Dublin property prices falling by €4,500 a month

[returning officer]

Irish public service salaries have risen by 59% in the past five years and the payroll has expanded by 38,000 extra staff.
http://www.finfacts.com/irelandbusiness ... 6397.shtml

(Average pay June 2003 €736 a week. June 2006 €880 weekly. While this increase (20%) is obviously less than the increase in property - it still provides a good bank of people with disposable income and savings (how many public servants 5 years + do you know who didn't take out an SSIA?)



While 4.5 times salary only gives €205,000 a double income household, easily comes within the price of an average house. (The average price paid for a house nationally in October of this year was €309,963, more than €32,000 higher than that recorded for December 2005 (€277,852).) see http://www.finfacts.ie/biz10/irelandhouseprices.htm. And this takes no account of public servants who already own property and intend trading up.

I have no difficulty with the concept of a short term price adjustment following a flatline (even if this is a softlanding the precedent for which does not exist) but the problem I have with any analysis which predicts a crash in the property market – fails to take into account that there is more than one market.

eg. - first time buyer single Dublin
- first time buyer double income Dublin
- Second time buyer house suburbs (miscellaneous suburbs)
- Subsequent buyer suburbs (Dublin 3, 4,6, and County)
- Commuter belt
- Galway, Cork, Limerick, Sligo.
- Other non-Dublin-commutable towns
- Rural detached dwellings
- Holiday homes
- Buy to lets eg near colleges

A fall in the average price from the peak might be of interest to an owner of a €35m property in Ballsbridge or lesser property in Blackrock but will the average price in Tallaght fall?

BTW Is there any publication of median price trends?

[feargach]

Any of you price-watchers got any hot info, now that the Budget's been & gone?

Will the minimum wage hike be simply swallowed by landlords? I can imagine landlords with slight consciences justifying themselves by saying "but the cost of living's (gas and electricity) gone up so much! Their rent money pays less and less of my bills every year". The more honest ones might just say "they can pay it, and they probably can't afford to move. The few who do will be replaced fast enough, and the new fellas will have the income stream back up fast enough to make it profitable over time"

[Sidewinder]

Any of you price-watchers got any hot info, now that the Budget's been & gone?

At this time of year? Nah, nothing will move till late Feb/early March. The stamp duty thing was a distraction, it meant nothing. The market stalled months before McDowell opened his mouth. Supply has increased massively, FTBs are priced out....watch for the first signs of panic by Paddys Day

[lff12]

I was very surprised that south Dublin homes were failing to sell as I really thought that the high demand (and quite low capacity as the actual number of homes for sale in SD are relatively small) would not be hit at all, with the brunt of the pain being felt in places where huge levels of building have happened (think north co dublin, meath and kildare), not to mention less attractive areas (last resort type-developments such as Wexford and areas more than 15 miles from the major cities).

However the fall in the highest demand areas of the country is ominous, as it suggests that all segments of the market are under pressure. What I find most worrying is enormous levels of houses for sale in areas that were previously very tight markets. A good example is Midleton, in east Cork, where today (2/1/07) there are 138 houses for sale. In teeny Ballycotton, with a very small population, there are 15 homes for sale - this has to be a large percentage of the total housing stock. Equally disturbing still is Rathcormac, where there are 25 houses for sale.

Compare this to Swords, Co Dublin, which has more than 4 times the population of Midleton, yet only has 124 houses for sale - which would suggest to me that demand and supply are more tight. Yet Swords is much less "high demand" in Dublin terms than Midleton is in local terms.

I think the main thing I'm seeing at the moment is a great deflation in "price expectations" of sellers as they realise that they are not in a position to make huge windfall profits on houses bought in the last 18 months. For example 6 months ago 3 bed houses in one estate in Rathcormac were being advertised at prices around 320k. This week there are about 6 for sale, all identical, at prices ranging from 265k to 285k. Now if you are a buyer, which would you start with? Of course you need to remember that a year ago the same houses were selling at around 230k-240k, so the sellers are still expecting a 10% profit at least.

Much of the problem as I see it is the blinkered belief of (mostly) existing home owners that their own houses are going to continue with exponential growth indefinitely.
From what is happening in the market at present, this is increasingly looking like a highly unrealistic expectation

[asknoquestions]

dunno about Midleton or Ballycotton but Rathcormac has more than doubled in size in the past 3 or 4 years. I'm not sure how many exactly but I'd say at least a couple hundred new houses were built, if not more. So 25 would not necessarily be that high a percentage of available houses.

Last time I was passing through I thought I was in Watergrasshill, they both look the same now!

[Quant]

This is interesting:

House prices up 0.1% in final quarter

Estate agents Sherry FitzGerald said today that the average price of a second-hand property in Ireland rose by 0.1% during the final quarter of 2006.

This follows very strong growth during the first nine months, bringing the total growth for the year to 18.1%.

The pace of inflation in the Dublin second hand market moderated further in the final quarter of the year with prices falling back by 0.66%. This follows very strong growth particularly in the opening half of the year bringing the rate of increase to 22.2% for the year in the Dublin market. This compares to growth of 23.3% in 2005.

Cork also saw a moderation of price growth in the final quarter with prices growing by 0.6% bringing the overall price inflation for the year to 15.1%.

First time buyers bought about 34% of all properties last year, while investors purchased 20% of all second hand properties in the year, compared with 17% in 2005.

Link

[Sidewinder]

with Irish inflation running at 4%, that means property values fell 3.9% in real terms in Q4 06.....

[kosh]And so it begins...[/kosh]

[tumeltyni]

Out of curiosity, I decided to look up my estate on Daft.ie, to see how drastically the prices had really dropped. And discovered that the cheapest of them are now going for €150,000 more than they were two years ago when I bought, and that nearby apartments are going for €100,000+ more than what I paid.

I know this level of growth can't keep going but I do think this is just a pause, and things will pick up again in the next few months. Not panic stations just yet anyway.

[Sidewinder]

Out of curiosity, I decided to look up my estate on Daft.ie, to see how drastically the prices had really dropped. And discovered that the cheapest of them are now going for €150,000 more than they were two years ago when I bought, and that nearby apartments are going for €100,000+ more than what I paid.

I know this level of growth can't keep going but I do think this is just a pause, and things will pick up again in the next few months. Not panic stations just yet anyway.

*sigh*

The usual wibbling. Read the thread, all anyone has said is that prices peaked in May 2006 and have been stagnant since. what possible relevance this has to two years ago escapes me. Of course, stagnant nominal prices means price drops in real terms in the last quarter...especially considering high and escalating Irish inflation.

As to this lunatic dream of ever-increasing house prices: how exactly do you imagine that will work? Have you actually thought this through at all? If interest rates continue to rise (and they will) and inflation continues to erode real wages and disposable incomes (as it will) and private-sector wages remain restrained due to the forces of globalisation (and they have, most people I know in the private sector haven't had real pay rises since 2001)......then who, exactly, is going to get the mortgage from the bank in 5 years time, 10 years time, 20 years time if house prices continue to spiral upwards at 10%+ p.a? Hmmm?

Without a steady stream of FTBs at the bottom of the "ladder" willing to pay stupid money for a shoebox so you can "trade up" (to a larger place which has also increased by 30% in the previous 2 years, meaning your gains on the first property are meaningless, especially if you are on an IO mortgage) then the whole insane pyramid collapses.

We reached that point 6 months ago. Even with exotic 40-yr IO mortgages , even public sector workers are now well and truly priced out. The only thing currently preventing a total collapse is the stubborn religious belief of existing owners that they are somehow entitled to massive yearly increases in the value of an unproductive asset, without lifting a finger.

[factual]

Out of curiosity, I decided to look up my estate on Daft.ie, to see how drastically the prices had really dropped. And discovered that the cheapest of them are now going for €150,000 more than they were two years ago when I bought, and that nearby apartments are going for €100,000+ more than what I paid.

I know this level of growth can't keep going but I do think this is just a pause, and things will pick up again in the next few months. Not panic stations just yet anyway.

*sigh*

The usual wibbling. Read the thread, all anyone has said is that prices peaked in May 2006 and have been stagnant since. what possible relevance this has to two years ago escapes me. Of course, stagnant nominal prices means price drops in real terms in the last quarter...especially considering high and escalating Irish inflation.

As to this lunatic dream of ever-increasing house prices: how exactly do you imagine that will work? Have you actually thought this through at all? If interest rates continue to rise (and they will) and inflation continues to erode real wages and disposable incomes (as it will) and private-sector wages remain restrained due to the forces of globalisation (and they have, most people I know in the private sector haven't had real pay rises since 2001)......then who, exactly, is going to get the mortgage from the bank in 5 years time, 10 years time, 20 years time if house prices continue to spiral upwards at 10%+ p.a? Hmmm?

Without a steady stream of FTBs at the bottom of the "ladder" willing to pay stupid money for a shoebox so you can "trade up" (to a larger place which has also increased by 30% in the previous 2 years, meaning your gains on the first property are meaningless, especially if you are on an IO mortgage) then the whole insane pyramid collapses.

We reached that point 6 months ago. Even with exotic 40-yr IO mortgages , even public sector workers are now well and truly priced out. The only thing currently preventing a total collapse is the stubborn religious belief of existing owners that they are somehow entitled to massive yearly increases in the value of an unproductive asset, without lifting a finger.

Good analysis.

Sinn Féin was against throwing away Irelands currency and the power to set interest rates for Irish economic conditions. The high levels of inflation, low interest rates and high house price inflation are all manifestations of an inappropriate monetary policy set in Frankfurt for Eurozone conditions, not Irish conditions.