Sherry Fitz review 2006 Outlook 2007

PDF is now available HERE

Some amazing statistics from this report:

In 2006 a FULL 37% of new properties sold by SherryFitz were sold to investors. This compares to a mere 33% being sold to FTBs.

53%, of houses sold (sold to their survey respondents) were sold for in excess of €381,000. This is compared to 27% of all new homes purchased in 2005.

75% of respondents earned a combined income of less that 89,000

75% of respondents live more than 5 miles from work

Approximately 8% of respondents indicated that their repayments absorbed over 50% of their take home salary.

From a different source (the IT Property Supplement yesterday) DNG rekon that, so far this year, there are three times (three times!!) more houses on the market in the greater Dublin area, compared to last year,

When the specuvestors stop buying and join the rush, their could be a two shot swing

There cant be any one in possession of all their faculties who would buy Irish residential property as an investment at the moment, surely. Which might explain the state of the market. And DNG reckon that there is three times more property on the market in Dublin now than compared to last year, extraordinary.

The supply of properties was exceptionally low at the start of last year. This was one of the driving forces behind the huge price increases we saw Q1 2006

EDIT :

The phrase “You’d be mad to sell” was the sage advice at the time

While figure is no surprise (previous reports have posited figures of up to 40% of properties were sold to investors), that figure is still staggering given non-existent yields.

Speculation on a monumental scale, coupled with the begining of the ‘death by a thousand cuts’ of the multinationals uprooting - I sense a perfect storm brewing gentlemen (and Calina).

Wasn’t it 40% of mortgages to investors, with no mention of what all the MEWing was being spent on… Given that a lot of falsehoods about PPRs have been in the air for the past decade you’d have to wonder if it is really as low as 37%…

Oh here, come on I can’t possibly be the only female here.

… well :question:

I thought that the bubble would take some time to deflate, but the magnitude of speculation in the market is staggering when you sit back and think about it. Rental yields of 2-3% net, 15% of the housing stock empty, a number of years of rental deflation in an economy with double the rate of Euro Zone inflation and 30-40% of the buyers market comprised of speculators. Maybe we should be looking at whats happening in highly speculative markets further along the curve, like Florida, Spain etc for clues as whats likely to happen next. :question:

You are not alone Calina :wink:

Although I usually only lurk

We’ve got the rising rents now though - I’ll be interested to see how temporary that will be or whether rents will rise as property sales prices fall so that they meet in the middle for viable rental yields. I don’t know.

I would have reckoned that there’d be a temporary rise in rents followed by a fall back…but I’m not quite so sure now. Interestingly enough the number of unemployed people continues to rise even if the rate is somewhat stable.

The choice is ours then the night of the first Property Pin drinks then…

malheursement, mais oui madam’sle.

There is a correlation between rental inflation and wage inflation. I don’t think we will see real incomes grow in Ireland by much over the coming decade, though given the deflationary impact of globalisation on labour pricing power. But I agree rents may increase as the supply of speculative rental property enters the sales market. This wont help the inflation figures as rent forms part of the CPI. :frowning:

https://www.amazingmagicshow.com/Twisting%20Mustache.jpg

:wink:

Does it? For some reason I thought it was one of the vagaries of Ireland that rent didn’t form part of the basket for the CPI.

Interestingly enough amongst the whinges about the current collective agreement is that most of the wage increases are below the current rate of inflation. I think that IBEC lobbied very hard for general wage restraint.

I think that a lot of rent tightness is linked to investment property coming on sale. This is evident in (sorry) Swords where rents are currently rising but where, equally, sales availability is now 95% higher than it was 6 weeks ago.

(I’m speculating that there will be 200 properties plus on sale in Swords by the end of next week). (incidentally, counter to my original thoughts that it’d be mainly two and one bed investment properties that were cashing in, it appears to be more predominantly 3 and 4 bedroomed houses. I think it’s the older landlords are cashing in…

I would imagine that rents are likely to fall once the bubble inventory on the sales market falls. This may take some time, but like I said (above) the magnitude of the speculative element of the bubble is hard to comprehend sometimes; so who knows? You have to stand well back and look at how utterly manic this market became. :open_mouth:

Yes, but the interplay is rather complex at the moment. At some point both the property sales and rental market will have to find some sort of equilibrium - oh one minute, that’s a naive statement. We could just whizz up and down for the rest of eternity.

I’m just interested to see at what point property gets withdrawn from the sales market to go back on the rental market. The extent of price collapse may well depend on factors such as unemployment and further rental collapses. I think that rentals might wind up balancing out slightly higher than they were for the past 5 or six years, but not quite as high as they are in some parts of Dublin at the moment.

If unemployment starts to tick up and economic migrants start to leave, then all bets are off on guessing where this is headed.