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

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...

I agree with most what you saying. But there is overestimated impact to Residential Property on interest rates rise, in particular for Ireland.

The main driver on mortgage amount in Ireland are LTI/LTV limits, not interest rates. If there is inflation and wage increase, the amount of mortgage how much people can get will go up, even if interest rate goes up.