What’s the current context? That central banks around the world finally achieve escape velocity and we all get back to a credit fueled boom wonderland? That’s the mindset that has driven Dublin property prices back to bubble nonsense once again, aided by constant spin from the government, the media and the property VIs that got this country into a complete fucking mess in 2003-2007.
All I hear all over the pin are the same ole arguments that were bandied about in 05/06. It’s the supply see, prices are never gonna fall see, property prices in Dublin are a one-way bet yada yada yada - complete bollix, it’s a bubble plain and simple and like all bubbles it will burst once again and sooner rather than later, although this one is uniquely Irish, as it’s fueled by a toxic mix of delusion and desperation.
So the prices of houses in parts of Crumlin, Inchicore, Clondalkin, Finglas etc are all going to fall even further below build cost? And what happens then? It will not prove economically viable for builders to build any new houses, leaving an accumulating shortage of 25,000 houses per year (according to the FT: ft.com/intl/cms/s/0/15bb4d40 … z3k3OTRWes).
When you’re done railing against claims that no-one has actually made, except yourself, could you try and articulate a plausible case for an imminent fall of >10%? Because I notice you’ve been claiming the sky’s about to fall for a couple of years, despite all evidence to the contrary. At some point you have to concede that your ‘dead cat’ is just a straightforward recovery.
Entirely possible that property will fall to that extent in the future, but not on the basis of current domestic pressures and influencers.
The relative quality/size and social environment on offer in Dublin is absolutely garbage. You back out that 250k house and a couple are going to have to earn 60k… to live in a pretty poor house. It escalates from there. And it’s not like you pay 750k and get some amazing 2,000 sq ft+ palace with amazing amenities.
The bottom line is that it’s going to be 6-months before you have proper evidence and where you see stock priced come the end of March 2016.
The key drivers I’d be pointing to is that he vast majority of the country are still skint, can’t afford decent holidays, new cars etc. taxes are going up, and certainly don’t have the income or deposits to support current property prices. Add on to that a false market where repossessions don’t occur, significant numbers are on interest only mortgages, significant numbers are on trackers that they can’t port, heaps of people in their 30s are in negative equity and are likely to remain in that position for another decade, leads you to conclude that the situation is f*cked.
Don’t you understand that building houses is like the Apollo Space mission and it’s terribly hard & expensive to do? Much harder than it is in other countries where the houses are built bigger and to better standards.
But then, the small number of potential buyers who are not hampered by any of the problems you mentioned above are bidding against each other for an even smaller supply of available houses in the capital city.
AS mentioned above it’s going to be 6-months before we’re proved/disproved but, and again referring to the above market, unless the current stock begins to move then it’s hard to not see prices down around 10% by March/April next year if we have two waves of stock in Autumn 15 and Spring 16.
Are you talking about that specific niche, or property prices in general?
Because there’s little logic in extrapolating outwards from a localised/unique scenario, to a general one. NCD properties in that bracket may be sluggish, or even falling, but that means very little outside the NCD context. The same type properties in SCD are more than holding their own. The general scenario is one of slowly increasing property values, with precious little to suggest a 10% drop is coming any time soon.
Literally read two posts up. With prices falling 10%. This is happening across North Dublin in the >€400k bracket and a trend I expect to accelerate over the next 6/12-months.
Without a shadow the South side is more robust for a number of reasons (schools, historic wealth, infrastructure etc.), but at the same time its a relative trade and its incredibly difficult to foresee a situation where you can have North Dublin falling and South Dublin stable/rising indefinitely. There does come a point where individuals say “Do I really think XYZ is worth €xyz more then Clontarf/Raheny/Sutton/Malahide etc…”
Again, this does exclude property outside of Dublin. Happy to conclude I know zero about property in Cork for instance and the above is irrelevant.
So - you’re essentially just talking about a 10% fall in a small niche. You wouldn’t consider that the logical inverse of that price difference quandary might also apply? “Do I really think XYZ is worth €xyz less than Ranelagh/Blackrock/Dundrum/Kilternan etc…”
Comparative suburban values aside, the overall underlying movement is for higher prices, not lower. It’s been that way a while now, and the economic background is getting slightly better, not slightly worse.
Yes - I’m talking about Dublin North and North County Dublin properties > €400k - c.10% of the Dublin market… but will have an impact on other sectors in both North and South.
People are going to fall into one of two camps:
wanting to live in SCD no matter what and so if there comes a point when they cant afford xyz, they move to a relatively less desirable area.
Those who will look at relative value and lifestyle factors between north and South Dublin.
This second cluster will become increasingly motivated to consider North should the price differential widen. In no way am I saying that’s why the prices in the north will go up. But I am saying that is why ultimately there is a cap on the directionally different performance of the two niches.
The economic background is improving of an exceptionally low base - it’s pretty hard not to have an improvement. At the same time, in 2015 you’ve had a structural change in the property market that has capped credit and strengthened the relationship between house prices and incomes. The price increases of the last 24-months were not fuelled by income changes but by multiple expansion/sentiment.
I’ll address these in due course (not dodging question), but you’re right this is purely anecdotal of my peer group of professionals aged 27-38 who generally operate in the fields of technology, accountancy, finance, investment banking, oil and gas, law and medicine and teaching.
Let’s look at tax.
You are completely correct.
The tax on €100k of earnings - those needed to support a mortgage of €350k and house purchase of €440k; lets call it your average 3-bed semi-D in a nice part of Dublin. What some may to aspire to, and not unreasonable especially if they do find themselves in the top quartile of earnings in the country.
That persons net income has increased €747 year-on-year, 2015 vs 2014.
Looking big picture however. His net income (due to higher taxes) is still down €6,583 from peak (low taxes) in 08/09. and down €5,097 from the average of 05-09. If we add in €660 for property tax and €140 for water that’s an additional €800 of taxes and combined with the €5,097 means that net income has decreased 9.1%.
If we look at a shorter period you are right that your man’s c.€600 better off this year, or €50 per month.
… unfortunately, he/she now needs to save/find an additional €23k to get a mortgage given the introduction of the LTV rules and additionally his borrowing power is capped at €350k whereas previously he may have been able to get up to €500k.
That €600 per year isn’t going to really make a difference is it?
Whether the economic improvements are from a low base or not is arguable - what’s not is that improving economic conditions are more likely to push property value upwards than downwards. The CB lending rules aren’t going to act as any sort of counter to the factors weighing in behind increased values - improved economy, positive sentiment, constrained supply, lack of new construction, increased employment, rapid rental cost increases, etc etc. The new rules will certainly limited reckless borrowing/lending, but whatever ones feelings about how the banks operated, such reckless lending/borrowing has been extremely limited in any case, since the arse fell out of the lending business.