Softening house market?

https://www.boards.ie/discussion/comment/119570939#Comment_119570939

If I had a young family and was renting, with all the increased rental disruption likely coming down the line, and found a place that suited me and my family for the long term, I would not hesitate to buy today

Dante

I just got mortgage approval this week, not sure what to be doing to be honest 😣

A couple of houses I viewed in North Co Dublin were already above the inflated initial asking price.

Royale with Cheese

I think we're in for declining prices over the next few years but I've no idea by how much or when. That said, the perfect house came up and we could afford it (I thought), so got involved. It's just gone 100k over asking and we've bowed out due to just not having the money for it anymore. There are two bidders now fighting over it who I think are both older couples and at least one of them paying cash. This is a now 850k house that needs a minimum 250k refurb, more like 400+ to do everything you'd really want to it. Part of me is glad we've been priced out of it now, I'd be worried about construction costs rising again in an energy crisis and being stuck with a house you couldn't afford to modernise.

walterking

Prices are probably going to fall as mortgage rates rise.

A 300k mortgage was costing under €1200 a month at 2.5%

Same mortgage will be €1600 a month if rates go to 5% (this would mean ECB of 2.5/2.75% and possibly reached next year)

If you are currently buying or are variable rate (utterly crazy if you are) or a current fixed rate is within a year or so of ending - fix for as long as possible under 3%. If you can get a 10 year fixed for 3% or less, take it immediately. The day of zero are gone and very unlikely to return.

It is near certain that there is ZERO break penalty on any fixed rates entered into before last January due to how the calculations are done. So break and refix for 5, 7, 10 or more years.

ECB will be increasing rates next Thursday. Possibly by 0.75%. This week is the last opportunity for the low fixed rates.

Q&A

https://www.boards.ie/discussion/comment/119571141#Comment_119571141

I would agree that increasing rates should impact prices except for the fact the central bank mortgage rules are so conservative that for most repayment calculations interest rates just aren't binding. Throw in the differential between rents and mortgage repayments and it suggests that as long as people keep getting paid price levels shouldn't fall away to any great degree.

Buddy Bubs

With 2nd hand house prices positively correlated but not perfectly correlated to new house prices, what are folks opinions on the effect of the outrageous cost to build at the moment on 2nd hand prices.

Every new launch near me seems to be dearer than the last but they sell out immediately, pushing buyers towards 2nd hand hand houses

All the talk here is of interest rates which, if people are rational consumers will make a difference, but there's very little rational about the irish housing market at the moment. People will want to buy and will continue to buy, demand is still huge.

I can't see cost of new houses decreasing and I can't see 2nd hand decreasing either. The latest initiative by the greens to ban oil and gas boilers in favour of heat pumps etc will only push cost of building up further.

I do think we've reached the peak of affordability but I can't see huge drops. If I was looking I'd buy now to get out of rental market anyway which is a huge steaming mess.

My situation is I own a property that is suitable, I do want to move towns about 10kms to a slightly bigger house with a garden but the hassle of buying and selling at same time is very off-putting. I defo don't want to be an amateur small landlord and keep my house.

walterking

https://www.boards.ie/discussion/comment/119571476#Comment_119571476

That "green initiative" was announced two years ago.

It's happening everywhere. Even Boris has done it in the UK.

Indo is a rag. It regurgitates old stories in silly season.

Higher interest rates always slow down prices. If the ecb goes to 3% rates will be over 5%. That will make people think.

House construction costs have gone up, but they pulled back recently too - especially wood and insulation. The main builders have huge room to assume increased costs - cairn homes made an average NET profit of 19% last year.

Market needs to fall back or we need a large wage increase. Current prices are unsustainable. (I bought 1st house 36 years ago - 3 bed semi in ballinteer for £39,950)

Ozark707

Many are predicting now a 3/4's of a point increase in IR's this week. Will be interesting what of this will be passed on.

Several ECB rate-setters have said they are focusing more on current record levels of inflation to decide policy, moving away from an earlier, more dovish approach that hinged mostly on where they expected prices to be two years from now.

The shift has led many economists to forecast a 0.75 percentage point rise on Thursday for only the second time in the central bank’s history — a move that would leave the benchmark deposit rate at 0.75 per cent.

“There are no doves left at the ECB, only average hawks and uber-hawks,” said Katharina Utermöhl, senior European economist at German insurer Allianz.

https://www.ft.com/content/e0fffb18-b603-4a36-8473-7a6176e5c795

Xidu

Crazy!

i was talking to someone who does the house maintenance work for insurance company.

said they go to Cork builders provider weekly. Price just keep going up without limitation.

and they can’t line up plumber at all.

suggested if can hold on, better not think about any house renovation at the moment

Bass Reeves

https://www.boards.ie/discussion/comment/119571120#Comment_119571120

The problem is if prices drop by any more than 15% building will slowdown at best if not cease.

It was as posted here that large developer profit margin is 19% which is excess but take away half of that and it too risky to build. Interest rates going up will increase building costs. If the rate is increases to 2% it will add at least 5-7k in interest costs alone to a 500k house.

Any drop.in labour costs will be swallowed up by transport costs to the contractor. Concrete is very sensitive to higher energy prices and this effects a lot of materials in a house.

fliball123

https://www.boards.ie/discussion/comment/119573506#Comment_119573506

Well the other side of the coin is wages are not rising quickly enough so something will have to give how long will builders be able to without building before they have no money? I wonder if the areas of renovation will see prices come down as people building houses from start to finish may need to find work else where

Bass Reeves

https://www.boards.ie/discussion/comment/119573556#Comment_119573556

It was virtually 8 years the last time from. 2008-2016. Yes some building may happen but it will slow down considerably IMO if prices fall much beyond 15%

Yes there will be a redirection to refurbishments or insulation and energy upgrades.

I think the projections were for 25-30k units to come on stream this year. Last year and the year before due to COVID-19 disruption it was 22kish I think.

You could see construction numbers drop to below 20k

fliball123

https://www.boards.ie/discussion/comment/119573631#Comment_119573631

Is there any updates on new builds for the first half of 2022?

ClaudeVercetti

I'm one of the luckier folks paying rent that's reasonable for what we're renting.

Still itching to buy but without the sense of urgency for the short term future, and in turn being able to view things with a more skeptical eye, it's hard not to feel worried about walking into a market-bubble at the tail end of things. (To be fair I'd have said the same for the last 2 years and things have only gotten more extreme!)

People say you shouldn't try and time a market as it's a fools game which I agree with, but the fear of being stuck in a regrettable situation is paralyzing.

Deub

I don’t know how people building one off houses are able to cope with the price of materials. I have seen a house for sale last year in Cork. It needed a lot of TLC. It sold just over 350k when houses sold for 450k-500k in that street but were in a better condition. They have now demolished it and are building a brand new house. The increase between the architect quote and now must be a lot higher.

Bass Reeves

https://www.boards.ie/discussion/comment/119574481#Comment_119574481

From 2012 until COVID it was very easy to build one off houses. Plenty of direct labour or builders available. Materials were easy to source as well. Now if building one off you are better off getting a builder. The builders providers are playing Molly Bawn with self build lads paying 30-40% above builders costs.

From 2012-COVID most one off houses were in the 2.5-3.5k sqft or above size. They were all Dermot Bannion type houses. There are virtually unaffordable now at 160-180 euro/sqft.

markodaly

The narrative around the ECB rate rises may spook a lot of people and give them pause into paying huge money for houses, especially houses that need a lot of work.

It's all anecdotal but some houses near me are still on the market months after being up for sale. Numbers at viewings appear to be less, although it was summertime.

Internationally there is a lot of negative stories about crashing house prices, again may make people think again about paying over the odds.

What we saw in Canada, NZ, Australia and parts of the US, was that once interest rates began to go up, market sentiment shifted in a major way, and now all those markets are seeing declining house prices with interest rates still on the rise.

Will Ireland follow suit? Possibly not, but hard to see prices continue to rise when there is so much headwind in the next 6,12,18 months.

Ray Palmer

https://www.boards.ie/discussion/comment/119575093#Comment_119575093

Were these countries suffering from a lack of housing? Sitting on money for a deposit with rapid and high inflation makes it worth less. If rents keep on rising then you have less to save to counter inflation. Even if house prices drop in a few years you would be worse off and years behind having a mortgage paid off.

People age out of mortgages too so don't have infinite time to wait for price drops. Be under no illusion here there are people who waited before and after the last crash who now are permanent renters. They thought they were being smart and many laughed at those in negative equity while rents dropped. They aren't laughing now.

Whatever about discussion on markets and housing it is an individual decision based on individual circumstances with many lead by the discussion and not their own life. A lot of wishing the market will collapse for personal benefit flavours opinions

spaceHopper

https://www.boards.ie/discussion/comment/119565648#Comment_119565648

Full rewire, rip out the heating and do it properly, insulation from the outside, new windows new kitchen new internal and external door.

ecjjaian

https://www.boards.ie/discussion/comment/119577843#Comment_119577843

If (and only if) house prices remain the same or fall, then the general rate of inflation has no impact on the money that is ringfenced for your deposit, because the rate of inflation of house prices is 0 or negative. Not saying I think this will happen, just saying that if the waiters are right about the direction of prices then their deposit becomes worth more not less

Mr Hindley

On the topic of refurbs - I'm on the cusp of bidding on a property which has no offers yet because of the low BER rating and the scale of work needed. My thinking is that yes, I'll have a lot of time and hassle to fix it up, and the cost of renovation work is sky high right now which is putting people off; but I'm a fairly low maintenance kind of guy who doesn't need to be living in showroom conditions. I'll be OK with a property where I do a first round of urgent jobs straight away (rewiring, some improvements for energy efficiency), and then just chips away at the rest over several years. If the decor's a mess for a few years, hell if I'm living upstairs for the first winter because it costs too much to heat the whole house, I can cope with that, if it just means I finally get somewhere bought. Am sick of the search by now! And A/B-rated properties nearby are still going well over asking.

I may look back on this post a year from now and cry into my (very cold) beer...

markodaly

https://www.boards.ie/discussion/comment/119577843#Comment_119577843

Yes, there was similar issues in those countries as Ireland.

We think we are exceptional in terms of housing issues and shortages, but there are similar issues in many countries, where housing is crashing at the moment. Just because you have a shortage of housing, doesn't mean housing cannot decline in value.

The question is of course the how much and when, not really an if.

Former Former Former

https://www.boards.ie/discussion/comment/119579233#Comment_119579233

We're not exceptional.

Canada, New Zealand and Australia are exceptional in that there was no real property crash post-2008. Whereas we're only hitting 2007 levels now, those three are miles ahead of 2007.

So you could argue they have a lot more scope to fall than we do.

markodaly

https://www.boards.ie/discussion/comment/119579808#Comment_119579808

Well the US had a downturn as well as the UK, yet they are at the beginning of a housing downturn as well.

https://fortune.com/2022/09/04/housing-market-map-home-price-cuts-redfin/

It could be that the frothiest markets were the first to fall but other markets like the US, UK was going to take a little bit longer.

LJ12345

https://www.boards.ie/discussion/comment/119579808#Comment_119579808

i do agree with you but we shouldn’t forget the crazy lending and borrowing that occurred in Ireland that brought the country to over inflated levels pre 2008. The same situation wasn’t replicated everywhere but now many countries are likely to be experiencing what we experienced then. They will fall harder and faster, we have the lending limits constraining normal buyers, but I think a lot of money has flowed into the irish property market from these countries mentioned as we are cheap in comparison and after covid people have come home to a highly constrained market rapidly increasing prices. Will house price increases here reverse now as the global housing market comes down and buyers purchasing property resumes on a fairer level? With everything happening I’d be very surprised if we didn’t see a correction here. It remains to be seen though.

Donald Trump

I see that the government is sending up flags about more concessions to keep the market artificially inflated. People worrying about softening house market need the remember that the people making decisions on what to do with the State's money tend to have conflicts of interest in the market. They have always been very quick to step in an subsidize it back up or offer unwarranted protections.

https://www.independent.ie/irish-news/education/landlords-could-be-offered-budget-tax-breaks-if-they-give-long-leases-to-tenants-41967511.html

Ray Palmer

https://www.boards.ie/discussion/comment/119579233#Comment_119579233

Not true. Canada is having the housing issue we had in 2007 which was speculation not lack of supply.

https://ca.finance.yahoo.com/news/canada-housing-crisis-shortages-aren-161500752.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAANlCjEjYMYSd-9xe45AYSPNjdUz2Tw1UDTWk2-oORhtJGN7Ylj_JYiij2FN3RZx4xMs5-D_oPxwrRwf9vPtxxnXxzreQefI8qqWcwZdzCV-ptaM86tcgsmlbiDWaMr0ykSAlWLEQojK4xqKHP0lxhAttIeCqTnEBH6UjPCGhvvcE

We aren't exceptional we just aren't the same mostly because we had a previous crash these countries didn't. The fact we used to have the highest home ownership in the world and long term renting was extremely rare here are also large factors not relevant in other countries. WE have huge differences to the countries you mentioned such as not having control over our local interest rates. For all the similarities there are enough differences to know our market is different to theirs which isn't an exception.

Sunny Disposition

https://www.boards.ie/discussion/comment/119583113#Comment_119583113

One huge difference from a lot of countries is that we have a quite small population, are quite wealthy and lots of people can easily immigrate here.

Migration is the real reason why we have so much instability around housing. In the 1990s people largely stopped emigrating (maybe go for a couple of years but not for life as had been the case) and large numbers started arriving. When the Celtic Tiger ended many of those people had relatively few ties here and could leave again. Then in quite recent years there has been more inward than outward migration.

Basically with such a small population and the fact that people from many larger, less wealth countries can very easily come here, means we're always likely to have a fairly unstable market. It does make it hard for people trying to buy a family home. It also has allowed speculators to make fortunes, but only if you get in and out at the right times. I got out of the Dublin market myself in the last two years, would have made more if I stayed, but still made a large profit and it's very hard to get the peak exactly right.

I'm not anti immigrant by any means, employ many recent arrivals and they are great workers, but this is just a reality of the immigration policy at the moment.

MrMusician18

https://www.boards.ie/discussion/comment/119577843#Comment_119577843

It's worth noting that the market collapses when many people cannot afford housing. If you are waiting on the collapse, the question is will you be one of the many people if it does come?

It is pure exceptionalism to think that the market could collapse and these individuals not be impacted by the cause of the collapse - thinking that they could then pick up a bargain.

yagan

https://www.boards.ie/discussion/comment/119583187#Comment_119583187

I'm a returned emigrant and as far as I'm concerned it's intentional landlord driven bad management that we don't know how many units are sitting idle beyond a five yearly census.