Softening house market?

markodaly

It seems that around the country there are different markets, with some places still plugging away while others appeared to have slowed down.

Claw Hammer

The proliferation of coffee shops is a relatively recent phenomenon. There used to be a handful, next thing they started appearing everywhere. people having take-away coffee was unknown until a few years ago. Most offices had a kettle and a jar of instant coffee on a shelf. people managed without them before and will cope without them again.

Ray Palmer

https://www.boards.ie/discussion/comment/119543045#Comment_119543045

You will still get your coffee there are just less people buying them to justify so many. We may only know after events but that is not hindsight. You are making the extraordinary claims not me. We are basically at full employment right now with many job vacancies. You are saying there will be a massive turn around based on very little information nor understanding of the current situation.

Maybe you will be right but likelihood is remote and slim.

OEP

https://www.boards.ie/discussion/comment/119543045#Comment_119543045

You've made some big jumps from some small cafes closing to us having no where to eat or drink and the MNCs leaving the country!

Aongus Von Heisenberg

In fairness it's well known that when MNCs are looking at investing in a country, coffee shop density is ranked up there with tax rates and stability on their metrics. You'll probably be seeing some verbose piece on it from David McWilliam in Saturday's Irish Times.

fliball123

https://www.boards.ie/discussion/comment/119543142#Comment_119543142

So can you not see that less people buying these coffees is just the tipping point as your right there is no justification to get more but this is mainly due to financial pressures to be meet else where and the coffee shop will not be able to continue trading due to the costs outweighing the profits as people cut down or cut out coffee?. Now substitute in a Pint for coffee and rinse and repeat, then substitute in hair cuts and rinse and repeat and you can keep going with almost any service or product produced and/or sold by our small to medium businesses. The likelihood is very high as what most services or products have in common within their lifecycle from being a raw material to being a finished product to being shipped/transported to be sold and then sold is at some point in the life cycle there is a reliance on energy. We are at full employment now yet in Q1 2022 we had an increase of 8% in companies going into liquidation and that was while Covid supports where still in play. The winter is going to be horrible. So you think there is little information to go on. There is information and pointers to an upcoming global recession all over the place jesus christ, Ireland is experiencing really high inflation and interest rate increases making everything here more expensive and wages are not keeping up in a lot of sectors. So just as a simple exercise look at how well or poorly Germany, the UK and the US is doing, these 3 countries have more sway and influence with regards to Ireland's fortunes than the rest of the world put together and we are way to open an economy not to feel the pain that they are going through.

fliball123

https://www.boards.ie/discussion/comment/119543152#Comment_119543152

Is it such a big jump most products and services produced in this country will be reliant on energy. Look no one knows for sure but I can see lots of coffee shops, hair dressers, clothing, hardware, pubs, restaurants and other industries/companies that have lower paid wages hitting the wall. Its not just high energy prices, people will not work in these jobs with such low wages and with the increase in costs to living add in the owners of such companies are not going to stay open if they are not turning a profit.

Bass Reeves

Coffee shops are a real optional spend. It's one thing being in town a good part of the day and deciding to get sandwich and a cuppa. However the coffee cult is very new and yes I believe it will be hit and hit hard. The reason being it has become a costly luxury. The spend could be 10+ euro 3-4 times a week. Add in Coffee takeaway coffees and you are at 50 euro in discretionary spending.

But it's not critical to the economy. It's mostly staffed by part-time and student workers. While it will directly effect those involved it not as critical as the 2008-12 bust where it was a banking and construction based bust. It was Mamma and Papa losing there complete income not Johnny going to college spending money. It might relieve some pay and employment pressure's elsewhere in more important parts of the economy.

It may also transfer into sectors in the pub and restaurants trade but price and employment pressure is hitting them anyway

Last time before the banking and construction bust we has scarified MNC's ( Dell and a few more) to continue building houses for each ither

Deub

https://www.boards.ie/discussion/comment/119543839#Comment_119543839

I am confused by your recent posts. Only a week, you said you couldn’t see a price decrease in the properly market for the next 5 years but you think there will be so many businesses closing that it will drive some MNCs to leave Ireland.

How do you expect MNCs leaving Ireland and not impacting the property market?

SuperBowserWorld

The government will knock down houses to reduce supply and keep prices high.

fliball123

https://www.boards.ie/discussion/comment/119544087#Comment_119544087

Yeah I still maintain that the government keep propping this up prices with different schemes and our demand for property far outstrips supply and it will take time for the above to impact, as things keep going I would re adjust this to about 2/3 years I think the oncoming recession will impact property prices a lot sooner than I first thought.

OEP

https://www.boards.ie/discussion/comment/119544112#Comment_119544112

Have you connected everything you've said in separate posts together? Some of it is quite contradictory

IWW2900

My take on this.....I have been following the accommodation forum and decided to give my take now that I have my business done.

I sold my two investment properties after finally getting rid of renters. I still have my personal property and small place in Portugal but would honestly consider selling up if I had the time. I have been around the block when it comes to property and done quite well, although I did get burned a bit in last crash.

I see the writing on the wall. Its difficult to say how much property will drop but I think its pretty clear property aint going to rise much more from these levels, so I decided I'm best off selling up. People keep citing supply, supply, supply. They dont understand what drives markets. Interest rates and government policy drive a lot of price action and we are seeing a turning in the tides. The addition of impending recession and rising cost of goods\services are the writing on the wall.

I expect things to tip along for a few months pretty stagnant before a drop. I believe we are in that moment where gravity has stopped the upward momentum and there is a slight pause before gravity begins to take us down. But really, no ones no whats going to happen....this is just my best guess from previous experience. I am seeing a lot of similarities to last crash...many people once again think property prices cant go down, this time for different reasons.

Ben D Bus

When there is a genuine shortage of housing people will spend what they can in order to get a property.

What people can spend is now changing in the downward direction.

High demand and falling prices are not mutually exclusive.

awec

https://www.boards.ie/discussion/comment/119544861#Comment_119544861

This is true and a great point, certainly on the macro level, but only really applies if the reduced spending power is universal.

e.g. if there are currently 100 people trying to buy 50 houses at 500k, and everyone has their mortgage offer cut so now only 60/100 can still afford it, then there will be likely no impact on prices.

The spanner in the works here is that even with rising rates, a mortgage is still likely to be cheaper than renting.

DataDude

https://www.boards.ie/discussion/comment/119544861#Comment_119544861

I’ve found a huge cohort of people, particularly younger people, just check the max they can borrow (be it 3.5x or 4.5x income) and then go shopping with that amount.

Given a fair chunk of the population just got 7.5% pay increases over the next 18 months (and you’d imagine private sector won’t be far behind), do feel that’ll provide some inflationary pressure.

Ultimately that’s what drove us to buy: I felt fairly certain prices will fall relative to incomes. But struggle to see major nominal falls with inflation running this hot.

lintdrummer

Looking for opinions here.

In the market to buy a house in the southeast. We sold a property in the greater Dublin area last year and have been renting since. Property market where we are in Kilkenny is pretty limited in supply.

We have made an offer on a property just outside the town. I really like the house. About 30 years old but well appointed and up to date. Asking was 645 and an offer of 645 came in about 2 weeks after first viewing. A week later we viewed again and were put under pressure to make an offer by the agent. We put 650 on. Were later told that the owners wanted closer to 675 but that the other party had pulled out and we were sole bidder. So obviously we didn't bid against ourselves. They have now accepted our offer.

Problem is my wife is having second thoughts. She is worried that we are paying over the odds. I'm not so sure that we are, the house is lovely but needs some modernisation in the kitchen and bathrooms. It's quite big at 230sqm with a gorgeous garden. It's 3km from the city centre. All in all, in a situation where supply is limited a decent house like this does command a price.

Just wondering if anybody here has thoughts on the situation? Is it mad to pay upwards of 3/4 of a million for a nice, but fairly standard house outside a rural town? Need to make our minds up on this so just looking for input from unbiased folk here. I'm also conscious that the recent announcement of Abbott creating 800 new jobs in Kilkenny is probably going to impact the market here for some time as employees look for property in the area.

thedart

https://www.boards.ie/discussion/comment/119545261#Comment_119545261

You will drop another €100k as 30 year old house will need rewire and plumb. Plus kitchen upgrade.

fliball123

https://www.boards.ie/discussion/comment/119544487#Comment_119544487

Not contradictory I said 5 years for house prices I am now saying that time frame will be shorter maybe 2/3 years

markodaly

https://www.boards.ie/discussion/comment/119545261#Comment_119545261

What have similar properties gone for in the past 24 months. Its interesting that the other buyers dropped out, what gave them cold feet?

Maybe go back with a reduced offer. Do you need to buy right now, or can you wait 6-12 months?

KilOit

https://www.boards.ie/discussion/comment/119544767#Comment_119544767

Don't remember inflation this high in the last crash. high inflation and salary increases could keep house prices high

Bass Reeves

https://www.boards.ie/discussion/comment/119545783#Comment_119545783

Wage increase for PS of 6.5%. half it backdated to last February and all to be paid by end of next year. If that is copied across the private sector a couple on 100k between them can draw down another 22750 euro at 3.5 times salary and nearly 30k @4.5 times salary.

That couple can draw down nearly 500 k and with a bit more than a 10% deposit can buy a 550k house.

Bass Reeves

https://www.boards.ie/discussion/comment/119545261#Comment_119545261

House is just slightly above 2500sq feet. To builders finish it would cost 450k at least at present building costs. That is 200k for site, planning, landscaping and present interiors of the house.

What are you paying in rent. What is your fixed rate mortgage going to be over 5 years and 10 years.

You have being renting for 12 months maybe more, will you be renting another 12 months waiting for similar property. Is twelve months rent costing 15k. On a mortgage a 1%extra interest rate over five years on 500k will cost 25k( assuming you buy next year and five year fixed have in teased by 1%).

It could take a 10% drop before you see anything in savings.

https://www.boards.ie/discussion/comment/119545276#Comment_119545276

It should not need a rewire or a replumb. Insulation and Ber rating I would be more worried about.

https://www.boards.ie/discussion/comment/119545384#Comment_119545384

Problem with going back with a reduced offer is that vendors may not only not accept it but lose trust in you as a buyer. It may work however another buyer may emerge.

There is risk as well as reward

Ray Palmer

https://www.boards.ie/discussion/comment/119543839#Comment_119543839

We also have too many bars with a declining trade. While you think change means doom to everything it is just change. You will still be able to get a coffee or a pint. It is basic economics of supply and demand. Did your mourn the loss of mobile phone shops as they contract? What about declining attendance at churches?

Public appetite changes randomly and some times has causes. Less footfall in the city centre means less demand for coffee which was making super normal profits for years. The fact is a new chain is entering the market here anyway putting more pressure on small independents as is.

AdamD

Do we actually have less coffee shops, or have the locations just moved? I think there are less in the city center but far far more in suburbs now.

Ray Palmer

https://www.boards.ie/discussion/comment/119546473#Comment_119546473

I agree with you and said similar earlier. There are 3 new coffee shops near my house and they seem busy

Ray Palmer

https://www.boards.ie/discussion/comment/119545261#Comment_119545261

My advice to anybody unsure of buying a property is make sure the house can retain value. That means in the worse case scenario you could rent it easily. Close to college or hospital makes the most sense. What you seem to buying is a great family home but not something many renters would look for and/or afford. Seems like a lot of money but certainly not a fairly standard house at that size. I wouldn't do it it unless I had plenty of security financially and employment wise

thedart

https://www.boards.ie/discussion/comment/119546275#Comment_119546275

A 30 year old house could have its services in a poor way. We had to totally rewire and re plumb a 25 year old house recently. Was plumbed in acorn joints were weeping in several locations, boiler was on last legs and hw cylinder was on way out also. The wiring had no earths at lights or switches, had two ring socket circuits that were not passing.

Dont presume nothing, I’ve wore the shirt.

Jayno66

I've heard mention of more people being refused for mortgages. Can anyone explain why this is the case to me?

I can understand why fewer people might be applying for mortgages for various reasons, which would lead to an overall reduction in the amount of mortgages approved. But unsure why more people are being declined - surely the banks assessment criteria are the same now as they were a year ago? I.e. 3.5 times income, credit history, savings, etc.

Is it due to the ECB interest rate rise, or recuction in exemptions given out perhaps?

Claw Hammer

https://www.boards.ie/discussion/comment/119546841#Comment_119546841

The banks are becoming nervous about the property market. The cost of living is rising faster than earnings in many cases so affordability is automatically lower, particularly with the mortgage rate rising. Many self employed people will have a substantial drop in earnings due to much higher overheads for energy. Some businesses will fail or suffer reduced turnover as discretionary spending reduces. The banks have a birds eye view as to who is mnaking money or not and who is stretched or not. They see the droppiong turnover in real time, they see the missed payments, bounced cheques and runs on savings.