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

When they talk about approvals here, is this just AIP or drawdown?

Nothing makes sense at the moment with mortgage banking here. I'm usually pretty good at working out what is going on behind the scenes but I can't put my finger on the current situation.

As somebody pointed out here before we went from one of the highest mortgage rates to one of the lowest in the EU.

Your point above about our central bank chief giving more money but telling others to tighten.

I just did an online mortgage application with AIB. With 50% LTV their variable rate is 3.15%. The deposit rate with ECB is 3.5%. They could park the money with zero risk and get a higher return.

What is going on?

If the vast majority of households in Dublin are earning less than 130k, which they are, then its not "very achievable" by any statistical demographic metric.

Calling a household income almost 300% the median household income (47k) for the country "very achievable" is either a terrible bias or extreme naivety.

Interesting, I thought it was AIP as there is a separate drawdown report by the same entity. Only produced quarterly I think.

Sometimes feel everyone is so negative about housing (and with good reason in many case), that they can’t see the wins when they stare us in the face. If FF/FG set out their stall 18 months ago and promised that:

• More FTBs would get approval to buy a house than ever before

• Unemployment would hit all time lows.

• We’d have some of the cheapest mortgage rates in Europe

• House prices would still fall 5-10%+ in real terms despite the above

• Housing completions would hit levels not seen since Celtic Tiger.

Theyd have been widely ridiculed, yet that is where we are today. Still a long way to go. Rental, in particular, is still a complete shambles, but these last 12-18 months have been almost surreal in terms of progress for those wanting more FTBs getting houses and cheaper prices. Yet still it seems all doom and gloom. Hopefully this current trend continues and things will be a lot better very quickly.

Are they seeking to kill off the foreign competition?

Nearly All of your points could equally apply to the maximum damage phase of the Celtic tiger.

Remember for ftb to purchase at current prices they have to come up with funding that equals what investment funds were able to raise paying no tax and an environment of negative interest rates and the state panic buying

I think conditions in housing market are a long way from where they were at peak Celtic Tiger. But my main point is I’m just confused as to what people want to see when they open news like today.

Mortgage approvals up - Bad News, prices will go up. Reckless lending

Mortgage approvals down - Bad News, nobody can buy a house. Rental market is terrible and I’m trapped.

The majority of the key metrics for housing are trending in the right way. Approvals up, prices down, completions up, employment levels up. If this isn’t good progress, then I don’t know what good progress is.

Sadly I think the reality is that many people want - ‘Mortgage approvals drop to zero…except for me, where the banks are happy to lend infinite funds to me…and prices drop 80% because nobody else can get approval…but builders keep building so I have lots of choice despite prices falling 80%…and then after I buy, banks start lending again and all returns to normal’

Banks are not paying for deposits and instead using the increased margin on deposits to subsidise the margin on the loan book.

You also need to take into account that we have an inverted yield curve at the moment where overnight money gets a better return than further out the curve. This is because the expectation is that rates will be cut in the future due to a weaker economy.

You’re way oversimplifying. Mortgaged FTB demand is only a piece of the puzzle. You’re ignoring that

• institutional demand has likely fallen by ludicrous amounts due increases in risk free rates

• upsizing demand has likely fallen as people don’t want to give up locked in low mortgage rates

• speculative investment, general sentiment is likely waning as global housing markets turned late last year/early this year.

• Cash is now longer yielding 0/negative making property investing less attractive to Joe soap.

• US dollar has weakened significantly vs the Euro hurting the purchasing power of wealthy expat buyers returning to Ireland who have been a SIGNIFICANT factor pushing up prices at the higher end during the last two years.

• private FTB demand is also impacted by levels of skilled inward migration. Possibly slowed due likes of Meta etc. reducing their size

• supply is increasing through higher completions, landlords exiting, possibly more vacant units coming into use as holding derelict property is expensive with risk free rates at 3%.

Mortgage approvals for FTBs have been pretty steadily climbing every year for donkeys years now. House prices have been falling for several months.

These are both facts from very reputable sources of data.

It most certainly is not ‘nonsense’. If it were as easy as more approvals = higher prices then we wouldn’t have so many diverging opinions on the housing market.

"• upsizing demand has likely fallen as people don’t want to give up locked in low mortgage rates"

I think this point is very underappreciated. When you consider also that any new purchase probably comes with some renovation work, and labour and materials are currently crazily expensive and scarce, this is going to be a big drag on the non-FTB market. Possilby also on the FTB market, but to a much lesser extent because they effectively have no alternative

its widely circulated on demand versus supply

look at both the housing and the rental market which is even worse, so whatever article that is is just obviously wrong

no one is holding onto a vacant property to the 10-20 years it might take to get to college without using it and if they are they aren't doing it at the supposed top of the market, you would rent it, in fact due to supply issues you'd be mad not to due to the rent, obviously there are risks, but you can be choosy on who you rent to and this drops the risk right off

there might have been nothing to be gained on savings but there are other methods of investing

Most people up-sizing are more financially comfortable. A lot even with little or no mortgage. Like the idea of moving from the starter home theyve had for years to something a bit nicer etc. GEtting any sort of exctension nowadays is cost prohibitive so its easier to just move to an already done bigger house to get the space you want if your current one doesnt do it for you anymore.

Do you have kids? That's the real driver of trading up, apartments to houses etc, the property ladder

Loads of people move house and that is a big portion of cash buyers

Everyone trading down as an example, everyone of those entire estate bought out by reits