Future price of Irish properties

[extopia]

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.

Wrong. Planning Permission is required for this kind of development. Here's a document you might want to take a look at:

http://www.environ.ie/DOEI/doeipub.nsf/0/559a098a4b8ace5580256faf00394f01/$FILE/PL5%20Doing%20work%20around%20the%20House.pdf (Doing Work Around The House) published by the Dept. of the Environment.

Converting a house into flats (even only 2 flats) is NOT exempted development.

I quote:

13. Can I carry out internal alteration, external repairs
and maintenance?

You can carry out any internal alteration you wish as long
as you do not alter the domestic use of the house.
External works of repair, maintenance and improvement
such as painting or replastering do not need planning
permission so long as they do not materially affect the
external appearance, thus rendering the appearance
inconsistent with neighbouring buildings. You may need
approval for certain external alteration e.g. a new
connection to a sewer.

This exemption does not apply to protected structures,
nor to the subdivision of a house into flats or granny flats.
Planning permission must be obtained for such works.

 

[Neffa]

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 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 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.

With the greatest respect , myself and others have laid out arguments involving supply and demand, interest rates, international comparisons, samples of customer buying behaviour, renting vs. buying cost comparisons and other data sources to show how our opinions are based on a wide range of analytical factors ......yet you keep coming back to the fact that we're not being scientific!

Meanwhile, you provide me with two scientific factors to counter my "religion":

(1) Houses converting into two will drive up prices - I accept you showed me a house where this could be possible but I've not seen the inside and I have no idea of how practical it is. I've also no idea of the latent economic value you can extract. Will converting them into four make the prices even higher?

(2) People will pay a premium to live near amenitities - I entirely accept this, but that does not drive price growth, just price differentials. A flat/house in Dublin 6 near the Luas will be worth more than the same property transported 30 miles from central Dublin with no facilities- no question. It does not ensure price growth, however.

I applaud your foresight in buying many years ago and you have no doubt done very well from that - well done and good luck. I did not as I was not here at the time and I am in the position (like others in Ireland) of watching from the sides at a market which I think is toppy and can only be sustained if we have the present state of full employment, low interest rates, low inflation, stable US economy, slow EU economy, high immigration, low emigration and widespread expectation of property price growth. My case (which I think I've argued ad nauseum) is that this is unlikely to be the case and we'll see a correction and instability in the market.

I assume that everyone must buy because every property must be owned - owner, landlord, developer who built it. If prices rise and incomes do not, who can afford to pay the price? Will a rational investor be able to sit on property for 10+ years whilst rent lags interest costs? Will the huge appetite to buy be sustained if the growth slackens in the market?

If you think that keeping investing in the current market at current prices is going to bring you real wealth over the next 10-20 years, then good luck and I hope it works for you. I have real concerns so I will wait and see how the market changes. Each to their own!

 

[Neffa]

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.

You can - just rent.

 

[Duplex]

Lokii

You do need planning permission for a change of use of one dwelling house to two or more dwellings, the development does not fall under the permitted development provisions of the Development Acts. If the property is listed you also require listed buildings consent and any building works will require building control consent from the local authority.

I am at a loss to understand how increasing the number of dwellings in a particular area by splitting existing units would have an impact on prices. Rational/Perfect market theory would suggest that an increase in supply will impact on the price of a product, (everything being equal.)

Now if you were to suggest to me that you base your theory of price increases on your understanding of behavioural economics and that the perfect market theory is hogwash, your argument would have more credence, but such an assertion would be a tact acknowledgement that a bubble exists in the Irish housing market.

My contention is that a bubble exists, ipso facto.

PS
plaudits to all concerned for an excellent discussion on an issue that is so deserving of cool calm debt. (sorry Freaudian slip Debat) ;

 

[walk2dewater]

Someone I know said today , "if [property] prices crash we've all F*&ked".

This is another of those 'Ah sure-isms' I seem to constantly hear... Ah sure if there's a crash...

Fact is only a few of us will be truly ruined. We're NOT 'all in this together'. Those that are highly leveraged when the "buyers walkout" occurs and sellers start the long, price-cutting process, will be handed their financial heads on a plate.

Most of us will muddle through, the biggest impact will not come from falling property prices per se, but the wider economic fall out of a crash in the demand to PURCHASE property. That's what a crash really is, it's destruction of DEMAND TO PURCHASE property.

Imagine the economy going from building a whopping 80k units a year to a point where there's ZERO starts in the space of say 6-12mths. Will all those brickies, roofers and labourers from Warsaw continue to rent houses in Ireland? Will the restaurants need all those immigrant staff? Will they even stay open? Will estate agents, auctioneers, mortgage lenders, appraisers, surveyors, solicitors, and related firms have need for all that staff, what about THEIR car payments, THEIR mortgage payments?

How will the big mortgage lenders react to a spate of defaults on mortgages and consumer loands? How will the government react, will they have the tax revenue to help? Will our college grads once again seek greener fields abroad?

What about additional external shocks unrelated to our domestic problems?

Those that take steps to protect themselves now will have better odds of managing this recession.

There is a silver lining:
Traffic will probably get lighter. Unemployed parents will get to spend more time with their kids rather than putting them in creches. Our pollution emissions will fall. Shopping centres will be less hectic. Urban sprawl will be stemmed, social infrastructure (local sports, having time for neighbours, car pooling out of necessity, binding together of communities etc) will have the time to catch up with the hastily built physical infrastructure

And the number one benefit of a crash is: Cheaper house prices.

WTTW

 

[Neffa]

A number of us have been in a long dialogue with Loki on the direction of the market. Is there anyone else who believes growth is still very likely and can put forward reasons why? It has been a good debate so far and it would be good to have other readers involved

 

[owenm]

this says it all really...

http://en.wikipedia.org/wiki/Irish_Property_Bubble

 

[dam099]

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.

A 200% drop from the current price is mathematically impossible unless prices move into the negative, the maximum in theory is probably 100%.

If a house has increased 200% over its original price since 6 years ago just a 67% decrease from the current price would bring you back to the same price it was originally.

 

[Glenbhoy]

A number of us have been in a long dialogue with Loki on the direction of the market. Is there anyone else who believes growth is still very likely and can put forward reasons why? It has been a good debate so far and it would be good to have other readers involved

I concur, fair play to Loki for fighting his/her corner, but it's amazing that no-one else will give him/her a hand - is it my imagination or is there not a property investment section out there? I would have thought that if any of those guys could spare a few moments from their pursuit of a global property empire they could give us some of their thoughts.
To Loki, am I right in saying that your rationale concerning changing the use of the housing stock is essentially that people will pay more for a house because they intend to split it up and sell it on as 2/3 units, thus the sum of the whole is less than the individual parts? ie I am willing to buy a house for 600k as I can make 4 units worth 200k each?

 

[Loki]

Some people seem to think I beleieve prices will just keep going up. I don't I beleive the market will change quite radically. I believe the prices will change as a result. As has been said I beleive the sum of the whole will be less than the parts. People mentioned a price differential which should have been a term I used as I beleive this is what will radically change due to increasing commuting times ,fuel prices,car costs,lack of ammenities and socail problems. THe demographics are changing and will continue to do so. More single people less families. The home ownsership percentage will drop at least 10% and level close to EU averages.
[broken link removed]
Less people will own more of the countries property. Children will inherit property and/or be given property by their parents. Buying on your own will be the perserve of the rich. Social affordable housing will exist but a public/private partnership will be more likely with big business building and managing such property.
I am talking a bigger picture and focusing more on the socail and property stock and natural progression. It uses a lot less assumptions about why people bought property and how they will react to a price change. I think it is possible that people will react as said but I think that is only likely in part of the market. Instead of a crash and a soft landing I perfer to look at it more like a bumping landing or emergency landing. It wouldn't take much for the governmemnt to effect any sudden price change. Reduce stamp duty for those that have paid stamp duty in the last 10 years on an upgrade house. Suddenly all the people who wanted to buy have property suitable for FTBs. Make down sizing from a large family home have a pension benifit now the other people who can upgrade with less stamp duty buy up these houses. Increase capital gains on property sales keeping the investors in the market. It maybe all reactive but I don't know if they have similar plans .
As for planning permission Dublin City Council told me otherwise and their planning regulations govern where I live. Even if I was misinformed it would not be difficult to get planning. Very easy to get lots of planning and not expensive. They are under orders to get density up. The house I showed was also pre 63 but I can't remeber if that only counts on property already rented out. There are lots of this housing stock within the M50 which I think has limited supply now and more so in a few years especially as the new hosuing involves so much travel and cost.

Dam099 I was talking 200% from the original purcahse price as beleive or not I understand basic maths.

People are not talking about the direction of the market they are talking about economics and how they beleive it will effect the ability of people to buy then how people will react. It assumes things like people are pabnic buying and panic sell. Yet somebody else posted up data saying people are buying for a pension which isn't short term returns. Some assume that means selling the property but why does it not mean for the rental income. I know people with just one extra house and they plan to rent it out forever or in my mothers case she bought a smaller house to rent but plans to downsize there in about 10 years. There are alot of smart people investing in property most see little value right now directly in returns but other returns. I know people who bought for kids,retirement and pension yet all people talk about here is speculative and I think that is too simple a view.

As I said I don't beleive what people think will effect the market if it happens. I disagree on how people reckon people will react mostly based on the fact it misses a ton of reasons and other factors that will effect the property stock. I am looking beyond 2-5 years also. There are also opposing economic theories with classical economists saying a crash and other economists saying a soft landing. People here sound like those without property or unhappy with what they have so is this why you are all so negative?
Those outside would of course be hoping for a drop so a portion of you maybe really just agreeing on this grounds. Maybe people should state where they are in the market when stating there view.
I own 2 and manage a further 4 properties

 

[extopia]

As for planning permission Dublin City Council told me otherwise and their planning regulations govern where I live. Even if I was misinformed it would not be difficult to get planning.

Dublin City Council (or any other council) do not have authority to ignore the Planning Acts. They are charged with enforcing the act on a local level. If someone told you you don't need planning permission to convert a single family house into multiple units they were plain wrong, or perhaps they misunderstood your question. Did you get this in writing? If so let us know what it says.

As to whether it would be difficult to get planning, that depends on many things. Perhaps your neighbours will object. Perhaps there are problems with infrastructure or parking in your area. Perhaps the area is already sufficiently developed. Or perhaps not. But you have to go through the process. It's always a good idea to have a chat with a planning officer before you make your application as they can tell you straight off what kind of problems you might encounter or whether your proposed development has a reasonable chance of securing permission.

Loki, I know this issue is only part of your argument but if you want to be credible, you need to get the basics right.

 

[Loki]

Loki, I know this issue is only part of your argument but if you want to be credible, you need to get the basics right.

I used to work in the planning department and my father did for 25 years. I think I might know a little more on the subject than you. I can assure you certain things are easy to get no matter who complains. Widening a drive way for example warrants little problem. There are concerns but very few and easily done. What are the rules and what the reality is are different. How much involvement do you have in property and construction? As I mentioned pre63 building also what do you know about the exemption there?
The basics are not rules but ways of getting things done.

 

[extopia]

I realise that planning issues are not the central thrust of this thread but I have to respond.

I used to work in the planning department and my father did for 25 years. I think I might know a little more on the subject than you.

Possibly. But there is no evidence of this from the information you are posting here.

What are the rules and what the reality is are different. How much involvement do you have in property and construction?

I'd prefer not to get into too much detail here, if you don't mind. I own property. I have been engaged in the planning process on my own behalf a number of times. I also worked in an architectural practice (admittedly quite some time ago) and made a large number of planning applications on behalf of small clients, mostly domestic modifications and extensions.

As I mentioned pre63 building also what do you know about the exemption there?

If you worked in the planning department you should know that the pre-63 exemption applies to houses that were subdivided prior to 1963, not houses that were built prior to 1963. Just because a house is of this period does not mean you can convert it to apartments or flats without permission.

 

[Loki]

I realise that planning issues are not the central thrust of this thread but I have to respond.

My last response on the subject is very simple. You are wrong it can and is being done with little on no hassle. You don't need to beleive me on how it gets done but I beleive it will happen more. I know what can be done from direct experence. There are ways and means which I will not go into other than to say it isn't bribery as many would assume just a bending of rules. I gave an example of house that such work could be done. It is a very small part of my arguement and is a technical detail that is insugnifficant. No further need for discussion on it.

 

[walk2dewater]

People here sound like those without property or unhappy with what they have so is this why you are all so negative?

Another popular statement of the property pumpers. People predicting lower prices are apparently "begrudgers" or "jealous" etc. Personally I don't need a property crash for any personal or financial reasons. I've owned property as well as virtually all other asset classes. Currently I am ZERO directly exposed to property, just as I am to US$ or US$ assets.

Like I said before, many people have excessive emotional and psychological stakes riding on the Irish property market. This is because they are highly leveraged and will face ruin if the market goes against them. It is THEM who begrudge young Irish people cheap property prices. THEY very much need to sell on for higher prices in the future.

WTTW

 

[extopia]

It is a very small part of my arguement and is a technical detail that is insugnifficant. No further need for discussion on it.

I take it then that you are not disputing my claims.

I never said that this kind of conversion could not be done - I am just pointing out that it cannot be legally done without planning permission.

Unauthorised development is illegal, plain and simple.

Loki, perhaps you could enlighten us as to the "ways and means" and "bending of rules" (and legality of same) to which you refer, in the interests of gaining some credibility in this area.

 

[Loki]

Another popular statement of the property pumpers. People predicting lower prices are apparently "begrudgers" or "jealous" etc. Personally I don't need a property crash for any personal or financial reasons. I've owned property as well as virtually all other asset classes. Currently I am ZERO directly exposed to property, just as I am to US$ or US$ assets.

JUst becasue it has been said before does not make it untrue. People here have referred to the fact they can't buy and from their view outside the market gives them insight. It is a valid point to ask is that why people here are so negative. Zero direct exposure? Does that mean you live on the streets? According to people here rent is direct link to price so that is a direct enough link. If you live in a house you own you are directly linked. I never mentioned jealousy or begrudgery so you can't accuse me of saying that. It is natural for people to hope things will change to make their life or dreams possible that isn't begrudgery that is hope.

Like I said before, many people have excessive emotional and psychological stakes riding on the Irish property market. This is because they are highly leveraged and will face ruin if the market goes against them. It is THEM who begrudge young Irish people cheap property prices. THEY very much need to sell on for higher prices in the future.

If people are so involved why does that not effect those not in the market? I am going to go with the view not everybody is out to get each other and jealous of everybody else but hoping for a sistuation that makes things beter for themselve and probably not understanding how that may negatively effect others. Insensitive or unaware rather than intentionally not looking to punish others or get something from the backs of the bruised.

I don't know why you would assume such negitive views are driving peoples' views but most people are connected accross the market through family and friends. Why not have a positive thought for the day on me

 

[gearoidmm]

http://www.rte.ie/news/2006/0228/housing.html

Latest permanenttsb index shows house prices rising by 1.2% nationally in January. This means that the annual rate of increase has been rising steadily for the past 7 months and at 10.6% is now in double figures again for the first time in over a year. House prices are currently increasing (for the past 2 months) at an annual rate of 14.4%.

What looked like a nice soft landing in the middle of last year has disappeared with the advent of 100% mortgages. The central bank warned around christmas that a rise in property inflation could be disastrous as property was already overvalued by all traditional measurements and the highr it went the further it was likely to fall.

[broken link removed]

Still can't make up my mind what I think is going to happen here but the signs are ominous (or great if you bought a house last July and have seen its value increase by 7.9% since then!).

 

[walk2dewater]

Zero direct exposure? Does that mean you live on the streets? According to people here rent is direct link to price so that is a direct enough link.

No I don't live on the street I live in a very nice, terraced house in the city centre for which I pay 60% of what it would cost to conventional mortgage. I also negotiated a 5% discount of the rent for paying 6mths in advance. If I owned it or had a mortgage on it I'd be directly linked. I have neither. My money is invested elsewhere, outside of property, mainly in, base and precious metal shares, gold bullion, oil/natgas shares and mostly in Cdn$ short-term bonds. Also have some exposure to Japanese shares and India.

If you live in a house you own you are directly linked. I never mentioned jealousy or begrudgery so you can't accuse me of saying that. It is natural for people to hope things will change to make their life or dreams possible that isn't begrudgery that is hope.

If people are so involved why does that not effect those not in the market? I am going to go with the view not everybody is out to get each other and jealous of everybody else but hoping for a sistuation that makes things beter for themselve and probably not understanding how that may negatively effect others. Insensitive or unaware rather than intentionally not looking to punish others or get something from the backs of the bruised.

I don't know why you would assume such negitive views are driving peoples' views but most people are connected accross the market through family and friends. Why not have a positive thought for the day on me

I really havent a clue what you're saying, but I generally get the impression you either havent read my posts or are misinterpreting them.

My last post made the point that people promoting higher property prices are actually the ones promoting 'doom and gloom'. Higher prices from here forward is in fact the PESSIMIST view in my opinion, it is truly a gloomy outcome if prices become x15, x20 average salaries. The ability to buy a cheap, well-built place of your own is a good thing for society, surely, is it not?

WTTW

 

[walk2dewater]

Also, I might add, I've done very well recently with my investments, have you checked the price of gold or base metals lately? Of course I would like to own my property again, more for psychological rather than economic reasons.

But not at these prices. I will wait for the sale.