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

hearing from some landlords that prices are now good and its quite simply the time to sell

A good analysis on what has been mentioned here around companies buying housing for workers. Honestly, I completely understand why people would vote for any party that claims it will ban corporate owners of property at this point. We are very much not a rental country in that it is totally unsustainable to rent long term in comparison to buying a home so if you are an unfortunate caught renting, you are really getting shafted the longer Ireland experiences "growth" (which is double speak for impoverishing renters and "late to the punch" homeowners).

What's crazy is that people somehow think prices could not come down and that they are sustainable in some way despite clear evidence the only reason prices are constantly increasing is because of State actions (throwing money at the market and trying to quench supply as much as possible) and (as far as I'm concerned temporarily desperate) companies (not property investors) now getting involved to buy up properties. The scary thing is that now these companies will be added to the list of vested interests that don't want to see housing costs drop the necessary amount they need to to become more sustainable (30/40%) because of course they will lose out big time. There's now little cash in the budget to take the heat off workers so it is getting even more likely that neither FF and FG will be near government after the next election, with SF and friends potentially holding all the cards (which is a political risk to our economic model according to the IDA).

How one could not forecast that govt pursuing such policies would lead to an emergency situation not just for housing but for the economy as a whole. Fg have alot to answer for as its predominantly their policies that got us here and they were in power when maximum lower cost solutions could have been implemented to alleviate the issue

At least when Ff broke the country, we had something after it in infrastructure terms and a practically debt free state with a pension reserve fund going into it. They also did much of the heavy lifting in implementing the tough corrective action after the bust and taking the electoral punishment.

24 billion in excess corporation taxes since 2016 and the state can't add or implement policies that add a few houses each year to help the people and companies that generate this revenue for the state, not to mention that such policies not only cool housing inflation, but could also be a significant revenue generator to the state. This benefits not only the general population but also long term investors in property in smoothing out the boom/bust cycles that can potentially destroy them

I apologise for speaking kindly of FF, but we are where we are, that often quoted term of the last crash

You may have put your finger on the problem. Lobbyists and vested interests were embraced while independent genuine experts were ignored

Ronan Lyons 01 October 2013

By not building sufficient supply in Dublin, the ripple effect has pushed people further away, and people in those areas have been pushed out because they are unable compete with Dublin salaries. Investment funds that pay no tax have speeded up the process

I purchased a bit of a doer upper in 2014, tradespeople were falling over themselves to get the work, so got as much done as I could then

The state was the the largest landowner in the world in 2013, 14, 15. There definitely could have been something done to at least help balance the supply demand issue in Dublin. It would have helped in retaining some of the much needed skills that left/diversified.

Construction spending is great economic enabler with the cash continually recycled within the economy. The costs would be minimal with the benefits substantial

If I remember correctly the imf in particular were very much in favour of socially progressive smart solutions and AJ Chopra was quiet a popular person in Ireland

Don't forget the golf courses. Far too many within the m50 that would be better off being new homes sites, sporting complexes and public parks. We can't have it both ways anymore; this small town type of vibe in Dublin whilst at the same time welcoming tens of thousands of new people each year to the city looking to live there. And I say this as someone who played in one of those golf courses for a decade; madness that they can still exist in such large numbers within the city.

Commercial (which does not include housing in this context for some reason) construction almost at a standstill due to inflation, but housing construction defiant to inflation in contrast.

when hostels are charging 100 a bed in a 31 room dorm here it pretty much sums up how bad things are here

Considering a lot of new builds in and around Dublin are at least €4/500k the last few years, those mortgage holders could be facing minimum €200+ per month increases to start in a few months, likely doubling to €400+ per month by the end of the year and into the start of next year as the ECB rate rises approach 1-1.5%. Not great when inflation is continuing to soar and food inflation is going to keep rising into next year as higher input costs now feed into higher prices when the food gets produced. While rents are limited to a maximum of 2% increases, it is likely that a full on rent freeze will be introduced at some stage; unfortunately nothing similar can be introduced for mortgage repayments. The government are wedded to spending our precious cash on propping up the housing market instead of allowing it to correct which also means they have less scope to take the heat out of some of the hotter inflation areas (eg cutting excise on fuel, more electricity credits etc) - a kick in the mouth to working families who receive no benefits from the State but with FF and FG, are you surprised?

The seaside "dream wfh" homes will start to collapse in value I think as even the one day commute is looking to increase substantially with petrol costs and these properties were definitely in high demand because of the very limited set of circumstances (ie once in a lifetime covid lockdown) which made them the most sought after homes on the market, but together with the increased mortgage repayments and commuting costs, the isolation is probably starting to sink in given there isn't actually that much going on in a lot of the more rural Irish countryside in comparison to the big towns, with little to no prospect of sustainable and vibrant communities developing given the new home pipeline is poor for the country.

Well, I like to be entertained. As far as I'm aware, mortgage rate increases aren't directly 1:1 to the ECB rate increases, with mortgage rates often being increased more than ECB rates. From what I have also seen, up to 5 years fixed would've been the maximum that people fixed for as standard in recent years, but a lot would've only done 1,2 or 3 years fixed. While these people may not be paying a few hundred extra per month by the end of the year, their mortgage repayments, if not fixed, would be due to increase by that much when the fixed period ends by the end of the year/into next year, should we see 1-1.5% ECB rates instead of the 0.25-0.75% people somehow think will be sufficient to do any damage to inflation.

So, for example, using the local new builds in Greystones from the last few years as an example; €450,000 new home cost for a FTB, using €25,000 savings and €25,000 HTB to make up the deposit, purchased 2/3 years ago on a 1-3 year fixed mortgage of €400,000, could be looking at €300+ per month increases in repayments with a 1% increase in the variable rate. Assuming they are higher rate taxpayers (as they would need to be to secure such a mortgage), this would require an extra €7,200 gross increase to their salary to cover without being poorer than last year. That's a bit grim to see such an, on paper nice, increase disappearing straight away into a mortgage repayment increase.

I read before that a 2 year fixed was the most popular for a first time buyer. Given the inflation phenomenon only took off at the end of 2021, alot of people who bought in the last few years probably saw no need to fix for very long durations. We will get 0.25% in july, September could be 0.5% and again in November. Looking at 1.25% increase between now and end of the year. This will be noticeable for people coming off fixed periods next year who bought a few years earlier.

Definitely. These LTI rules are critical.

Btw. Can you refix your morgage in the future for when your current fixed rate ends??? Ie if my fixed mortgage ends in April 23 can i agree today with a lender that they will take over in April 23 at a fixed rate? I thought you would have to wait till your current fixed morgage rate expires to agree on a new fixed morgage rate?