happened, as there is always other solutions in place. Some better some worst.

But with less government spending, I think the prices would have fallen slightly in 2020/2021, and would start rise a year or 2 later. Construction sector probably would have a hit, thus the supply in coming years would have been lower that what is expected.

mcsean2163

Just back from 2 weeks in Kerry and the housing stock in Dublin is very depressing. Money doesn't go far in Dublin 😥

JimmyVik

https://www.boards.ie/discussion/comment/117795302#Comment_117795302

I remember looking at houses for €500k in Dublin.

Going away for a couple of weeks in Kerry.

And then cmparing what you get for half a million in Kerry to what you get in Dublin.

Nearly moved to Kerry :)

agoodpunt

https://www.daft.ie/for-sale/end-of-terrace-house-22-grace-park-heights-drumcondra-dublin-3/3448565

Tenants paying €850 a week no pics so i would imagine viewing will be difficult.

Its probably worth 400k socialising private LLs has gifted it away am sure the residences inside know they are worth 50k cash to consider leaving

MacronvFrugals

Lick of old paint and an increase of 200k in the space of 9 months

Bass Reeves

https://www.boards.ie/discussion/comment/117796233#Comment_117796233

You be better off burning the place than giving them 50k to leave. If you are really determined to you will get any tenant out legally. Rent is very low 850/ calender month. New owner will probably turf them out and do the place and Jack rental up to at least double. I say tenants are there decade's

fago

Obviously things not increasing at a fast enough rate for every vested interest.

Could also argue 3.5 -> 4.5 doesn't fall into the "tweaking" category

Home ownership being blocked by mortgage rules, industry group claims

IPAV says rules should be tweaked to allow people borrow 4.5 times their income

Via Irish Times

Jmc25

https://www.boards.ie/discussion/comment/117798224#Comment_117798224

Absolute mad stuff. Never waste a good crisis I suppose.

Scarily I'd be almost certain their are some in government and the senior civil service who believe this would be a good idea - "we just need to push prices a bit higher and developers will build" has been the thinking for a whole decade.

jc1001

https://www.boards.ie/discussion/comment/117798256#Comment_117798256

It's so disappointing that more people don't call this out for what it is. Makes my blood boil to hear people peddling this nonsense. Yes borrow more, that will fix everything. Extend mortgage repayments until maybe 85 now. Make roofing and walls optional for houses. Have a wall purchase-plan, where the buyer would start with one wall, where they could hang a picture, but eventually aspire to work up to 4 walls over an extended payment plan. Have we learned nothing over the last few cycles, or do the vested interests and their ever more subtle spin doctors frame things so effectively now that any dissenting voice is easily dismissed as outlandish or as having an unrealistic expectation that if housing is too expensive for people, that its price may need to be revised downwards. Is there not a bigger picture being missed here where younger generations simly decide they have had enough, and move away to countries where it is cheaper to live, leaving a pension fund hole for the current comfortable classes, or maybe said classes will have flipped enough cheaply bought properties for it to make no difference to them. I'd be happy enough to see my place drop by a significant double-digit percentage if it meant my kids could purchase in the same area when they want to settle.

The Student

Prices will go up simply because raw material prices are rising. Couple this with increased min building standards and prices will rise.

Someone has to pay these additional costs.

Increasing exemptions, allowing people access pension savings, multi generational mortgages should all be considered.

We need to look at all alternatives. Existing options don't appear to be improving the current situation.

Heraclius

https://www.boards.ie/discussion/comment/117798376#Comment_117798376

Accessing pension savings sounds like robbing Peter to pay Paul.

jc1001

https://www.boards.ie/discussion/comment/117798404#Comment_117798404

Yes, along with "multi generational mortgages". Hopefully end up in the middle of the pyramid instead of at the bottom. To me, most of that post reads like an Industry shill propping up an opinion - I guess it shows how far apart my own opinion lies that I cannot see any solutions here, just more propping up of prices.

mcsean2163

Was looking at

https://www.myhome.ie/residential/brochure/silverwood-bray-road-enniskerry-wicklow-a98xy20/4499715

it ticks a lot of boxes but is very close to a sewage waste water.

In Iraq, waste water treatment plants must be 3km from residential housing.

https://www.researchgate.net/post/What-is-the-minimum-distance-to-the-site-of-a-wastewater-treatment-plant-to-the-nearest-residential-expansion-in-the-town-environmentally

in Ireland they seem to be located literally next door to residential housing. Does anyone know if that is correct/ legal/ safe?

Below is a study on impacts to residents within 500m of a waste water treatment plant.

https://www.hindawi.com/journals/jeph/2016/8467023/

pathogens observed and yet the waste water treatment plant in enniskerry is next door to a house. Am I missing something?

The Student

https://www.boards.ie/discussion/comment/117798494#Comment_117798494

If the price of raw materials are increasing who do you expect to pay for the increased costs?

Jmc25

https://www.boards.ie/discussion/comment/117798494#Comment_117798494

It's only natural that these ideas are suggested at this point . We've had years upon years of this housing model - an entire adult life for many people - and multi general mortgages etc is the logical next step if we continue to follow the model of ever increasing prices, where each generation purchases at significantly higher real costs than the last, in the hope that they'll look back in 20 years and consider the price a bargain compared to the prices of the day.

We had one crash, sure, but that was very much the exception. The underlying trend of the housing market in Ireland and most of the western world has been increases above the rate of inflation and wage growth over a prolonged period.

It's not sustainable, but if you were to try and sustain it, loosening the lending rules (a resounding success last time) longer/multi-generational mortgages would be the things you'd be suggesting.

Essentially I think where we are at the moment is something of a crossroads. Where we go from here will come down to is whether there's more votes to be gotten by maintaining the status quo and keeping homeowners happy, or explicitly pursuing a policy of reductions in house prices, and obviously making those who don't own a home at the moment happy.

enricoh

I finished a big extension and revamp on my house 4 years ago, around 700sq ft ground floor with a bedroom+ ensuite upstairs. Not willy waving but it cost sod all to get it to a builders finish with direct labour and I appreciate labour and materials have taken a fair jump since.

It seems to me government policy is to get prices to go as high as possible. more requirements, a2 ber rating etc etc. Its nuts- inter generational mortgages, sod off we're being sold a pup methinks.

Littleredcar

I pulled out of investor sale last week - investor dragging heels despite being sale agreed a long time. I originally went on the market in October 2020 - had a few viewings. One couple didn’t want house wanted a different area - anyway had first viewing last night - much more interest - same couple turned up and are making a bid today . One lady who’s local actually asked agent to not go to bidding war and for me to basically name a price

PommieBast

https://www.boards.ie/discussion/comment/117799273#Comment_117799273

I am skeptical of the extent that raw material costs are responsible for the increase in prices. Has there been any actual research into this by people who don't have a conflict of interest?

Jmc25

https://www.boards.ie/discussion/comment/117802492#Comment_117802492

I would have assumed that developers would charge the max they feel they can achieve, regardless of their costs.

If they can't make money at the market rate due to increased costs then I'd expect to see a slowdown in building activity rather than houses going up at prices beyond what people will pay for them.

Similarly if costs went down I wouldn't expect to see a reduction in prices - developers would continue to charge the max the market will pay and simply pocket the reduced costs.

SummerK

https://www.boards.ie/discussion/comment/117802492#Comment_117802492

I don't think its just the raw materials driving up the price but instead demand-supply gap.

A friend bought a house for 369k when HTB was 5%. I remember he bought the house couple of months before HTB was increased. Price of that house was revised to 379k the day HTB was increased to 10%.

I also got to know a couple of other developers raised prices by 10k in the following week of increasing HTB %. To me HTB is not 'Help to Buy' but instead 'Help to Builder'.

timmyntc

We already know the pre-pandemic house prices were well above the cost to build.

We also know that the most expensive part of house builds is labour - not materials. I very much doubt that the increase in material costs have eroded that massive profit margin that was there pre-pandemic for new builds.

awec

https://www.boards.ie/discussion/comment/117802694#Comment_117802694

This was the whole point of help to buy.

That house you mentioned with HTB at 369k, your friend would have needed a deposit of 36,900. Minimum 18,450 of their own money, combined with the 18,450 from HTB.

With the 10% HTB at 397k, they needed a deposit of 39,700. But they could get up to 30k from HTB, and therefore only needed 9,700 of their own money, half of what they needed to save before.

This has been the case since day 0 of HTB, it has never been much of a secret. Developers raising prices in line with increases was the whole point, the main purpose of HTB was to increase prices so developers would build more.

Buyers pay a bit more for the property, and therefore have slightly higher monthly mortgage payments, but the amount of their own money they need to put in at the very start drops massively and in many cases will result in people being able to buy years in advance of when they otherwise would be able to.

L1011

https://www.boards.ie/discussion/comment/117799015#Comment_117799015

Good luck finding anywhere 3km from another house in Ireland that isn't in absolute wild countryside. Sewage treatment plants have to be near where the sewage is being produced.