Supply shortages, not a new bubble, the concern in Dublin

Ronan Lyons, Economist

1st Oct 2013

Ronan Lyons, Daft's in-house economist, commenting on the latest Daft research on the Irish property market.

Supply shortages, not a new bubble, the concern in Dublin

As we enter the final quarter of 2013, the signals emerging from the housing market have totally changed compared to two years ago. Then, it seemed there was no end to falls in house prices, particularly in Dublin, which at that point had seen asking prices fall 55% from the peak compared to 48% elsewhere.

Now however, even as asking prices continue to fall outside the capital, and at double-digit rates in Munster, there are concerns about a new bubble emerging in Dublin. Such concerns are probably overstated - ultimately bubbles can only emerge with loose credit, and there are few who would argue that the housing market in Dublin is cursed with easy money.

Instead, what we are witnessing is something like the lancing of a boil. For almost five years, a significant chunk of would-be first-time buyers based in Dublin held off making a purchase, enjoying not only falling prices while they did but falling rents for the early years also. And they saved. Then, probably due to a combination of the end of mortgage interest relief, rising rents and starting their own families, they started to buy.

But this backlog of buyers is not limitless. They are two-job couples, working in FDI sectors or related professional services. They have secure incomes and are, for the want of a better word, the darlings of the mortgage market currently. It is this backlog that we are currentlywitnessing driving in the market. And markets being markets, there is probably an element of momentum emerging, with other transactions occurring as people get caught up in the rush.

The problem for policymakers therefore is not another bubble - it's a scarcity of houses in areas where people want to set up homes. It does not take an economist to point out that jobs are scarce currently and what jobs are being created at the moment are being created disproportionately in Ireland's cities, particularly in Dublin. This is shifting demand towards the capital.

Six months ago, my commentary to the Q1 Report presented figures for the average four- bedroom detached house and one-bedroom apartment in South County Dublin and in Mayo. I mentioned at the time that the ratio of prices between the two areas would be a good signal of pressures in the market. The ratio for both properties is shown in the graph (overleaf ). The trend over the last six months is every bit as dramatic as what preceded it: if prices can act as a warning signal, this is the alarm bell ringing.

Figure: Ratio of prices in South County Dublin to Mayo
Figure: Ratio of prices in South County Dublin to Mayo

Intricately tied up with the shift in prices towards Dublin is the issue of supply. Not only has Dublin almost no backlog from the bubble years, it is also building next to no new homes. A city of almost half a million households is building only slightly more than 1,000 units a year. This is probably one tenth of the number of new homes it needs: available figures suggest that there are about 10,000 first-time mothers in Dublin each year.

Bizarrely, when the topic of new supply is raised, a common response is: "We don't want another bubble." The whole point about bringing new supply of homes is to prevent prices from rising to unaffordable levels, not cause it. As mentioned above, supply of credit increases house prices; supply of dwellings lowers them.

The findings from this report are stark. For the first time since 2007, each of the six regions of Dublin covered in the Daft.ie Report now shows asking prices rising in year-on-year terms. Every single other region in the country shows them still falling. While year-on-year inflation in the capital will ease over the next 6 months, as the last quarters of falling prices fall out of the equation, this should not be taken as the problem going away.

Ultimately, housing near centres of employment needs to be affordable. This sounds like a tall order for Government, something perhaps impossible to get right through tinkering with the market. Policymaking is as much about diagnosis as anything else. Thus, for policymakers, a logical place to start addressing this issue is establishing why builders are currently not building.

Future Daft.ie Reports will be publishing more price per square metre information. Hopefully, this will contribute to be a better understanding of this key metric of the market and with better informed consumers, we are less likely to fall into so severe a bubble as the one we are still recovering from.

HIGHLIGHTS:

Sale Index
Asking Prices, Residential Sales

Stock and flow of properties
Stock and Flow of Sale Properties


SNAPSHOT:

Snapshot of Asking Prices Nationwide
Snapshot of Asking Prices Nationwide

Discuss This Article

  • Re: The Daft Sale Report Q3 2013

    Posted By: NWL Date: Tuesday October 1, 2013 @07:54AM

    Is the Property Price Register series of indices correct?

    Was there really an 8% decline in the month of January 2012 and also 8% in the month of January 2013?

    Has Daft.ie any comment on the compilation of the PPR indices - these should be by far the most accurate in the State because they examine all transactions, cash and mortgage, whereas the CSO only examines some mortgages. Also Daft has the estate agent details including pictures indicating condition, something not available to the CSO.

    But the monthly figures seem to vary greatly and prices are up 15% in the last nine months.

    Is Daft.ie happy with the accuracy of this index series?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Kieran (Daft.ie Employee) Date: Tuesday October 1, 2013 @11:46AM

    Thanks for your post NWL.

    On page 6 of the report, we analyse the government's Property Price Register (PPR).

    Our objective here is to match the properties sold on the register with those that were on our site - so we can analyse the price trends of properties with similar characteristics (number of bedrooms, number of bathrooms, terraced/detached/apartment etc.).

    The PPR website itself states that it is not a good indicator of price trends, because it doesn't differentiate from a 4 bed house being sold in one month to a 1 bed flat the next.

    It is a fantastic resource however for getting clarity around transaction prices and volumes, and it's been a welcome addition this year.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: James Date: Tuesday October 1, 2013 @09:16AM

    Very good analysis and gets to the main driver which is now lack of supply in Dublin. The reason builders/developers are not building at the moment or in the next five years are numerous , Here are a few :

    1 . Lack of finance - " don't walk into a bank with a housing project"
    2. No business case: Cost of land + Cost of building + Risk+ Profit is more expensive that buying second hand property of a similar specification.
    3. The developer types are gone bust and/or have left ireland , despite views to the contrary these guys are a rare bred and a unique skill set.
    4. The risk profile in incorrect , profit not rewarded by the risk
    5. Land owners will wait until house prices rise to 2007 levels before getting back into the market ( this will happen in Dublin in 3 years).
    6 . Not many builders / developers survived the last crash who have the cash to fund the long led in

    Regards

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  • Re: The Daft Sale Report Q3 2013

    Posted By: mark Date: Tuesday October 1, 2013 @01:31PM

    "Land owners will wait until house prices rise to 2007 levels before getting back into the market ( this will happen in Dublin in 3 years)"

    James I fail to understand this point that you have made, with banks lending less and less, the mortgage arrears crisis which could break the banks due to banks massive losses leading to another bail out or bail in as we cannot afford to bail out the banks again. Stagnent unemployment levels, higher taxes, lower wages,deminished disposable income, job uncertainty the list goes on and on. How could anyone in the face of all this afford a house in Dublin that was at 2007 levels? If anything the amount of housing that may be repossed due to the arrears crisis may aid the shortage of housing in Dublin. The current trend of house prices increasing is due to a unhealthy property sector which is being manipulated. This cannot last forever and house prices will eventually fall to the levels in which people can afford. Certainly not the crazy levels seen in 2007

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Fintan Reilly Date: Tuesday October 1, 2013 @02:19PM

    Mark ,

    In fairness , James is just stating the facts.


    House prices are not the dictate of anyone, the market decides . When the supply is low in relation to demand then prices will rise . If you own land and want to maximise your return on captical, off course you will wait until prices rise.

    There are plently of people in ireland with money , for every bad purchase done at high prices in the boom someone has got that cash ........... I know lots of investors that are buying up south city centre dublin homes for cash and getting yields of 10 - 12% on there money in the rental market


    People need to move on from 2007 , every storm comes to an end , this one came to a end in Dublin in 2012 , prices will continue to rise until supply side in adjusted.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Derry Scully Date: Tuesday October 1, 2013 @02:33PM

    Repossession
    Bank of Ireland chief executive Richie Boucher, whose loan book is less distressed than some others’, said that while the bank had initiated legal proceedings in many cases he did not see it getting into repossession territory. The legal threats are intended, it seems, primarily to get customers to talk to their bank.

    The other reality, however, which may upset some commentators at home and perplex some looking at us from outside, is that mass repossession of homes is just not politically palatable in the Republic.

    The Irish have not rioted on the streets during this crisis even though at times they had almost as much reason to do so as the Greeks. Instead they have confined themselves to rioting on the radio and venting their frustration and anxiety by ringing phone-in shows. They rioted too at the ballot box at the 2011 general election, thrashing the outgoing government parties. However, a pattern of large-scale home repossessions could precipitate riotous behaviour by the Irish.

    In the main the distressed Irish population has stoically soldiered through five years of crisis hoping that, aided by overall growth, collective and individual financial circumstances might improve.

    That growth hasn’t come, the financial stresses have not eased much and many people are now close to breaking point. If over the next couple of years people look around their neighbourhoods and communities and see families evicted on foot of orders for possession and know or even sense that those families are genuinely squeezed, it is those events that will trigger direct action on our streets

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Bob Date: Tuesday October 1, 2013 @01:43PM

    The government have no housing policy .........in 3 years time they will be giving tax incentives to developers to get the housing shortage sorted.

    It all proves again that this was a banking crisis not a building boom that broke Ireland...however its not so easy to affect supply side issues of lack of housing

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  • Re: The Daft Sale Report Q3 2013

    Posted By: paul Date: Tuesday October 1, 2013 @07:32PM

    James, I would love for you to expand on point 5, does not seem to make much sense.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: NICK DURHAM Date: Tuesday October 1, 2013 @11:17AM

    There would be less lack of supply in Dublin if there was an efficient and cheap commuter transport system between Dublin city-centre and commuter towns.

    When one can buy a decent three-bed home in ,say Port Arlington or Dundalk for ca. 100k -and prices are still falling - why would one want to buy in an average suburb of Dublin for three times the price? Answer-because spending three hours a day and s thousands of euros a year commuting is making living fifty miles away and working in Dublin unbearable.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: David Date: Tuesday October 1, 2013 @03:04PM

    I am one of those holding off buying a place but now realize I left it too late. Was trying to get the bargain of bargains but all the semi decent places seemed to be gone. The trouble is that even though house prices are much lower than 5 years ago, my repayments will be similar to my sister who bought at the height of the boom six years ago as she got a rate of 1.4 percent or .9 percent above the ECB rate whereas I will have to pay 4.5 percent, three percentage point more which is really unfair. People should think of this when feeling sorry for those who bought in the bubble..most of them have really low trackers and end up paying similar to those who buy now even if the cost of the house on paper is different.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: David (too) Date: Tuesday October 1, 2013 @03:24PM

    but if you can save 10 grand (to say so) to put against the mortgage you will reduce much more your repayments than your sister because you owe much less capital

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Matt Date: Tuesday October 1, 2013 @03:43PM

    David

    I am in the same boat as you , have been holding out and renting and going to go for it later this year or early Jan / Feb. Have make a couple of offers but have been outbid mainly by cash buyers who can do a fast completion. Am getting in south dublin looking to buy in stillorgan , prices are up by about 50K since last year. Got a mortgage agreed in principal , but lender will be looking at the property and only then approving. Not a sign of the repossessions being talked about.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Mark Date: Tuesday October 1, 2013 @04:40PM

    Who will pay for the arrears crisis? where will the money come from to afford the rising house prices? all economic factors in Ireland point downwards so just because house prices is rising this does not mean that the market is stabilising it is a not functioning under normal circumstances. This phase of arrears/shortage of housing will pass. Only then can we start to gauge the market with the elephant in the room dealt with. Those that buy because they fear they will be priced out of the market really need to look at what got us into this mess in the first place. Fear of missing the boat etc. It is hard to believe that we are back to this after such a short time. Have we learned nothing?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Frank Date: Tuesday October 1, 2013 @07:25PM

    Mark,

    You don't need more money in the economy for house prices to rise , you just need more money per property for house price to rise ..............that's the point of the whole of this Daft report ...in Dublin there is the same money chasing a reducing stock of house supply .............get it ??

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Mark Date: Wednesday October 2, 2013 @09:15AM

    Yes Frank I "get it" I understand what the report is talking about. My concern lies in the fact that our economy is not performing and rising house prices with cash buyers aside is only going to lead more people into mortgage defaults which will add to banks bad debt. As reposessions is impalpable to the Irish population the only option will be for tax payers to refund banks. With a further austerity budget to come 2014 will be the hardest year for tax payers thus far. I fear that history may repeat itself as the facts and figures dont add up. I hope that you "get it" and realise that rising prices are not necessarily a good thing.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Fogarty Date: Wednesday October 2, 2013 @10:47AM

    Mark ,

    If you want a cheaper house move to Cavan and do not live in Dublin .. its a free life . You seem to suggest that house prices should be controlled , What about petrol prices , they have gone up by 50% from 2007 and no one has had their car repossessed.

    Housing is a consumer market , I am not sure you " get that" . Talking about prices rises being good or bad ? what is that about ? is it a moral question ?

    Have you noticed that a pan loaf has go up by 30% since 2007 ? Really ...

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Anonymous Poster Date: Wednesday October 2, 2013 @12:00PM

    Fogarty,

    House prices were controlled untill finance regulation went out the window and interest rates were dropped which created a bubble that in turn created the mess were in now do you "get that"?. Rising house prices is a moral question when families may loose their homes dont you think? or do you not "get that" also? As regards rising petrol prices i fail to see your point but if however i have a car on finance and fail to pay that finance my car will be repossed, FACT. Also as regards a loaf of every other household item has risen in price but incomes have dropped and unemployment is at a very high stagnent level. Sad state of affairs that you choose to not see whats in front of you.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Bob Date: Wednesday October 2, 2013 @12:46PM

    I see what you means , lets price control everything .... follow the USSR model of the pre 1990 's .......Oops that did not work !!

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Anonymous Poster Date: Wednesday October 2, 2013 @02:05PM

    Bob,

    Financial regulation has nothing to do with communism but everything to do with capitalism which when its not implemented as it should the outcome is what we have seen in the last few years.

    • Reply to this message
  • Re: The Daft Sale Report Q3 2013

    Posted By: Bob Date: Wednesday October 2, 2013 @03:06PM

    Do you really need regulation to tell you that you are living beyond your means ? if your rent or house price is too high move .... the underlying problem with the Irish is that no one takes personal responsibility, when they can't get a mortgage they blame the banks , when house prices go down they blame the government , when they go up in price they blame market manipulation ....really don't be a victim take responsibility for your own like and stop blaming everything and everyone for the cost of your choice pan loaf

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Anonymous Poster Date: Wednesday October 2, 2013 @03:56PM

    Bob

    I though you referred to financial regulation as communism?. I fully agree with you as regards people taking personal responsibility. I for one have not lived beyond my means but I am still subject to the USC and a multitude of other taxes resulting in less take home pay along with the rising prices of most things. I have not blamed anyone or see myself as a victim but find it odd that with the massive arrears crisis in this country and a banking system which is not functioning properly which will most probably need a second bailout in the not so distant future (which we the tax payers will pay for) none of this has been mentioned or taken into account?. The last thing I want to see is more austerity and more arrears but the way we are going i fear that its on the way and taking a cheap shot as regards my "choice pan loaf"and sticking your head in the sand is not going to make that go away, so ill agree to disagree and let time tell whos is right and who is wrong.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: John Date: Tuesday October 1, 2013 @06:26PM

    James sums it up perfectly his point no.2

    What is not appreciated by some people is that while the cost of 2nd hand houses is falling,and may coninue to fall, the cost of building new houses is rising.

    The cost of some building materials are higher now than they were in 2007.
    The price of oil ie energy has increased significantly. Land in Ireland is a scarce
    commodity and prices still high. New building regulations have added significanly to the cost of new housing. The cost of labour has fallen . The current cost of housing outside dublin is being sustained by the oversupply in the market

    As in dublin, in any area of high jobs density where the oversupply is used up you will see a significant increase in prices because it is not possible to build new houses for current prices.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: PaulyFromDublin Date: Tuesday October 1, 2013 @07:45PM

    This property bubble / burst can be best compared to a lead weight on the end of an elastic band. Let it go from a height and it will drop as low as the band allows, spring back up and back down again untill it finds its its perfect spot.... expect this to happen with property prices in Dublin. I expect an up and down motion for the next 3 years with the first few movements extreme (such as the current price rises) but in saying that, if i could afford to buy now, I WOULD.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Gerry O'N Date: Thursday October 3, 2013 @03:38PM

    I am not sure that saving all your money for many years is the answer. You may be very dissapointed to find that the price of a property has gone up twice as much as you have saved. Okay if everyone agreed to stop buying property then the crash would come. But as soon as we started back into the market, prices would shoot up again. Accept it or not, as long as we (or those whose business depends on promoting the property sector) can devise some means of financing property purchase prices will go up to match our ingenuity.

    Perhaps someone else can propose another solution, but for now if you want to own property you save enough as quickly as you can, beg borrow from friends, employers and relatives,do whatever is legal and get on the property ladder. (Some of these people, despite your best efforts will thwart all your efforts to return the money to them, decline interest payments etc.Cheque payments stuffed in their letter boxes late at night will never be cashed or acknowledged. But do not worry about tax implications concerning gift tax etc. and you can quote a most senior politician in the country's view on this that you have not broken any law etc.)

    Another approach is to buy one of those €50,000 ( prices vary) holiday places abroad in Spain ( not Costa Del Sol - Try East Coast fro Alicante down to Almeria), Bulgaria, Croatia, Morrocco etc. Not only do you get it cheap, a place to go on holidays between times when its not let.In due course if you buy well the price will go up enough for you to perhaps get into the property market back here if you sell well. Meanwhile avail of cheaper rents here now (or ask Mam?Dad can you convert the garage into a bedsit with your own private door to the world outside).

    I have to lay the blame for this situation concerning the difficulty in getting suitable affordable property with all our politicians over the last 40 years. The scandal of land prices manipulated to make the few rich and the many poor is all too clear. These politicians, or the majority of them, ( from the Councillors right up to the top), have stood by and allowed this happen. They know they can manipulate all arrangements on so called Social Housing by exchanging token amounts of money from the developers to make it look like they are doing something and we ejits will stand by and re-elect them. At the end of the day where are these houses (apart from the token few in disadvantaged areas)and in 10 years time we can pay for a tribunal to examine what went wrong. In the Dublin area 25 to 30 years ago Dublin County Council and Dublin Corporation had purchased huge tracts of land in advance and then handed over to developers. They could have retained the land and invited builders to build houses on it at competitive prices and with the sites as a seperate low cost transaction in the deal with purchasers. Now they are allowing the builders to cram us into little 2 storey over single story boxes, and coupled with adjacent traffic jams, this is no way to live.Very soon the box you live, sleep etc. in will be the same size as the one you get buried in (refer to Japan for prototype) Would the leaders of 1916 endorse this turn of events. I'm sure Padraig Pearse would have had something to say about paying the toll over the jammed West Link Bridge and all the other scandals on all these developments that we have to suffer.

    Excuse me for being a bit flippant on this issue. I have one daughter who last year managed with some help to get a 35 year mortage and a house and another who, despite my offer of some help, just refuses to engage in the stressfull endeavour and says that if its an issue with her in the future she will just emigrate so as not to have to put up with the challenge. She thinks this country is getting too crowded in any event.

    My final advice is for you to find a way, any way, of getting a reasonable property as soon as possible. I despair meanwhile of the powers coming up with some other solution for you. If thats your ambition dont wait too long.

    Alternatively commit yourself to renting, it has become cheaper, the quality etc. has gone up, and you have good secure rights up to 4 years. After that its a matter of coming to some arrangement in the family home if thats an option and not to wear out the parents in the process. After that then theres only 20 million people in Australia which is bigger than the USA or Europe. There has to be some space for you there

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Paul Date: Wednesday October 2, 2013 @10:47AM

    Why don't more businesses relocate to other parts of the country. I work in Software Development, and it still amazes me how few software companies there are in Cork, Galway, Limerick and Waterford. I'm sure this is also true for other industries.

    A lot of people I know who are currently working in Dublin would prefer to work elsewhere (in a place where they could afford a detached house with a decent garden).

    Surely the simply solution to the housing shortage in Dublin is to decentralize. This would give both the people living in Dublin and outside Dublin a better quality of life. Prices would fall for those people who want to stay in Dublin, and job opportunities would open up for those people in other parts of the country.

    Decentralization would also solve problems such as the lack of water supplies in Dublin. Building more houses will just make this worse.

    I know your article deals with a very specific issue, but I feel that we really need to look at the big picture or we'll end up making the same daft mistakes that we made in the past.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: James Date: Wednesday October 2, 2013 @03:20PM

    . Point 5 Land owners will wait until house prices rise to 2007 levels before getting back into the market ( this will happen in Dublin in 3 years).


    You have asked for a explanation :

    If land costs £200 per sq. ft. and building cost £170 per sq. ft. and I want a profit and risk factor of £100 per sq. ft. , then I would have to sell the house at £470 per sq. ft. , at the moment you can buy a similar hour for £280 per sq. ft. .

    There why would a developer / builder be interested in building until house prices rise ?

    The government have wasted all the developers via NAMA via insolvency and there now buying social housing from the existing stock.

    Two facts :

    1 : no house building in Dublin WILL MEAN INCREASED HOUSE PRICES until the cost of development equals house prices

    2 , If you want a cheaper house move to other areas of Ireland and you will find that you cost of housing will be up to1/3rd of the Dublin prices , if your staying in Dublin BUY NOW

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Paul Date: Thursday October 3, 2013 @09:29AM

    I fail to see how people will access the credit of house prices of 2007 levels when our economy is bust and banks are on life support. I think house prices which have risen by 10% in a year in Dublin is by far too much and is in fact a bubble. All bubbles burst. House prices should only increase by 1-2% per year in a healthy market. People beware.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: john Date: Thursday October 3, 2013 @03:17PM

    The big differance is that this is not a healthy market , NAMA have killed off the builders , when demand exceeds supply , prices will increase . instead of 2 people paying for one house , 4 people pay for one house until you increase the number of houses

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Greg Date: Thursday October 3, 2013 @11:59AM

    Hi James,

    Just because demand is increasing and forcing prices up does not mean that prices will return to 2007 levels in 3 years.
    Firstly. banks are not giving credit easily anymore - as prices increase the demand will therefore tapper as there will be less and less enabled buyers. Also, many property purchases are currently being made by investors with cash - both domestic and foreign. Once the prices rise to a point where there will be no return on investment demand will therefore decrease. With both of these factors limiting an increase in demand there is no way prices will rise to anywhere near the levels of 2007. On the flip side you have a mass of houses which could be repossessed increase supply - possibly driving prices down.

    As has been pointed out previously - house repossesion is something that may be delayed for political reasons. If these houses are not repossessed who do you think is going to continue with the payments?? The banks need to repay the loans used to secure these mortgages to begin with. That gets lumped into 2 categories. Banks have increased their interest rates to new customers to drag back some debt and the rest gets lumped onto the tax payer at the end of the day with our bailout money. So next time you feel sorry for someone that can’t pay their mortgage – don’t worry, you’re paying it for them. Repossessions and refinancing arrangements are an unfortunately part of the process to return to a healthy market. It's time we stopped kicking the can down the road. Someone needs to make the hard (and unpopular) decisions so that this country can return to a healthy state. I'm sure that is something wanted by everyone.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: James Date: Thursday October 3, 2013 @01:59PM

    Greg
    A couple of points:
    1 When a house is repossed the occupiers will go onto the rental market , thus demand for housing does not decrease
    2. The repossessing bank will have to find a buyer , Bank "A" in repossesion offers a new loan to a buying costomer , or Bank "B" offers a new loan to a buying customer or the Bank "B" simply rents out the property. They are the only ways that bank can get any return of capital.

    The point is there is no increase in supply from repossessed property as the previous owners increase demand in the rental sector or move to social housing and the local authority rents a private dweliing for them . The Bank "A" will want to mortgage to a new customer and this is only risk transfer unless they find a cash buyer

    Those that think that repossessions will effect house prices are dreaming. With no new housing being developed and the population in Dublin increasing by 30K per annum property prices are sure to increase due to the lack of supply. In fact I think the current year on year increase is more like 15% thus far from Dublin 2012 prices

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Greg Date: Thursday October 3, 2013 @03:26PM

    Hi James,

    Interesting point, but you may be forgetting that this is the cycle -

    Property Market
    A house is repossessed +1
    Buyer buys a house -1

    Rental Market
    Repossessed dweller -1
    Person moving from rented accommodation to owner occupier +1

    As you can see, a house repossessed only relocates occupants. They are like energy - they can't be destroyed only transfered

    According to this theory the only way demand will increase is by population growth. How many people do you know that have left this place compared to coming in the last few years??? Dublin has had less than 10% population growth in 10 years....

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  • Re: The Daft Sale Report Q3 2013

    Posted By: James Date: Friday October 4, 2013 @11:07AM

    Greg ,

    I agree totally

    Regards

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Frank Date: Friday October 4, 2013 @11:32AM

    Greg ,

    All the migration is from the country to Dublin , that's why rentals and house prices are rising in Dublin and falling in the county ,.... the growth in the service sector.


    Regards

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  • Re: The Daft Sale Report Q3 2013

    Posted By: selina Date: Wednesday October 2, 2013 @03:32PM

    Through gritty realism house prices explores the hidden needs that drive often baffling human behavior. Many house pruchase judgements are open ended but we draw fundamental truths from from the lack of supply , shining a searchlight into the dark corners our lack of understanding . The builder /developers are gone, housing need remains in Dublin for families who want homes. Noonan talks about 30000 houses that need to be build each year , relistically that is not going to happen in the next 5 years. House prices are going to bounce back by 2014 by 20% - 25% in Dublin .. I am talking house prices not flat prices.

    If you want to buy be prepared to be paying more year after year as we go forward in the haze of confusion that now is the Dublin housing throught lack of supply

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  • Re: The Daft Sale Report Q3 2013

    Posted By: hugh W Date: Thursday October 3, 2013 @02:39PM

    As more people move from the country to dublin for jobs , house prices will fall in the country and rise in Dublin ... that is what is happening now. Last year I had a flat for €1,000 per month , the landlord put up the rent to €1200 , now I share a house at €700 per month ( 3 sharing) , everything is being pushed up from the bottom

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Barney Date: Friday October 4, 2013 @10:44AM

    Facts are meaningless. You could use facts to prove anything that's even remotely true! --Homer Simpson

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  • Re: The Daft Sale Report Q3 2013

    Posted By: -candide- Date: Sunday October 6, 2013 @12:44AM

    While the lack of new supply is surely part of the cause of the price increase in Dublin, that is not the whole truth.

    Think about it: why are sellers not reacting to a 10%+ price increase?? That is against everything single classical economic theory we know, SOMETHING is very wrong. Real estates are not the stock market - a 10-15% increase per year usually points to serious market dysfunctions, not fundamental supply-demand imbalance. Remember: in a normal functioning market, some retirees will always be happy to cash out their house for 15% more to live in a bigger country house - which doesn't seem to be lacking in the country.

    At this moment, it is in everybody's interest to manipulate the dublin market for higher transaction prices:
    * the banks get a better mark-to-market for their loan books end 2013
    * the government can avoid another round of recapitalisation (so soon) - and they want to negotiate for the exit of the rescue program, for crying out loud!
    * except for those who need to live in Dublin!!!
    * don't worry - Troika sees through that game, and that's why the Central Bank is crying foul, loud...

    Even NAMA is sitting on stocks and not releasing them into the market right now - has anyone counted the empty flats in the docklands that you cannot buy (and not being let to collect rent, btw)?

    Once the capital-gain tax relief expires end 2013 (and the foreign buyers disappear), the repossessed stocks - if they do come - will arrive at exactly the wrong time of the market. Hope that Noonan will be smart enough to recognize that to smooth out that CGT "cliff" in his 2014 budget.

    I am writing this for all frustrated buyers with the in-principle mortgages - chances are that the prices will fall again once the repossessed stock hit the market - patience always pays!! But repossessions have to happen...

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Tom Date: Monday October 7, 2013 @04:09PM

    Having read all your letters the only one of that makes any sence is.. James and perhaps.. John.. The reality is that while it costs more to build a new house than you can buy a second hand one means that demand will determine what you can buy for. And there are two more factors that will impact on this.. 1 There has been almost no house building in Ireland for more than 5 years now .. 2 Job creation for that period has been disproportionatly in Dublin. If you make allowance for the credit sqeeze (not a recession) which is the reason that house prices have collapsed (driven down) in that same period then it is clear that prices will increase substantially from their current under value.
    You should also be fully aware that the banks too are going to get their pound of flesh ! I don't believe that bank interests rates are going to stay at current levels of 4-5% more like 8-10% I would guess.-now that most of the compettion (foreign Banks) have left Ireland !! .I would think that if you can buy now and get a fixed loan (not variable) would be a good idea .
    And Greg I cannot understand your view at all !! How can it make the slightest difference to someone who wants to live in Dublin to have someone disposessed in Kerry or Sligo ??? .Can houses be moved ?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Mark Date: Monday October 7, 2013 @05:47PM

    Tom,

    Why do u think houses are currently undervalued? The average industrial wage is 40K per year. Traditionally house prices have been 4 times that. So an average 3 bed semi in Dublin should be no more that 160K. These traditional averages are the bench mark, not the last ten years which resulted in the right fine mess we have been subject to with the average house costing 11 times the average industrial wage in 2007 leading to massive arrears.

    As you say interest rates will be hiked up to 8-10% which can only depress house prices as at their current value these interest rates will only add to the arrears crisis.

    Building will begin again because it has to.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Frank Date: Tuesday October 8, 2013 @09:31AM

    Mark ,

    What a load on nonesence. The person on 40K per year can either rent or buy a very small apartment in Dublin , in Kerry they can have house. Some one on 200K in Dublin might buy for cash or mortgage to 800K. Applying average benchmarks makes no sence as wages / demand outside Dublin in totally differant. In London demand is so high that average prices are 10 times wages for the last 5 years.

    Building will not begin until prices exceed €300 per sq ft in Dublin otherwise there is no incentive to build

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Steve Date: Tuesday October 8, 2013 @11:39AM

    Frank,

    So the average industrial wage can afford a family to rent or buy a very small apartment. That makes sense doesnt it. Why bother going to work then.

    "Applying average benchmarks makes no sence"

    Really? So the long standing averages make no sense? but the last ten years that bankrupt the country and lead masses of people into arrears does?

    "In London demand is so high that average prices are 10 times wages for the last 5 years"

    I fail to see the relevance of the London property market and the Dublin property market they are in a word poles apart, so far apart in fact that it actually is a load of nonsense.

    "Building will not begin until prices exceed €300 per sq ft in Dublin otherwise there is no incentive to build"

    Supply and demand Frank. The demand is there. Maybe developers will not be earning the amounts of rock stars and premiership footballers but a profit will be made.

    What did a developer earn pre celtic tiger? when the industrial wage could afford a three bed semi in Dublin?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Kevin Date: Tuesday October 8, 2013 @12:59PM

    Steve ,

    Rents are the reality of the market and house prices are the fiction. rents will always tell the real story and they are going up in Dublin

    As rule 20 Times annual rents give you a fair valution for cities and 15 Times annual rents gives you fair valuation for the country locations.


    There is a shortage of houses in dublin , but but there is very little money in most peoples pockets .. I am a landlord renting houses ... its the dynamic of the free market working really well.. rents have gone up about 10% from last year for good quality property .. next year i would say its not going to go up by more that 15 % , people have got the money , a three bedroom house goes for £1500 to 1800 pcm , as a rule of thum every bedroom gets you £500 pcm for a 2 bed to a 6 bed.

    There is a lot of hype about house price increases , but when you put a property on the market its a reality check , also rental inflation is as great as some people are saying , something like 10% increases are going or more like 15% max and the landlord is passing on the property tax in that.

    Shortage of property is a REAL issue , will that drive rents and prices higher ... yes it will . Will developers build at current prices NO THEY WILL NOT because you can not build for any kind of profit or to cover you RISK . I can tell you Developers take huge risk with thier own money and sometimes with the banks money ... NAMA and the like have killed off the developers ( the risk takers) . We can depend on Dublin Council to build the homes !!!( Ha Ha) .

    There is massive value now in the market ... perhaps some have missed the boat , you should have bought in 2012 . I can tell you now prices will be 50% highter in Dublin by 2016 and 20% cheaper in Sligo County. IT jobs are in DUBLIN.

    That the real story from a hard working ...and caring landlord/developer who has being doing property for 30 years

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Steve Date: Tuesday October 8, 2013 @01:53PM

    "There is a shortage of houses in dublin , but but there is very little money in most peoples pockets"

    Fully agree with u on this one Kevin

    "There is massive value now in the market ... perhaps some have missed the boat , you should have bought in 2012 . I can tell you now prices will be 50% highter in Dublin by 2016 and 20% cheaper in Sligo County. IT jobs are in DUBLIN"

    As i previously stated there is not value in the market (wont go into that again).

    Kevin if you do indeed have a cristal ball and can predict with such certainty that house prices will be 50% by 2016 tell me how will people afford these prices with very little money in their pockets(which was your quote)?
    How will they get access to the kind of credit which would be needed to afford these prices?

    Its as simple as this, they wont.

    People like yourself Kevin are only interested in seeing property rise as your buy to lets are currently in NE. You can dismiss major factors to form your opinion to suit your own vested interests, which is fine but it does not take away from the fact that a manipulation of a situation will only last so liong.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Selina Date: Tuesday October 8, 2013 @03:08PM

    Steve,

    Through gritty realism house prices explores the hidden needs that drive often baffling human behavior. Many house pruchase judgements are open ended but we draw fundamental truths from from the lack of supply , shining a searchlight into the dark corners our lack of understanding . The builder /developers are gone, housing need remains in Dublin for families who want homes. Noonan talks about 30000 houses that need to be build each year , relistically that is not going to happen in the next 5 years. House prices are going to bounce back by 2014 by 20% - 25% in Dublin .. I am talking house prices not flat prices.

    If you want to buy be prepared to be paying more year after year as we go forward in the haze of confusion that now is the Dublin housing throught lack of supply

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Steve Date: Tuesday October 8, 2013 @04:33PM

    Selina,

    Will you repost that to every opinion that you dont agree with or have you nothing else to say? is it ur mantra?

    Keep the head in the sand

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Jim Date: Tuesday October 8, 2013 @03:57PM

    Just a quick thought -

    Everyone talks of up coming repossesions. Curently around 25,000 mortages are in arrears by 2 years, with something over 100,000 over 90 days.
    Most properties purchased in the boom were on tracker mortgages.
    How many more defaults are to come when the Cash rate returns to its normal 2.5 - 3%? These tracker mortgage repayments are set increase somewhere around 50% higher PM than they are currently. Surely this is going to put many mortgage holders in arrears and lead to more defaults and repossessions

    Or am I missing something?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Steve Date: Tuesday October 8, 2013 @04:36PM

    Jim

    Your missing nothing, you are just looking at the full picture which alot of people obviously cannot or do not want to comprehend.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Gosia Date: Wednesday October 23, 2013 @09:54PM

    Hi there, i m from Poland and live here for 8 years, earning around average wage. I felt pressure to buy something in Dublin and did at the end of last year. Instead of going for nice 3 bed house-had sale agreed- ( but full of damp) i went for 2 bed specious apartment- built just before boom, so relatively well built. I rented it out and didn't have to spent much on it. Last minute i also got 15k off. Hope it was right decision as i know Irish people prefer houses, even if they are tiny and with damp ( which i hate!!!). To the point, nevermind the increase in interests rates ( to cover bad debt) and increase in dirt. The point is that people earn less. I see drop in wages by even 10k so how will the prices go up??? it is impossible. The prices are coming close to european.2 bedroom apartment in Warsaw would cost about 125k-150k-the monthly wage(average) would be about 1000 euro. Yes properties here are very affordable i think. The problem is that people don't know what they can afford, and go for highest mortgage, not living themselve financial space to live or room for renovation or upgrading old houses. They need so much improvement, i cant believe that 500k doesn't mean top quality and sometimes dated carpet and dump!!! I think prices will increase only for quality apartments in good location mostly city centre and family homes in mature locations, rest will fall.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Gerry O'N Date: Tuesday October 8, 2013 @03:55PM

    TOM

    Well writen you make excellant sense

    Regards

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Martin Date: Wednesday October 9, 2013 @08:49AM

    The boom – some say the "bubble" in Dublin is returning – it has created its own citadel. Estate agents talk enthusiastically about "PCD" – prime central Dublin – those parts of the capital where properties normally sell for more than €500m. Prices in this area are now 18% above where they were in 2012. Buyers are falling over themselves to snap up properties. Viewings in prime central Dublin are up by 15% compared with the previous year. The number of properties sold has increased by more than 8%.
    The government realise that a housing shortage in Dublin is heading for a crises and this budget will offer incentives like lower VAT on building supplies , suspending of the environmental charge on land to get builders/developers back into building. However at the current price levels there is no business case for building as you can still buy for cheaper on the second hand market. Until price levels hit 2006 levels no developer meeting his accountant can justify the costs/return.
    Meanwhile, great value in the other counties will continue as house prices will dive lower as migration from each county to Dublin continues. In places like Meath and Kildare , nice 3 Bedroom semi will be easy to get for less than €150K and may even go lower which will give people the option of commuting. Repossessions will have a zero effect as most properties in trouble are in the country anyway and/or in poor locations for transport and can’t even be rented to pay the mortgage.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Jim Date: Wednesday October 9, 2013 @09:43AM

    Hi Martin,

    Just one questions - how do you know where the properties in trouble are?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: David Date: Wednesday October 9, 2013 @10:05AM

    Martin,

    Good post,just a few things

    I fail to see that the current situation in Dublin is a "boom", for it to be a boom the economy would also have to be accelerating. It is a situation which arose from a lack of housing and is affecting house prices as there is no housing to meet a regular demand for regular 3/4 bed houses due to the fact no housing has been built since 2007.

    As you have stated the government is starting to move on addressing this shortage which needs to be addressed. However if house prices need to be at the levels of 2006 for building to start I cannot understand where people will get the credit to afford these prices. If this is in fact true then the market is in a state of paradox.

    Also I think that most of the properties in arrears will be in the Dublin area as the prices were highest here with alot of mortgage holders working building during the boom, but people have lost employment across all sectors and wages have decreased. For families renting out a home is not an option when in arrears

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Martin Date: Wednesday October 9, 2013 @11:34AM

    David ,


    Lots of people will not be able to afford Dublin price , these will have great oppertunities to buy in Kildare or Meath were prices continue to drop for the moment.

    The cost of construction matrials has risen sharply from 2007 and the price of a new house is made up of the following:

    Cost of land (and infrastruture + Cost of Construction + Profit for Risk = .€340 per sq ft Dublin

    It is very hard to get away from a €340 per sq ft base figure for a average location meaning that to build a new 3 bed semi 's at 1200 sq ft it would cost above €400K . Well you can see that you can still buy Dublin homes of similar specification for €300K , so it very difficult to make a business case at the current price levels to build new homes.

    It is also true that banks will not fund new builds or developers ...they are now classed as the great unwashed .

    So David , withour any new stock of housing hitting the Dublin market for the next 3 to 5 years existing house prices will push up


    Regards

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  • Re: The Daft Sale Report Q3 2013

    Posted By: JIm Date: Wednesday October 9, 2013 @12:42PM

    Hi Martin,

    You mention yourself that the government looks set to introduce measures to help builders start up again. So the 340 per square foot rule you are mention could all be changed in the very near future anyway??

    If the government does introduce these measures supply will increase and possibly even force prices back down depending on the supply created. We all know the banks will not loan to builders currently - this would be very different if the government measures turn building back into a profitable business.

    You also mention that repossessed houses will not be in Dublin - I really would like to know where that insight came from - it does not seem to be logical that Dublin is somehow immune to repossession. Sure repossession will happen elsewhere, but jobs have also been lost in Dublin, living costs have also increased in Dublin. Why no repossessions???

    I agree that prices would increase if no supply was created - but it seems only logical that more houses will be available in the next 12 months

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Kevin Date: Wednesday October 9, 2013 @12:54PM

    Repossession
    Bank of Ireland chief executive Richie Boucher, whose loan book is less distressed than some others’, said that while the bank had initiated legal proceedings in many cases he did not see it getting into repossession territory. The legal threats are intended, it seems, primarily to get customers to talk to their bank.

    The other reality, however, which may upset some commentators at home and perplex some looking at us from outside, is that mass repossession of homes is just not politically palatable in the Republic.

    The Irish have not rioted on the streets during this crisis even though at times they had almost as much reason to do so as the Greeks. Instead they have confined themselves to rioting on the radio and venting their frustration and anxiety by ringing phone-in shows. They rioted too at the ballot box at the 2011 general election, thrashing the outgoing government parties. However, a pattern of large-scale home repossessions could precipitate riotous behaviour by the Irish.

    In the main the distressed Irish population has stoically soldiered through five years of crisis hoping that, aided by overall growth, collective and individual financial circumstances might improve.

    That growth hasn’t come, the financial stresses have not eased much and many people are now close to breaking point. If over the next couple of years people look around their neighbourhoods and communities and see families evicted on foot of orders for possession and know or even sense that those families are genuinely squeezed, it is those events that will trigger direct action on our streets

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  • Re: The Daft Sale Report Q3 2013

    Posted By: David Date: Wednesday October 9, 2013 @01:13PM

    Kevin,

    So we the taxpayers will pay for the defaults of others?
    So therefore i can go out buy a house decide i cannot afford, default on the mortgage and let everyone else pay for my decisions.

    I do not see the general public going for that Kevin sorry but your personal financial crisis is your business I will not be paying for the mistkes of others.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Martin Date: Wednesday October 9, 2013 @01:44PM

    Jim

    More houses will be available in the next 12 months ? from where ?

    Do you mean repossessions ? They normally are just sold back into market , in Dublin they are 10 buyers for every house coming up for sale and its mostly cash buyers that are investors and renting back onto the market at 8 to 12% yields

    Repossessions do not create any new housing , if fact the person who has lost there house will simply be a renter going forward.

    The is NO evidence that anything like mass repossessions are talking place or are going to take place , at present there are a lot of distressed sellers , but in the right market , in Dublin there are plenty of buyers. In Kerry on the other hand there are very few buyers so houses are going down in price . YOU CAN NOT BUCK THE MARKET.


    Is your are thinking repossessions is going to give you a cheap house in Dublin to buy going forward you really are taking a gamble ... its more likely that Dublin prices are grossly undervalued and will rise year on year until construction is a good business decision.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Jim Date: Wednesday October 9, 2013 @02:18PM

    Hi Martin,

    You have answered that question yourself earlier -

    The government realise that a housing shortage in Dublin is heading for a crises and this budget will offer incentives like lower VAT on building supplies , suspending of the environmental charge on land to get builders/developers back into building.

    Even if you believe no extra housing will become available due to repossession - you must agree with yourself on this point??

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Martin Date: Wednesday October 9, 2013 @02:35PM

    YOU NEED TO READ THE FULL CONTEXT :

    The government realise that a housing shortage in Dublin is heading for a crises and this budget will offer incentives like lower VAT on building supplies , suspending of the environmental charge on land to get builders/developers back into building. However at the current price levels there is no business case for building as you can still buy for cheaper on the second hand market. Until price levels hit 2006 levels no developer meeting his accountant can justify the costs/return.

    • Reply to this message
  • Re: The Daft Sale Report Q3 2013

    Posted By: David Date: Wednesday October 9, 2013 @02:55PM

    Martin

    I think its more likely that building will start as I do not see any banks giving that kind of credit to people looking for a mortgage.

    At the end of the day the amount of finance that a bank is willing to lend plays the most important role in house prices. The lack of financial regulation, low interset rates and 100% mortgages gave us the prices seen in 2006. None of that exists now.

    Your theory is flawed

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Frank Date: Wednesday October 9, 2013 @04:46PM

    David ,

    Why would some one build to sell at a loss?

    Regards

    Franks

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  • Re: The Daft Sale Report Q3 2013

    Posted By: David Date: Wednesday October 9, 2013 @10:31PM

    Frank

    As previously stated

    The government realise that a housing shortage in Dublin is heading for a crises and this budget will offer incentives like lower VAT on building supplies , suspending of the environmental charge on land to get builders/developers back into building.

    This is the start of an overhaul of the current shortgage situltion to get building restarted with more changes to come in favour of building as they will not stop at just these changes untill building is feasible which will happen as it is an absolute necessity creating Industry/jobs tax returns etc. which is badly needed not to mention lowering the amounts currently on the dole that have skills ie tradesmen etc.. The government have the power to do this.

    As previously stated in the daft report by Ronan Lyons

    "supply of credit increases house prices"

    This is my point, a shortage of property does not facilitate a prolonged rise in property but can be addressed through changes. The supply of credit during the boom years is what facilitated the massive increase in house prices not a shortage of property.

    Banks have already been bailed out and have to own up to massive losses with the amount of arrears on their books.

    For this reason the credit needed to grant large mortgages of the levels of 2006 cannot happen again as it is actually impossible.

    The money needed, lack of regulation, 100% mortgages, low interest rates are all gone. Banks from now will be very stringent as regards lending. No government intervention can change this as they have already intervened bailed out the banks and the problem is getting worse not better for the banks which are looking more likely that they will need a second future bail out.

    Therefore all your points are flawed. Its this misunderstanding of the situation that is giving people false hope. The manipulation of the Dublin market will be dealt with and when it is along with reposessions coming onto the market house prices in Dublin will plummet.

    My only advise for future buyers is to save as much as you can to keep your principle sum borrowed as low as possible as interest rates will be high but will not lead to mortgage arrears and allow people to see out there mortgage terms as it should be. High interest rates will also keep house prices depressed with average prices rising by 1-2% per year as it should be.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Martin Date: Thursday October 10, 2013 @10:36AM

    David,

    The one big hole in your argument is the will be no further house build until prices increase.

    At present it cost €400K to build a house you can buy an equal specification of an existing house for €250K , if the government want to bridge that gap then to fund 30000 units will cost €4.5Billion in incentives. THAT IS NOT GOING TO HAPPEN. PRICES NEW TO RISE IN ORDER FOR CONSTRUCTION START TO INCREASE.


    1 in 4 properties are distressed sales - very few repossessions , if you want a repossession go to Allsop ..............have a lot at what’s on offer in Dublin ...very little .. just rubbish.


    Price are already moving up from way below European averages , my advice buy now to buy cheaply

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  • Re: The Daft Sale Report Q3 2013

    Posted By: David Date: Thursday October 10, 2013 @11:21AM

    Martin,

    I take your point but as said previously the market is therefore in a state of paradox as the credit needed to fund these large mortgages is not going to be available.

    Things can be done to get building started but i fail to see how things can be done to access large amounts of credit and keep interest rates down.

    Time will tell how this all pans out, I have a different opinion to you on the matter and i dont think now is the right time to enter the market as there are too many uncertainties.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: hugh W Date: Thursday October 10, 2013 @11:40AM

    Jim

    I understant that 50% of purchases are from cash investors ?


    Also if your are a bank that wants to sell a house after repossesion , offering a new mortgage to a new person makes complete logic.


    Repossession only add to the transfer of property , new mortgages ... I think this report looks at the effect of housing shortage caused by 5 years of no building in Dublin


    Lots of really illogical post sabout repossessions driving down prices , reposessions in uk are 50 time the level in Ireland and prices are rising.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: David Date: Thursday October 10, 2013 @12:37PM

    Hugh

    Population of UK is around 60-65million

    Population of Ireland is around 4.5 million

    Hard to compare the two.

    reposessions = more housing on the market

    More housing on the market = more supply which aids the shortgage of housing. which is affecting house prices

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Jim Date: Friday October 11, 2013 @12:29PM

    The market in the UK is completely different. For a start they have been repossessing at a constant rate since 2007. Ireland have been letting the back log build up. The result being alot of properties may enter the market at the same time.

    And it is not illogical that repossessed houses will help with supply.
    If a house is repossessed - then purchased by a new owner - the new owner is no longer in the property market. So demand has dropped by one. This will happen over and over - demand decreasing as the houses are sold.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Jim Date: Thursday October 10, 2013 @11:23AM

    In regards to reposessions Martin, these have not happened yet as there was a loop hole in the legislation which made it almost impossible for banks to repossess. This loop hole has been closed so that repossessions can commence. This is a legal process and like most of these processes take time. Repossessions are happening right now. What the banks do with the houses is a different matter - they could rent them out rather than sell, or dribble onto the market to try to keep prices high. As for your building arugment - you have said yourself that the goverment plans to address this issue - yet you keep banging on about the need for prices to be back to stupid levels before it starts. It can't be both ways can it??

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Jim Date: Wednesday October 9, 2013 @02:48PM

    Yes at current prices and situation it may not make business sense to build as you have pointed out- but is this not a temporary situation? Once the government measures take effect and building starts, surely stock will hit the market in the not too distant future - say halfway though 2014? would you disagree with this?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Gerry O'M Date: Thursday October 10, 2013 @02:04PM

    In the region of 8,000 new homes will be built across the country this year and while this represents a reduction on last year's figure, it is still a remarkable low level of output. The favourable economic outlook - sustained levels of job creation, strong wage growth, maturing SSIAs, buoyant consumer spending - and the continued increase in population will ensure demand remains strong. Average price growth of 5 per cent looks likely this year, which is a far more sustainable rate of increase than the double-digit growth rates of last year. Even after taking into account the last two recent interest rate increases, affordability for first-time buyers actually improved in the first couple of months of 2011, thanks in large part to the changes in mortgage interest relief for first-time buyers announced in Budget 2011. The benign outlook for interest rates in the year ahead, with at most one more rise expected before the ECB will put rates on hold for an extended period, and the more moderate pace of price growth should see affordability improve again in the latter half of 2013 To sum up, the residential property market is performing well, particularly when compared to spring 2008 and 2009 rather than the overheated market environment dominated by spiralling prices in spring 2006. Bricks and mortar have consistently proved to be a reliable long-term investment - nothing has changed in this respect

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Brendan Date: Friday October 11, 2013 @03:10PM

    Very few properties to buy or rent in Dublin.

    Why is this happening , if you do a map view form Stephens green for 3 miles , wow there is not mucj out there

    Any answers or theories ?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: PaulyFromDublin Date: Friday October 11, 2013 @06:46PM

    Why would anybody WANT to live within 3 miles of St, Stephen's Green. Not really answering your question but I'm making a valid rhetorical statement....ok some people prefer this but not me, go, instead to places like Carpenterstown (wan-a-be's will call this Castleknock but a very nice place all the same) which is a great spot, good links to the city with reasonable prices, also look at parts of finglas and glasnevin.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Jack Date: Saturday October 12, 2013 @07:57PM

    I like Newbridge myself , Dublin is too expensive for rent and when I tried last
    month viewed 6 places and the agent was showing 3 people at each appointment.
    The is a shortgage of the right piced flats in Dublin , nothing decent now below €1000 a month for a 1 bed

    Trian prices are a issue for the commute from Newbrigde but at least I can get a place for €700 pcm.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Ian K Date: Sunday October 13, 2013 @01:51PM

    The classic theory of economics state that if the cost of production exceeds the sales price then sales prices most increase otherwise production can not commence.

    In housing terms that means if it costs you more to purchase the land and build the house than you can get from sales price then the if no business case to commence building . Prices a too low in Dublin for any developer to commence a building project. For instance you can buy a new(nearly) flat for €300 per sq ft , it would cost me €450 per sq ft to build the same property and buy the land and make a small property. The people that have land for development will not build until price rise that may take anothe 3 to 5 years.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Bill Date: Thursday October 17, 2013 @01:58PM

    It's all rather simple:

    1. Wrong stock built in the wrong location for close to ten years (plus no services in many of those areas)
    2. Poor housing stock in many places (shabby apartment blocks are all over the city).
    3. No supply in areas generally within the city limits because the residents are either in negative equity and/or on trackers so are not moving
    4.. Strong demand for houses in those areas from people who have not bought in 5/6 years due to age/circumstance wish to do so and want to stay within reasonable distance to the city.

    The result - very sigificant rises in Dublin propery prices. The 10% figure is way too low. In my experience over the past four months, houses are selling for circa 20-25% up on this time last year. As none of the above fundementals can change, it is hard to see them doing anything else but rise.

    As for reposessions, leaving aside whether they make economic sense or not, they wil simply never happen on any sigificant scale. Not one politician in Ireland will stand over them. Extraordinarily naive to think otherwise.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Paul Date: Thursday October 17, 2013 @02:29PM

    Bill

    Reposessions are in the hands of the banks not the politicians, the loophole as in the moratorium on unpaid mortgages was closed.

    The banks do not care about public opinion only profits, as with rising house prices now would be a good time for them to start reposessions as they can make more profit on defaulting mortgages.

    We are in the hands of the banks not the government

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  • Re: The Daft Sale Report Q3 2013

    Posted By: James Date: Thursday October 17, 2013 @05:16PM

    Bill,

    I agree with your analysis , in addition the banks will prefer to drag this out as it allows them not to write down losses on the books. They will do there best to offer people who co operate deals that will allow them to at least pay the interest.


    It becomes more interesting when houses move out of negative equity , then the banks can do a repossession and not have to write off any debt. People who pay nothing will just get repossessed there can me no other outcome , depending on the location there can be lots of willing buyers in Dublin.

    The lack of supply will drive prices higher and higher in Dublin. Lack of demand outside dublin where there is loads of stock will continue to drive prices lower.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: paul Date: Friday October 18, 2013 @05:03PM

    i agree with you, in carpenterstown, my neighbour sold his house for 225k this time last year and now one beside it sold at 299k plus.

    I dont care what they sell for as I am going nowhere and have no intention to sell but the estimated increases are way off the mark, easily up 25% around here from last year.

    I just feel sorry for people who were holding off to get bargains, I think if you were waiting and waiting, you are too late, those who bought this time last year were the smart ones.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Tim Date: Thursday October 24, 2013 @11:48AM

    People get very upset by house price increases , when transport and food prices increase by 10% no one bats a eye . we must remember housing is a consumer product , with a number of procurement routes to rent or buy and like a lot of things over time prices increase , when a pint was 37 pence a average 3 bed semi house in Lucan cost 8000 Irish pounds , ( €12000 euro) , today the pint is €5 euro and 3bed semi can be got for less than €150K . Looks to me that by the pint to property index that housing is underpriced by about 30% . There is also the supply side , pints are easy to produce , property and land are difficult and last a longer time , my point is ...............don't expect prices to keep droping .. expect to see continuel rises until production of houses in the right areas increase.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Joe Date: Thursday October 24, 2013 @03:04PM

    Where do you buy your milk?? a pint is only around 600 ml - I pay 1.50 a litre
    But good point even if the numbers don't quite add up. Until supply increases there will be continual price rises

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Martin Date: Friday October 25, 2013 @09:35AM

    Joe ,

    In fairness , when TIm one says a pint in ireland its usually black and bought in a pub.

    The Pint to House Price Index is surely one of the best methods to determine the ratio of cost to price and inverts the theory that house prices are either to high or too low. The market determines the rental price , if the rental price yields a return on capitcal investors like this, banks want to do secured lending in order to make profits 90% of mortgage loans preform therefore if a defaulting loan can be reassigned in the market to a preforming loan(# this is called a repossession and resale) then this process is happening at the moments. Banks by the nature of there business must lend to make profits , for the right profile customers this will not be a probleim in Dublin as the assest class returns to performing. In terms of comparables with other european capitals and average wages Dublin prices are 50% below market comparables. On the flip side in the country towns there is little demand prices will continue to sink.


    Next year will those that have waited for 4 to 5 years return to the market in number to find that the stock in not there in Dublin and landlords will continue to push up rents.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Andres Date: Monday October 28, 2013 @02:28PM

    hey

    in 2007 i went sale agreed on a two bed apartment in citywest for 280k. At the time i changed my mind and decided to keep renting. this week i have just gone sale agreed on a 4 bed semi in dublin 15 for just under 200k. My mortgage will be around €250 more a month than my current rent in a 1 bed apartment. For me, surely this has to be a good time to buy??

    All this talk of repossessions, interest rates, bank bail outs and a new bubble is making me think twice that maybe i should hold off and see how the market settles.

    in a nutshell, should i buy yes or no?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Sam Date: Monday October 28, 2013 @02:45PM

    I've been viewing a number of properties recently and apparently, according to the agents, the panic wave is starting to calm down. it's still a cash buyer market, so prices can only increase as much as people have money to afford a purchase.
    the recent out-of-cointrol price increase have discouraged people from making offers. Demand is slowing down. Vendors who really need the cash will have to accept lower offers. It goes around in circles
    It really looks like it's just the end tail of recession with its uncontrolled bouncing before prices stabilze and then start to increase at steady normal rate, usually 1% to 3% per year

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  • Re: The Daft Sale Report Q3 2013

    Posted By: hugh W Date: Tuesday October 29, 2013 @11:46AM

    Sam,

    Is there a panic ? Yes in Dublin you can get 2O People viewing a property on a open day viewing , travel 20 miles to Newbridge and you lucky to get a viewing once a week from very unmotivated buyers. Never before has location , location been so true and under pins the point that must of the overdevelopment from 2000 to 2008 was in the wrong places ( looking backwards 20/20 vision etc) . Developers matra was " great value for family homes and a easy commute to Dublin" Transport costs have gone up by 20% and all the jobs are in Dublin for white collar workers, but very few houses or big apartments were built for families. So there is huge demand but as already stated by others until prices increase further there is no business case to build new homes where they are needed. I see many young couples (30 - 35 ) wanting to move from rental apartments and get houses in Dublin and then understanding that prices are now moving forward at a rocketing rate for the inside the M50 for good places. If you are prepared to move to Navan or Newbridge and do a drive every day then your ok and will get a good family home... but I find that young people view these remote spots with no wish to live there are there is a lack of culture/sea side etc.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: TOM Date: Thursday October 31, 2013 @03:52PM

    Whats all this nonsence about wide spread Bank repossessions ? The only properties that the banks are interested in are the ones where they can get their money back and lend it on to someone else who can service that loan ! Example- 2007- Bank loans 300K to client towards cost ,client puts up 100k and buys property for 400k , 2012 client cannot afford full monthly repayments,client can only now manage to pay interest only repayments ! Client decides to put property on the market , client finds cash buyer who offers 180k, (no bank loans available) so no more offers !! client goes back to Bank and offers a settlement of 180k. Bank asks client if he can continue to pay interest only , client says yes ! Bank says ok ! problem solved !. However its a completely different story if the property realised the 300k that the bank was owed --sell or else !!
    The morale of the story is that the banks are not interested in the clients equity , far from it, they wouldn't consider that for one second. So there is your answer ! there will be no wide spread reposessions because there are no buyers !
    And after all when the market returns to normal they (banks) will once again get their money back. The Dublin market is somewhat different in that you can let the property for price of the mortgage repayments but this is not so outside of Dublin.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: James Date: Thursday October 31, 2013 @04:37PM

    TOM

    Excellent post and you are totally correct . People in equity are more likely to come under pressure to sell. Banks need buyers in order to solve any arrears problems .... this will propel mortgage advances going forward, bad borrowers in arrears will be replaced by better risk profile borrowers going forward.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: MARK Date: Friday November 1, 2013 @10:09AM

    As there are a shortgage of 3/4 bed houses in Dublin, with the prospect of these rising over the coming years would this be a good time for investors to purchase housing in Dublin that may need renovation work, develop the property and sell on within a year making a profit?

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  • Re: The Daft Sale Report Q3 2013

    Posted By: peter Date: Monday November 4, 2013 @12:40PM

    In Dublin if prices are supposedly rising rapidly surely anybody thinking of selling will be holding off putting their homes on the market in order to achieve a better price thus adding to the shortage of homes coming onto the market and contributing to price increases, not realizing that the next home they want to buy will also have gone up in price,holding off selling in dublin only makes sence if you have other property bar a family home,I know if I had,I would be looking at 2years at the current price rises in dublin to sell to claw back some losses,AND that's probably one of the main reasons property coming onto the Dublin market is drying up.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Bob Date: Wednesday November 6, 2013 @08:10PM

    Have we really learnt nothing from the last 5 years?

    House and apartment prices are on the rise in Dublin again. The reason for this is due to the fact that there are more people looking to buy than there are properties on the market.

    As a potential buyer myself, I have seen apartment prices rocket by as much as 30K over the last 6 months.

    If the past has taught us anything, it SHOULD have taught us that this level of growth is not sustainable.

    At some point, the realisation has to be made that property is just not going to be worth what it was.

    A property market must be created at a sustainable price level with sustainable price increases. This is the only way another property bubble and burst can be avoided.

    Banks are wise to this. Do you see mortgages being given out in their masses anymore? I think not. Banks are using stricter lending practices with better stress tests to ensure they don't get burnt the same way they did. Mortgages will be given, but will be given in fewer numbers, for lower amounts, to safer borrowers. Fact.

    The halt on repossessions is now at an end. Watch this space. The next 12 months will be interesting for the property market. Now a balancing act is required. Do NAMA and our main lenders flood the market with freshly repossessed properties for sale? This is drive supply well past demand again and the buyer becomes the stronger player in this game of property chess.

    Maybe the banks play a slow drip feed approach, never letting the supply get too high to keep the prices higher. But think it through, there is not an infinite amount of cash buyers out there. Pretty soon, the mortgage market has to cover the a larger stake of the purchasing. So banks sell higher, but have to lend higher in the process.

    The time has come for our wonderful government to finally own up and accept that big writeoffs are needed. Free up losses, get properties back on the market and let the property industry rebuild itself.

    If the value of property matches what the banks can, and are willing to lend, the property market starts off again. This will aid in employment as builders see potential for sales, employment of trades and services increase as newly purchased property is upgraded. This reduces unemployment thereby reducing pressure on social services. Slowly, everything starts to recover itself.

    But none of the above happens without the first step. Correct the property market, rebuild the country.

    My money is staying put for another 6 months. I can see it all gong belly up again if we get the property market wrong.

    Cannot wait to see what the next report says, I wonder will they agree with logic??

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  • Re: The Daft Sale Report Q3 2013

    Posted By: john Date: Thursday November 7, 2013 @09:28AM

    Bob,

    I totally agree with everything you have written. Most people want the market to recover as they are in negative equity and see the shortage of housing and the rapid rise in housing as the second coming they have been waiting for.

    At the current rate it will end in disaster again, and anyone who buys for fear of "missing out" really needs to do their homework and see all the factors in this game of chess as you put it, as rising prices are not always a good thing for all parties (especially at the current high rates in Dublin).

    This is an unpopular opinion and I can understand why, but putting personal circumstances aside i feel most people would agree with everything you have written. Easy credit caused the boom of prices in the Celtic Tiger era. that is the one factor which is missing today and wont be back. The shortage of property can be answered through arrears etc. it is all in the governments hands now, sometimes unpopular decisions are the right ones in the long term

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Martin Date: Friday November 8, 2013 @11:08AM

    Bob ,

    In classic economics when too much money(credit) is chasing a good supply of properties you will always get a bust(2007/8)

    Now in Dublin its differant , money is chasing too few properties ,therefore there will be no bust , these house price increase have got real traction.

    Until there is a business case to build more properties( prices must increase to make a profit for builders/developers) no new housing will be build ( until 2018)

    It's all that simple.

    Prices will recover to 2007 levels by 2016 in Dublin . The developer builders will enter the market with new completions about 2018/2020.

    Prices will continue to increase. so will rents by 15% pa. if you want value buy now , not in 2016.

    For the record , I am a professional in property in London , but from Dublin.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: John Date: Friday November 8, 2013 @02:03PM

    Martin,

    Just one question on your post. Where will the credit come from for housing at the levels of 2007? I am very lucky in the sense that i have a secure job with a decent salary have savings and no debts. The amout that the banks are willing to lend to me are no where near the levels needed at 2007 prices.

    Cash buyers are a pool that will dry up in my opinion and are holding the sales side of the market up in Dublin currently.

    I think that the current levels are already at the peak that someone in my situation would find difficult to afford a 3 bed semi in a decent area of Dublin.

    The credit just isnt there and wont be any better by 2016.

    professional in London or not I feel that this is basic economics that seems to get overlooked especially by people who got burnt in the property crash.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Martin Date: Friday November 8, 2013 @04:53PM

    Bob,

    There is £94BN on deposite in Irish banks - mainly from Irish people. Ma and Da will surely lend a few bob to there son or daughter when it comes to house buying . Its far from a lack of finance that will hold the Irish property market Back.


    The other reason is profit .........how do banks make money to pay depositors interest on savings .....they lend money ...land and .property is the best form of security to lend against .... so as banks try to rebuild profit they will lend more and more to people with good jobs that are 30 plus and can pay back a mortgage .

    Agains lack of finance will not be a problem .. the problem is lack of supply of housing . that why prices wil continue to rise.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: David Date: Friday November 8, 2013 @08:37PM

    Wow.

    I'm actually shocked to read this post from yourself Bob, I find it shocking that someone can have such a lack of understanding and ill informed opinion to the workings of the banks, the cause and effect of the banking crisis and most western countries sovereign debt and the global financial crisis.

    Do you really think it was caused by parents lending their lives savings to liberally to their children to buy property??

    Your opinion shows a level of ignorance that just baffles me, but at the same time strengthens my own opinions.

    Good Luck with that

    David.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: David Date: Saturday November 9, 2013 @09:04AM

    Apologies Bob the message above from myself was in response to Martins Post

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Bob Ballox Date: Friday November 8, 2013 @09:39PM

    Martin, like many people working in property you are neglecting to mention one or two important factors. You talk about classic economics that 'good' housing supply and increasing credit in the form of mortgage loans leads to a bust. Don't think anyone would argue with the principle, and I don't think anyone would argue that prices in Dublin as in all capital cities will defy downward pressure on the property market over the next 3 years.

    However, in Ireland it is not exactly following classic economics when you have a bank bail out, and NAMA holding a lot of stock to stop prices bottoming out earlier and more violently which would have allowed classic economics to take their natural course.

    Inflated rents and thats what they were then in my opinon, were caused by credit fuelled binge spending just as the housing market was . The rents may remain high they may not. A lot depends on how Ireland manages the post bail out exit spending.


    And where will this credit come from to fuel the new price rises in Dublin for the next 3 years? The banks are technically bankrupt, you are talking about the new recovery assuming the banks are going to operate in the same way as they did pre crash. This is why people have had 5 years of near zero interest while the banks ''strenghthen'' by charging slightly higher rates. The European states are are inflating their way out of debt or trying to, but at the moment its not working The result is (if there is no pick up in the economy) that goods cost more , the house you were looking at in 2010 for 150k is worth maybe 180k in 2016 . Does this mean that the house is a good buy now, if wages are anyway held back and commodities and things like electricity go up significantly, its arguable that its better off to keep your money. and invest elsewhere. Housing is no longer an investment for individuals.

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  • Re: The Daft Sale Report Q3 2013

    Posted By: Bob Date: Friday November 8, 2013 @08:56AM

    Hi John,

    Glad to hear I'm not the only one who sees the logic!

    I would now call for an auctioneer to weigh in on the matter. All I'm hearing from them so far is basically buy before it's too late!

    Without giving exact details, I enquired about a 2 bed apartment in south Dublin, on the market at €250K. The auctioneer advised they had an offer of €257 and he was waiting on instructions from his client. In March 2013, I had an offer accepted for €205K on a 3 bed apartment in a similar south Dublin area.

    Taking that example, I've lost a bedroom and over €50K in 9 months. My income has not gone up in that period of time so my access to credit has not changed.

    Do you think a bank will top up my mortgage application for me?

    So all this new bubble will do is price the average FTB out of the market AGAIN!
    Not a clever move.

    What does Ronan think?

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