# Average Dublin house in 2015 to hit €750,000



## Lemurz (3 Jun 2005)

Came across the following story on the Unison site .............  Your thoughts?

THE average Dublin house price will hit the €750,000 mark or higher in 2015, according to 70pc of attendees at an Ulster Bank CBRE Gunne Property Conference yesterday. 

Speakers at the conference included Pat McArdle, chief economist, Ulster Bank, Marie Hunt, director of research, CBRE Gunne, and professor Joe Durkan, department of economics, UCD. 

While some property experts were more conservative with their prediction for 2015 of a €500,000 average, Mr McArdle said the higher figure was not particularly startling. 

"We have already seen prices rise very rapidly and many people feel this will continue," he said. 

In the shorter term, 71pc of delegates expect Irish house price inflation of between 3pc and 7pc during 2006. A majority of 80pc believe that the construction boom will continue for another two to three years. 

However, despite the upbeat theme, the conference heard there were some signs of slower activity in the first quarter of 2005, with 60pc citing factors that limited activity, principally lack of demand and labour shortages. 

More than half felt that the number of new house completions would be down on last year, but not to any great extent. 

In the rental market, more than half the attendees believed that prices would be unchanged in two years' time, but Professor Durkan felt that rents might fall again as house price inflation eased and investors decided to offload empty properties. 

In the construction sector, four-fifths expect an increase in land prices within the greater Dublin area. Over 50pc said the business outlook for the next three months was better or much better, while 42pc expected no change. 

Planning delays are still the highest negative factor facing the industry, with cost inflation and declining demand sharing the second slot. 

And, while developers cited inadequate supplies of zoned land, official figures given indicated a plentiful supply. 

The conference heard that demand is being driven by the residential sector and a buoyant economy, with commercial activity and civil engineering relatively quiet. 

Looking forward to the future of the property market, delegates were relatively evenly split over a number of areas where SSIA money would be spent. 

Investment in property, at 60pc, was the favourite.


----------



## joe sod (3 Jun 2005)

"THE average Dublin house price will hit the €750,000 mark or higher in 2015, according to 70pc of attendees at an Ulster Bank CBRE Gunne Property Conference yesterday"

Well what were these "eminent institutions" predicting in 1995 for Dublin prices in 2005. Im not even sure Gunne were even involved at that stage. Alot happened in the last 10 years which they didn't see in 1995 although the first signs of it were there. Alot more will happen in the next 10 years but it won't be in the direction these bodies are predicting and the first signs of it are here today. Of all the Irish banks AIB is the most exposed to property.


----------



## zardebt (3 Jun 2005)

Lemurz said:
			
		

> Came across the following story on the Unison site .............  Your thoughts?
> 
> THE average Dublin house price will hit the €750,000 mark or higher in 2015, according to 70pc of attendees at an Ulster Bank CBRE Gunne Property Conference yesterday.



Ya Ulster Bank and Gunne would like us to think .....and I wonder what the 70pc
represented. Its always good to talk up the market ....... !!




			
				Lemurz said:
			
		

> .
> Looking forward to the future of the property market, delegates were relatively evenly split over a number of areas where SSIA money would be spent.
> 
> Investment in property, at 60pc, was the favourite.



They say a fool and its money are easily ........ I wonder just how many fools are out there ....I mean seriously how many for sale signs have I seen in rental areas ???

Will it take a crash like the technology bubble did for shares to make people more aware .... of the risks !!


Interested in yer thoughts,
Zardebt..


----------



## CoffeeBrew (3 Jun 2005)

zardebt said:
			
		

> Interested in yer thoughts,
> Zardebt..


 
I think you're right on the button.

A poster on another BB has been tracking property in Galway and come across this example.

Initial asking price of €1.3 million. Now €975,000.

A reduction of €325,000 or -25%

Can anyone confirm?

The house is the sixth in the list. 
http://www.barnaestates.com/residential.htm


----------



## tonka (3 Jun 2005)

*Galway Price Drop*

Yes. I can confim that  .  My sister is offloading a Creagán house 200m away . 

It is worth no more than €750-800k because it is on a busy main road ..... secluded me This post will be deleted if not edited to remove bad language  , a house in a much better location 300m away went for about €750k . This one in fact. 

[broken link removed]

Mind you the house that went for €750 k ish was initially on the market a year ago for €550k to €600k which gives an indication of the frothy market around there,  Barna is in the middle of a fair oul speculative frenzy at the mo you see. 

The €975k house is a bog standard 70s bungalow of no architectural or structural merit albeit with a new roof and plaster to make it look new  

You will see that lots of speculators are unloading in An Creagán at the moment , this speculative overhang is compressing some prices . 

See this ad for example, every auctioneer in Galway seems to have an An Creagán house for sale despite there only being about 120 of them . 

[broken link removed]

Then again, look at the price of a bog standard semi in the general  area

[broken link removed]

The average Dublin salary will be €70k in 2015 because Dublin workers are quality thru n thru and the average mortgage approved will be 10x salary so of _COOOOOOUUUUUUUURSE_ the price of the average house will be €750k


----------



## Bluebean (3 Jun 2005)

Can I ask what BB has the thread tracking property in Galway? 


Thanks!


----------



## Duplex (3 Jun 2005)

I assume that the attendees at this conference predicting €750,000 average home prices in Dublin in 2015, are making an implicit assumption of a hyperinflationary period in the wider global economy in the meantime. To maintain current house price to income ratios of 1:9 would require average incomes in Dublin to reach approximately €83,000 per annum, wage inflation of approximately 200- 250% over ten years. Given global low inflation/deflationary trends, as evidenced by low yielding long term bond markets it is highly unlikely that these experts are anticipating a hyperinflationary period. 



It may be the case that they are assuming a more benign inflationary environment and are assuming the adaptation of an early 1990’s, Japanese style 100 year mortgage by Irish lending institutions. However I am certain that they are aware of the collapse of the Japanese real estate market and the economic misery and mire that followed the introduction of these ‘products’.



Perhaps they are anticipating a craze among the global wealthy for 1970’s infrastructure, perhaps in ten years time living in a country with iffy infrastructure will provide these ‘nostalgia’ tourists with kicks. Hats off to those estate agents and economists, they sure have their societal radar fine tuned there. 





Or maybe, now just maybe, they think, that by simply donning a suite in the morning they obtain sufficient gravitas to make unsubstantiated sweeping statements, the unproven nature of which implies that their intended audience are a bunch of semiliterate gobdaws.





I wonder, I rely wonder.


----------



## rory (3 Jun 2005)

> A poster on another BB has been tracking property in Galway and come across this example.
> 
> Initial asking price of €1.3 million. Now €975,000.
> 
> A reduction of €325,000 or -25%


This one example doesn't tell you much about trends in the property market. It could be that this auctioneer isn't very good at establishing the value of property; or he decided to take a punt at 1.3 million and see would anyone bite. Anyone can set any asking price they like, it doesn't mean anything.

If the property sold for 1.3 million last year and was now on the market for 975k, then that would be a different story.


----------



## BrokeExpert (3 Jun 2005)

I think anybody who tries to (confidently predict the price of a house in dublin in 2005 is incredibly naive.
I think it's reasonable to suggest that they are as likely to be 450K as 750K.
There are too many variables that are beyond our contol and indeed that are beyond reasonable predictabilty in this time frame. If you look at some which may be remotely predictable such as interest rates (i did say remotely), demographics, employment levels what about trying to predict what's really important i.e. when sentiment (perceptions) change and at what rate over such a timeframe. Estate agents get real (or maybe honest).

Predicting 3 years ahead is brave, 5 years naive and 10 years ahead in such a historically fickle market is irresponsible!


----------



## CoffeeBrew (3 Jun 2005)

rory said:
			
		

> This one example doesn't tell you much about trends in the property market. It could be that this auctioneer isn't very good at establishing the value of property; or he decided to take a punt at 1.3 million and see would anyone bite. Anyone can set any asking price they like, it doesn't mean anything.
> 
> If the property sold for 1.3 million last year and was now on the market for 975k, then that would be a different story.


 
It's just one example of Mr. Expectations gets introduced to Mr. Reality. Stay tuned - I suspect these two will be getting a lot more acquainted in the years ahead.


----------



## zardebt (3 Jun 2005)

CoffeeBrew said:
			
		

> It's just one example of Mr. Expectations gets introduced to Mr. Reality. Stay tuned - I suspect these two will be getting a lot more acquainted in the years ahead.



what happens to Mrs Expectations and Mrs Reality are they well matched....?


----------



## Becca (7 Jun 2005)

*Re: Galway Price Drop*



			
				tonka said:
			
		

> Yes. I can confim that  .  My sister is offloading a Creagán house 200m away .
> 
> You will see that lots of speculators are unloading in An Creagán at the moment , this speculative overhang is compressing some prices .



What (or where) is ' An Creagán ' ?    Is this an area in/near Barna?


----------



## tonka (7 Jun 2005)

*Re: Galway Price Drop*

an estate of 120 houses in Barna .


----------



## MugsGame (8 Jun 2005)

> To maintain current house price to income ratios of 1:9 would require average incomes in Dublin to reach approximately €83,000 per annum, wage inflation of
> approximately 200- 250% over ten years.





The ratio of income to house prices is meaningless. What we should be looking at is the cost of servicing the loan as a percentage of income. That's what the estate agents would say anyway, and it does explain a lot of what's been going on to date. Of course this assumes interest rates remain low in the medium term. With some talk of the ECB lowering interest rates further, €750,000 doesn't look so crazy (assuming Daddy and the Credit Union will still be helping out with the crazy deposits!). 


Also, you are ignoring the impact of speculators and investors. How low a rental yield are they willing to accept? Speaking of which, has anyone seen average rental yield figures that take account of vacant properties?


----------



## CoffeeBrew (8 Jun 2005)

zardebt said:
			
		

> what happens to Mrs Expectations and Mrs Reality are they well matched....?


 
Oh yeah baby !! (Spoken with Austin Powers accent)

Just to get back on track ;-) I really haven't a clue what the average house in Dublin will be like in 10 years. I always remain skeptical of anyone who promises to double or triple your investment in x number of years though.

What we can say is that house price appreciation in Ireland has been on a steady and quite dramatic downward curve since last summer so who knows whats ahead !

September 2004 - 12.0%
October 2004 - 10.8%
November 2004 - 9.8%
December 2004 - 8.6%
January 2005 - 8.5%
February 2005 - 7.9%
March 2005 - 7.5%
April 2005 - 6.5%

End of 2005 < 4% ???


----------



## Teabag (12 Jun 2005)

I live in Galway and I have noticed that houses are taking longer and longer to sell. Our road near Oranmore was pretty popular in the past few years. Houses were fairly much snapped up at above asking price but while I am not buying or selling, I do keep an eye out on local market and things are looking stagnant to be honest. A lovely 4-bed house up the road was going for a bargain 315,000. Its only 4 years old and has a lovely garden. I thought it would get snapped up but it is now at 295,000 (after maybe 6 months at 315k). I'd nearly buy it myself if I could sell my own. Maybe people are just watching for a downturn - have seen that before but it looks more worrying now.


----------



## CoffeeBrew (13 Jun 2005)

House prices set to slide according to Davy's Robbie Kelleher.




> "The house price index has shown a remarkable slowdown," Kelleher told the Sunday Independent last week. "Outside of Dublin, house prices have been flat since last September."
> 
> "You could get to a point where inflation is higher than house price growth," he warned.
> 
> "I wouldn't rule out that house prices could fall in coming years."


 

He also seemed to be saying that the main factor preventing a collapse are the record low interest rates from the ECB. Something we have no control over in the years ahead.



> The Davy economist ruled out a major collapse of property prices. "I'm not in the calamity mode," he said, pointing to the fact that current interest rates of about 2 per cent were unlikely to lead to any devastating meltdown. "But, if they were 4 or 5 per cent that would be another kettle of fish."


 
http://www.unison.ie/business/stories.php3?ca=80&si=1415447


----------



## Lemurz (14 Jun 2005)

Some useful conflicting views from the so called experts........

http://www.finfacts.ie/biz10/irelandhouseprices.htm


----------



## daltonr (20 Jun 2005)

Someone from Davy's (interested in pushing Equities) says property is over valued.  Someone from Gunne (interested in pushing property) says property prices will soar.

Is this really the level of intelligent objective analysis we're getting from experts?
The average poster to these boards has greater insight, greater objectivity, and is as likely to be right.

-Rd


----------



## CoffeeBrew (20 Jun 2005)

I hear what you're saying but sometimes I think Davy is not as predictable as 'talking down property to push equities'. The reason for this is 

1. As recently as late last year they were issuing quite bullish statements on property.

2. Many key Irish equities (think financials and construction) will take a hit if sentiment changes about property.

3. Davy encourages property investment because they sell a number of property investment structures themselves.

Obviously their crystal ball is no shinier than the next guy's but I think property and Irish equities might be more entangled than you're suggesting...


----------



## Lemurz (21 Jun 2005)

*Ponzi scheme*

Good article in the latest edition of Foutune:

Common sense or what............

The monthly cost of buying a house is significantly higher than the monthly rent.  Using the "imputed rent" test it makes no sense to buy.  

People buy because they assume that house prices will keep rising, meaning they can sell later for a profit.  That of course requires that another buyer will come along who also assumes that prices will keep rising, which will require yet another such optimistic buyer down the road, and so on, and so on.  Welcome to the perfect Ponzi scheme - the Irish property market!


----------



## stuart (21 Jun 2005)

> People buy because they assume that house prices will keep rising, meaning they can sell later for a profit



People buy houses to live in, I thought


----------



## CoffeeBrew (22 Jun 2005)

stuart said:
			
		

> People buy houses to live in, I thought


 
Perhaps people should buy houses to live in ?

Of the massive record-breaking number of houses built in Ireland over the past two years, it's estimated that *40%* are lying vacant as second homes, holiday homes or unlet investment properties.

It's probably a fair statment that this "artificial demand" i.e demand for houses not as a residence is fueled in large part by a desire for capital appreciation and is distorting the market considerably.


----------



## joe sod (22 Jun 2005)

A key factor will be what will the ECB do with interest rates. I am convinced they will be left at 2% for the moment but will soon start rising following the American rates back up. It looks like the American dollar will be a weak currency for many years to come even with higher interest rates. That is what Warren Buffet has been saying  its fundamentals will continue to drive it down. The Fed will have to keep rising rates in order to slow it down and stop foreign capital leaving too quickly. The reason why the ECB lowered interest rates to 2% was to get the german and french consumers to consume more. This has not worked but instead has caused property bubbles in ireland and spain and  crippling debt levels in italy. Now the ECB is more worried about this than the lack of consumer confidence in france and germany.


----------



## zardebt (22 Jun 2005)

joe sod said:
			
		

> A key factor will be what will the ECB do with interest rates. I am convinced they will be left at 2% for the moment but will soon start rising following the American rates back up. It looks like the American dollar will be a weak currency for many years to come even with higher interest rates. That is what Warren Buffet has been saying  its fundamentals will continue to drive it down. The Fed will have to keep rising rates in order to slow it down and stop foreign capital leaving too quickly. The reason why the ECB lowered interest rates to 2% was to get the german and french consumers to consume more. This has not worked but instead has caused property bubbles in ireland and spain and  crippling debt levels in italy. Now the ECB is more worried about this than the lack of consumer confidence in france and germany.



Hi Joe- 

Will the weakness of the dollar againts the euro not prevent the ECB from raising interest rates ?

Do you think there will be a rise after the German election ?

Doesn't the current German government want to boost growth inorder to get re-elected ?


----------



## joe sod (22 Jun 2005)

First of all America wanted a weak currency in order to reduce its current account deficit and make its exports more competitive so they reduced interest rates to historic lows. It didn’t work because instead the American consumer borrowed more and more increasing the deficit by sucking in more imports. 



            Europe on the other reduced interest rates to historic lows in order to encourage growth in Germany and France by getting consumers to consume more. It also didn’t work instead German industry became more competitive and efficient and is now the second largest exporter in the world. But the Germans and French didn’t go out and borrow more money but the Irish, Spanish and Italians did. This is exactly what the ECB didn’t want. If 2% interest rates didn’t raise confidence then lower interest rates will hardly work either.



            So in both cases interest rates will have to rise to halt the borrowing binge in America, Ireland, Spain and Italy. This is now a much bigger problem than lack of growth in Germany


----------



## CoffeeBrew (24 Jun 2005)

*"The greatest BUBBLE in history"*

Finfacts is an often quoted site - being one of the main business info sites for Ireland. 

The finfacts team have taken the recent Economist article and added some additional facts from an Irish persective and some additional analysis from the IMF.

Interesting to note that the surge in global house prices *"not only dwarfs any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s .... or America's stockmarket bubble in the 1920's '*


*Global House Price Boom: The greatest BUBBLE in history :*

http://www.finfacts.com/irelandbusinessnews/publish/article_10002284.shtml


----------



## redstar (8 Jul 2005)

... sometimes I wish the ECB WOULD push up interest rates, just to shake out the market here and see what happens ......


----------

