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

Most people borrow to buy a house and their borrowing capacity is linked to their salary. Based on this fundamental factor, prices flatlined from 2018-2020.

Incomes haven't risen since then but people have been able to save significant sums during the lockdowns which are now being spent on property.

Unless people can keep saving at the rate they did during the lockdowns, they won't have this additional money above what they can borrow to throw at property in the future.

It seems to me that 2018 prices are where prices "should" be right now, based on people's incomes. Everything else is down to factors which are unique and won't last forever ie historically limited supply and large amounts of savings.

Agree this might take a number of years to play out.

Worrying about a price crash within the next 10 years is one thing, but what if this is to be your family home for the next three decades? Surely that perspective comes in to it?

We've waited and waited since the start of the pandemic. For the much predicted pandemic dip. All we've seen is prices constantly rising, and bidding getting increasingly competitive, and supply getting worse and worse. I think the only thing that could happen in the next two years is that supply may improve as people move on from pandemic fear. But I don't see a huge drop in prices coming as a result, maybe a moderate one and more choice of housing, that's about it.

In the mean time, we're getting older, living between rental and parents homes, and putting off having children due to not having the space for them, while already in our late 30's. This is a situation faced by many right now. Perhaps paying a premium if you can afford it would be worth it in this case.

It feels like an impossible situation at the moment for people who are just trying to get a family home.

Yes - meant to say no significant increase.

If you look back at the post he was replying to, the user said Where in the developed world are house prices going down? Rising house prices are a near global phenomenon. So I am not sure you actually read what people are replying/commenting on.

I literally quoted what I answered to. The poster stated he will lose "another 50" if another recession hits. The loss only occurs an a property if you sell. I'm not sure if that can be explained any more simply.

I will agree to that, most people that buy property need to realise that it isn't an investment - but rather your home.

It's tiny, has no garden, half a kitchen, BER D1, is in an area not great for having a family. It's €600k at best but that's mainly due to location.

I'm not sure what new apartments are sterile? Most of the rubbish around Grand Canal Dock, IFSC, Sandyford, built in the 00s is sterile and impractical. New build apartments seem to be extremely well built and serviced with amenities.

Again, had you not bought in 2007, you would have paid rent for 14 yrs up to today, you have no possibility of recovering the amount of rent you have spent during that time.

Over the term of a mortgage, which is typically 20-30 yrs, the cost of buying your property can be expected to fluctuate, that is normal. There is a realistic chance that if you sell your property at the end of the mortgage term, you will recover at least the purchase price, and probably the interest paid on on mortgage, so what is the point of cribbing about the value of your property today if you don't intend to sell today?

2007 was an awful time to buy property. I can see why you’re so bitter about the property market after that. Luckily for me I couldn’t afford to buy back then. I moved to cork in 2007 and might have been able to afford something there but didn’t want to give my money to a langer.

I didn’t buy until 2015/16. Should I give a toss that my home that I’m never going to sell is worth more than when I bought it? Or should I give a toss that my home I’m never going to sell could well be worth less than what I paid for it at some stage?

The rent you pay is saving, paying off the mortgage on your property is losing? Which one of those payments have you a better chance of recovering?

Rough calculation, €350k over 25yrs on a €450k property at 3% works out at an average monthly interest of €480 over the term. The repayment of the principle is around €1100, which is €200 less than the current average rent. Your property would have to rise €145k over the 25 yrs to recover every cent of the interest paid, I'd say there is a reasonable chance of that happening, wouldn't you?

You would also have to consider that your rent would increase significantly during those 25 yrs as your earning potential diminishes. Also, as you approach retirement your home would be paid off, while renting would drain your savings as income comes to a halt.

The big question is whether QE can last forever as it needs to, being the reason the whole financial system has not collapsed - house prices are being propped up by QE. It is directly correlated to house prices increasing, to the point where I would say it has caused price increases. With central banks it seems to be a case of "well we've come this far with QE so we might as well continue" but it is hard to view QE as sustainable - it creates a further divide between home owners and non-home owners which will lead to a situation where wealth is stuck in property with no way of extracting it as the money won't be there for individuals to buy the QE inflated property prices. There might appear to be no ceiling for house prices right now but there is an affordabaility ceiling for individual buyers and it maxes out for even very well paid couples once they need to take on a mortgage of more than €600k, which will continue to squeeze prices from the top down as it started to do in 2019.

I read an article today about the Federal Reserve and an acknowledgement of rising House prices in the US, while at the same time saying that house prices in the future are not known. The quote also spoke of demand remaining high even while mortgage rates would go up, but that they have absolutely no clue about supply of housing. What is scary is that these are the gatekeepers and are seemingly oblivious to the fact that their QE actions are fuelling the demand which is causing the unsustainable rise in house prices. The covid dust really needs to settle fast so we can see what sort of mess economies are in but it is worrying.

The reason the government are the largest single player on the market (not the majority player though) is due to the demand we have to house our people. That’s not going to change even if the government stop spending. People still need to be housed. We don’t have excessive building like we had last time. We don’t have excessive lending that we had last time either. The main risk to the value of properties now is if interest rates rise and make mortgages more expensive. However the demand for housing is not going to drop. If interest rates rise it will just mean less people can afford houses, and put more pressure on the state for housing. Maybe then they’ll build their own and actually own social housing rather than renting it, but the demand won’t go away.

The only way demand will drop is if there is large scale emigration out of Ireland or if the projected immigration figures are totally overcooked. As you say people sill need to live somewhere...