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

Yeah the premium end of the market is still a mile off where it was in Celtic Tiger times. Before it became a basket case full of headcases, ThePropertyPin had some decent material on it. There was a very good piece showing how the best houses in D4/D6 fell on average 75%+ from 07-11. Always makes me laugh when people say that the best locations will keep their value through economic downturns. It's the complete opposite in reality.

House we're buying, the owners paid 550k more for it in early 2000s and had it listed for €1.1m over current price in 07.

I believe the lack of repossessions was to protect the banks rather than the inhabitants, an extension of NAMA so to speak. Hardly a left leaning ideology.

Sourcing social and affordable at the most expensive price is more about feathering the nests of the super wealthy rather than solving an issue and achieving bang for buck

What's happening in Dublin is a rather loose definition of urban sprawl. More than half the people working there live outside the county. Is it Dublin City or Leinster city.

Housing and childcare would capture the entirity of 2 median salaries in Dublin. Maybe that's not a detterent to having children. Some would disagree I suspect same for the increased age for ftb. Add in the high tax rates when you go over median wage and the situation is rather bleak. This is at a time of close to peak prosperity.

The system is awash with money and those that pay high taxes (citizens) have to chase investment funds paying 0 tax, have access to 0% rates and their risk underwritten with citizens taxes long into the future in order to meet housing need. Can you not see how that scenario leads to a bubble

I'll deal with your 2 average earners affordability metric later with research from the LDA. It's an annual argument and time to put it to bed

the demise of the property pin is sad, there was some excellent analysis and sources of information on that site once upon a time.

First time buyers pushed out of the new homes market despite ftb grant

Well as I pointed out this is what happens when your population grows by over 10% in the space of a decade and government make decisions to stop building housing? I don't see why you or anyone else think Dublin should be any different to any other major city in the world, can you show me one main city that does not have a premium placed on its property when compared with the rest of the country? You only need to look at London , Paris, New York where people travel in their droves from outside to work where the action is.

I am with you with regards to how high we pay for childcare we also pay a lot for our PS, our Welfare and all of that is based on our tax take but people do have the choice not to have kids and some could live in a less expensive area. So the averages I put up where country wide there are areas that are cheaper if you want to pay less to live.

Once again I agree with you with regards to investment funds vs private citizens. I am not sure if I had it on this thread it may have be been another, but I believe people should pay for rent/mortgage, childcare and any other necessities like food, clothes out of your pay before you get taxed and even the field. I think we agree on a lot of things I just think you may be confusing a supply problem with a bubble but we wont really be able to prove it as most bubbles are only labelled after they have burst..

I mean you still never answered the premise of if we had the same over supply now as we did back at the start of 07 would prices be as high? I don't think they would be.

Do not fool yourself the government made this the most expensive bailout ever (if carlsberg did bailouts) your saying the government made a decision to stop banks from prepossessing houses in order to try and stop the property market from dropping by over 50/60% after 08, prices did hit the floor and so instead of housing people who had homes repossessed they decided lets leave them in the house and lets pay out 64Billion for the broken banks. Banks were broken to the point that 2 of them are leaving (ulster bank and KBC) due to the legacy of this, both AIB and BOI are still owned in part by the state. They set up NAMA in order to keep distressed property off the book a vehicle to allow for distressed assets to be sold at a discount - This seems counter intuitive to you saying they allowed people to stay in their house to save money?.

So your argument doesn't hold water as everything you are trying to spin that by letting people stay in their house in the governments eyes would help avoid such things as the economy crashing, property prices crashing, the banks all being banjaxed and the government borrowing billions to the point the IMF were at the door. This all happened and you think that by allowing people stay in their home instead of repossessing going on this should of stopped all of the above happening? As I say its not hard to look at Ireland's political sphere and understand the majority of all the political parties are to the left this has been the case for decades. There is no real alternative on the right. The decision to allow people stay in a house without paying a mortgage is without equivocation part of the left leaning narrative that FF/FG/Labour and the Greens have been spinning for 2 decades.

Arrears are big business these days, the white collar professions are gorging on the returns.

Has it escaped your notice that politicians from the party largely responsible for the mess are integral to this new unfortunately booming sector.

Like every boom budst cycle are quids in on the way up and down

Profit both ways, Happy days

Have you any data on the arrears and how much third party people are making from this??

So you think now that the government allow people stay in their homes without paying a mortgage so that white collar can gorge out of their misfortune.

OK I think you may be the man to find out all the people who killed Kennedy

You still have not answered my question with regards to the hypothetical of if we had an oversupply of housing stock in 2021 like 2007 would prices be rising still?

Tbh, even though I tend to favour free markets to solve problems in a lot of cases, I don't think that's really ever going to be really possible with housing. There has to be some degree of central planning with housing, for the simple fact that it has big effects on common goods and services. Government are going to have to provide goods and services for people living in whatever places get built (schools, utilities, infrastructure, green space, etc.), and ideally these things should be put in place before more people start moving into these areas.

That said, government interfering in the market in terms of pricing (whether its giving tax breaks, subsidies, setting price controls) etc. only seems to have bad consequences in the long term, with the possible exception of some regulations on things like the salary-to-mortgage limit that curb excess risk lenders are willing to take on.

Well we had an oversupply back in the day there reports like the below links I agree there was building in the wrong areas but then again define the wrong areas. I mean this all comes down to the crux of affordability, if you cant afford Dublin there were other areas, maybe less attractive areas you could buy and live in and that same option exists today. But everyone wants to close to the action and unfortunately that costs.

Just on your opinion that assets values are multiples of historical norms I would argue we have lower house prices today than the prices in 07 so how are we a multiple above that?, is 07 not part of our history?. What people like yourself fail to take into account is there was a serious drop in prices between 08 and 12 and prices dropped well below the actual build cost and this had to recover even if there was no supply issue over the last 5 - 7 years prices would be bouncing back as the cost of building a new house would be more than what you could sell for and that in its essence is why new build numbers went through the floor in the after math of the last recession. Why would you build at a loss? So what should the average price of a house cost? its the million dollar question and the only real answer is what someone is prepared to pay for it..

The lack of repossessions was a response with the amount of bleeding heart stories about Billy and Mary not being able to afford their mortgage back in the day and the big bad banks where hounding them for payments and the optics of this after us pumping 64 billion into the banks didn't look good for our politicians. You can google away at amount of poor me stories after the last crash this fed into the term "THE FAMILY HOME MUST BE PROTECTED" this term was never used in this way before the last crash. So any notion that people being allowed to stay in their house without paying was in somehow a conspiracy to help the banks is complete nonsense. It was fueled by ordinary people having a hard time through the recession over 400k people lost their job and not being able to afford the mortgage. This then added to the banks trying to get blood from a stone lead to the left rising and literally taking over in the country they are ones who scream longest and loudest and if politicians don't tow the line they are demonized by the media.

The provision for social housing should never have been anywhere near the private sector as its out of kilter with what the private sector are looking to achieve I.E profit.

https://www.scotsman.com/news/world/irish-property-crisis-could-mean-10-years-ghost-estates-1649761

Grand so your in agreement that we are not in a bubble and that the reason why our prices are rising is because of a supply issue. I have also added the rebound factor for prices that had to happen as the selling price of a house < the build price of a house for about 5/6 years after the bust of 08. So like I have said I dont see that we are in a bubble yet

The "wrong area", imo, means places where most people who live there don't actually want to live in, but will buy when they are desperate and stuck as a way to get on the property ladder. I think it's about more than just cheap vs expensive. You can have cheap areas that people still want to live in because they like the community, or have family ties there, or whatever else. The "wrong area" lacks these things, and if prices end up dropping and people are no longer desperate, they won't want to live there anymore.

I think a lot of this could be solved by increasing density in the desirable areas, but we have a huge pushback against that in this country. If any developer tries to build even a mid-rise apartment building in an area close to the city that has an established low-density population, there will be outrage from the locals and the county councillors that they're turning the area into "Manhattan" (it's always Manhattan) and that the local bat population will be negatively impacted by the construction. So they end up getting pushed further out. The locals will also usually complain about the traffic that will be caused by new people moving in, but ironically pushing new developments further out probably makes this worse overall, since people further away will be more likely to rely on cars instead of public transport and many will end up driving through these places to get to work in Dublin anyway.

Yeah fair enough, I didn't mean it comes from the government specifcally, more that it comes from some kind of authority and not from the free market. I'm sure if the central bank rules were done away with, banks would be plenty happy to start handing out higher mortgages again.

But the fact that we have another 1/2 a million people living in Ireland than we did 10 years ago this would suggest we have to start building in these so called less desirable areas and bring them up to a standard with regards to the infrastructure so that people can live there. I mean working from home will trend more and more globally as the pandemic has proven a lot of jobs do not need people in a physical location and that is a big saving for a company. I mean we would all love a nice gaff with panoramic views of the Atlantic but does that make it an area that is in the wrong location due to the infrastructure not being available or is a tiny squalid studio apartment in the middle of Dublin city center with the best infrastructure in the country is that the right location but just a horrible small place to live in.

Look I do take the point that building with the absence of infrastructure that went on before the last crash was madness. Having said that there are a very low % of people living in this country that are living in the house/area that they want as they cant afford it. Desirable houses and locations cost as is the case globally and has been the case ever since people started buying property. I don't see why it should be different in 2021. I mean I find it galling that a person on the housing list can turn down a house due to not being 10 mins away from mam or we have not got a south west facing garden but this is whats happening. As I say we are without a doubt one of the most left leaning nations on the planet and we have gone so far left that anyone not making an effort to work (I exclude the sick and handicapped from this) are giving an advantage when it comes to a property over someone working. Its crazy stuff.

You have to look at this from the point of view of the person in the so called low density close to the city, in a lot of cases they have worked their a$$es off to buy this out of after tax monies (dont get me started on how punitive income tax is in this country) and now you want to put flats/apartments beside their house I can see both arguments to be honest. I mean I would put 100 euro on this if someone bought a house say today and in 5 years time a big load of apartments where built right beside it I reckon the majority would not of bought this house in the first place. I know I wouldn't.

Our last bubble was mainly fueled by allowing the general populous easy access to cheap credit like the precursor to 08 (110% mortgages anyone) I mean people were getting mortgages out on the equity based on another property which still had a mortgage. Fast forward to 2021 this is not happening as the rules have been changed and changed for the better meaning the 3.5 times your salary and 10/20% deposit has stopped prices really going through the roof. As I say we wont know if your right or wrong about us being in a bubble as their nature is only exposed as a bubble after they have popped. You throw in other factors such as inflation, houses crashing to under the cost of the "build cost" up till about 2012/2013 how do you or I or anyone else know if we are currently in a bubble or if its a correction to property prices going too low back in 2012 or if its do with the supply issue or the fact that we have 1/2 million people more here to be housed in the last decade. Its probably a combo of all. I think we will have to agree to disagree I think on the calculations of a couple on the average wage can still afford the average property price here using the mechanisms that everyone uses when buying a property with 50k left over.

In high demand areas investment funds and social housing are setting price, both have access to 0% and near limitless finance and pay no tax

90% mortgage at 3.5/4 times income. Mom and pop loans 10% of the total mortgage market. FTB grant of upto 30k. Mortgages only attainable to the top 3rd of household incomes.

Would you accept that 2 people on average incomes would be in the top 25% of household income in the country given that the middle third have an income range between 45 and 80k.

People forget that 08 to 12 was a correction as well as a recession. Did we also loose 250k people in that period

Granted inflation is a biggy, it could drag the market either way imo

Regardless of whether we can tell if we are in a bubble or not, we can see if what we are (not) doing is sustainable or not.

But the median household income is far lower than €100k. As the previous poster stated, even in DLR, the median household income was only €66k, which gets a mortgage of €230k, and good luck finding many homes in DLR for that price (you'd also have to imagine that houses with couples under 35 are over-represented in that bottom 50% who make less than €66k too). The national median was €45k, which doesn't even warrant a mortgage of €160k, and I can't imagine shopping for a house on a budget of that is going to get you too far.

No the assumptions I was making are as follows

The average wage is 40,283 annually according to the 1st link below

The average house price in 2021 is 208708 according to the 2nd link below

The property is being bought as a couple and the couple are both FTBs (keeping it simple as there are way to many permutations for 2nd time buyers with selling and buying, 10% deposit becomes 20% and no FTB grant etc)

The couple availing of the 30k FTB grant

This would mean that in this scenario they can afford a house of 40.283 (average wage) * 3.5 (salary borrowing constraint) * 2 (as the most common mortgage given is to a couple) + 30k FTB Grant + 31198 (10% deposit) = 343179 So under my assumptions they are a way over what is needed to buy the average house 343179 > 208708

Without the FTB grant above the figure drops to 310179 which is still less than 208708

Under your premise

So lets change the headline figure to that of the average gross household income including a 7.1% increase in the household incomes for the years between 2016/2021. The figure given for 2015/2016 for the average household income is 57200k from the 2015/2016 CSO stat and this is now 5 years out of date so we need to up this so just looking at the last time the CSO had data for household incomes it was recorded in 2009/2010 and it increased by 7.1% when recorded again in 2015/2016 so the new estimated household income is 62.204 (adjusting the average household income by 7.1% from 2015/2016)

So in this scenario they can afford a house of 62,204 (foretasted household income for 2021) * 3.5 = 217714 + 30k FTB grant+ 10% deposit 24771 meaning a house under your rules for a couple on the average household income can afford is 272485 which is still above the average price a house has been selling for this year. 272485 > 208708

Without the FTB grant and even taking away the fact that household income has risen since 2015/2016 so taking away the 7.1% I added in the amount they have to play with drops to 220220 and this is still allowing for the average house price of 208708 so its still greater than the average house price.

So even taking your premise of the average household income is 57k that was recorded in 2015/12016 and household incomes have definitely risen in the mean time this couple from 2015/2016 is still well able to afford the average house price of 2021 by 12k. So how is that for a fair comparison going way to lenient on figures?

https://www.thejournal.ie/house-prices-increase-ireland-inflation-5558577-Sep2021/

http://www.salaryexplorer.com/salary-survey.php?loc=104&loctype=1

sorry that was a typo should of been 287704 for the average house price Q3 2021 so using the value of a house that two people on the average wage and the median wage its still below figure needed for the average price of a house.. Household wage is hard to know due to the last figures out from the CSO was in 2015/2016

You're saying it makes sense to tell someone else they cannot build something on their own property, because you don't want it there. You can say people will have preferences about what they want to live beside, but that's a risk you take when owning any property and you don't really have a strong case for stopping other people from building what they want and living there just because it's against your personal preferences. If I decided decided I didn't want to live near any foreigners, and then a Spanish family moved in 3 houses down, I wouldn't have much of a right to protest just because I wouldn't have bought it if I'd known they would move in.

My guess is that if you asked most people who own a house if they were happy with where they lived, they would say yes. Most would not think of it in terms of "no, I don't, I'd much rather be in a more affluent area, but I had to settle for this because the market was tough, and I can't wait to get out", even though almost everyone could probably think of somewhere that would be objectively more desirable.

In fairness it was one error which was repeated and my calculations still worked for the median and average wage with no way to prove average household income due to out of date data. So just to update this.

The amount a couple can the average wage can using the rules get a house up to the value of 343179

The amount a couple on the median wage can using the rules get a house up the value of 339450

Average house price = 287704 so both are about 40/50k above this.

I cant find any up to date data on household incomes but there are stats that show the average wage has gone up in the last 5/6 years which would suggest household incomes have too.

https://www.statista.com/statistics/416212/average-annual-wages-ireland-y-on-y-in-euros/

So I will wait for the CSO data on household incomes but by that time we could see prices continue to rise or fall. So both of the metrics I used which have valid data sets show that people can afford to buy a house at the average price of Irish property. So when people talking bubbles and affordability they need to put a bit of substance or math behind it. When you look under the covers at the data both of these metrics show that properties are affordable. I also believe we have a supply issue which some people are saying is a bubble.

So you believe there is zero demand for buying a house at the moment ok have you any proof? As mortgage draw downs and mortgage approvals would beg to differ

Mortgage draw downs

Mortgage approvals

https://www.irishexaminer.com/news/arid-40303151.html