2Pack will call the bottom now!


#521

Lads,

Yizzer dangling temptations in front of me there. :slight_smile:


#522

It looks like a bit of a plateau now in Dublin. The next month or two of data from CSO will likely confirm it.

Seller expectations are being forced to re-correct to what buyers can afford as the CB rules keep lending in check.

Short term I can see:

-Banks forced to lower mortgage rates and offer more cash back/legal cost incentives to meet their loan targets.

-Govt put under pressure by interest groups to circumvent CB rules, like they did with the 20K FTB new build grant.

-TDs and interest groups asking CB to loosen their rules again.


#523

How much of an impact might the CGT exemption be having or about to have? It was available from 2011 to 2014 but you had to keep the property for 7 years. As of last year’s budget that period was reduced to 4 years, which means all CGT exempt properties can be sold as of the end of this year. Investors seeing a flattening Dublin market may decide now is the right time to cash in their chips.


#524

“May” being the optimum word :slight_smile:


#525

And put their money where?


#526

They bought much lower than now and can pocket a nice profit with the CGT exemption.

However current rental levels in Dublin (most bottom feeders bought lots of apartments like Bernards Elm Park or the Islandbridge complex) mean that their current rent rolls, and the rate of return on capital deployed, is very tasty right now.

I would think most are pulling in a 10% annual return, or more, on that basis.

They ain’t gonna dump these and go long on a 3% bond instead, although there is a currency risk as many are US$ investors. So I think that only a flood (or a threatened flood) of supply in the GDA will make them review their long positions with a view to cashing in.

And there is no such realistic supply threat in the pipeline because relative to demand we are building fuck all in the GDA right now and not much more in Cork and nothing at all in Galway. This dismal holding pattern shows no sign of breaking down.


#527

@2Pack

Do you see prices holding steady in Dublin, or even a return of general inflation coming in?
It looks like I will need a bigger gaff in the new year, but I thought things might start to cool so no rush.
What says the oracle?


#528

Dublin is still creating jobs faster than it can create bedspaces for the workforce. That is what is the key driver of prices.

The last time Dublin was booming (during the bubble) we could build at a frenzied rate of 100,000 units nationally a year and a good half of those at peak were in the GDA. If you assume that the average GDA unit had 2.5 beds back then (and now) we were creating 125,000 bedrooms a year at peak. This exceeded net new jobs in that region. There was a bedroom for everyone in Dublin in effect and for everyone coming the following year.

We mopped up a lot of excess bedrooms from 2008 to 2014 as we built nothing, then the tightening started.

In 2017 we built 6000 units (15000 bedrooms in Dublin ) > Source and a total of 9000 in the GDA or only 22500 Bedrooms. (we also see 1% of the preexisting stock being lost every year)

One needs to point out that more than 22500 net new jobs were created in Dublin in 2017 and that this sucked in migrants from all over to take these jobs, and bedrooms.

However 13000 net new jobs were created in Dublin in Q2 2018 alone so accomodation is, if anything, further behind than ever in the GDA.

Sadly Ireland is now shite at building anything and the lack of response to what is clearly an emergency now makes me feel prices will not fall for some time. Maybe Brexit will put the brakes on job creation.

In the rest of the country Brexit will cool the jets for sure, bar in Cork and Galway cities (and Kilkenny) where airbnb has bollixed the long term rental market up.


#529

CSO Residential Property Price Index – June 2018 figures are out

Dublin houses at

0.0% monthly change
0.6% quarterly change
2.0% change since Jan 2018
8.4% annual change

the plateau looks increasingly there…


#530

Hmmm :smiley:


#531

None of that reflected in the coverage so far. You’d have to dig in a little to the Statbank - as you did - to get the file. Terribly hard work…


#532

Yeah, can’t decide if it’s laziness or what


#533

It is very telling that all the media attention is on property prices whereas there is almost no reporting on the volume of transactions although those are the figures that matter in the long-term, particularly in terms of supply and of homelessness.

There were 5,200 new dwellings sold in H12018 which is a 10% increase on H12017 but less than one-third of what is needed by most estimates and the unmet housing demand is growing much faster. Almost 4,000 existing dwellings were sold in June which should improve the allocation of existing resources but it doesn’t address the underlying gap in supply/demand.

The price figures are highly seasonal so every year we have an annual media cycle, going from “prices boom” to “prices flat”. Top prices are typically achieved in May/June and stamp duty is paid on these transactions in the Autumn. Conversely, properties which fail to sell before the Summer are eventually sold off in the Autumn at below their asking prices and these transactions are usually completed in the Spring. There is a similar trend in volume of sales registered (Oct/Nov is the peak, unless there is a rush in December for some tax dodge). There is a strange pattern in Dublin now - house prices in June were absolutely flat m-on-m in Dublin as a whole but houses in Fingal dropped by almost 1%. Apartments are now the fastest growing sector in Dublin after trailing for years.

We will have to wait a few months to see the results of the Spring sales but I think we may be able to call “top” in Dublin at the end of the year, mainly thanks to the Central Bank and Brexit fears.


#534

Cliff Taylor is the best of a bad bunch of hacks as usual

irishtimes.com/business/eco … -1.3596355


#535

CSO Residential Property Price Index – July 2018 figures are out

Dublin houses at

0.7% monthly change
1.1% quarterly change
2.6% change since Jan 2018
6.5% annual change


#536

The second derivative is interesting though. Annual change is down from over 12% in April.


#537

The second derivative change is the important one.

Look at the three-month over three-month change for Dublin houses- it’s on the CSO website.

There is a second derivative improvement pretty much every year in July or August. More houses go on the market in spring and get registered in the summer. There is (unsurprisingly) a liquidity premium. This is visible even in 2011 when the market was it its driest! (only exceptions are 2006 and 2015).

There is no evidence of it at all in 2018, and in fact possibly the opposite.

I don’t have any seasonal adjustment software but if I did I would expect to see the Dublin house market flat or potentially showing very small falls.


#538

#539


#540

Having been looking to buy around South Dublin for the last 2 years and being outbid on every single property I can
say from experience that there is definitely a dip rather than plateau happening around there.

Especially in the 450-600k price range

Very little attendance at viewings most houses are sitting on the market for a good few months.
I have noticed price drops on multiple properties that would have been selling 20% over asking at the start of the year.

I think a lot of it might be down to the fact that most bank exemptions are wiped out for the year and also
the EAs were getting a bit too aggressive in their pricing.