Property Market 2018

Franz Von Peppercorn · 11-04-2018 2:08pm

draiochtanois wrote: »

I paid less than the cost of constructing it

The correct value is the construction cost + plot cost + builders margin

That’s not the way anything is priced.

Cyrus · 11-04-2018 2:16pm

Franz Von Peppercorn wrote: »

That’s not the way anything is priced.

its the baseline, banks wont fund a project unless they see a 15% margin for the builder, and they work up from that if the market will bear it.

Arthur Daley · 11-04-2018 2:20pm

Boatswain wrote: »

So no, the circumstances are very different now than in 2007.

So we can name 2 things that are different so far.
1 The Central Bank has imposed some limits on borrowing
2 We have half a million more people to house.

Any advance on these two from anywhere?

Lessons have been learned by central banks and governments around the world to try prevent a repeat.

For example? Beyond the CBI lending limits.

draiochtanois · 11-04-2018 2:22pm

This post has been deleted.

OwlsZat · 11-04-2018 2:27pm

The recession changed very little. We restructured our debt agreements. We are still saddled with an extraordinary amount of debt as are many of the worlds leading economies.

Wanderer78 · 11-04-2018 2:30pm

OwlsZat wrote: »

The recession changed very little. We restructured our debt agreements. We are still saddled with an extraordinary amount of debt as are many of the worlds leading economies.

this is actually one of the most important statements in this argument, so much so, some well known and well respected economic commentators believe we may have no choice but to introduce very radical polices such as 'modern day debt jubilees' in order to rectify these problems.

OwlsZat · 11-04-2018 3:15pm

We owe 50B back over the next few years but we don't have it! What are we going to do, borrow it of course. Everything is on solid footings. No need to worry in the slightest.

[Deleted User] · 11-04-2018 3:16pm

Debt jubilees for those who won't pay. A tiny minority can't pay.
Yawn.

Wanderer78 · 11-04-2018 3:20pm

OwlsZat wrote: »

We owe 50B back over the next few years but we don't have it! What are we going to do, borrow it of course. Everything is on solid footings. No need to worry in the slightest.

Augeo wrote: »

Debt jubilees for those who won't pay. A tiny minority can't pay.
Yawn.

a tiny minority, i think not!;)

50B, public debt maybe? just maybe our real 'debt burden', is in fact our private debts!

OwlsZat · 11-04-2018 3:28pm

Well the public debt handing has been farcical. The private debt is driven by household borrowings? Stands to reason considering we are awfully soft on those that can't pay back.

bigpink · 11-04-2018 3:30pm

MayoSalmon wrote: »

What type of crash are you expecting...we are only building 9,000 homes a year!

Crash we were up on 80,000

People can’t afford homes so a lot are just giving up on owning a house for now

[Deleted User] · 11-04-2018 5:11pm

Augeo wrote: »

Debt jubilees for those who won't pay. A tiny minority can't pay.
Yawn.

Wanderer78 wrote: »

a tiny minority, i think not!;)

50B, public debt maybe? just maybe our real 'debt burden', is in fact our private debts!

Indeed.
And most folk pay their private debt.

Wanderer78 · 11-04-2018 5:16pm

Augeo wrote: »

Indeed.
And most folk pay their private debt.

if you look a the graph though, you will see whats happening over time, effectively younger generations are getting priced out of the market more and more, and job security is decreasing, this is actually unsustainable. the argument being, private debts are in fact too high, but our politicians generally ignore this, and continually talk about the 'debt burden', i.e. public debt, but is this public debt the actual problem?

[Deleted User] · 11-04-2018 5:20pm

Wanderer78 wrote: »

......... effectively younger generations are getting priced out of the market more and more, and job security is decreasing, this is actually unsustainable. the argument being, private debts are in fact too high, but our politicians generally ignore this, and continually talk about the 'debt burden', i.e. public debt, but is this public debt the actual problem?

Job security might be decreasing (I remember a chat on boards about that previously that you participated in, we are no doubt moving away from the jobs for life thing if that ever was a thing) but the tax take is increasing and that's what pays the public debt. The public debt is undoubtedly a burden and a problem for us but as a nation we are plugging away at it.

Folks being priced out of the market won't increase the overall private debt.

Galwayforliam · 11-04-2018 5:21pm

10 people started queuing in past hour for the final phase of Belarmine Woods in Stepaside which is reportedly launching this weekend

thomas 123 · 11-04-2018 5:21pm

I for one am holding out on another crash.

I don't think house prices will ever come down without one.

Looking at saving for a mortgage currently and the prices are just crazy. Then again so are rents.

Cyrus · 11-04-2018 5:27pm

thomas 123 wrote: »

I for one am holding out on another crash.

I don't think house prices will ever come down without one.

Looking at saving for a mortgage currently and the prices are just crazy. Then again so are rents.

well if its like the last time the banks wont be lending so you wont be buying a house anyway

ArnieSilvia · 11-04-2018 5:29pm

Augeo wrote:

And cost to achieve that is?

Augeo wrote:

The ROI is ludicrously long tbh, IMO.

What I referred to is the comfort of living in a modern house compared with a drafty old/Celtic Tiger build. No comparison there. Funnily enough, these cost similar money so the ROI argument is not relevant. I brought the heating cost to give proof of what I was saying about thermal efficiency. As I said, you'd change your view quickly if you lived in one, there's no coming back.

In the mcmansion I live atm 200l of oil had gone through in the last 20 days and it was uncomfortably cold most of that time, what a waste.

Arthur Daley · 11-04-2018 5:29pm

Wanderer78 wrote: »

if you look a the graph though, you will see whats happening over time, effectively younger generations are getting priced out of the market more and more, and job security is decreasing, this is actually unsustainable. the argument being, private debts are in fact too high, but our politicians generally ignore this, and continually talk about the 'debt burden', i.e. public debt, but is this public debt the actual problem?

So according to this chart Private debt is circa €600bn? or three times GDP. But this isn't Household debt. Total Household debt. for Mortgages for example is circa €100-125bn. The Central Bank reckons household deposits now exceed Mortgages:

Banks held €10.2 billion more in household deposits than loans at the end of February.

According to figures from the Central Bank, the loan-to deposit ratio stood at 0.9 in February - matching the lowest level since the series began.

The decrease in the ratio in recent years has occurred due to deposits reaching near series highs, while loans have fallen significantly from the peak just over a decade ago.

In January 2008, household loans exceeded deposits by €71 billion.

It means Irish households are net funders of the Irish banking system.

https://www.rte.ie/news/business/2018/0329/950912-loan-to-deposit-ratio-at-series-low-central-bank/

Public Debt is around €200bn, where it was around €50bn in 2007. So just realised that's a third thing that is different this time around. Don't think you can spin this as a good thing though when trying to sell houses.

draiochtanois · 11-04-2018 5:34pm

This post has been deleted.

Wanderer78 · 11-04-2018 5:38pm

Augeo wrote: »

Job security might be decreasing (I remember a chat on boards about that previously that you participated in, we are no doubt moving away from the jobs for life thing if that ever was a thing) but the tax take is increasing and that's what pays the public debt. The public debt is undoubtedly a burden and a problem for us but as a nation we are plugging away at it.

Folks being priced out of the market won't increase the overall private debt.

if you actually look at the levels of private v's public debt globally, trends are very similar, i can understand why people such as steve keen calls us 'the walking dead of debt', in relation to our growing private debt levels, its also important to realise, increasing job insecurity is one thing, but the pay of many younger generations is relatively stagnant or not growing quickly enough to even begin to be able to buy a home, theyre effectively priced out of the market, and many may never be able to buy.

to personalise it, some older generations seem to think theyre home and dry, but you will find most of these people are indeed parents and grandparents themselves, and their kids and grand kids housing security is in fact decreasing overtime, and if our housing systems fail to house them, theres an increasing chance they ll turn to their parents and grandparents to provide them with that essential need, i.e. we all have skin in this game, i know a couple of families in this situation right now, and id imagine im not the only one that knows somebody.

Arthur Daley · 11-04-2018 5:41pm

draiochtanois wrote: »

This post has been deleted.

Not sure I was selectively quoting it. The article says Household Loans are covered by deposits. This is in response to the idea that there is massive amounts of Private debt. My point is that there may well be, but we are discussing Household formation and House prices here, rather than the wider Private debt in the economy.

A big reason why new lending is not coming on faster than people are paying back, is because Ireland has the most lax repossession regime in the World. The Arrears lobby we saw all over the news yesterday has made it very unattractive for domestic or international banks to lend into this market at regular mortgage rates, when they can't claim title to the security they own.

Ronaldinho · 11-04-2018 6:18pm

Augeo wrote: »

The public debt is undoubtedly a burden and a problem for us but as a nation we are plugging away at it.

We're not really: http://www.ntma.ie/business-areas/funding-and-debt-management/debt-profile/historical-debt/

the_syco · 11-04-2018 6:20pm

Bob24 wrote: »

Saying our property crash was caused by the financial crisis is like saying the pothole caused my accident. It is convenient to escape responsability but the reality is that many counties went through the same crisis without such a property crash and many people have been driving on that pothole without crashing. In both cases the crash was meant to happen.

Losing credit would be like losing consciousness. We were hurtling down the road in a car, and losing consciousness meant a large crash. Other countries were going at a slower speed, so when their consciousness was removed, their car slowed and only had a small bump when it hit a tree.

OwlsZat wrote: »

The recession changed very little. We restructured our debt agreements. We are still saddled with an extraordinary amount of debt as are many of the worlds leading economies.

One of the things that still puzzles me is how people are not evicted for failure to pay their mortgages. They get to keep all of their things but those that scrape by with paying their bills seem to almost be penalized for abiding by their mortgage agreement?

In turn, this means that no banks outside of Ireland would want to lend to the Irish, because like the current LL's; if the tenant/home owner stops paying rent/mortgage, there's not much the LL/bank can do about it.

And how much public debt is for building social houses houses in the past, and then selling said houses for a fraction of the cost many years later. And then finding out due to this sell off, they don't have a social housing stock to house people who need it now?

[Deleted User] · 11-04-2018 8:18pm

the_syco wrote: »

And how much public debt is for building social houses houses in the past, and then selling said houses for a fraction of the cost many years later. And then finding out due to this sell off, they don't have a social housing stock to house people who need it now?

I think it's important to point out that this is possibly a non-financial idea. Anti social behaviour is prominent in council estates.

The good tenants generally will get to buy their houses, and the scummers can't. Effectively you force (slowly) gentrification upon an area and there's less scum in it (resulting in less money being spent dealing with anti social issues).

For example, I bought a council house, and among the rules to be eligible, i have to have an income. Money from the dole doesn't count. Unless there's a non-welfare income, they won't sell you the house.

Also, the house is sold at a big discount, up to 60% off. But if you sell the house within 5 years, you owe all of the discount back to the Council (to prevent people buying and selling the houses overnight). And if you sell the house within 25 years, you owe a percentage of the discount (it reduces over time, by 2% each year).

Plus it saves the council money on maintenance as they don't have to take care of the house anymore. Also, if I decide to sell the house, the council get first refusal. So it can go back into the social house stock.

Assetbacked · 12-04-2018 12:54am

Inheritance tax at a level of 100% would be a great leveler in society. The dead should not be allowed disrupt opportunities for the living.

Bob24 · 12-04-2018 1:01am

Assetbacked wrote: »

Inheritance tax at a level of 100% would be a great leveler in society. The dead should not be allowed disrupt opportunities for the living.

This thread: "Property Market 2018"

Villa05 · 12-04-2018 7:40am

Boatswain wrote:

CB rules + chronic lack of supply are the major differences now. Demand is one of the most powerful market forces on the planet. Lack of supply = increased demand. So no, the circumstances are very different now than in 2007. 2007 prices were largely set by people borrowing up to 10 times their income and not requiring any deposits. This is a fundamental point because people are assuming we are in 2007 again because prices are near that level, and 2008-2013 will repeat itself soon. The recession started in 2008 was one of the worst in global history, events like that don't just come around every 10 years. Lessons have been learned by central banks and governments around the world to try prevent a repeat.

Demand you describe is what is driving the price bubble. Price is being dictated by the top 20/30% income earners very often with financial assistance from parents. This is not sustainable

Superlow abnormal interest rates will not last forever especially in a market where 12000 borrowers are 5 years behind in repayments.

Lessons have not been learned. The central bank rules were imposed by Europe. Everything is been done by political forces in Ireland to get around/relax these rules

We are one of the most indebted countries in the world a far cry from our position in 2007. Our public services/infrastructure are for the most part not fit for purpose despite massive spending

When the next crash happens due to runaway house prices I don't think the EU will be as willing to fill our begging bowl

draiochtanois wrote:

This post has been deleted.

I note from your quote that 87% of bank lending is to property. I think you may be focusing on the wrong issue. A healthy dose of diversification needed there I think

[Deleted User] · 12-04-2018 8:01am

ArnieSilvia wrote: »

What I referred to is the comfort of living in a modern house compared with a drafty old/Celtic Tiger build. No comparison there. Funnily enough, these cost similar money so the ROI argument is not relevant. I brought the heating cost to give proof of what I was saying about thermal efficiency. As I said, you'd change your view quickly if you lived in one, there's no coming back.

In the mcmansion I live atm 200l of oil had gone through in the last 20 days and it was uncomfortably cold most of that time, what a waste.

My flat is 20 years old, far from drafty.
My ole lads house is 1930s/1940s, that's drafty.

What's a McMansion? As in size and number of bedrooms etc?

sunnyday1234 · 12-04-2018 8:41am

Augeo wrote: »

My flat is 20 years old, far from drafty.
My ole lads house is 1930s/1940s, that's drafty.

What's a McMansion? As in size and number of bedrooms etc?

I live in a 3300 sq foot house in County Cork, built in 2008 to A standard and we bought unfinished and finished it 2 years ago.

Very warm house, about 450 euro a year on oil. 6 bedrooms i think :-)

Property Market 2018

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