Dublin property prices are falling again


#103

Seems EU wont be getting out of negative/zero rates in the short to medium terms - can easily see 2025 before anything meaningfully above the ZERO bound

This is gonna levitate asset prices for a long time to come and to a certain extent you can see the smart institutional money stepping up their investments in ‘real assets’ realizing euro denominated government bonds / triple A credits are gonna be yielding pretty much zero for a long time - a PRS/commercial building with a yield of 3.5% is pretty attractive asset in that environment


#104

Brexit uncertainty, or a wider issue?


#105

Too expensive?


#106

Combination of factors.
Government regulations (especially BER requirements), taxes, levies & ‘contributions’ forcing prices up.
Also cost of labour forcing up prices.

On the other side of the coin, banks are restricted (thankfully) on what they can lend.

So whilst demand for housing may be increasing, the amount people can afford is not.

Consequently, prices have risen beyond what people can afford. Hence new sales down.


#107

Thank f**k, without this I’m guessing we’d have double digit house price inflation and would ‘all be partying’


#108

With the PPR as evidence the vested interests will be baying that the CB is strangling the market and, by a certain logic, they’re not wrong. What they won’t acknowledge is that the CB is the “backstop” (everyone’s using that word nowadays so what the heck), but the proper solution lies elsewhere.


#109

Probably the largest problem is too much government intervention.
They tax the property market to shreds at so many levels along the way.
Furthermore, the social housing requirement in new developments skews the development (cost) figures even more.
The irony is that this requirement has undoubtedly caused large scale developments to be delayed or abandoned so no housing gets built at all.
Everything the government does causes prices to increase.

This has the very simple effect of retarding the natural supply of new stock as the cost of building exceeds what buyers can afford.
Developers simply will not build if they think the demand (at the sales price) will not be there.

Finally, and sorry to sound all xenophobic, but 40% of Fingal’s housing list are non-Irish.
This is madness at the best of times, let alone when even working people can’t find accomodation.

To sum up: The government, through their knee jerk legislation, is causing blockages in the supply pipeline, meanwhile they are shoving all and sundry into the demand pipeline.
Utter incompetence.


#110

While there are many factors that play some role in the supply side problems I believe that the main cost issues are the price being paid for sites, the fact that the margin on the sale is also applied to the site cost and the failure to adequately financially punish holders of land in urban areas who are not building on it. Putting a site levy of n% on land (when it even gets applied so wide are the exceptions) when prices are rising at n+x% is pointless. The cost of labour is driven up by the focus on office and hotel construction - which is pushing a bubble at the moment and can only exacerbate the problem.

I am finding it difficult to find the site element of building costs - it is never quoted and I don’t think it’s very paranoid to wonder why. I see sites being purchased at rates that suggest over 100k per apartment. The only full analysis I can find is from 2017 - https://www.irishtimes.com/business/construction/578-000-to-build-a-two-bed-apartment-in-dublin-report-1.3266171

Here you see site costs (for the lower end apartment) of 33-50k, Margin and contingency of 49-57k and the statutory contributions of 16k - if you increase the price from 293 to 470k (taking the lower bounds) the statutory contributions rise to 20k. This doesn’t seem enough to complain about (8% of the price whereas margin and contingency are 20%)


#111

What is the main reason house prices are falling in Dublin and how long will it continue?


#112

Banks restricted on how much they can lend.
Demand still outstrips supply.
Also, government regs pushing up prices beyond the affordability of average purchaser.


#113

Those points were all in effect when prices peaked in Q3 2018. Why are they dropping from this peak since then?


#114

I imagine Brexit is playing a part. Buyers in the market would be mad not to consider the potential impact of a no deal or bad deal Brexit on the economy. I think the jobs market is also slowing down a bit at present because of this uncertainty (anecdotal).


#115

There will always be investors looking out for slowing house price increases as the most opportune time to sell. So there’s no reason to expect a leveling off – if prices aren’t going up, they will go down.