Do you know for a fact that there is one person using 3 different accounts? Or are you arriving to that conclusion from observations?
Pity if it’s true, as I always valued the insight gained on the Pin, although it wouldn’t surprise me based on some of the questionable assertions on this thread
Do you know for a fact that there is one person using 3 different accounts? Or are you arriving to that conclusion from observations?
I have a healthy skepticism for all stats in Ireland. But let’s try to make sense of it. The factors that affect the population count are births, dates, and net migration. One seemingly paradoxical factor in the births and deaths numbers is that the Irish birth rate at 1.8 children per woman is below replacement level, yet there are more births than deaths – around 60,000 vs. 30,000 in the last few years. It’s not paradoxical at all of course. Firstly, the fertility rate is falling rapidly from recent highs:
Second, the population is aging rapidly. Irish life expectancy at birth increased by two years in the decade to 2017 (source: World Bank). That on its own would reduce the number of deaths by 100,000 over the period. Imagine a hypothetical aged population where all the women have had their quota of 1.8 children but none are of childbearing age. Obviously no children would be born. In short, the fertility rate is not the same as the natural population increase per head of population. The latter decreases as the population ages.
Then we consider the effect of migration:
This is a very dynamic picture. Net inward migration was highly negative post the GFC, but turned a corner in 2015 and is now strongly positive. Let’s assume that both emigrants and immigrants are typically of working age. The combined effect of migration, life expectancy, and a birth rate that is below replacement level but still high compared to other European countries, is that the population is both increasing and aging.
How does this all compare to your breakdown of the age cohorts between 2011 and 2016? I’m going to have to guess here, but I would say the decrease in the 0-34 age cohort is adequately explained by the strong net outward migration in those years. I would guess if you had numbers for 2016 to 2020 you would see a reversal in that trend.
Government policy across the western world favours immigration. Indigenous citizens may gripe, but governments and their corporate clients simply go by the numbers which indicate a demographic implosion without replacement by immigration. Unless you are Japan, the result is inevitable. World population balance is shifting massively toward Africa and away from the global north (including Asia). The migration pressure – both push and pull – is set to intensify. I’m not commenting on the wisdom of government policy, that’s simply the way it is.
So I’m not saying your conclusion that house prices should fall in the face of less people of working age is wrong. But your starting premise is probably wrong. Your numbers are simply skewed by including the after effects of the GFC and ignoring the bounce since then.
That sounds pretty fantastical to me. For a start you don’t even have current interest rate right. Yes, mortgage interest rates in Ireland may be 3%. But that is double the rate of many European countries. In fact, Irish mortage rates have quite a lot of leeway to fall, were it not for that special Irish risk premium due to mortgage payments being optional. Underlying interest rates are not going to go up 3% or 6% by 2030 barring truly exceptional circumstances. Your idea that the Germans would hike rates to avert a pensions crisis doesn’t even make sense. How would that work?
yes it is a huge assumption. show evidence of any of them leaving before asserting that this is not a big assumption. there is more evidence to them expanding than them leaving. you are mistaking your opinion as being a fact.
in 10 years time you might end up being right… accidentally. your predictions about very long term factors are not relevant to people who are currently in the market. why not come back and post in a few years when there is evidence to support any of the assumptions you are trying to make. you have rejected most of the real data based evidence put to you by posters. ‘‘maybe’’ appears to be your only response to any fact put to you based on your posts to date in this thread.
500k less 150k less 150k is 200k is it not?
i’ll give you that.
Thanks for your explanation of the population increase between 2011 and 2016.
As always you’re data analysis is second to none. But, and I’m sure you will agree, you couldn’t adequately explain it either.
You appear to readily admit that the figures for the population increases between 2011 and 2016 would suggest that the housing demand/ supply issue isn’t as big a problem as we’re all led to believe.
Your assumption on future housing demand then appears to be based on continued high levels of immigration.
I think you will agree that most of the Google jobs were created prior to April 2016 (i.e. the 2016 Census), so these jobs, at least the Google jobs are probably 80% - 90% captured by the Census 2016.
So, what happened after 2016? House building. So, as I originally stated, we appear to be building houses for the builders building them as was the case in the 2005 - 2007 period prior to the last crash.
In relation to interest rates, I assumed, given that this is the thepropertypin, many would understand what I meant. I did start off by stating that interest rates are zero. I’ll be more careful in future to
distinguish between interest rates and mortgage rates.
If you believe 3% interest rates in 2030 are ‘fantastical’, maybe it is. But if interest rates don’t rise, am I wrong in assuming that many pension schemes (especially the defined benefit ones), will be bankrupt/ insolvent etc. in ten years?
Am I also wrong in assuming that if interest rates are still zero in ten years time, that means there will have been little growth in the european economy over the next ten years? If that’s true, what state will the EU be in politically? All the young people with no jobs today will be much older and politically astute by that time.
If interest rates don’t rise by 2030, that signals (you see, signals :)) bad times ahead for the EU both economically and politically. So, it appears to me, that if interest rates don’t rise over the next ten years, house prices will fall significantly due to the economic situation prevailing in ten years time. If interest rates do rise? Well, we all know what impact that has on house prices.
Maybe I’m wrong?
“if interest rates go up, house prices will collapse”
“If interest rates stay low, house prices will collapse”
Apologies. Replied to wrong post.
If interest rates rise, below is the mortgage approval based on repayment capacity, all other things being equal:
Monthly repayments on a typical 30-year mortgage of €500,000 at 3% = €2,108.02
Monthly repayments on a typical 30-year mortgage of €350,000 at 6% = €2,098.43
If the economy is on a downward trend, banks lend on a similar basis.
Am I wrong? Maybe I am.
I think a better question at this time is how long can the current Government Covid supports continue?
And will the economy snap back anytime soon?
If the answer to the second question is ‘not anytime soon’ and if the answer to the first is ‘not much longer’, then surely the ability of many potential market participants to purchase properties will be impacted and will surely have an impact on prices over the coming 12 to 24 months. Throw in the well documented likelihood of changed work practices and again, the likelihood must be that some manner of price correction is on the cards.
However, if none of this comes to pass then perhaps we just continue as we are and maybe prices remain unimpacted.
My own take is that the odds favour the first scenario. But nobody really knows what the future holds.
True. Nobody knows the future.
But if interest rates are zero in 2030, would it be wrong to assume that the EU would be in a worse position both economically and politically in 2030 than today?
If someone believes the EU will be in a much stronger position in 2030, wouldn’t it be safe to assume interest rates would be higher in 2030 with the obvious negative impact on property values?
Given both scenarios, wouldn’t both impact upon property values negatively?
In other words, whether the EU performs strongly or weakly over the next ten years the outcome for property values in Ireland are mostly likely on the downside given that interest rates are currently zero and all potential value in a property price In ireland attributable to interest rates is probably currently fully priced in?
Maybe I’m wrong?
36 Callary Road, Mount Merrion, South Co. Dublin
2 beds, 2 baths, 101sq m, detached house
Sold for €465k in 2013 so the asking price represents just a 28% price rise from what they paid at the bottom of the market.
Good house for a downsizer, and there has been some other new developments suitable for downsizing that remain on the market in Mount Merrion:
3 Stone Park, Trees Road, Mount Merrion, County Dublin
€775,000, 3 beds, 3 baths, 122sq m, Duplex
Penthouse Apartment Greygates Hall, Roebuck Avenue, Mount Merrion, Dublin
€685,000, 2 beds, 2 baths, 107sq m
The Callary Road property stacks up well against the competition.
Do you know if any of that Stone Park development has sold?
It looks well overpriced for what it is… €1.075m for the 4 beds looks about 10% over-priced based on other new builds on the market?
I have had no reason to enquire about it, but it doesn’t look like they have. They have 5 ads on MyHome and there are 7 properties in total. We can assume that either they have 2 sale agreed at a push or else they have just not put up ads for the other two because they are similar/identical to other ones advertised thus negating the need to double up on ads, meaning they would have none sale agreed. Either way not great progress considering these have been advertised for quite some time but they are expensive, as you say.
Why even speculate about interest rates if you think property prices are going down either way? But then you’d have to explain how our property prices went up in the last five years even though ECB rates were near zero. Or how the last couple of years of our last bubble were in a period of rapidly rising rates.
I did state, as you quoted me: “interest rates are currently zero and all potential value in a property price In Ireland attributable to interest rates is probably currently fully priced in”
The last years of the last property bubble were a period,as you state “were in a period of rapidly rising rates.”
Hence the subsequent collapse. As you know, property is highly illiquid and it can take one or two years to offload a property in such a market.
But as I said, I believe Irish mortgage lending rates have plenty of scope to fall further if lenders felt the credit risk was lower. Not that I think that’s likely to happen. I think in reality the Irish market has been driven largely by credit availability, as people have shown themselves willing to borrow whatever is on offer. That’s something you might see shrink in coming years.
The last bubble was halted fairly abruptly by a credit crunch. The banks were unable to get financing. That’s unlikely to repeat. But they may still get a lot less willing to lend, with a similar effect.
I think at that time the powers that be blamed the global “credit crunch”.
You may remember that in 2006, residential rental yields in many parts of Dublin were c.1%. As your graph shows, interest rates went from 2% up to 3% and then up to 4%.
If the rental yields were 1% and an investor can get a minimum of three times that return, risk-free, on deposit, they move to selling their investment properties and placing the proceeds on deposit in a bank. More return and no risk.
These investment properties were under water from at least 2005 and that’s why the market collapsed. The global “credit crunch” was just a handy scapegoat, that just happened around the same time.
A Davy report stated as much back in 2005. I put the link in another post, but I’ll put it in here as well as I believe it shows that the property collapse in Ireland at that time had very little to do with the “global credit cruch”: https://www.rte.ie/news/business/2005/0524/63495-construction/
The Fed have recently announced changes to how they conduct monetary policy - they will now target "inflation that averages 2 percent over time” — which means it will allow inflation to rise (or fall) above (or below) 2% based on where inflation has been and for how long. Inflation has been stubbornly below 2% for a long time now - in most Western economies. This new approach essentially means they won’t raise interest rates in response to temporary shifts in inflation. Expect low rates for a long time - and if/when they raise, they will raise fast.
This is the US - wouldn’t be surprised if the ECB also make similar changes to policy - they are notorious for being slower to act than the Fed.
What does this mean for interest rates (& mortgage payments)?
IMO, it means they will be low for some time. If there is inflation (which could include wage increases), interest rates won’t necessarily rise immediately, meaning less of your income would be used to make mortgage payments, and helping affordability. If there is sustained inflation - bringing the average over time above 2% - then central banks will most likely react by raising rates. But this would signal/suggest a strong economy, in which asset prices and salaries are increasing.
As also pointed out by @ps200306, there is scope for Irish lenders to reduce rates further to bring them in-line with our European peers.
Remember - central banks will do all in their power to increase borrowing and spending, and protect asset prices. Don’t underestimate that. They are flooding the financial system with liquidity, and they want banks to lend. Market forces may eventually win out, of course!
Strange times indeed.
Maybe the ECB will follow. I don’t believe so for the following reasons:
Only 5 or 6 members of the 19 member eurozone have a debt problem. The majority of the eurozone members have a pension problem and not a debt problem. Pension funds need interest rates to go significantly higher to meet their future liabilities.
I believe the ECB may soon come to the conclusion that the inflation trend going forward may be below 2%, no matter what they try to do. In my opinion, and I’ll fully agree it’s only an opinion, is that the 13 eurozone members who don’t have a debt problem will begin to place significant pressure on the ECB to increase interest rates far sooner than many people believe as low interest rates are now causing more problems than they can foreseeably solve.
The Bundesbank chief basically stated as much recently when he called for a scaling-back of crisis aid and that “monetary policy as a whole must be normalised”. Here is the article: https://www.ft.com/content/1d38cfe1-b7c3-4e71-b527-970c4d6138a2