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

There's no simple comparative dataset for sale prices like there is for listing prices. Lots and lots of manual work to try link them to listing prices and similar properties

Inflation is irrelevant - the only thing relevant really is the cost of a mortgage over the lifetime of said mortgage.

House prices drop when rates go up - but only because a house worth 500k when rates are 2%, could be worth 400k when rates are 5% (these figures are purely illustrative and not real!)

A couple on same income in both cases sees their affordability drop, and that is the cause of house price decreases. As you said general inflation is irrelevant.

The only buyers who benefit from increasing rates are cash buyers. Anyone waiting on a house price correction should not cheer interest rate rises as its ultimately a 0 sum game.

No they are the date of the sale as far as ive ever seen.

Only problem with scraping data from the PPR is that its very hard to identify the houses on it most of the time.

It would be far far better than the pointless reports of asking prices are though for gauging the market.

I think the government should continue their agenda of subsiding rents and also leasing social housing. Always good to keep our debt levels high, rather using the corporation tax for building social housing.

https://archive.ph/6NENO

They havent been aggressive enough from the start though. Thats the problem.

As a country we are bankrupt but sure the the boom is getting boomier, what could go wrong, it’s different this time.

your post made reference to 30k that was already saved though.

Im seeing a 17 euro rise in monthly payment for every 1% ecb rise. Not a lot but enough to p!ss me off. 42.50 up from last Summer so far. Was 50/50 to fix or not before the hikes started. Never imagined ecb rate would go back over 5% but looks like it might.

Was reading about people's mortgages sold off to vulture funds due to being classed as non performing loans. They restructured in the 2010s and parked part of the debt. However they now dont have any options to fix so are giving up on trying to service their mortgages due to massive monthly increases so that could be more properties on the market soon.

I wonder are we over egging the impact of interest rates on the market. Take an example, 400k mortgage over 30 years. A few months ago you could fix for 5 years at 3%. Mortgage cost 1.7k approx. per month. You can currently still fix for 5 years at 3.5%. Mortgage cost 1.8k per month. If we assume rates go to 4.5% its 2k per month. So about 3.5k more per annum over the base case. Hardly back breaking for most people who are considering getting a mortgage at this level. Could rates really go much higher than 4.5%? Unlikely I would imagine considering the broader risks to EU economy. In an era of high rents and broader desperation around housing, I wonder will people really get the drops they are expecting.

Certainly - Irish mortgages are much more heavily stress tested than most countries so the likely worst case scenarios of interest rate rises won't change the affordability calculations for most people, though it will of course factor into decision making. Most experts still seem to be of the opinion that the interest rate rises will cool the price increases we've been seeing, but the likely outcome is swapping a period of rising prices for a period of stability, rather than a sudden drop off a cliff.

People in Ireland have record levels of savings on deposit currently which is allowing banks to keep retail rates from rising as much as the ECB, and the growing economy is an outlier in difficult times globally which will likely see more increases in net migration and continued growing demand, while building and material costs continue to constrain supply. So there's a lot of factors at play pushing in different directions, but fairly stable prices look like the most likely outcome.

The trouble is that, for the majority the affordability calculation means they were unable to buy before the rate rises started

House prices were never in the CPI. They are a capital expenditures and are consider to be an asset.

Mortgage interest is AFAIK as is house rent.

I do wonder whether the vagueness of some of the stuff on there is outright deliberate..

I’d just like to ask about your figures.

Biggest lender in ireland is AIB and they’re 4.2% for 5 year fixed when i google it. So if I’m in the majority and my rate is to be 4.2% over 5 years and i’m looking at houses right now and I’m a long term aib customer and I’m borrowing 400k like you suggested then if rates were to increase again by 0.5% in march which is a done deal before i get to draw down…. So I’m now looking at possibly 4.7% (if they pass on the next one within 24 hours like the last one) and we then apply that to 400k then you’re saying i’m only down 100 or 200 euro per month compared to me taking out a 400k loan for 5 year fixed rate with Aib before they increased rates by 1.5% cumulatively over recent months, can you confirm this is what you’re saying?

I’m surprised by that.

on the 2nd half of your post, that HAD been the case, hence the delay in irish banks being slow to pass on increases but recently the goal posts have shifted with the arrival of other options like trade republic with 2% returns and while irish banks had been slow to pass on mortgage interest rate rises they have been woefully slow to pass on interest on savings too until recently but they are under pressure to do so now.

They will need to fund that, obviously.

This is why they’re responding faster now, like AIB did yesterday and the variable rate also went up up which was telling. It’s a changing climate.