So, elsewhere on the PIN good debates rage about the current Dublin market, most notably about if we are in a bubble, whether excess credit is a precondition for a bubble, and whether prices will continue to rise. While some mention anecdotal evidence of heat going from parts of the market, others can point to PPR data that confirms the huge prices being achieved. Those who insisted it was all a Dead Cat Bounce have retreated, citing, quite fairly, the strange combination of factors that are making predictions so difficult (NAMA, political failure, the European macroeconomy, no repossessions, etc, etc).
From the perspective of many who might jump on here out of interest during the stressful days of house-hunting, however, the most critical question may not be whether house prices will continue to rise but whether they will **fall **and, if so, when.
I tend to think that (taking into account average earnings, interest rates, tax issues, etc) prices around 2012-(early) 2013 were affordable for the ‘average’ person. Healthy deposits, repayments of circa 1.2k a month and loan terms of 20 years or more were still then required to fund, for example, very unremarkable, 75 sqm former corporation houses in a decent north Dublin suburbs (e.g. Marino).
Prices would have to fall very considerably for that situation to return. While I can see prices levelling off fairly soon (though most are predicting price rises all through next year), I just can’t see them falling circa 40%. Some will scoff that this is more ‘soft landing’ stuff, but I can’t see a change of that magnitude. The recent comment by Conor Skehan of the Housing Agency that buyers must above all ‘adjust their expectations’ was interesting. I’m not sure how much lower people’s expectations of the house/apartment that their income can get them in Dublin can go, but his view is one many buyers are having to consider.
I’ve been out of the hunt since mid-2013, consider myself a high-earner (top 10%) but wouldn’t be able to afford (on my wages alone) a decent family home in Dublin, I don’t have high expectations. A 3-4 bed semi in a relatively safe part of town would suit say Glasnevin or Harolds x. I think there is something wrong with that picture.
Will they fall all the way back to 2011, its hard to say, depends on how that giant bubble in the stock and bond markets plays out, Dublin’s revival is tenuous at best. It looks good right now, but that can change and suddenly. Wouldn’t like to make a prediction but I think the current situation is not sustainable and anecdotal reports suggest its reached exhaustion. People are slowly but surely getting ‘tapped’ out.
I just bought. Couldn’t hold out any longer.
Over the last few years of dithering and trying to be clever, I watched prices go down, missed the bottom. Then I watched prices shoot up and read all the material about bouncing felines and convinced myself to wait it out. Finally I had had enough. The rental gaff was starting to look shabby, the kids were at the tail end of primary school and to be honest, I just really missed the projects and DIY that make a place your own.
So I am the schmuck who has been herded by this government into buying an overpriced semi that I could have got three years ago for a third less money.
Despite one of us being self employed and the other part time in retail, we got the mortgage very easily with 25% deposit. Pretty surprised at how easy it was.
As I collected the keys from the estate agent, I asked him straight out where he thought the market was going, (there was no point in bullshitting really as he had already had his pound of flesh from the vendor). He said: the double digit increases were over, all viewings had cooled considerably. Modest 3 to 5% increases would be the new norm for the next 3 years until new stock came on or a scheme was introduced to let people move with their trackers, unfair though that would seem. All of this was dependant on there being no big external shock.
So that was his opinion. He seemed a nice chap, although obviously under the suit and tie he had to have tentacles and an oozing exo-skeleton.
There are a huge number of possible events, both internal or external that could expose the current bubble IMO. One of these is the stress tests. The attached from Reuters is interesting, especially the below comment. Interesting that the article specifically references BOI.
A housing market doesn’t get much more illiquid than Ireland…
Congrats! I must admit I totally understand where you are coming from, am same position myself. Have waited years, have good rental and could wait longer, but we know where we want to live, kids are well settled in school and community, we can afford the repayments (have already restricted myself to 80% LTV value and less than 3x joint income) so even if I do believe prices are inflated at the moment I have a 15+ year horizon and am looking for a home, not an investment.
Well done Gherkin. We’re in a similar position - not looking at the house as a short or medium term investment whatsoever but getting very conscious at being taken for an absolute ride.
In the bidding for a couple of properties at the moment that are about 15% over what they should be getting, even taking into account the current Dublin market. And, of course, without a transparent system of bidding (where one could view bids retrospectively, for example) we have no idea whether this is just family members pushing up the price or people who could never afford the damn thing when push comes to shove.
Well done on biting the bullet. I hope to do so soon.
I should mention that we were outbid on a few houses in that estate, so every EA in the district might as well have had our bank statements. In the end, we were shown the one we bought exclusively by the agent. No marketing or open viewings for him, no gut wrenching bidding war for us. Maybe the vendor could have got more… Maybe we could have paid less…
I guess we’ll never know.
Wow, bualadh bos to you for this. We’re in the thick of it at the minute ourselves and I can’t imagine any of the agents we’ve been dealing with going for that. Beats the pants off phoney bidding wars, in my book.
b) incorrect. If the exchange was simply between two parties, both of them “honest brokers”, then I would agree with you. I’ve been in that situation before and it’s a much easier negotiation: one person offers X, the other wants Y. But there are other factors, like the false floor set by this government, NAMA and the banks, setting a false expectancy about what should and should not be fair value. I have had two friends who have been told by EAs within the last month that they had been outbid on a property by 3%-5% of the house value only to then be told, in one case two weeks later, that they were in fact still the high bidder. When you add that lack of transparency to the rigged game currently on offer then, like it or not, the sense of the “market” is indeed being impacted by all and sundry. And, yes, that has a direct effect on what I feel I have to offer to secure a property.
Well, if the fluctuations, either way, are modest next year then, as per the first post, people will indeed have to reduce their expectations of what a healthy deposit and sizeable mortgage will get them.
She has 5 raves, here they be. Incoherent nonsense of the highest order.
“Five reasons why Central Bank plans are bonkers”
1.Interest rates: Interest rates in the medium to long term will only go one way and that’s up. This will naturally curb the housing market and will also hit cash-strapped punters trying to buy a house as well as those hoping to move on from negative equity or up the ladder.
2.Timing: What will happen is that the move will fuel the housing market in the short-term and kill it off from when the rules are introduced.
3.Regulation and protecting the consumer: Who will police the move and can it be monitored. Not just banks and credit unions but mortgage brokers too, remember they make money by selling as many mortgages as possible. Who and how will it be policed?
4.Cash buyers: This will do nothing to stop cash buyers, particularly in the capital, where first time buyers are already being pushed out of the market. In fact, it is likely to make them more aggressive in the short-term.
5.Bubble: There is no bubble in the property market as the growth is not credit-driven. However, there is a supply/demand issue, again really only in Dublin. These plans will do nothing to solve that problem either. And the urban/rural divide that we already see will only widen as a result of the meddling.