Future price of Irish properties

[Loki]

When you talk about houses being "split" do you mean development of the site (e.g. more buildings in the garden) or subdivision of the house itself? There's no doubt about the former, but I see little or no evidence of suburban semi-D's being turned into two family houses, at least not officially. Bedsits, maybe, but "apartments"?

I am talking about the split in terms of houses. As I said there are 7 on my road with 5 in the recent years . If you can find a corner garden in any of the estates now it is rare. Back gardens are getting houses now too. They aren't besits. A 3 bed house with two reception room becomes two places very easily, the box room becomes the kitchen, one bedroom a sitting room and the other a bedroom, downstairs, change a reception room to a bedroom add an extention for a bathroom and you are done. They become two household houses not family property that is the point. Families can't afford them hence change of use.
People are mostly retired and heading towards 90 and death so their children in their 60s are selling to developers or spliting themselves. Thoses bought by families or couples are bought by people well into their 30s and not FTBs. The people renting in the area are a lot younger but working professionals. The reason they are there is because of travel times they have no plans to buy as they are accepting they can't buy and have quality of life. The view of renting and owning will change.
It is not going to happen everywhere but it is something people aren't considering. The property market changes but people are ignoring it and only looking at economics.
There are no official figure for this change so it is being ignored. The reason for no figures is it there is no application needed.

 

[Calina]

As for the ability for a dcotor to buy a property straight out of college. Look around the world and be amazed that in other countries this is also the case and they have not collapsed. Look at TV and see how many people rent why is this relevant ? It would be so unrealistic to have them afford a house that even in situation comedies they won't streach that far. Scrubs have them still renting and they are fully qualified.

The problem I have with this is that immediately someone tries to prove something by saying "look at TV", they lose a certain amount of credibility with me.

If you looked around the world, you would also realise that in most other countries where renting is prevalent, the relationship between tenant and landlord is a lot more mature and regulated. Although security of tenure has improved radically in the past while, it's fair to say that in my experience, quite a lot of landlords in Ireland are extremely well up on their rights and are totally convinced that they have few if any obligations. It's not that they don't know there are rules - they just think that they don't apply to them. I had someone try to give me all of 14 days notice to move out of a house he wanted to sell, claiming I'd no written lease (that would be the lease that was signed when I moved in, along with the provision for extension, along with legal requirements compelling him to give me 43 days notice none of which he appeared to think applied to him). He is not the only one I had this type of problem with.

If you looked around the world, you would understand that American television does not reflect the world at large. In fact, I've lived in several other countries, and yes, rent is very common in some of them. But the cost of acquiring an entry level apartment is much, much more reasonable too. Brussels is a case in point. Even Paris is a case in point. An entry level box in Ireland, in the suburbs with little or no public transport costs almost a quarter of a million euro. This is not the case in many other cities in Europe. And where it is, the rental market is not as screwed up as it is here.

 

[Neffa]

I used georgian houses as an example. Go to London and look at the vitorian estates. Some are close to a complete split in every house. IT just happens to be house stock in the location. This isn't so much a theory as a reality happening now. 7 on my road alone from a house built in the 50s. Are big property build prior to the current was the 70-80s and these houses are being changed . All the corner sites are being used, back gardens are being built on. Georgian houses are hugely different but that isn't the point the point is people didn't think there way of life would change so radically.
People here are focusing on economics and the construction industry (mostly the economics of it) and not property. I think if you are going to talk property prices you need to talk about property stock and who uses it.
You people buying a house will be a sacrifice this society will make. Ireland has the highest home ownsership in the world the next is Italy yet they have a falling population size. I can see this giving before house prices as that is the super annomoly not the price. People here are making the assumption people must buy. The globalisation aspects of our economy seem to be ignored in the property section except for the economic effects.

All the property baddly built now may mean people will dismiss owning property built after 2001. Then supply and demand may change. I beleive it will be congestion that will effect the market. Many areas are so far away that public transport will be unviable kids raised in cars will not be will to commute long distances.

As for the ability for a dcotor to buy a property straight out of college. Look around the world and be amazed that in other countries this is also the case and they have not collapsed. Look at TV and see how many people rent why is this relevant ? It would be so unrealistic to have them afford a house that even in situation comedies they won't streach that far. Scrubs have them still renting and they are fully qualified. As for taking the free education and then leaving, you won't get you much sympathy from me. I can see why you would do it and that stopping you going is in our best interest but I don't use it as a gauge for property prices.

Loki - you are right about London - large swathes of the 4-5 bed Victorian houses in London are converted and many houses left unconverted are being extended via loft conversions and the like. However, I don't see how this applies to Dublin - the housing stock is mostly non-period and not particularly suited to conversion to apartments unless you knock-down and re-build. I also don't really see the connection between this and prices in the market.

 

[Calina]

There are no official figure for this change so it is being ignored. The reason for no figures is it there is no application needed.

Does this require planning permission - turning one house into two apartments?

 

[Amygdala]

I would like to respond to the comment below eventhough it is not in keeping with the thread

As for taking the free education and then leaving, you won't get you much sympathy from me.

1. Free 3rd level has been available to all for some years ( just like when second level eduaction was made free...and when did that stop being refered to as "free"). It is a sign of progress. If you want a knowledge based economy then have free eduaction.

2. I hope also that this sentiment is shared with your family members who have,is or will benefit from free third level and that it is not only reserved for prospective tennants.

 

[jdork]

1. Free 3rd level has been available to all for some years

Once you pay the registration fee of 700/ 800 / 900 euro.

 

[Loki]

The problem I have with this is that immediately someone tries to prove something by saying "look at TV", they lose a certain amount of credibility with me.

I used an easy digestable source. You don't like it doesn't make you right. I know doctors in the US and I know where they lived when starting out. How are you going to know or reference that?

If you looked around the world, you would also realise that in most other countries where renting is prevalent, the relationship between tenant and landlord is a lot more mature and regulated. etc...

So we are never going to mature? Why assume the price is the only thing that has to give. How do renting rule mature, obviously time and conditions. I think the current situation will mean this will happen to some extent. People are ignoring it, by saying it isn't here doesn't mean it isn't coming.

If you looked around the world, you would understand that American television does not reflect the world at large. In fact, I've lived in several other countries, and yes, rent is very common in some of them. But the cost of acquiring an entry level apartment is much, much more reasonable too. Brussels is a case in point. Even Paris is a case in point. An entry level box in Ireland, in the suburbs with little or no public transport costs almost a quarter of a million euro. This is not the case in many other cities in Europe. And where it is, the rental market is not as screwed up as it is here.

I don't know Brussels very well but I do know the state it is in from being there. A lot of very run down property in a very large city indicates that there is no shortage of property in the place so that would explain why it cheap. I disagree with you on Paris for prices based on what I looked at buying. Again the city also has no shortage with many run down properties. Try and find a run down property in Dublin city is extremely difficult and the ones you find are normally be sat on by investors. That also doesn't even mention employment rates in these cities. When people are working things cost more. If you live in Paris or Brussels the property is just as unaffordable to you as if you lived here. I don't think people who ignore the high employement here and ignore the low employment in other places as very credible

Loki - you are right about London - large swathes of the 4-5 bed Victorian houses in London are converted and many houses left unconverted are being extended via loft conversions and the like. However, I don't see how this applies to Dublin - the housing stock is mostly non-period and not particularly suited to conversion to apartments unless you knock-down and re-build. I also don't really see the connection between this and prices in the market.

Not what I know and see. Lots of 2 bed victorian houses have been converted not just the big ones. Bear in mind the largest percentage of houses in England is Victorian as she was in power a long time. The property doesn't need to be period it is to do with location. Property built between 50s-80s is easily convertable in Dublin. The 70s houses are more likely not to be in fairness due to building materials and construction (like present housing). I have seen 5 old corporation terrace houses converted in Donnycareny to two households. If they can do it to those houses they can do any. No need to knock down houses to do this.

Does this require planning permission - turning one house into two apartments?

Not in most areas but importatnly not do Dublin City Council plus 40sqm can be built without planning. That is a lot of space to add and in many cases half the house. By the way these would be flats as they would be entire floors where appartments actually only means a section of a floor or building

[broken link removed]

This is the type of house I see being converted. If you imagine the 4th bedroom not being there you can see the original house. Still as is very eay to convert into 2 two bed places as it currently stands. The doorway and stairs can eaisly be sorted out. The top place could convert the attic also making it a 3 bed. If you got the house beside it you could make it into 5 places easily with relatively little work. Some houses have back lanes taht mean the back can be changed to maybe just a different entrance or another build. _People seem to miss the fact we have such low density housing as our housing stock, this has to change for our own good and I would say as an inevitability. The rent from two places make that a viable investement and resale value also. Two friends purcahsing, siblings or an investor might buy this place after or before conversion. As I said this is not a case of can they do it, it is a case of they are doing it and what it's effect will be on proeprty. 5% on my road but there is a larger portion going to spread?

 

[walk2dewater]

Spiralling out of control property prices in Ireland are being caused by:

Buyers that expect never to be burned and sellers that know this. No collective memory of results of previous speculative behaviour or consequences of over-extending on debt. Related to the Irish trait of "Ah sure-ism" and fatalism

....compounded by a lack of honest and 2-sided information. The Irish media is complacent and uncritical of the views of the vested interests. The opinions of "property economists", who's salaries are paid by estate agents and mortgage lenders, are reproduced verbatim in the property sections and passed off as factual, sober analysis (which miraclously always arrives at the same conclusion)

... and aided and abetted by the continuing loosening of lending standards at banks, the so-light-to-be-non-existant regulation of lenders practices, political incontinence and widespread fraudulent behaviour such as unreported rental income and undeclared debt by borrowers

But it's mainly the mania of buyers borrowing whatever to accept whatever price is offered, no questions asked.

The rest of us, our economic security and our families well-being are being held hostage by these factors.

Yet some of us sit around and think this won't end badly?

WTTW

 

[Duplex]

1. The US economy is teetering on the brink, with a sharp slowdown in the housing market; continuing falls in productivity and incomes, an inverted yield curve and a deficit ceiling fast approaching, not to mention rising oil prices, MNC labour off shoring and a cripplingly expensive war in Iraq, oh and a dollar that looks as much in demand as a pack of Danish bacon in a Tehran market. Can anyone provide me with a reasoned explanation as to how Ireland will not catch a lot of flack if the US economy goes into recession?


2. I read a report about lawyers in California brushing up on their case law from the last crash in preparation for a plethora of civil actions against appraisers (valuers) and banks as the housing bubble deflates. In Ireland I wonder if our wigged friends in the Law Library are at this moment licking their lips at the prospects of a stampede of disillusioned bubble ‘victims’ seeking ‘justice’.

What you loose on the swings you gain on the roundabouts

 

[extopia]

Does this require planning permission - turning one house into two apartments?

It most certainly does. Turning a single family dwelling into a two-family dwelling, or into flats or apartments constitutes a change of use of the building. This requires PP, regardless of whether the house is extended or not.

 

[Calina]

It most certainly does. Turning a single family dwelling into a two-family dwelling, or into flats or apartments constitutes a change of use of the building. This requires PP, regardless of whether the house is extended or not.

That's what I thought myself. But Loki appears to think otherwise.

Not in most areas but importatnly not do Dublin City Council plus 40sqm can be built without planning. That is a lot of space to add and in many cases half the house. By the way these would be flats as they would be entire floors where appartments actually only means a section of a floor or building

 

[Neffa]

.. So we are never going to mature? Why assume the price is the only thing that has to give. How do renting rule mature, obviously time and conditions. I think the current situation will mean this will happen to some extent. People are ignoring it, by saying it isn't here doesn't mean it isn't coming.

I'm coming closer to understanding your argument, but I'm afraid I'm no closer to agreeing with you.

I don't get the connection between splitting houses and prices. Even if you can split houses, I don't see why it drives up prices. It did not have that effect in the UK. It simply produced "new" flats in areas which had mainly houses.

You keep saying "why does price have to give?". Prices cannot keep growing at 8%+ if incomes are growing at 4-5% if interest rates are constant. If interest rates are rising and the market is highly priced by historical averages, then the gap between price growth and salary growth should be zero or negative. Clearly it is not at present as people believe that it is a sure thing and will only go up so will accept the higher prices, but basic economics dictates it should be. At some point, first-time buyers simply dry up - they rent or in the worst case will emigrate to countries with more attractive situations. People can twist details on mortgage applications and so on to drive up the amount they can borrow, but it can only go on so long. This imbalance is not sustainable.

I think the earlier poster who postulated we were in "Giffen good" territory made a very valid point.

 

[Loki]

It most certainly does. Turning a single family dwelling into a two-family dwelling, or into flats or apartments constitutes a change of use of the building. This requires PP, regardless of whether the house is extended or not.

No change of use it is still residential property. Change of use is a graden into a car park space or a house into a business. A residential house into a residential property requires no change of use. Unless a city official told you that I'll beleive the people in the planning department who told me. Either way the governement want to increase density and palnning not to be blocked hence the 40sqm planning exemption.

But it's mainly the mania of buyers borrowing whatever to accept whatever price is offered, no questions asked.

Do you have other super human powers besides the ability to read minds? You don't know this, you think this and no report or expert advise can say this is true. You can't know why people are willing to pay prices. Maybe it is becasue they think it is worth the money and they maybe right or wrong. Why they think it is worth the money is pure speculation as is any reason you believe the house prices are too high. Try to understand what you are saying is your belief and not fact. You may be proved right but what you are saying is wild speculation as you are taking two of your opinions of why things are happening and drawing conclusions from them. Big differnce to using facts and speculating on those effects. I don't no anybody who panic bought as it takes too long to buy. People were told the same 6 years ago and if people listened they would have been boned

 

[Neffa]

Do you have other super human powers besides the ability to read minds? You don't know this, you think this and no report or expert advise can say this is true. You can't know why people are willing to pay prices. Maybe it is becasue they think it is worth the money and they maybe right or wrong. Why they think it is worth the money is pure speculation as is any reason you believe the house prices are too high. Try to understand what you are saying is your belief and not fact. You may be proved right but what you are saying is wild speculation as you are taking two of your opinions of why things are happening and drawing conclusions from them. Big differnce to using facts and speculating on those effects. I don't no anybody who panic bought as it takes too long to buy. People were told the same 6 years ago and if people listened they would have been boned

Of course we cannot read people's minds, but we can talk to them and get their opinions! Since I returned to Ireland, I've had the "property conversation" with a lot of people. And if I ask people why they bought, an overwhelming majority will say that "it's only going to go up", "Renting is dead money", "Ah, sure they've been saying there'll be a crash for years - I'm getting in now when I can", "I was afraid of being left behind" or words to that effect. If you ask them about perceived risks, the only risk they see is about waiting and getting priced out. Unsuprisingly, only a small minority believe that there is any risk of a fall because frankly it is a pretty unpallatable message to hear.

So I don't think any of us claim to be mind-readers, we are reporting what we hear people say, so I think it is a reasonable stance/opinion to have.

 

[hmmm]

On one side of this discussion we have statistics, economics, anecdotal evidence and the laws of supply and demand. On the other we have someone who believes that some sort of magic house splitting arrangement will prop up house prices (that's a new line to me) and nothing else.

If I could figure out a way to leverage myself into a position which relies on a fall in house prices over the next 2-5 years I would.

 

[roryodonnell]

Prices should have stablised about 18-24 months ago. But the demand out there from investors is pushing it up. The most recent purchases will have no increase in value for 5-7 years. It may increase marginally up until the summer, but after that it will remain flat. These "investors" will get nervious over the xmas period and may decide to sell then. So, the storm will come early next year, say March 16th 2007 when the ECB puts the base rates up to 3.5. (5 year fixed = 5.8 - 6.5, variable = 5.25 - 6. or just over 3000pm on a 500k mortgage @5.5 over 25 years).

 

[Loki]

I'm coming closer to understanding your argument, but I'm afraid I'm no closer to agreeing with you.

You don't have to agree with me. I see what people are saying and I understand it and I would say I understand it better than them in most cases. People assuming to know why things are happening and not looking at the whole picture doesn't lead to a rounded view.

I don't get the connection between splitting houses and prices. Even if you can split houses, I don't see why it drives up prices. It did not have that effect in the UK. It simply produced "new" flats in areas which had mainly houses.

I think you missed the point. People are saying house prices can't keep going up. I say they can because of two reasons.
1) The houses will no longer be lived and owned by single families. .
2) Supply and demand close to amenities will keep property going up in many areas.

Splitting house is just a natural evelution of that. As is renting in areas not normally rented. I live in an area as close to Dublin as Rathgar except Northside are you going to speculate the economics of Ireland about the house prices and development of the area or what is there and happening. People are spliting the houses and I gave you the type of house it is happening to. Are you just going to deny this as happening and state some economists theory of what might happen instead? 5% on my road and growing versus a belief and a reading of signs of property crash revelations. People on my road in their 90s are dying their children are selling to developers or renting out the property. A market change why refuse to look at these details?

You keep saying "why does price have to give?". Prices cannot keep growing at 8%+ if incomes are growing at 4-5% if interest rates are constant. etc...

You are still on the assumption that everybody will be buying. Say if prices keep going up and income doesn't why are you assuming people must buy? Why won't the super normal property ownership drop? Maybe the nature of the property will give. Maybe the prices will give. Maybe the prices of certain areas or distances will give only. Maybe a combination will happen is what I say and if you want to buy you can do if you do so correctly.
Why do peope keep thinking prices will drop and set of a huge price crash? It is such a simple belief for a really complex issue. THe economists have been wrong for 10 years in my eyes but people will except 6 years. The people fighting this arguement won't consider any other additional information that will and does effect the market. I know the arguments and I have heard them better explained than many here. I have not really said they are untrue but I certainly do point out where people are making assumptions. People are making it a belief like religion not a scientific analysis of the facts and possible out comes intead they state it like fact. 6 years of being wrong how can people defend that by saying they will be eventually right. What would you say if in 4 years it doesn't happen? A decade of economists being wrong or a decade of over priced property. THe drop would need to be something like 200%+ to be an issue for somebody 6 years ago in Dublin at least plus the rent paid over that time.

 

[gearoidmm]

. THe drop would need to be something like 200%+ to be an issue for somebody 6 years ago in Dublin at least plus the rent paid over that time.

That's all very fine, but the issue isn't whether people who bought 6 years ago made money, we all know that they did. The issue is what is going to happen in the future and by extension, is now a good time to buy as an investor. With the highly leveraged state of many investors and new home owners, even a small drop would be significant for them and for anyone getting into the market right now.

 

[Calina]

You are still on the assumption that everybody will be buying. Say if prices keep going up and income doesn't why are you assuming people must buy? Why won't the super normal property ownership drop? Maybe the nature of the property will give. Maybe the prices will give. Maybe the prices of certain areas or distances will give only. Maybe a combination will happen is what I say and if you want to buy you can do if you do so correctly.
Why do peope keep thinking prices will drop and set of a huge price crash? It is such a simple belief for a really complex issue. THe economists have been wrong for 10 years in my eyes but people will except 6 years. The people fighting this arguement won't consider any other additional information that will and does effect the market. I know the arguments and I have heard them better explained than many here. I have not really said they are untrue but I certainly do point out where people are making assumptions. People are making it a belief like religion not a scientific analysis of the facts and possible out comes intead they state it like fact. 6 years of being wrong how can people defend that by saying they will be eventually right. What would you say if in 4 years it doesn't happen? A decade of economists being wrong or a decade of over priced property. THe drop would need to be something like 200%+ to be an issue for somebody 6 years ago in Dublin at least plus the rent paid over that time.

Loki, you accuse a lot of people of making baseless assumptions, and yet, this is full of maybes too. It also is not underpinned by anything other than your anecdotal evidence, something which you are reluctant to accept from those who oppose your view point. Your primary support in favour of your position appears to be that "people have been wrong for six years, therefore they will probably continue to be wrong".

Secondly, if prices keep on going up, and people can't afford them, at some point, you run out of purchasers. If there are people willing to sell, and no people willing to buy, the prices come down. If the number of people willing to sell continues to increase, and the numbers of people willing to buy does not increase, then prices start to fall faster.

Regardless of how you split properties - and incidentally, although the Dublin local authorities are mute on the subject, both Sligo Borough and Clare County Council explicitly claim that planning permission is required for this on their website [broken link removed] [broken link removed] so the question is not quite so clear cut - this is still inescapable. Additionally, to some extent, if you split houses into smaller accommodation units - you are increasing supply...which also should, normally, lead to a fall off in prices.

You provide absolutely no evidence to support how the splitting of property would lead to stable or increased prices. The point about access to amenities is valid, but is equally not dependent on split properties.

You should also understand that for property prices to stay high, or continue rising, you need an excess supply of buyers over sellers. If people aren't buying...then realistically, prices will be falling

That's why I have trouble with this:

You are still on the assumption that everybody will be buying. Say if prices keep going up and income doesn't why are you assuming people must buy? Why won't the super normal property ownership drop?

 

[walk2dewater]

You can't know why people are willing to pay prices. Maybe it is becasue they think it is worth the money and they maybe right or wrong. Why they think it is worth the money is pure speculation as is any reason you believe the house prices are too high.

It's pretty easy to INFER what was going on in the minds of buyers at Adamstown few weeks ago is it not? Why do you think they were queuing up overnight and taking WHATEVER PRICE the developer/sales agent was plucking out of the air?

Activity at Adamstown was not due to special or discounted prices, the developers there were ratcheting property prices to a HIGHER level. Yet do you seriously think Adamstown buyers were buying because they liked the prices or the rental yields?

This is not sober, considered buying activity, this is FEAR.