House Prices Back at 2014 Price Levels?


#41

Thank you - the link worked for me so was able to read it all - it’s exactly my point, but written in a slightly more professional way! I also think Ireland could be impacted if the UK suffers a big recession.

Oh, and if Biden wins, as expected - watch for major turmoil in financial markets…


#42

No problem. The implications for inheritance stood out for me. FG had been stating just before the last two elections that they intend to keep increasing the thresholds before the tax kicks in. I assume to grab the middle class vote.

It appears that there is now every chance the thresholds may start to go in the opposite direction over the next few years.


#43

Oh you just reminded me of another headwind…if the Shinners get in, which is quite likely, it will have a very negative impact to property and inheritance…to the extent that the reality of them getting elected in would put me off returning to Ireland…


#44

If you can share actual sale price data with evidence of price declines in the residential market in south Dublin, can you share it please?
Anything I’ve seen so far points to a (surprisingly) resilient market, with plenty of demand still out there.


#45

Completely agree - seems over-priced relative to Prospect House development.


#46

i went to take a look at prospect house they look very nice, and its a great location imo (if you want to be in blackrock)


#47

Yes, again completely agree - excellent location and proximity to village.
And for a new build development, this really has character, beautiful stone facades, and Prospect House itself it a lovely building.
Other new developments with apartments can be quite ‘ugly’


#48

yes they have eschewed the prevailing plain colour rendered house with dark windows and delivered something nice, they arent that dissimilar to enderley in dalkey in a way. That and dalkey manor are examples of how to make an attractive new development imo, then you have broadlands and the nurseries which look like the designs came from a cad design book somewhere.


#49

I was searching in that price bracket, in SoCoDu and I have closed on a house, during covid…

My expectation is that prices will drop, but will take a good long while to do so. I wouldn’t have bought if I saw it as an investment or if I thought I was going to be moving in a few years. Although I may have to emigrate if I lose my job, something I am maybe a little to open about. I am fortunate in that I negotiated a discount, not as much as I was hoping, but it will pay the mortgage for a year or two plus some works that need to be done on the house.

I would agreed that there is not a lot of “good” houses in that bracket, but equally the equity I have put into the house, is what I could have bought something bigger down the country so the location for family is a factor for me. what good is to people will differ considerably.

What I noticed was that price expectations go up very quickly in vendors minds, but they are slow to come down. In a purchasers expectations it is the opposite. Long story short, the person who is willing to walk away has the power.

My experience with the banks was that while I had AIP with a few of them, some banks became very reluctant to give final / drawdown approval, preferring to ask an eternity of questions rather than actually say no. Banks are preoccupied with managing their current lending books as many people have stopped paying with covid moratoriums. Some will go back to their payment schedules after the 3 months or whatever it is, and others won’t. As we know it takes years to solve the arrears problems, and these moratoriums hang around banks like a bad smell - if its stinks enough there is every reason not to approve similar loans, but if the problem reduces, bankers stop worrying about it and wonder what they can do with all their liquidity that the ECB is giving out for free.

So the last number of people who can & want / need to buy will. And some will buy because they don’t know when they might be in a position to again. But once that number of buyers is exhausted, then prices will start to drop so long as there is property coming available. however we know from last time that investors (or bankers) will try to hold off crystallising a loss. And lots of people won’t sell because their neighbour got mill for their house and they should get the same.

And remember that the ECB and the fed are printing lots of money meaning investors have to put it somewhere. Most investment grade bonds are below 1%… That means investors (and banks) may not be inclined to withdraw money from a particular investment until it is very clearly making obvious losses. If there can be an argument to hold an asset long term, investors may take that option too. Therefore it could take some time before banks start to repossess properties en mass, as was previously the case. Thereby slowing down the inevitable decline in house prices. Nothing changes quickly.


#50

Thanks for sharing you recent house purchase experience!
What you say makes sense.
Can you share the percentage haircut you were able to negotiate from the sale agreed price?

A lot of market participants share all the reasons why house prices must drop. Yet risky asset (stocks, bonds) prices continue to reach new highs, and seem completely uncorrelated to the real economy. Central Banks are printing money like never before - this has to find a home.
I believe it will take a while for prices of “family” homes in SCD to fall, and if/when they do fall, it will be nothing like the “crash” in the financial crisis - more like a mild correction, before (hopefully) stabilising.


#51

Maybe, but last February (pre-covid), developers were openly admitting there was no real demand for their units. Has something changed in the past 6 months?

Irish Times article here: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644?mode=amp


#52

You’re referring to apartments - I think we are agreed that there is evidence of price drops in this area of the market. However, it is not clear (yet) that the new build ‘family homes’ market in South Dublin has been impacted at all.
If you have evidence of actual sale prices that can prove this, please share it here.


#53

On the 18th January this year, the Irish Independent asked the various leading estate agents where they see the property market going this year. They all said either flat or low single digits. And these are the optimists with a stake in rising prices.

The only thing that has happened since then is Covid-19.

The article is here: https://m.independent.ie/business/personal-finance/property-mortgages/how-much-is-your-house-worth/ask-the-experts-our-panel-answer-the-key-questions-about-the-property-outlook-for-2020-38864992.html


#54

I guess we can’t really know until the property price register is updated in about 4 months time to reflect the sales agreed today. But all the signals were pointing towards future price falls rather than price rises just before Covid hit.


#55

Not SCD but Im watching outer Dublin (read county Wicklow) commuter towns and have observed a number of asking price drops in places like Arklow and Wicklow town over the past 3 months.

My home reckons an average of about 7 percent drops in these places over the period.

If prices tend to be set at the margins and both outer edge and top end Dublin are seeing some contraction youd have to expect that the middle and upper middle of the same market will be impacted in due course.


#56

The only thing that has happened since then is Covid-19.

And another ‘whatever it takes’ signal from those who spend our taxes and print out money


#57

Yes agreed.
But let’s wait until we see the evidence - i.e. actual transaction data. Logically, there should be price drops, but the same can be said about financial markets and it’s not happening.
Don’t underestimate the power of central banks (and to a lesser extent, governments)


#58

Just checked the MyHome 2019 Q4 report (link below) as someone referred to their reports a while ago.

Dublin prices were down 1.4% Q on Q. This would probably be the last meaningful report just before Covid hit. It would be bizarre if house prices actually went up instead of continuing their downward trajectory after Covid hit. But, stranger things have happened.

Report link here: https://www.myhome.ie/reports/2019/Q4


#59

Good article (Link below) on how the stock market rally is being driven by the 5 big tech companies. The rest of the stocks haven’t really increased at all despite all the fed money being pumped in.

This makes sense since they have the most to gain from the shift to WFH, so at least there’s some logic (if one wants to find it) to the stock market rally.

There’s no logic I can see that sees house prices increasing in Dublin, when they were falling just before Covid hit.

Article here: https://www.barrons.com/articles/big-5-tech-stocks-fundamentals-2000-bubble-earnings-valuations-51595886949


#60

The s&p and the equal weighed s&p diverged a few months back, and while the mega caps are fueling some of that, there are plenty of stocks up this year, last I checked about a third were up ytd, with Nvidia is leading the pack in % terms.

Things seem to have stabilised somewhat since again approaching record highs. If there is another stimulus package, we could see melt up round 2.

Everything is going up, people are unsure what to do with money, so it flows into things that are rising. Bond funds are up, PMs are up, equities are up, money printing is up, debt is up, shure it’ll be grand.

Since the US government is buying corporate bonds to improve liquidity, some companies are use this as cheap financing for stock buybacks, further fuel to the fire