This is based on past, non-bubble experience using a Dublin-based middle management salary (which nowadays probably runs to around 80k) as its basis. When property prices are at a normal level i.e. on or near the long term curve the following have generally applied in the past -
You can buy your first house for about twice your salary. It won’t be in an ideal location, it won’t have a garden, you wouldn’t raise a family in it but you will probably live there for three or your years. In the 80’s it was a two-up-two down in the Liberties, in the 90’s it was a TUTD in Ringsend, in the 00’s it was a TUTD in Stoneybatter, now its probably a 2-bed apartment near the river.
Your second house usually costs about 3.5 times your salary, it will have three or four bedrooms, a garden, on-street parking and will be located in an area populated by your peers. These areas haven’t changed much - the cheaper areas of Sandymount, Ranelagh, Rathmines on the South side, Clontarf, Drumcondra, Sutton on the North side.
You can buy a house in Dublin for less than your salary but you probably won’t want to live in the area that its in
You can buy a bolt-hole down the country for less than half your salary. It won’t be pretty, it probably won’t be beside the sea, it will need lots of work. Thirty years ago these were half-wrecked cottages with outside toilets recently vacated by an elderly person. Nowadays they are probably 3 bed detached houses in a field in the middle of nowhere.
5.You can buy a nice holiday home in the likes of Connemara, Sligo, West Cork or Clare for twice your salary. It will have four bedrooms, a nice view and a town with nice pubs/restaurants nearby.
A trophy house is detached, in its own grounds with trees, has sufficient parking for all your friends when you throw a party, cannot be seen from a main road and should make you feel scared to be alone in it on a dark windy night. There are no trophy houses in Ranelagh, possible one or two off Palmerstown Park or Temple road - most of them are in Dalkey or Foxrock. A trophy house is unachieveable on a 90% mortgage - you need to have at least half the money up front, a trophy house costs at least 12 times a middle management salary.
You will always know when you are at the bottom of the property market - prices will not have changed in either direction for 6 months, it will be virtually impossible for anybody to get a mortgage, the press will be talking about ‘a permanent era of low prices’ and advising against property as an investment as 'no capital appreciation can be assumed for the foreseeable future/
I’ve lived through three property busts (2 here, 1 in the UK) and bought two houses, both in a rising market (by coincidence rather than design). In both cases I reckon I bought pretty much on the long term curve and in both cases I was constrained by the 2.5 + 1 times salary rule imposed by the lenders. I don’t have any particular expertise, I’m mainly going on memory of my salary, the prices we paid for houses and the prices of the houses that we couldn’t afford.I also have the memory of what friends and relatives paid for their houses, country boltholes and holiday houses.
So where are we on 1 to 6 above. This is going to be a kind of ‘Location,Location, Location’ deal for pinsters. By the way I wrote the text above before I did the research so I didn’t set out with in any preconceived notions that don’t exist in the above.
- A starter home in Dublin for 160k. You can argue that you are unlikely to be middle management or on 80k when you are buying a starter home but I suspect that you can’t manage this on anything less. In reality you will probably be looking for a starter home when you are on 50k (if you are on the middle class, middle management track) - this should really mean a budget of 100k but I think any sane person on 50k will be renting.
Liberties - 170k TUTD myhome.ie/residential/brochu … lin/305851
Ringsend - 240k TUTD daft.ie/searchsale.daft?id=550942
Stoneybatter - 130k cottage daft.ie/searchsale.daft?id=458424
180k TUTD daft.ie/searchsale.daft?id=556508
Dockland flats - Fishermans Wharf, Ringsend - cheapest docklands apartment at 195k daft.ie/searchsale.daft?id=512985
Rialto - 160k daft.ie/searchsale.daft?id=406084
Crumlin - numerous around 160k
So it looks as if things are close to normal in this market, apart from the SCD reality distortion field. This didn’t always exist - the Liberties was the first ‘Yuppieland’ in the early 80s when the TUTDs sold for around 25k when your typical middle management salary was also around 25k - that was admittedly a bottom in the market but I remember looking at TUTDs in Ringsend for around 40k in 1992/3. Watch out for Crumlin suddenly getting fashionable! I was also surprised at the price of 2 bed apartments in the city. I really did think that they would have been cheaper than any of the 2 bedroom house stock.
- So now we come to family homes. For your middle management type this needs to be 3 bedrooms, preferably 4. And we have a budget of 280k. I already have a sinking feeling on this. I have gone for the cheapest house in each case ignoring sites, townhouses, council houses (I’m basing this on the likely prejudices of my prospective client - not mine) and apartments. I’ve also ignored extreme do-er-uppers and houses that aren’t really in the area.
Ranelagh - 390k - Mount Pleasant daft.ie/searchsale.daft?id=555835 (not really in the area and needs some refurbishment)
Rathmines - 495k - Semi-Detached, Maxwell Rd daft.ie/searchsale.daft?id=570466
Sandymount - 795k - Terraced daft.ie/searchsale.daft?id=551977. This was the cheapest house I could find in the ‘real’ Sandymount that wasn’t some thrown-up townhouse where your SUV blocks all the sunlight coming in to your lounge.
Still some way to go here then. I would expect prices in these areas to come down to around 300k. Although these areas have now become aspirational there is no cash or accumulated equity in the pockets of potential buyers to make up anything more than a few grand extra.
- So - a house in Dublin for less than 80k. I’m going to include apartments in this as this is all about price - quality is completely irrelevant!
Here we are - East Wall €74950 - daft.ie/searchsale.daft?id=573714
There were actually 3 properties for 80k or less.
- Next a country bolthole for 40k
There were 54 candidates here varying from desperate to tolerable. Here’s a good example of the better ones within a reasonable drive of Dublin -
40k Bailieborough Co Cavan, daft.ie/searchsale.daft?id=555414
So I’m going to look for a nice 4 bed holiday house in a nice place for 160k
West Cork - CastleTownBereHaven 160k - myhome.ie/residential/brochu … ork/241962
Connemara - Best I could get here for the money (150k) was a pretty ugly 5 bed doer-upper in Carraroe - myhome.ie/residential/brochu … way/265874
I was looking for something like this (but this is 395k) myhome.ie/residential/brochu … way/356241
Sligo/Mayo Coast - 350k - This is at the posh end - Strandhill - myhome.ie/residential/brochu … igo/413445
Clare - Cree 145k 5 beds myhome.ie/residential/brochu … re/1243986 (not great but it hits the budget)
- What do houses over 960k look like? Are they all trophy houses?
I set the bar at 1m and found 159 houses in Dublin over that price - of these only about 70 met my criteria. I went on the photographs and a knowledge of the areas - I didn’t have time to go in to too much detail. But it seems that even at over 1m there are a lot of very ordinary houses in very ordinary areas.
Here is a selection that I think meet the criteria -
myhome.ie/residential/brochu … lin/124267
myhome.ie/residential/brochu … n-4/219196
myhome.ie/residential/brochu … lin/219380
myhome.ie/residential/brochu … -14/397522
myhome.ie/residential/brochu … lin/423236
And a further selection that don’t -
myhome.ie/residential/brochu … n-4/363841 (semi-detached, limited parking)
myhome.ie/residential/brochu … n-6/361639 (terraced, no parking)
myhome.ie/residential/brochu … n-6/422353 (terraced, no parking)
myhome.ie/residential/brochu … n-3/129817 (terraced, no parking)
myhome.ie/residential/brochu … n-4/435868 (a mews!)
I was kind of surprised that so many of my guesstimates had been fulfilled - I thought we were a lot further off the mark
On point 1 it looks like you can buy a starter home in a tolerable area in Dublin for 2X a good salary, the surprising thing to me is that it isn’t an apartment (one bed apartments might be a different story though)
On point 2 the aspirational middle class home for middle management in Dublin in one of the better areas (north or south of the river) is still a good way off - I would guess a fall of a further 30% is required here.
On point 3 - you can get a house in Dublin for less than a middle management salary - and yes, you probably wouldn’t want to live in it
On point 4 - country bolt holes for half your salary are a possibility
on point 5 - considerable variation here with West Cork and Clare seeming to offer better options than Sligo/Mayo and Connemara. This kind of surprises me - I thought there would be a big offload of holiday homes in the current climate as these were typical purchases of those most affected by the downturn. One possibility that occurred to me was that they may be living in them having sold/rented their Dublin pads - any one have any anecdotal information on this. Also very few of the newly built and unsaleable 3/4 beds that I imagined when I set out - they all seemed to be priced well over 200k.
On point 6 - This is a pretty trivial and subjective point so it shouldn’t be taken too seriously but the results show that there is still delusional pricing out there in Dublin.
On point 7 - prices are still falling even on a monthly basis so I don’t think we can even start thinking about a bottom - certainly in Dublin