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

According to a research paper published by the central bank in 2018 there is evidence of higher default rates after the Dunne case

"The results are similar to those obtained via asymptotic inference, and indicate statistically higher default rates in the treatment group only after the time point of the Dunne judgment"

Source: 1rt18-the-impact-of-repossession-risk-on-mortgage-default-(o'malley).pdf (centralbank.ie) (Page 2)

You are right in saying property can be overpriced but unfortunately this is not just an Irish Phenomenon and as property prices become unaffordable for the general public the investors that are pushing up prices see an increase in demand for rental of their investment properties as people that are unable to afford a property are pushed into the rental Market. As long as their is strong demand for rental properties we will see investors buying more and more property as it is a viscous circle.

You can use a P/E ratio as an indictor if a share price is overvalued in relation to current earnings but that doesn't mean that the share price is overvalued as many companies that have low earnings at the moment but potential for increased earnings in the future will have a high P/E Ratio but that is not to say that they are overvalued.

When you are unable to borrow to fund the pricing of a house due to macro prudential rules (3.5 x LTI) then this tells you that property prices are overvalued in relation to income but you can't assume that this overvaluation will lead to a correction as it does not take into account items like savings, wealth, Impact of investments or government on property prices.

I take your point with numbers - nobody can really say what the "true" price of a house is to any degree of accuracy, but you can make general statements when it goes way beyond affordability for the target market.

If somebody decided to buy up all the baby clothes in the world - despite not being the intended market - the price would rise far beyond families who need them. Then you could say it's "overpriced" in relation to the target market.

The target market for homes is by and large owner-occupiers - yet these people are priced out. That implies overpriced/affordability issue. The exact degree of "overpricing" is impossible to say, but once it goes beyond max affordability it is overpriced for sure.

I agree with all this but one dark cloud on the horizon (or silver lining depending on your position) is that demand for property in Ireland is predicted to stay strong due to the massive population growth expected over the coming decades. A lot of this growth is based on immigration as opposed to increases to the birth rate. Putting aside the "everything bubble" and assuming that it does not pop, our population numbers go up but it is not a guarantee that this demand will equal sustained pricing in the housing market.

There needs to be a good reason to come to Ireland for this demand to be sustained and one thing myself I see as a possible error in the calculation of sustained demand due to immigration is the quality of the immigration in terms of their own personal situation and how that might feed into demand for housing at the costs it is in Ireland. For example, central or south American students/low paid essential workers as well as Indians filling low paid tech jobs will feed into demand for property but at the current cost of housing there is little to no chance that the current prices would even be met by this type of immigrant to Ireland. The other point is just that, should the increased immigration not materialise anywhere near to the extent it is predicted to grow, then there will be a fairly steady flow of downward prices across the market as the tide of buyers/renters who can afford these elevated costs goes out.

Internal vs external maybe, could easily have 20m of walls perimeter at 0.3m thick, 2 floors that is 12m2.

Might be best to just ask them.

The latest doom and gloom

Push comes to shove the priority is those who overpaid for property back in the 2000s. Dublin will never have affordable housing until that cohort is told they will never recoup their debts.

All swings and roundabouts, will come around again in 5/6 years

I'm by far an economic expert but I also have to wonder how expert some econmists are.

Main issue at the minute is shortage as there was very few houses built for the best part of a decade. I don't see a housing collapse as the economy now isn't totally reliant on one sector as we were in the boom. Maybe there will be a correction if funds/markets take a drop but that's something I know very little about.

People are panic buying due to lack of supply which is driving up prices. Dublin is simply unaffordable for many but most attractive cities are. I just feel sorry for young families who really want to buy now and are renting. They're the real victims.

They've definitely been one of the top priorities for the Government over the last decade when it comes to housing. And fair enough in some respects.

But surely the majority of people who bought then, even at the top of the boom, would no longer be in negative equity when you look at current prices and factor in 15 years of mortgage repayments. Probably some outliers but in the vast majority of cases surely?

Unfortunately in the really extreme cases the only way to help some of these people is essentially to have someone else overpay to the extent that they did - hardly much of a solution.

Dublin Chamber of Commerce 2022 budget wishlist, with a huge emphasis on the need to make housing more affordable (i.e. material decreases in cost and significant increase in appropriate supply). So the businesses as well as the electorate have housing as their biggest political issue, it is a tsunami of cries for change at this stage, with pretty much little to no noise in voices happy enough with the status quo.

That's the way it looks like going.... And as rents increase it will create wage inflation which in turn will make the building of houses more expensive which will make them more unaffordable and the cycle continues.

Unless there is action take to build large scale social housing which would free up rental properties and put downward pressure on rents I can't see the situation changing.. .....that is unless they find a new way of building properties cheaper which is unlikely as the properties will need to be eco friendly.

Reversal in mass migration from EU countries to Ireland to work for MNCs would probably do a job on alleviating the crises with rentals.

If only it was a month ago when boards could be used properly you would have had hours of entertainment going back through posts from years gone by.

:)