Stabilising rents point to importance of real economy

John Fitzgerald, Professor at the ESRI

22nd Nov 2010

John Fitzgerald, Professor at the ESRI, commenting on the latest Daft research on the Irish property market.

Amid all the uncertainty and excitement concerning bail-outs and banks it can be easy to lose sight of what is important to long-term growth prospects - the performance of the real economy. One important aspect of this is the housing market. While the dangers of a housing bust were well flagged, its full consequences, especially in terms of the financial system, have proved even more serious than anticipated. For the housing market itself we have seen a collapse in prices since 2007 and, as a result, a collapse in building. Unthinkable though it may be under current circumstances, eventually new building will become profitable producing an inevitable supply response. At some point in the future things will change - we will eventually run out of vacant dwellings in desirable locations and prices will begin to rise.

It is far too early to predict when the market will turn. All the uncertainty about the macro-economy will continue to have serious consequences for household confidence for some time to come. Households, even if they were not scared before, must be scared today. Even with secure jobs and reasonable after tax incomes it will be some time before many people are prepared to contemplate a major investment, such as buying a house. House prices, though falling much more slowly still have some way to go. This is also suggested by the current yield on rental properties in Dublin, which is below what might be considered its "equilibrium level". However, the real economy continues to develop and the backdrop against which the housing market should be viewed is also changing.

One of the early and more surprising developments arising from the fall in house prices was an increase in the number of households in 2008/9. Over the period 1995 to 2005 the proportion of people aged 25 and over in Ireland who lived in independent households - had their own pad - did not rise significantly. On the face of this it was surprising given the huge increase in incomes. However, the very high cost of accommodation to rent or to purchase meant that Irish people shared an apartment or house or lived at their parental home longer than was common elsewhere in Europe (a similar pattern was apparent in Spain). With the fall in rents in 2008/9 this pattern changed and those who could afford the new lower prices (having jobs) took advantage of the more favourable market. This change in behaviour shows that people are sensitive to prices and rents.

In Dublin and Cork an important factor has been the desire by those who financed much of the recent build, banks (and NAMA), to see some income coming in even if they could not be sold. (It is important to remember that NAMA, just like an old fashioned bank, wants to make money - it is unlikely to adopt policies that would destabilise the market.) Hence the supply of rental accommodation increased and prices fell. In turn, as discussed above, more people entered the market, renting where before they might have bought. The result has probably been a reduction in vacant dwellings in the greater Dublin area. The recent Department of the Environment study shows the relative stock of vacant dwellings to be lower in Dublin than in much of the rest of the country.

What the DAFT rental index shows is quite interesting. Having seen very substantial falls in 2008 and 2009 it would now appear that rents in Dublin have stabilised. This is apparent from the data for the last few months. It is clear from this that the supply of properties to rent is equal to the flow of new households being formed - the market is in a temporary equilibrium. This is happening in spite of the very significant outflow of people through emigration. This situation could persist for some time with stable rents. However, at some point, with the supply of properties fixed, new household formation through new renters could begin to put pressure on the market. This may not seem likely now with major fiscal retrenchment in prospect and, hence, low growth likely in 2011. However, the recovery in the tradable sector of the economy, which is clearly under way, will eventually begin to drag the rest of the economy back to growth. Then, with employment rising, incomes stabilising and prospects becoming brighter, more people will seek rental accommodation. In turn, as the excess supply dwindles rents will begin to rise. Initially such a small rise in rents will not have much impact. However, when it becomes well established it will have a number of effects. It will cause some of those renting to assess whether, in the face of rising rents, house purchase might be attractive. Eventually, as returns for those owning rented property rise and when there is some limited bounce back in house prices, there will be a gradual perception that Ireland will need some more dwellings in high demand locations.

All of this is some way off today. Much will depend on the vigour of the recovery in the tradable sector. In July when we envisaged a fiscal adjustment of €7.5 billion over the period 2011-14 I felt that such a turnaround could occur in 2012 or possibly 2013. With the doubling of the fiscal adjustment, and its consequential effects in depressing domestic demand, this could be postponed till 2013-14.

The first sign that things are beginning to turn will be a move towards rising rents. This will predate any recovery in house prices and any new building. As of today it is clear that rents have stabilised. From now on I will be watching the DAFT index seeking signs that rents are beginning to rise. I don't expect to see much action over the coming year but time will tell.


HIGHLIGHTS:

Rental Index
Rental Index

Stock and Flow of Properties
Stock and Flow of Properties


SNAPSHOT:

Average asking prices across Ireland in Q3 20010
Asking Prices in Q3, 2010

Discuss This Article

  • Re: The Daft Rental Report Q3 2010

    Posted By: RAYMOND Date: Monday November 22, 2010 @01:01AM

    Same old news. It will be 10 yrs before house prices in Ireland will begin to rise. The main problem with Ireland is the cost of living and wages. Wages are far too high compared to the rest of Europe. Ireland cannot compete with other European countries for international companies.

    Raymond

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  • Re: The Daft Rental Report Q3 2010

    Posted By: robert Date: Thursday December 9, 2010 @10:53PM

    ive have been waiting for 6 years to buy a home in ireland.i knew at some stage the whole thing would collapse and now it has.Irish people are sheep or rather lemmings when it came to house buying they all followed each other off the cliff
    and couldnt get on the property market soon enought.
    People kept telling me that my rental money was dead money and it was.But im waiting another year or so till the house prices reach bottom.I willl then pick up a nice 3/4 bedroom home for a bargin at the moment there are 3 bedroom house all over the country for around 100 to 125 thousand and these where 2.5 times this 3 years ago and they will still fall futher.Why because of supply and demant 300 thousand empty units and no bank loans for the majority of people.
    I believe the banks will go back to the 80s model of 3.5 time your wages and proof of 3 years saving in there bank.Where are the people to buy these homes there is only 4.5 million of us and getting less every week.
    With a average of 2,5 people per home you would need 750 thousand people to buy these homes.Leaving rented accomidation and buying a home does not count as it just leaves a rental unit empty.So where are these people to buy these homes, are we going to import them maybe.It looks like even the polish who like it here are leaving according to the papers.So with a smaller population we will need less homes not more homes.So there is a huge supply and a small demand so prices will continue to fall especially out side of major cities or commuter belts.People with savings for a deposit are still very weary of commiting to a home at the moment especially if the rent is lower than the morgage as it still is in the cities.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Tom Date: Monday November 22, 2010 @08:57AM

    Ray, you are 1/2 right, But people forget that all the wealth has not gone away. Yes, some people have lost their jobs (1/2m) and some have overextended themselves in the property mania (a lot of these are able to survive).

    My main point is that there is still a lot of wealth in this country, much of it in savings, and confidence will return and it will start to come out again.

    Biggest issue is a NAMA for the young people who got caught at the top of the boom (mania), perhaps large tax relief for 15 years but something should be done,

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  • Re: The Daft Rental Report Q3 2010

    Posted By: declan Date: Monday November 22, 2010 @12:52PM

    "wealth has`nt gone away", This assumption is correct in many ways, for everybody who bought at the height of the boom means somebody sold at the height of it! Unfortunately some of these people invested in Irish bank shares(then a blue chip commodity).
    There is still money out there, many facets of the economy are holding up extremely well, its the fear and terror being drilled into people by the highest paid public employees(Kenny,Duffy and Finucane) that has people hoarding and stashing leading to further difficulties for business and therefore, for its employees, the same people who are the sons, daughters, friends and relations of the people terrified to spend. Its a vicious circle, it has to be broken,
    We are a great country full of great people, let us get up and get on with it, stop the bloody whinging,

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Monday November 22, 2010 @03:42PM

    Banking crisis? where exactly is the wealth you are talking about?

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Friday December 3, 2010 @05:27PM

    savings....in the banks.....brilliant!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Simon Date: Monday November 22, 2010 @11:01AM

    <quote>Unthinkable though it may be under current circumstances, eventually new building will become profitable producing an inevitable supply response. At some point in the future things will change - we will eventually run out of vacant dwellings in desirable locations and prices will begin to rise.</quote>

    Well which is it? Is supply going to increase or isn't it?

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Friday December 3, 2010 @05:29PM

    Very true, 2034 will be a good year for economy

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  • Re: The Daft Rental Report Q3 2010

    Posted By: alan b Date: Monday November 22, 2010 @11:27AM

    Do you have any information in regards to rental yields? It would seem all the information is there given Daft has a geography specific valuation index. It would be very intersting to see this from a historic perspective.

    Rough calculations put this at 3-4.5% yield which still looks too low for any real change in actual house prices (or suggests prices have much further to fall).

    I remain worried over the invariable negative wage impact that the budget slashing process will have and its knock on effect on rental levels given you describe the fact that we are now close to a supply/demand equilibrium. Your longer term timeframes therefore seem appropriate.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Ronan Date: Monday November 22, 2010 @01:14PM

    Is page 4 not titled incorrectly? Those are not Year-on-Year figures. They are quarter-on-quarter.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: David Date: Monday November 22, 2010 @02:26PM

    Isn't the ESRI the same body who said Ireland wasn't in a housing bubble and when that proved wrong they said we we're going to have a soft landing, why should we listen to anything he has to say.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Friday December 3, 2010 @05:35PM

    Yes they also acknowledged having a skills deficit in macroeconomics which I would have thought is the only area of economics anybody would have sought their opinion on....unless of course they provide private academic consultancy services to individual businesses who already know more about what they themselves are doing specifically and indeed business affairs on planet earth in general than the hippy wing of the CSO ever will!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Fred Date: Monday November 22, 2010 @03:09PM

    Rent might be stabilising but selling prices are still way too high to make any financial sense. Using a very simplistic price/rent value indicator it's common to see properties still valued at over 40 years of rent excluding interest (0% mortgage). This ratio becomes far worse with the mortgage cost. As a comparison, this type of ratio is in the range of 20 to 25 in France.

    With interest rates going up for the foreseeable future I think prices will have to go down by another 50% to make any financial sense.

    Interestingly enough (...) Hong Kong is addressing similar bubble risk by asking for a 40 to 50% deposit for houses over €1m and second house + 15% tax on sales. This remains my biggest question, why there hasn't been any property tax or other similar tool to regulate what monetary policy couldn't due to cheap money?
    Not mentioning the fact China is also imposing banks to keep 18% of the deposit in their vaults, thus reducing the bank leverage ratio.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Kevin Burke Date: Monday November 29, 2010 @05:08PM

    I can confirm what you say about French house prices being in the 20-25 year rent ballpark ...at least in my neck-of-the-woods, which is near Geneva.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Maire Date: Monday November 22, 2010 @06:13PM

    I do not trust John Fitzgerald above all people, he has some cheek on him trying to light a fire under the property market. I blame him for the rise in prices in the boom with his chain of auctioneer business all over the country. He and his business created the property bubble and now he is coming on here trying once again to manipulate people into thinking there is a scarcity of property in Ireland, how dare he. There are well over 300,000 empty houses in this Country and emigration is rampant.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: David Date: Tuesday November 23, 2010 @09:15AM

    Maire, I think you are getting slightly mixed up. John Fitzgerald is a professor with the ESRI and has no connection with the Estate agency you refer to or any other estate agency.........."with his chain of auctioneer business all over the country. He and his business created the property bubble and now he is coming on here trying once again to manipulate people into thinking there is a scarcity of property"

    I nmust admit your post did give me a giggle! No that you have established that he is not part of the chain of auctioneer business all over the country which you refer to can we accept his analysis???

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Maire Date: Tuesday November 23, 2010 @07:33PM

    David I think it is you who is mixed up, in fact Mark Fitzgerald youngest son of Garret Fitzgerald and brother of John is still CEO of Sherry Fitzgerald and in 2001 set up My Home.ie, so you see they are all in the thick of it together.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Maire Date: Monday November 22, 2010 @06:18PM

    I am surprised at Daft, are you also trying to re light the fire in the property market. The Irish people are not going to ever be fooled or manipulated ever again. Who is in charge of these lies and manipulation at Daft. You would say all of the above after all that is what you make your money from , house advertising and sales, how dare you.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Kevin Burke Date: Monday November 29, 2010 @05:15PM

    Correct. Plenty of folks have stopped paying rent - or are in arrears. and landlords can do NOTHING, because there are no takers! You can't rent out property unless you get real about the (complete lack of) demand!

    Rents, like prices are on a downward spiral .....and it AIN"T stopping ANY time soon.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Catherine Date: Monday November 22, 2010 @08:20PM

    There were over 300 rent reductions advertised for Dublin alone on the collapso web site just for the last three days, . Every three days this is repeated, more and more rent reductions for Dublin and the rest of the Country, so my question to Daft is, why are Daft putting out false information to the public?

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  • Re: The Daft Rental Report Q3 2010

    Posted By: martin Date: Monday November 22, 2010 @09:24PM

    My 'say' from Brussels...when I do compare Brussels with Dublin ...the Irish capital is still overpriced in terms of rents by at least 50 pct ....you can let a 1 bedroom in Brussels for 480/550 euros in medium class areas.
    Talking about the wages in Ireland I found them quiet low since 2009 (gross)for the low to medium skilled jobs at least.It is not interesting anymore to work in Ireland.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Mad Max Date: Monday November 22, 2010 @09:54PM

    It would be interesting to revert back to this topic after the 1st quarter of 2011. Certain factors may be helping with the stabilisation
    a) Reduction in the rate of people leaving the country including
    b) Decrease in the rate of people being made unemployed

    However, the next budget is going to bring a significant increase with the level of compulsary redundancies, and mandatory salary decreases in conjunction with an increase in the standard and higher rates of tax (and also bringing the lower paid, traditonally not in the tax category). Throw into this too, the cumpulsary reduction of the minimum wage

    The normal young middle class worker, who is your stereotypical renter, particularly in the Dublin region, is going to see a reduction in his take home pay and this will have an impact on the potential income for rents. I genuinely see rent decreasing by a further 10% by the end of 2011.

    There's a theory too thats doing the rounds that as house prices become cheaper and with rents stabilising, the property sales market may see a small bounce or leveling. This is a theory with little reflection upon reality.

    Banking criteria for home mortgages are more stringent i.e 4 x salary, minimum deposit, history of savings (no parental gifts etc etc). In an environment where the average annual salary for a normal middle class worker is going to take a beating in 2011, again I can only see further price reductions in the property sales market.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: HJ Will Date: Tuesday November 23, 2010 @10:52AM

    Good post Mad Max. I agree. I have a feeling that a report like this is being published to introduce a bit of 'panic' for those thinking of buying.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: David Date: Tuesday November 23, 2010 @09:31PM

    It is amazing how many negative people there are out there - typical Irish to put everything down all the time...it is the biggest problem here...no confidence in oneself so no confidence in any one else. One thing is certainly true - House prices will go back up..they have done so in every housing bubble-bust cycle ...usually taking 4 - 6 years to run their crash cycle...so we probably have one year left before they stop falling and then another 5 years of almost stagnant growth before the next bubble develops....starting maybe 2017.....whether all you negative people out there like it or not! Why would Daft suddenly start saying rents are stabilise after so many quarters of telling us they were still falling...but then there are the Maires out there who think the world is out to get them...! Time to get out the champagne!!!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Artimus Date: Tuesday December 7, 2010 @10:41AM

    Get real David.
    I am currently close to €200,000 in negative equity on my mortgage and if I had listened to the real wisdom of independent advisors like David McWilliams who said that house prices were well over priced, instead of believing all this hype about “soft landings” and a “quick recovery” I would not have paid what I did for my house and subsequently would not be in the mess I find myself in at the moment.
    There are thousands of people just like me who got caught up in all the hype and now are stuck with crippling mortgages. I can barely meet the repayments at the moment as it is and if this budget is as harsh as people are saying it will be, I am in hot water with no way out, except to hand back my house keys. And before you say “why don’t you re-negotiate with the banks”, I have already done this.
    If it is ignorance that has you up on the high horse, I hope this posting serves to educate you a bit.
    I am sick of these property web sites posting rubbish about the state of the property market. I have just had my house evaluated for sale and I was shocked to hear that my house in Rathfarnham, which I paid over €655,000 for, is now only valued in the region of €400,000 if I were to sell today, if I get that much. I was also told that “houses are not getting the listed value” because there is such an over abundance of supply. So all the crap you read makes me really angry.

    So I repeat, get real David.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Paul Moloney Date: Wednesday November 24, 2010 @11:01AM

    Take off the rose-coloured spectacles, put away your keyboard and look out the window. The country is broken. Not only is the country broken, but we've managed to break Europe - or at least, the Euro - with our obsession with property. We're a few inches from being the next Argentina. We are on the brink of having the middle-classes and retired rioting outside boarded-up banks.

    And here's Daft, churning out the same rubbish we've been hearing from vested interests for almost two decades now.

    Only vested interests would argue that artificially maintaining high rents is _good_ for the economy. No doubt these are the same people who are saying that, at the same time, the minimum wage should be cut and wages lowered overall. Companies are folding everyday due to the fact their incomes cannot hope to pay for the overpriced rents they are being charged. Property in Ireland, both to buy and to let, is still way too expensive. And oddly enough, the only people who disagree with this are those who own/let said property.

    Cop yourselves on.

    P.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Wednesday November 24, 2010 @02:49PM

    Ireland is in western Europe. As such our rents should be comparable with our surrounding neighbours, namely the UK, France and so on. Also our property prices shouls be similar. Since the crash they ARE. Maybe some people would like Ireland to go back to being a second world country when we were the poorest in Europe and so rents reflected this. Lets hope their wishes arent granted.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: dan Date: Wednesday December 1, 2010 @01:26PM

    (A) It`s not your flat!
    (B) You got 200euro reduction LAST year.
    Have you looked to get another 200euro off this year?
    The property markets (sales and rental) are not a one size/rule fits all, we are at last getting back to the basics, location first and foremost, good ones will attract a premium, poor ones have a bit more to go.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Potatoeman Date: Wednesday November 24, 2010 @03:04PM

    Well said Paul. House prices should never exceed 2-4 the average industrial wage and in most European countries rent is substantially less than mortgage payments. Daft rent and house prices are also based on asking prices and this makes any figures they produce now meaningless. I got over 200Euro off the asking price of my flat last year.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: me again Date: Wednesday November 24, 2010 @09:26PM

    now that europe has bailed us out, rather than the monster we expected, i think a certain sense of calm has come over the country, except for those who are looking for conflict no matter what. there's definitely an element of people, regardless of what's happening, not content until their anarchic behaviour upsets the flow of things good.

    the pictur i get from the nints we are getting from the government, is that we are going to have to get used to a slightly lower standard of living, i heard 2003 levels, but honestly, it must be 2000 levels or earlier. house prices will possibly drop below 2003 levels as there won't be a new boom on the horizon, and and no panic buying stirring things up. as a result of the lower overall wages/income, rents will have to drop accordingly. it may seem unpercieveable to landlords with multiple properties that everything is dropping, but it's just a reverse of how things went up. was there never a thought that all would never stop rising? it was a gamble, many of us chose not to gamble.

    did i hear properly, that there is a proposal that capital gains tax may be introduced on primary residence sale?? this is like a stamp duty on both sides of the sale, this can only cause confusion to prices, although if it is introduced, i can see offloading occur before it comes into being. i could be wrong in relation to this matter, it was a contributor on rte radio this evening who mentioned it, so not sure if it's speculation or fact- anyone anymore information on this, or how it will be implemented?

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Kevin Burke Date: Monday November 29, 2010 @05:21PM

    A certain sense of calm... really?

    I would hasard a guess and say you are up to you gonads in overpriced property.

    Sorry Dude, Fasten you seat belt and try to hang on - the reality check is only starting.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Friday December 3, 2010 @05:52PM

    It is not a bail out but a calculated attempt to stave off an immediate default which would jeopardize the euro and leave european banks exposed to their investment losses in the Irish market. They know however that we cannot pay for this or grow our way out of it so after having been 'bailed out' once they will repossess the next time in approx 2-5 years now that we publicy accept them as part of the solution rather than the problem giving them a moral highground vis vis european public perception. Despite 80 years of statehood our greedy gobshites never managed to f*@* up on this scale, the euro gave them the rope to hang us all. Tax harmonisation, Euro Navy in our waters, social policies contrary to public consensus etc etc. We've been on a slippery slope to being owned since 1973 but even to the european first, irish second brigade that riddle this country for a few shillings; the price of membership will become unbearable. Better to default now and maintain our resource rights-would be ugly for a few years but a future is still possible. Our current arrangement is a more deadly form of servitude than quisling shortsighted Taoisigh of another era signed us up to with surrender and regrant in the 1500's.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Wednesday November 24, 2010 @09:33PM

    Hey potatoeman,

    I dont know what planet you are living on but rents in Ireland are far lower than mortgage repayments!!! My mortgage is 1500 a month.But people renting next door are paying 850. I would call that sunstancial !!!!!!!!!!!!!!!!!!!!!!!!! You need to research your figures and stop the BS.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: RAYMOND Date: Friday November 26, 2010 @03:51AM

    Can anyone please tell me why a person in Ireland expects to make 5 to 6 hundred euros a week in wages while other European countries make that in a month.
    Why should somebody in Ireland ie, an Electrican make more than a person in Poland when the price of living in Poland in so cheap compared to Ireland.
    It does not make sence. Ireland has to drop its minimun wage to 3 euros an hour in order to attract business and compete with the rest of the world.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Mad Maxq Date: Friday November 26, 2010 @09:57PM

    Hi Raymond

    I understand you point and its a very valid one. However, when assessing an electricans income in Ireland, to an equivilant income in Poland, the whole notion of relativity comes into play,

    Income in Ireland is largely a reflection upon what we can purchase,
    What is the average price to rent an apartment in Poland compared to Dublin?

    I don't think there would be an issue with dropping the minimum wage to €3 (outside of the astetics) an hour if rent, food, bills, socialising etc etc was reduced accordingly.

    The issues we have in Ireland currently, is that our government is actually trying to do this, however a big majority of Irish people purchased property at very high levels and the servicing of these debts is quiet high. If we reduce our labour costs by too much, the level of people defaulting on their mortgages would spike thus causing another banking crisis....rock and a hard place on this one!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: RAYMOND Date: Friday November 26, 2010 @06:06PM

    Are you having a laugh. There is no wealth in Ireland.
    How would you classify wealth?

    Raymond

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Monday November 29, 2010 @01:34PM

    Re:Anonymous
    Your mortgage is high because you bought at a bad time. 1500Euro a month, I hope you have a good job.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Tuesday November 30, 2010 @07:49PM

    Just for all ye negatves out there!!!

    There is wealth in the country!! for sure....the housing crisis has only affected people who bought in the bubble. Anyone who bought in the 90s still has a house which is worth far more than they paid for it.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Tuesday November 30, 2010 @08:03PM

    For the people who bought in the bubble - here is food for thought .

    Okay so you feel depressed cos you live in a place which is worth half its value while your mate is renting and telling you he is glad he didnt buy and he pities those who did.

    Well if you do the calculations, you are probably paying about the same in interest for your mortgage as your mate is paying in rent i.e both dead money so to speak so your mate is no better off in that respect.

    Second, if your mate decides to get on the property ladder now and buy the house next door that is now half the price of the house that you just bought you can find comfort in the fact that he will have to get a mortgage at a substancially higher rate than you if he is lucky enough to get a mortgage epecially if you are on a tracker rate. So if he gets a 30 year mortgage he could end up paying a lot more in interest repayments ...in fact his extra interest could actually be pretty similar to the amount your house has dropped....

    Bet this will irritate all the renters out there who are payng out dead money each month..!!!! and no I have no vested interests...just food for thought.........! Life isnt always what it seems!!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Thursday December 2, 2010 @08:34AM

    dead money...30 year mortgage......dead money
    You’re a couple of years late for that talk for anyone to take you seriously.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Thursday December 2, 2010 @03:51PM

    You need to read what I wrote properly - not skim it hoping to jump in on a word to put your negative vibe in!

    I said rent is dead money, paying interest is dead money! both equal! Just wanted to point out that we all have to pay the same whether you are renting or have bought...whatever way you calcuate it ..

    .rent for 10 years then mortage for 20 yrs...
    .rent for 30 yrs and never buy
    .rent for 20 yrs then morgage for 10 yrs

    It all works out roughly around the same!!!! thanks to low tracker mortagages...no longer available to first time buyers.....

    Happy holidays!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Paul Date: Saturday December 4, 2010 @09:28AM

    it all depends on price, if I can rent for 10 years costing 100000, and the price of a property drops 150000 (possible saving of 300000 with interest added), how is renting a worse option?, i own a house but you argument is way too simplistic, its a matter of timing.

    And tracker mortgages are cheap now, but I seem to remember the ECB rate was at 4 or 5 percent only a while ago, so things can change and will change, they will also rise in time and if the euro breaks up, well they will be worthless, everyone will be paying huge interest on all them big mortgages they took out in the boom.

    The elite that pull the strings behind the scenes have enslaved lots of people by letting the biggest housing bubble ever form, debt is and always has been slavery, the elite want your money, thats what it is all about, we have now become debt servicing slaves.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Marg. Aussie Date: Sunday December 5, 2010 @12:11AM

    Our rents are average/our mortgages 7.5% our Rates on invest.house $2000, Land Tax every year, Water Connections and maintenance (but not quantity used...tenant pays that...and we are retired with no pension because we have investment houses 2 that equal $900,000 so no pensions from Govt. if you have that much not including dwelling you live in. If you sell they wack you with Capital gains tax...and all selling costs and in fact get a few dollars pension. It is a strange world we live in. So keep a stiff upper lip and hang in there everyone. Our renters are in front...we fix everything pay 90% outgoings and mortgage. Happy New Year...Hang in there!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Aztec Date: Sunday December 5, 2010 @02:44PM

    House prices are still hugely overpriced. They will continue to drop until we have the following.

    - stable banking system.
    - availability of credit.
    - reduction in backlog of built houses.
    - stable employment.
    - political stability,
    - a stable population. immigration preferably.

    Ireland will probably be forced out of the Euro in about 5 years anyway. That will introduce foreign exchange risk which will make borrowing more expensive. I expect interest rates to be on the rise then anyway so credit will be even more expensive. Interest rates in Ireland will be in the double digits.

    When this does happen Ireland will be able jump start its economy by devaluing but this is a long way off.

    My guess is a further 50 -75% drop in prices. A 200K 3 bed house in Lucan for example will be worth as little as 80 -100K. Even less.

    We will easily be returning to 1995 levels.

    Once that happens I believe the who cycle will start again. A second boom will be born but not as extravagant as the last - high interest rates and less credit will keep a cap on it.

    To finish - I can't see any proper growth in the Irish property market for another 10 years. The good news is you will be able to buy 3 bed house in the burbs for a fair price e.g. 4 X normal salary over a 20 year term.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Tuesday December 7, 2010 @03:09PM

    It sounds like you want Ireland to return to being a 2nd world country?

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Monday December 6, 2010 @02:15PM

    I have more money now than I had 3 years ago even though I had a 10 percent pay cut because my mortage has come donw by almost 40 percent and the cost cost of living by about 10 percent.

    I think a lot of people are the same as me i.e. have more money but saving more for a rainy day. I am saving almost half my slary each month now as against about 10 percent 3 years ago.

    So it seems to me that it that while some people who have lost their jobs and have less money, the 83 percent of the workplace who are still working are no worse off now than before - sure they may have had a pay cut but gained from lower mortage repayments, lower rents, cheaper food and basically have stopped wasting money on things.

    What I cant figure out is why Irish moan about levies and say they have no money now but yet squander so much on alcohol at the pub thinking nothing of buying a round of drinks for 50 euro. Great priorities!!!!!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Monday December 6, 2010 @02:23PM

    If I could get a mortage I would buy a house now. I cant see prices going down much more. Probably bounce along the bottom for a while but not down and I feel my rent is dead money. Sadly the bank doesnt think so but I ll convince them eventually.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: LK Date: Tuesday December 7, 2010 @03:09PM

    Likewise anonymous - I am going to buy because I can now afford a 'good area'. Although prices may not be on the bottom, I plan to get in before all the other folks finally cop on to this. Never has location, location, location been more relevant.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Tuesday December 7, 2010 @06:16PM

    wippee the budgets out . done and dusted. and as always it is is not as severe as we expected. I think I will be down about 90 euro a month which is managable if we get this country sorted. I think people are too spoilt here. we still spend more than any other country at Christmas so maybe if we stopped waisting and accepted the budget and moved on. acceptance is key, Moaning is futile!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: me again Date: Tuesday December 7, 2010 @07:56PM

    so, stamp duty reduced significantly in the budget. thanks brian. it's not going to have the massive effect it would have had 3 or four years ago. one thing's for sure, it it had been 3 or four years ago, greedy builders would have just added 20 or 30 grand to the asking price of properties in the average price group.

    as it is, it makes it slightly more attractive to buy, however, with our net income just reduced, our borrowing power has also been reduced. along with this, the lending practices of banks have been tightened up, interest rates are due to take off soon, so the prices need to drop another 20% or so before any real interest returns to the market.

    i for one will not take the plunge anytime soon. and so many people are now in a completely different mindset from up to 3 years ago. the panic to get on the property ladder has been replaced by images of the horror of being in negative equity and a mortgage that's gonna be paid off over the next 30 years.

    people have realised, in many cases, that they don't actually need to own a property. this reccession is a great time to appreciat the advantages of renting. am i the only one to have noticed, that many people, working for the minimum wage, or slightly more, are never too far from work. foreign students living in dublin and working in coffee shops, etc, are normally living in close proximity to the premises in which they work. and work could be in the best areas of dublin.

    so even on minimum wage, you can live in a great area. so i think we've all been the mugs for far too long, we've got to change our mindset and realise exactly what suits our needs most, rent or buy.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Wednesday December 8, 2010 @12:47PM

    I agree with renting long term in principal - but the main problem is your landlord can evict you with a momths notice. I have had to move twice because of this and am tired of settling down and then having to move. So I for one would prefer to buy as I am now in my thirties and not really into living out of a suitcase anymore or sleeping in a bed that has been slept in by go knows how many people before..so to sum up, I will be buying if I can.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Friday December 10, 2010 @12:05AM

    I hope to buy in the near future probably next spring sicne i think house prices are no going to fall much more and I want to get a semi decent interest rate so I need to get in before the ECB starts raising rates again. Was checking the calculator online and for an average mortage of 30 years, a rise of just 1 percent would result in an extra payment of 200 euro a month. Pity trackers are gone.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Friday December 17, 2010 @12:37PM

    Which is precisely why house prices have to halve again!

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  • Re: The Daft Rental Report Q3 2010

    Posted By: me again Date: Sunday December 12, 2010 @08:03PM

    this time last year, i was hoping to buy in the spring. i didn't, and the exact same sentiment was out there- will the prices drop any further?
    i've stuck with my own judgement call,based on logic, and i've saved another 50-100k, despite being told by some that houses had levelled off.

    think if you put all of the above information and opinion together, it points towards a continuing decrease in prices. i'm gonna hold out for another 50-100k reduction, then i'll buy.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Monday December 13, 2010 @02:02PM

    maybe the prices will drop a bit more maybe not.. either way i think i am going to buy in the next 6 months since the rates will probably go up from then and i want to get the best fixed rate i can

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  • Re: The Daft Rental Report Q3 2010

    Posted By: me again Date: Monday December 13, 2010 @06:42PM

    i was thinking the same, before i thought how hard it will be to get a car loan for something like a two year old 5 series bmw. cars are gonna get cheaper in the new year, 2nd hand anyway, as there'll be a shortage of buyers.
    hopefully if i hold out for at least 6 months, the money i save, will buy me my new(ish) car.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Anonymous Poster Date: Thursday December 16, 2010 @02:58PM

    Time to buy lads...the fall is almost up and cant possibly fall anymore
    .house have never been so cheap. I just got my loan approved and will be buying my 4 bed dream home very soon .

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  • Re: The Daft Rental Report Q3 2010

    Posted By: me again Date: Saturday December 18, 2010 @01:08PM

    THE ONE THING I'D SAY TO ANYONE READING THESE BLOGS, IS THAT THIS IS DEFINITELY WHAT YOU'D CALL INDEPENDENT ADVICE.

    everyone who comes to make a comment on this site, obviously has an interest, one way or an other, in the property market.

    and, whether we like it or not, each of our well thought out opinions are based on our thoughts, concious and unconcious, and our processing of the information we've taken in over varying periods of time.

    i, for instance, do wish to buy a house. i believe that house prices are going to come down by another possibly 20% in 2011. to me this is a well founded thought. i do believe that anyone who's just bought a house or is about to buy, thinks prices will fall no further.

    so are our thoughts and hopes subconciously shaping what we believe are our strongly founded beliefs?

    but that's not just here on this site. in everyday conversations with colleagues and aquaintances, we hear a differing opinion on the future of the property market . why, when we all have the same information at our disposal do some of us believe the opposite of what others believe?

    DEEP, I KNOW. BUT MY ONE WISH IS THAT ANYONE CONTEMPLATING BUYING OR SELLING, TAKES CARE OF HOW THEY COME TO THEIR CONCLUSION. EVERYONE IS WILLING TO OFFER AN OPINION, BUT THE PERSON BUYING OR SELLING HAS TO DEAL WITH THE CONSEQUENCES OF THEIR ACTIONS ALONE. THERE'S ENOUGH PEOPLE OUT THERE, STRUGGLING TO PAY MORTGAGES. YOU ONLY GET ONE CHANCE AT LIFE, SO WEIGH UP YOUR OPTIONS CAREFULLY.

    BONNE NOEL A TOUT.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: sean Date: Thursday December 23, 2010 @12:16PM

    In relation to Catherine's comment about 300 rent reductions on the collapso website in the last 3 days, this tells us little. Most landlords advertise a figure above what they hope to get, e.g. 1200 and then reduce it down until a renter bites. These reductions from the introductory price are not "real" reductions therefore and only reduce the rent down towards the going market rate for the property.

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  • Re: The Daft Rental Report Q3 2010

    Posted By: sean Date: Thursday December 23, 2010 @12:16PM

    john's beard needs a trim

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  • Re: The Daft Rental Report Q3 2010

    Posted By: Thierry Date: Monday January 3, 2011 @04:20PM

    I am an investor and have 300.000 Euro cash to invest ... If I put this money away on a fixed term account for 10 years, or in secured government bonds, I will receive at least 5% or 15.000 Euro every year. If I buy a house for that money (or 2 for 150.000 each) and rent it out, it will bring in less. So why do the effort? If prices go down another 30% I might start considering it. My advice, wait to buy. Prices have to come down for investors to get interested. Only buy a house now if 1. you realy like to live in it yourself, and 2. if you can easily afford to pay it.

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