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

unlike the Fed and BoE, the ECB can’t afford to raise rates because of the massive indebtedness of some member states.

The Euro will have its 20th birthday soon, I would guess it wont make it to 30. I only have USD/GBP/CHF savings accounts now and will transfer back if needed.

The US and the UK have have debt issues as well. Inflation is a lot better than deflation. Be careful what you wish for regarding the euro. I think you totally off the ball regarding the euro. It is now a solid currency. There is danger you may see a few countries leave the EU however after the UK that gra seems to be gone.

On inflation it is the friend if the property owner and buyer. Inflation will increase wages. Most buyers are going for 5 year fixed at minimum. A 5 year fixed on a 300k loan is around 1100-1150/ month at present. If at the end of the 5 years if fixed rates rose to 4% the repayments would be about 1340/ month.

For that to happen you need a continuous inflation rate of 3% wages would rise by 10% at least if that happens. That 8k in extra pre tax income for a couple on 80k and that is not allowing for any wage rise due to either increment in the PS or natural wage rises that may happen anyway by modern job movement in the private sector.

Hi. Im after opinion on my strategy

I will be putting my home which I bought in 2007 up for sale in the next couple of weeks.

I want to move the family west or the midlands where I can have a big home and maybe a bit of land for my children to possibly build on in the future. And a very small mortgage.

With my long overdue equity build up, and the the current house prices in the east, I should walk away from the sale with 150k in my pocket.

But without a property.

We intend to rent in the midlands and continue to work in Dublin, and wait out the current high price boom.

We have all seen collapse in the recent past. Albeit with different economic reasons . But it cant really continue like this forever.

Im looking at 1.5 to 2 hour commute daily and child care till an alternative is found in my new setting.

We are trying to look at the bigger picture of what we want to achieve in our life. And I am witnessing alot of landlords sell up now in an attempt to catch the tip of the wave.

Big question is, When do you predict a fall in property prices.. Should I buy now? Or rent and wait.

What’s your commute now? If diesel goes to €3 a litre in the next ten years would that make a 45x2 commute less attractive?

I know many posters will consider this outrageous but we are in the “just the tip” phase of carbon taxes meeting Irish society (national herd etc) and even though the Greens will be unceremoniously turfed out at the next election, the carbon considerations they brought to Gov will necessarily stay.

If commuters are ever asked to pay there fair share of carbon taxes, they are getting the full shaft, not just the tip.

Irish people are road warriors and love to drive (hence the obesity) but I really think you are swimming against the tide.

Back in 2002/3 a lad not too far from me sold his house at the edge of the village as a small estate was being build opposite him.

He spend 12 years renting before he managed to build again. If as some predict we are entering an inflationary period I be very slow to do what you intend. You will buy very little with 150k or even sub 350-500k. Remember it immaterial to an investor, he is either walking away with a handsome profit or is escaping a negative equity situation.

Even in a lot of rural Ireland rents are 1k+/month. If you are paying 15k/ year for 5+6 years how will you feel about it. Any fall in 2-5 years time may only bring you back to today's prices.

Too many fail to understand the factors for the 2008-10 crash. People owning multiple properties with 100%+ mortgages, people with proper abroad, a construction industry that was the economy not serving the economy, 70k houses build in one year, developers holding back houses as prices were continually rising. Developers acquiring large land banks and hoarding them for to develop 3-5 years time.

There is no where near them factors at present.

Ok. Thanks. Wise advice.

I would have all my eggs in one basket for sure..

Great value is still to be had in the Midlands so we will probably forge ahead and buy something soon after we sell.

Fair enough summation, but I would look at locations with strong rail links to the capital.

With young kids and daily commute to Dublin. Will you ever see them not to mention getting someone that will cover a day's work and 3 to 4 hour commute in childcare.

You never really value what you have untill you have lost it.

Demand pushed out to more rural locations increases the likelihood of an oversupply as happened after 08

Rates will be raised and might be sooner than later... ECB don't care for Eugène who took out 700k mortgage to buy brand new 2 bed in Milltown.

But I also think people financial situations are probably quite resilient to dramatic rate hikes what could follow over coming years...

Its corporate + government debt that is a time bomb.

Edit: https://www.ft.com/content/e8fd411b-6adc-4404-9d72-88fc7f9f475e

I'd love a shot of whatever they have when they write these reports, it seems like I'd be buzzing all day with that enthusiasm! The adjectives are immense, though I read the article and see it slightly differently based on how the information is presented; it seems that deals are not actually completed yet and a lot of the activity is just pre-planning and site visits.

What I see is that there is still significant uncertainty in the commercial sector, with the following parts of the article;

And

I won't say too much about the report highlighting the "recovery" in the Irish economy other than to point out that the economy has nothing to recover from so it is false to claim we need to "recover" from the pandemic when there was no fallout...as of yet.

Where are you getting 18 months of inflation. There was deflation for 11 months and we have only seen true inflation where prices rose above pre pandemic levels for the past 7 months.

The property market has soared during covid restrictions the past 18 months and then other sectors saw costs increase as they reopened. CPI-measured inflation is a scam.

CPI-measured inflation might paint a picture of what it is intending to show but it does not show the whole picture with respect to the cost of living. I mean, if you believe that the cost of living increases have been below 2% each year for the last few years then I think it is clear that cost of living and inflation are two different things.

It's like how debt:GDP is used to paint a picture which is the opposite of what is seen in reality; government debt has soared since 2008 but by using debt:GDP, it looks like our debt has become more manageable than when it was far lower. Cuckoo stuff.

The net effect is that the man on the street can tell you more about the state of the economy as it impacts the man on the street than officially used metrics can.

It's not just renters; anyone who bought in the rising market is experiencing higher mortgage repayments due to extra borrowing needed to buy the more expensive property. Childcare, insurance, housing and energy costs have all soared beyond the headline CPI rate so I question what it is the CPI is measuring that it stutters along below or slightly above 2%? Maybe if you water down or ignore energy, childcare and housing you can claim inflation is low?

On the government debt being manageable point, I really don't see how that is the case. The absolute figure is totally unrepayable and we now only seem to focus on the interest and how manageable that is.

What % of people have bought a house in the past year that have higher mortgage repayments compared to the majority of home owners who have benefited from lower rates. It is a very small % impacted.

Likewise you talk about childcare costs which I agree are crazy but that again is different for everyone.... someone who has granny or grandad looking after the children does not have creche fees. When my kids were small before going to school childcare costs were crippling us and was our largest expenditure even above rent and the cost of running a car put together.. But now they are in school this has fallen massively and is way more manageable. Yet again how many people as a % of families are needing to pay creche fees.

Your post shows the perception of inflation because it is real to you but not everyone will be impacted the same.

Whether people like how they measure CPI or not it is the most reliable way of measuring inflation in the overall economy. It may not best way of measuring an individuals inflation as people will spend differently as you pointed out and this is exactly the point that I was trying to make.