Irish Property Market chat II - *read mod note post #1 before posting*
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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.
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Genuine question - with the amount of HAP families to be accommodated pretty much nulling the supply of new builds the Govt has promised, is there anything whatsoever to suggest property prices will stop increasing at their current rate in the short to medium term? Would you think a lot of people are waiting until the new year to put their properties up on the market?
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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
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Bleaks a loaded question if ever there was one. Anyone advising you on this does not know unless they are Nostradamus reincarnated. No one knows anyone telling you differently is a spoofer. You can only look at data from other areas and make a guess. If I was looking to buy now I would be looking at the following data sets for the last 5 years and keeping an eye on it for the next couple of years.
Money in Irish savings accounts.
How low interest rates are.
Minimum wage
Inflation
The rate of immigration into and out of Ireland.
The rate of deaths vs births.
Mortgage applications vs mortgage draw downs over the last couple of years.
Sinn Fein getting into power and promising housing for everyone.
Immigration laws cutting the time taken from having undocumented migrants to being legally able to work and live here from 8 years to 4 months.
How much longer vultures can snap up property without any regulation
How much longer the government are behind the curve when building and supplying social housing
The amount of property available for sale and rent.
Rental prices.
All of the above would be impacting on either the supply, demand or access to credit: all 3 are the fundamentals of a person being able to afford a house. In My Opinion (and take that with a big note of caution and do not make any decisions based on this) I cant see prices coming down for the next 5 years, they may not continue to go up in that time I reckon another 2/3 years of slower price rises and 2/3 years of them staying constant.
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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?
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Sorry, the lack of repossessions was policy to prevent flooding of the market. Like many other things it was allowed to get out of control.
Michael Noonan when asked if he was concerned about the pace of inflation in house prices replied that he felt they should rise by a little bit more.
With regard to oversupply in 07/08. To what extent had we an oversupply.
Was it more an issue of building in the wrong place, which the market appears to be doing again, or at least demand is pushed out to these areas for affordability reasons
Was it a result of migration figures reversing due to the economic shock. Is an economic shock likely again after the longest bull run in history with asset valuations at multiples of historic norms.
When the provision of housing is left to the private sector, I think it's impossible for supply and demand to be at equilibrium. There has to be state involvement in providing supply at different price points. Stoking demand makes the situation worse
If supply was >= demand now, prices would be lower and rents much lower
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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.
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In fairness salary to mortgage is a non government intervention, its being imposed on us by the central bank.
Government have been trying to change them or work around them for years, showing there a major part of the problem rather than offering solutions
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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
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It interesting you bring up the Carlsberg ads of the 90's and 00's as I often think of 1 of them when we consider our housing problem
Do you remember the Carlsberg ad on the perfect night out on the town where the people out partying exited the night club to a line of taxis ready to cary them home.
At the time you Had masses at the taxi ranks/offices and it could take hours to get a cab, all that was resolved by removing barriers to supply.
Imagine what we could do for housing if some of the supply barriers were removed
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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
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Bubbles are caused by supply and or demand factors
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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.
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In the noughties supply was chasing demand as well culminating in the 90k build figure for 06
The housing fo all plan, should it live up to its title would imply prices and rents must fall, I acknowledge that government plans and results are 2 different things
Prices are still below 08 peak but rents are significantly above. Are these rents sustainable, given the lack of wage inflation in rental demographic and the high degree of government subsidies propping them up.
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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.
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Yeah I hear you with rents but once again this is a product of our population expanse and lack of building over the last decade meaning that the supply of houses for rent is just as bad as it for buying if not worse. So while you may think the rate of rents are not sustainable, I can guarantee that if a house comes up for rent in an area that is desirable it will be rented. Add in the mom and pop landlords are leaving this area by the droves due to the new laws and the fact that vulture funds can actively leave apartments/properties lying vacant for long periods in order to keep rent prices high in their other properties would suggest that the property available to rent is worse than that of whats on offer for buying and if you do a quick check on myhome today (right now) to buy there are just under 13k properties countrywide available to buy and just under 700 Available for rent. Once again its the supply problem squarely kicking those without somewhere to live in the butt
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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.
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In your calculation that the "average couple" can afford the "average house" in Ireland, you assumed the average couple earn €100k combined. Only 14% of households have income of over €100k in 2016 (Income in Ireland - CSO - Central Statistics Office). So in reality it's 15% of households can afford the average house in Ireland. Even the very wealthiest part of Ireland (DLRR) the average household income is only €66k. So I don't think saying a €100k income household is your "average couple" is a fair representation by any means. Would also have to factor in that majority of homebuying activity happens in 20/30/40s when incomes are typically lower than average.
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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.
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You seem to conflate living somewhere you "want" with living in your dream home. I can say that I would like to live in a multi-million Euro mansion on Ailsebury Road, but obviously that is not realistic for me, or for most people. That doesn't mean that every other place is somewhere I "dont want to live". And I'd personally be pretty conservative in how many people will realistically be working from home long-term, and don't think it's great to plan as if most people will not need to get anywhere for work and that will just solve our transportation problems.
It also strikes me as kind of contradictory that you complain about the left-leaning nature of Ireland but then support the idea that you should get to decide what other people do with their own property. As I said in the thread earlier, I'm generally in favour of free markets (and therefore not very left-leaning), so I think people should generally be allowed to build what they want on property they own, assuming it meets things like safety and environmental regulations. Imo, it doesn't really matter how hard you worked for your property, your ownership is for that property and not for all of the property around it. Honestly, if some apartments go up down the road from where I'm hoping to move into shortly, I'm not going to be up in arms about it because I realise there's a shortage of housing and that other people are entitled to live there too, but more to the point, it just won't be any of my business because it will be built on land that isn't mine.
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First signs of a cooling setting into the US market? Watch this space closely in the coming months, I reckon. Increasing mortgage rates a real wildcard that will impact not only the US market.
Pending home sales, which are a measure of signed contracts to buy existing homes, fell an unexpected 2.3% in September compared with August, according to the National Association of Realtors.
Analysts were predicting a slight monthly gain. Sales were 8% lower compared with September 2020.
Pending sales are a forward-looking indicator of closed sales in one to two months.
Sales may have dropped due to higher mortgage rates. The average rate on 30-year fixed-rate mortgages fell below 3% in July and stayed there until the first week of September, according to Mortgage News Daily. Then it began rising and crossed over 3%, ending the month at 3.15%.
Inflationary pressures are ramping up the world over. Central Banks will find it difficult to maintain ultra low interest rates, in my view anyway. There's an entire generation of adults who know nothing but negligible interest rates.
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I'm not saying that average couple can afford average house, but you got something wrong here.
3.5 * 100K / 90% = 389K. Which is much higher than median house price in Ireland of around 270K.
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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.
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I was not commenting on average wage. I repeat: I'm not saying that average couple can afford average house.
I commented on the estimates:
"Only 14% of households have income of over €100k in 2016 (Income in Ireland - CSO - Central Statistics Office). So in reality it's 15% of households can afford the average house in Ireland."
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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.
Or hows about we take a different measure as in the median wage in the country meaning 50% above this figure earn more and 50% earn less probably the fairest measure and according to link 3 the median is 38500. So doing the math of 3.5 times salary then multiplied by 2 for a couple 10% deposit and 30k FTB. This couple can afford a property for 339450. Which is still more than the average property price 339450 > 208708
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
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NO I wouldnt see my above post
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"The average house price in 2021 is 208708 according to the 2nd link below" - that doesn't sound right neither.
Your link says: "the average price nationwide in the third quarter of 2021 was €287,704"
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Where was I deciding what other people should do with their property and I said I could see both sides of the argument as the need to build vs a person or group of people who have bought a house and if they had prior knowledge of a bunch of apartments being built beside them they probably would not of bought the house. I was conflating it to try and make the point maybe a bit over done but in general if you asked most people would they like to live in a more affluent ,bigger, better area with better infrastructure I would hazard a guess a very % would.
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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
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Higher interest rates are coming and those that maxed out their borrowing abilities in the last 2 years with no fixed rates hopefully also factored in an extra few hundred euro monthly mortgage repayments within the next couple of years when they jumped in to the exuberant market.
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