Dublin housing rebound may just be a false dawn

sddt.com/News/article.cfm?So … iul8sbYB8E

I have to say, I think he is right.

The economy is still in the toilet. The deficit is still too large and there are at least two deficit reduction budgets coming. In the absence of growth, in Ireland that means increases in taxation, not reductions in spending. The GDP numbers are more fictional than ever and GNP has been drastically restated.

I don’t really buy the argument that Europe is a basket case or that the european model is broken (since I think that GDP does not measure accurately mature economies (Ireland is not yet a mature economy)). Ireland, though, needs to move away from gaming GDP numbers and living on debt financed growth. Sadly the popular view is that a return to debt financed growth would be just fine.

Given the experience of the last twenty years, many people are under the impression that house prices move in one direction for a long period of time. The ups and downs of the next twenty years will short lived and reversed in short order i think. In general houses are just about affordable now with the exception of Dublin.

“In Monkstown, a six-bedroom house overlooking Dublin Bay with four floors including a basement, sold for 1.1 million euros last month. Savills Plc is now offering a similar property for about 1.4 million euros.”

Anyone got a link to either?

It’s difficult to form an opinion on what a flash gaff with sea views in a capital city ought to cost, as it completely depends on how wealthy people choose to spend their money at any particular time. The spending is somewhat discretionary, and you can project any future valuation you like just by changing a couple of key assumptions.

Does it have any relevance to the broader Dublin market? Sold prices where I live (not in SCD) are pretty much flat, or possibly up 8% over 2012, depending on how I pick my data points. Most of my neighbours would have somewhere from zero to -100k equity and aren’t going anywhere.

I’m refusing to get trapped into this bubble we’re experiencing at the moment, my gut tells me it’s a trap, but it’s damn frustrating to have to hang around for years waiting for things to stabilize. Ideally I’d like to hold on until all the big ticket issues are sorted, but who knows how long this will take? I guess it’s a case of right house, right price and forget about timing

you could be old and gray before that happens.

Where do these people think the money is going to come from? We are already close to the limits of mortgage lending and it’ll only get tighter is if the banks keep lowering multiples, increasing the required NDI amounts and the government keeps slapping on tax increases.

I’ll keep paying someone else assume risk of further price falls. Price discovery will happen before too long

Agree, house prices in Dublin are still too high, there is some delusion that the economy is stabilizing and we are on the road back to the boom, it’s trapping people into a dead cat bounce scenario. I know it argued over and over about the supply of decent family homes in Dublin, but I don’t think people are factoring in external shocks to economy of which there are many on the horizon. The DCB is a lot more fragile than people realise IMHO and yet these Dublin prices are still ridiculous. Even when they hit lows in 2011 they were still too high relative to wages. All Dublin pricing appears to be based solely on joint incomes and ignores the dreadful quality of the actual properties, this is a flaw in peoples thinking and will lead to further problems down the road.

Just saying is all…

It’s a very hard one to gauge. There’s now a good few years worth of young professional couples who have sat renting on the sidelines and accumulated large deposits and are obtaining decent sized mortgages with ease. A lot of this category are well capable of putting in 20% deposits and now they’re all looking at the same types of properties in the same locations at the same time in a market segment that’s under supplied. Even this small spark allows VIs an attempt to put the word out and try an reinflate the bubble in whatever way they can.

“There’s now a good few years worth of young professional couples who have sat renting on the sidelines and accumulated large deposits and are obtaining decent sized mortgages with ease”

The figures relating to draw-downs doesn’t support this narrative yet it is constantly been passed off as fact in the media. Bank lending is struggling at best to hold onto life, further shocks await.

I’ve seen it for myself. The supply of houses this cohort want is small, only so many of them are going to draw down, they’re outbidding each other instead of lowering their expectations. Exactly what data is going to reflect this?

@Poor Student, What are your thoughts on the market/banking/Ireland over the next two years? Optimistic?

Coles, I’m not really in a position to comment. I should clarify I no longer work for the same employer so don’t take anything I say as being indicative of goings on at that company. I’m still in employment for anyone who is worried. :wink: I have primarily worked on mortgage cases for SCD so I have generally been dealing with a certain demographic. Overall, mortgage lending is very prudent and cautious and correctly so, in my opinion. Overall, I cannot see anything that would suggest property in general has much of a chance for recovery in the next few years, particularly apartments and outside Dublin. Is the buoyancy in 3 bed + family homes in desirable areas a dead cat bounce or not? I couldn’t tell you. Perhaps a certain level of Celtic Tiger cash is being sucked into this and it will run out but if it is a dead cat bounce I think it’s going to carry on for at least a couple of years based on the feeling I get for such demand but that’s just gut feeling.

The stance on arrears both PDH and BTL is becoming increasingly harsh as is being driven by the central bank and its targets. From what I hear there should be quite an increase in BTL repossessions in 2014 and people with equity in their PDH are being increasingly encouraged to go the voluntary sale route. Again, I don’t know enough to speculate how this is going to influence supply.

@Poor Student, Thanks.

The Ardenza Terrace ones?

myhome.ie/residential/brochu … in/2504239

Previous terrace discussions


^^ Thanks.

I don’t think 1.4m is a different class of bonkers from 1.1m to be honest. Price discovery, innit?

Just because one (unsold) property is priced 27% higher than a similar sold property, doesn’t mean “the market” is up 27%. Maybe the first one was just underpriced and/or the second overpriced.

Neither one particularly appeals to me, but whatever butters peoples muffins.

When I hear this I always think of the other side to the equation - presumably there was a house that somebody could have sold - but didn’t - to the couple sitting on the sidelines? The population is pretty much in balance at present - there are people emigrating but I’m prepared to take the point that the non-SCD demographic emigration rate is a lot higher the SCD emigration rate.

So what happens to that house? - is it the one that the couple that would have bought are renting? If the original owner has passed away is it sitting idle? is the person who would have moved on to the nursing home/downsize staying in the house because they are waiting for prices to rise again - perhaps with their kids in the house with them?

I personally know of two ‘unresolved’ executor cases in SCD from the boom or just post-boom. In both case large numbers of siblings are involved and agreement on when/whether to sell has been difficult. In one case the house has been rented in the other case it is getting used for cousins from down the country staying for varying lengths of period and for house swaps in other parts of the world. I passed the house last week and to be honest it is looking a bit down on its luck.

I also know distantly of another executor house which lay unoccupied for four years and has just been sale agreed for the last two months - from what I hear the bank are getting cold feet with the purchaser as a result of their survey. Which is hardly surprising - the house is near me and it took a bit of a battering over the two cold winters, peeling paint and a deteriorating , overgrown garage.

I just wonder how many houses there are in this kind of situation. I

Probably at least 5k in Dublin (or 1% of the housing stock).

Or it could be 2%, I don’t know.

But on census night sub 6% of properties in DLRD were vacant for whatever reason.

Bottom line is that the banks and the Government need the property bubble to re-inflate, it sorts out their balance sheet, The supply is very tight, and demand for quality property outstrips supply. If they can re-inflate the bubble just enough then it will become self sustaining as consumer confidence improves and re-starts the rest of the economy.

if the banks keep lending it could just happen. there are just enough lunatics to make it work.

However a tough budget on October 15th could kill everything, The lack of kite flying is disturbing tho.