Board index » The IRISH PROPERTY BUBBLE » The Central Bank

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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Wed Dec 26, 2018 5:48 pm 
Neo Landlord

Joined: May 21, 2017
Posts: 215
FreeFallin wrote:
...Central Bank economist Mr Gaffney found that the lending limits have less impact on modestly priced houses where cash buyers are prevalent.
However, the lending limits are acting to hold back prices at the higher ends of the property market, where people have to use mortgages to afford a home. This means there is a "structural limit" to the impact of the Central Bank macroprudential rules on property prices

We know cash sales have been declining relative to mortgages in recent years but the Indo today suggests we are approaching a normal market in that respect:
cash sales have diminished (from 27pc to 19pc in the year) ... 57508.html
The Central Bank restrictions are biting also at the lower end of the market: an Estate Agent's Index shows no price increases for 3-bed Semis during Q4 2018 in about half of all areas in Ireland.
Overall, the average house price across the country rose by 4.6pc in 2018 - indicating that the market is continuing to steady after an 11.3pc overall rise in 2017.

Overall the price of a three-bed semi-detached house in Dublin city has increased by just 1.6pc in the last 12 months as the Central Bank's borrowing rules increasingly define affordability in the housing market.
Does the Indo congratulate the Central Bank on taking the steam out of the property market and keeping house prices within reach? 8)

In fairness, the Indo might have a point about seasonality which seems to go beyond the traditional slowdown:
This is an end-of-year paralysis caused by an artificially created slowdown in mortgage lending, particularly as people tend to wait for the new year and a new chance at exemptions to strict lending rules.
But it doesn't occur to the Indo that the banks should simply spread these exemptions over the full year.
Brexit is also blamed of course, but this is a complicated way of saying the British buyers are scarce:
In holiday home areas, such as Killarney and Bantry, buyers over €500,000 are hedging their bets on a rise in sterling if there is no hard Brexit, which could give them a 15pc increase in value.


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