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

Obviously you guys all earn a lot more than me. I’d love to buy in Clay Farm but I can’t afford it.

People really get caught up in what they THINK is a functioning housing market. If property is being sold and bought it is functioning just not the way you want. I do agree that things should be different but something radically changed in Ireland in the 90s disrupting the traditional housing market here. Those changes are now the norm after 30 years.

A few years in the difference of buying a property meant completely different outcomes. I have seen senior managers living in bad areas and small properties compared to much lower paid staff who are paying less for their mortgages. This means if that lower paid staff, if promoted in the mean time, can afford these expensive homes. The belief new housing is being sold to FTB and they have no saving above the deposit is the issue. The expensive housing was very rarely sold to FTBs and more often sold to people going up the ladder.

FTB housing is always the cheaper property and not every development has to be for them as we need the smaller properties and prices for FTB to become free by getting them original FTBs to move up the ladder. That is the nature of housing markets.

At one point prices were going up so quickly it made it affordable to retain the FTB house and still buy another one.

We need more housing is the only thing most people agree on now. When the government was advised by the ERSI to encourage building a large vocal public were furious. No investment happened and no housing was encouraged and we ended up with a huge housing defecate that will most likely sorted by an aging population rather than new buildings.

Bigger housing is going to be split up and can be seen in many modest housing estates around Dublin already.

There are many ways that the housing market can and will change in Ireland that people aren't even considering as they expect certain things to remain. WFH is also a huge change to housing requirements that people were considering but COVID ramped up the speed on that than anyone expected.

What household income would put you in the top 5 or 10%?

Also to add to this

In numbers how many such 600k+ house are for sale in whole of South Dublin , I would say << 1000 in total , so for a developer to sell them they only need 1000 people with an ability to get 600k mortgage , sounds like a easy job to me.

That will also explain why even if you want to buy these houses (you have the money) there is a queue and people are camping overnight to book houses in west dublin new estates last weekend.

Cherrylane had a viewing last weekend and all 3bed are already booked .

Clayfarm has this weekend and I can assure you that if you are not in first 20 people in line you are returning home with no home.

Of the properties purchased this year, 94% of them were purchased for less than €700k. So those Clay Farm houses at 700k would be in the top 6% of most sought after houses sold this year.

CBI stats say average FTB mortgage is for 80% of the property value. So a person buying a €700k house is taking mortgage of on average €560k (Huge percentage of FTBs get family gifts hence chunky deposits. I believe this to be unfair but most people baulk at that suggestion it should be stopped).

In order to get a 560k mortgage you need a €140k household income. Average income of the 9th decile (likely to be a bit above the 85th percentile but obviously below 90th percentile) of households in Ireland per CSO is €129k. So a household which is ‘only’ in the top c.10-12% of households (c.€140k), can afford to buy all but the top 6% of houses that were sold this year. These are just rough figure but it doesn’t seem crazily out of whack.

The suggestion that only the top 1% of households can afford the ‘undesirable’ houses in clay farm doesn’t stack up.

How is disposable income calculated? Is it after mortgage/rent/bills and other loans?

In other words, the commitments we have to pay each month.

Your figures are for the population as a whole, not for those under 40 - the young buyers in question. Where incomes are much lower.

That notwithstanding, you seem to have missed my point entirely. It wasn't that the Clay Farms houses are unaffordable, its that they're absolutely terrible value for money.

In a functioning housing market a high earner, on either top 1%, or even top 10%, of income should be able to afford to live in a far nicer area than somewhere thats not even one of the top 10 suburbs in South Dublin in terms of amenities.

Kilgobbin/Carrickmines is, despite what realtors may be claiming, not a desirable area in any way compared to most of the coastal areas in South Dublin, and a good chunk of in-land areas like Ranelagh or Clonskeagh on top. Its pretty grim up there.

Rather bizarrely CSO has households headed by 18-34 year olds as the highest income, shortly followed by 35-49. Both are 20% the overall state average (both average €57k disposable income vs €47k state wide). 50-65 and 65+ pull down the average significantly. I’m surprised by that.

On your second point, I don’t really follow the point you are making unless it’s just a very direct personal dislike of this particular area. I don’t know the area well, The houses look nice. But ultimately the market has determined those houses are among the top 6% most desirable sold in the country this year. I believe the market to be fairly efficient so a significant cohort of people must really like the area (green line Luas mentioned earlier). Anyone buying there could easily choose to buy in coastal SCD (albeit with some tradeoffs I guess). They have decided not.

Personally I would also probably choose to buy coastal, but everyone has different priorities. I don’t believe these particular houses are just wildly overpriced in a terrible area…yet sell out every single time.

To confirm this. The average house price in Blackrock is €735k. This is the highest average postcode in the country. So yes, anyone buying a 4 bed in Clayfarm has the means to live in an (basically) average house anywhere in the country.

New builds in general are overpriced for the (relatively) poor locations they're in, so its difficult to make a comparison.

Income and wealth both increase with age, so those higher income households are much more likely to be older, and existing homeowners rather than FTB.

As I said before these 600k+ new builds are aimed at mover purchasers than FTBs as you need the existing equity to afford them. Saving a large enough deposit & having a large enough income not only to hit the mortgage multiplier limits 3.5/4.5, but also to afford repayments on top of childcare and other expenses that the bank will stress test against... its not realistic for FTBs even at the higher end of income.

I would love to hear how you think it would be possible to stop family members giving gifts to each other in order to buy homes. Whether you think it is wrong or not doesn’t really matter. How could it be stopped? Would it also prevent family members giving money for medical care or helping family members that experienced some other mishap?

FTBs aren’t generally buying such expensive property as they simply can’t afford them even if they were straight up given the entire deposit. Very unrealistic description of the reality the vast majority live in. Houses in my estate that sell for less than the values you are talking about are not being bought by FTBs. They can’t afford them. They can afford the properties the people sold to buy near me. There is a reason it is called the property ladder.

As for costs by sqm it is really irrelevant as location is a key factor in price above size. Large property is also more expensive to maintain and run. Newer builds are cheaper to heat and a higher standard which is expensive to upgrade an existing older property to. Everything has a price

99% of the people who buy where I live are trader uppers. Houses cost anything from €600k to €1M.

The only exception in the last few years being a young couple in their 30s bought a house a few doors down from me this year. Their house cost €625 from the PPR. Dont know what their mortgage is but they seem to have no problem still affording weekends abroad fairly often. The boyfriend works where I used to work and I can say with certainty that he is earning about €80k including bonus. The girl is a garda, but she is saying she is leaving within the next year. She said if she gets pregnant before then she will stay and then leave after her maternity leave, but she is not staying in the gardai. No idea how much she earns but household income is probably well over 100k.

• Average weekly earnings were €909.77 in Q2 2023, an increase of 4.3% from €871.93 in Q2 2022.

Wage inflation has will offset some of the interest rate increases also. 4.3% seems very significant

Savings are going up too. The statistics don't seem to match the doom and gloom you read online

Interestingly the CSO stats don’t seem to show that. 18-39 and 39-50 have the joint highest household incomes on average with a steep drop off then in older years impacted by pensioners. Surprising to me too but those are the stats.

We’re obviously not talking about the majority. I know that. But there are plenty FTBers with big budgets. We had a budget of €1.3m+ as FTBs. All our friend group have bought in the €600k+ region as FTBs in their late 20s/early 30s. Again, not saying it’s the ‘norm’. But they do exist and in decent numbers. They are also heavily concentrated in the south dublin area.

For example, there are 100s, potentially 1000s of accountants churned out by all the accountancy firms each year. Each of them earn c.€65k/70k basic, plus 5–10k bonus at qualification at around 27. Shack two newly qualified accountants up (v common) and you have a €600k+ budget. Significant more at 30 when you’re made director. You really don’t need to be a superstar to achieve that. 400 points in the leaving a 3 years of grunt work and it’s there.

Same goes for lawyers, doctors, actuaries, dentists, tech workers etc.

Whilst these couples are small as a percentage of overall population, 600k+ houses are also small as a percentage of the overall houses for sale, so think you’d be surprised the prevalence of FTBs in that price range.

The people whose wages outstrip inflation are young professionals into there mid thirties and beyond. Young teachers, nurses, Gardai, staff in banking, accountancy financial, engineering etc will expect there wages to outstrip inflation.

As I said with modest 2%/year pay rises along with increments my daughter wages will rIse by 30ish% over the next five years if she get a promotion it's another 6% nursing is similar.

Daughter dose not live at home. She lives with her BF who has his own house. She may build on a site she has planning sometime in the next three years.

The biggest effect on pubs and restaurants is those that took a complete tax holiday during COVID and are now expected to stump up the back tax for that period. Many of these because they are in company format and leasing have taken the money out and are closing down and reopening elsewhere