Future price of Irish properties

[ivuernis]

I know it's "how long is a piece of rope",but anybody prepared to put any ballpark time frame on the bubble busting?.

The $64,000 question eh!

You asked so here goes... late 2007/early 2008.

• All the SSIA money will have been unleashed and probably spent by then... the final binge perhaps.
• Interest rates will probably be at least 4% in the ECB by then.
• Another 80,000-120,000 housing units will have been built... eventually supply will start to meet demand.
• Oil and gas prices will almost certainly continue to rise affecting the costs of many things and most importantly pushing up inflation.

This is by no means an authoritative or definitive list, just my take on things but to back it up I've decided to sell this year and rent for the short-term and see how it all pans out in the next 12-18 months.

Only reason ,I ask is that 2 friends of mine are considering emigrating as they can't afford a shed in Cork city & I'm trying to reassure them/keep them in country!

Where are your friends thinking of emigrating to? Property prices in many english-speaking western economies are over-inflated too.

 

[bearishbull]

the dutch have more of a reason to have high price rise theres feck all land there! we have six times more land per person in ireland!we even have six times more land per person than england! even with their boom i dont think dutch house prices are anywhere near our prices.because we ahve so much land in ireland and room in dublin to build up in the future in the long run supply WILL exceed demand and this will cause prices to fall independent of other factors like economy affordabilty etc.

 

[ADK]

theres not much land left to build on in dublin thats why land costs are so high me thinks

 

[redo]

• Interest rates will probably be at least 4% in the ECB by then.
• Another 80,000-120,000 housing units will have been built... eventually supply will start to meet demand.
• Oil and gas prices will almost certainly continue to rise affecting the costs of many things and most importantly pushing up inflation.

If the US were to attack Iran that would push oil prices even further, the ECB would have to fend off energy prices/inflation by rising rates even further say a base 0f 4.5 - 5 %

I personally think that there is too much supply at the moment but it's really hard to get an accurate picture. However, I think the real danger is the demand reducing and not the supply increasing. Too much supply may lead to a stablisation of prices, reduced demand, will cause them to fall. The demand will eventually fall when prices level off after the ECB rate kicks in and there are even murmurs about the ECB lifting rates again in May.

I don't think the SSIA's will have too much of an effect, the effect will be mainly driven by FTB's who have used the scheme in order to get a deposit for a new house. The noob investors will probably use the SSIA money for cars, holidays etc as they already have an investment (property) and want to take some kind of dividend.

 

[ivuernis]

If the US were to attack Iran that would push oil prices even further, the ECB would have to fend off energy prices/inflation by rising rates even further say a base 0f 4.5 - 5 %

Absolutely they would go higher. However, it may not even take a US attack on Iran for this to happen. If tensions escalate further in this stand off then the Iranians may just take some of their supply off the market thus using it as an economic weapon if sanctions were applied against it.

I purposely left out any scenarios like this though as these are hard to predict. The ones I did give are all likely though.

I personally think that there is too much supply at the moment but it's really hard to get an accurate picture. However, I think the real danger is the demand reducing and not the supply increasing. Too much supply may lead to a stablisation of prices, reduced demand, will cause them to fall. The demand will eventually fall when prices level off after the ECB rate kicks in and there are even murmurs about the ECB lifting rates again in May.

World supply and demand are about evenly matched at the moment. There is no spare capacity really to increase production. All predictions are for demand to continue to rise and for supply to eventually start to decrease. When and by how much supply falls by is a whole other debate though.

 

[gearoidmm]

Remember that there will be a sharp fall in inflation in August/September. At the moment, core inflation is low and the rise is almost totally accounted for by the rise in energy prices. Inflation is calculated on a yearly basis and oil prices have actually fallen slightly since August last year. As a result, year-on-year inflation probably will nosedive in August removing from the ECB one of the core rationals for their recent interest rate hikes.

There are some who suggest that, for this reason, the ECB interest rate rises have little to do with inflation and more to do with asset prices and getting back to 'normal' levels. The inflation rate is being used to justify the rate rises to politicians

 

[SteelBlue05]

There are some who suggest that, for this reason, the ECB interest rate rises have little to do with inflation and more to do with asset prices and getting back to 'normal' levels.

So what are 'normal' levels?

 

[Howitzer]

There are some who suggest that, for this reason, the ECB interest rate rises have little to do with inflation and more to do with asset prices and getting back to 'normal' levels. The inflation rate is being used to justify the rate rises to politicians

Yeah, I'd suspect that's a bit closer to the bone. There seems, in my opinion, to be serious concerns of an asset bubble bursting in an economy with an ageing population (Eurozone). The repercussions from when this happened in Japan are fairly obvious.

 

[gearoidmm]

So what are 'normal' levels?

Who knows - whatever Jean-Claude thinks I suppose

 

[Duplex]

the dutch have more of a reason to have high price rise theres feck all land there! we have six times more land per person in ireland!we even have six times more land per person than england! even with their boom i dont think dutch house prices are anywhere near our prices.because we ahve so much land in ireland and room in dublin to build up in the future in the long run supply WILL exceed demand and this will cause prices to fall independent of other factors like economy affordabilty etc.

Bearishbull




The Dutch introduced generous income tax breaks to encourage owner occupation in order to get away from the social model of housing provision. Owner occupation accounts for approx 50% of the market at present, the government is looking at a target of 70%. Housing output is a healthy 90,000 units p.a.

 

[ivuernis]

Remember that there will be a sharp fall in inflation in August/September. At the moment, core inflation is low and the rise is almost totally accounted for by the rise in energy prices. Inflation is calculated on a yearly basis and oil prices have actually fallen slightly since August last year. As a result, year-on-year inflation probably will nosedive in August removing from the ECB one of the core rationals for their recent interest rate hikes.

Yes, oil prices (crude) have fallen from their highest value last year, but they had risen quite sharply from a lower base. Assuming prices stay around their current level then the average price for this year will actually be higher than the average for last year so I cannot see a sharp fall in inflation. Also gas prices have risen sharply also of late.

 

[gearoidmm]

Inflation isn't generally calculated on an average basis. Although the central banks do release average figures for each year, they keep an eye on the monthly rate. If the rate was 6% in January and 2% in December, the yearly average would be ~4%. The bank would be much more inclined to reduce rates at an inflation rate of 2% than 4%.

Similar to the effect of a large increase in the duty on cigarettes here a few years ago - it added 1% to the inflation rate at a time when inflation was rising anyway. Then, a year later, when the effect of that sharp rise disappeared, inflation dropped by a corresponding amount (leading to much self-congratulation on the part of the politicians).

 

[bearishbull]

Absolutely they would go higher. However, it may not even take a US attack on Iran for this to happen. If tensions escalate further in this stand off then the Iranians may just take some of their supply off the market thus using it as an economic weapon if sanctions were applied against it.

I purposely left out any scenarios like this though as these are hard to predict. The ones I did give are all likely though.




World supply and demand are about evenly matched at the moment. There is no spare capacity really to increase production. All predictions are for demand to continue to rise and for supply to eventually start to decrease. When and by how much supply falls by is a whole other debate though.

the iranians dont supply open markets much they have deals with china and other i believe who are backing them against america so i cant see them cutting supply to their supporters.

 

[bearishbull]

Remember that there will be a sharp fall in inflation in August/September. At the moment, core inflation is low and the rise is almost totally accounted for by the rise in energy prices. Inflation is calculated on a yearly basis and oil prices have actually fallen slightly since August last year. As a result, year-on-year inflation probably will nosedive in August removing from the ECB one of the core rationals for their recent interest rate hikes.

There are some who suggest that, for this reason, the ECB interest rate rises have little to do with inflation and more to do with asset prices and getting back to 'normal' levels. The inflation rate is being used to justify the rate rises to politicians

inflation in eurozone is affected by value of euro,oil doesnt have to rise and it can still affect inflation if euro declines against other currencies,central bankers are raising rates around the world which rises the value of their currencies and lowers the relative value of euro. if everyone else is rising interest rates eurozone will have to too.

 

[bearishbull]

So what are 'normal' levels?

in an economy growing at 2% its normally 4-5%.look at uk its growing at close to eurozone at present(2.5%) and their rates are still at 4.5%.usa is growing at 3% and rates are 200basis points higher than that there too.

 

[Loki]

because we ahve so much land in ireland and room in dublin to build up in the future in the long run supply WILL exceed demand and this will cause prices to fall independent of other factors like economy affordabilty etc.

Remember that there will be a sharp fall in inflation in August/September.

Can you guys tell me who will win the 3:30 in Cheltnum today seeing as you can see the furture?

Unbelievable arrogance without any facts stated.

Bear> Name where there is room!
You claimed some figure for units zoned in Ireland yet never stated how you knew the number of units when only land is zoned and planning tells you what houses may be built. DId you get zoned and permission mixed up?
Riddicule any view that doesn't agree with yours yet state your views as fact.
All these houses that can be built in Dublin where is all the sewage works and the like going to go? The rules changed we can't dump it on another council area. You never stated where all these appartments were being built on knocked down houses
Fine to have an opinion but you run away scared when asked for facts.
I have a fair knowledge of city planning guides and EU regulations. I would love to see where and what you are talking about to see if it is even possible under current laws and regulations. Green spaces in Dublin or very important and it will be interesting to see how much planning persmission will actually be granted for what remains.

 

[bearishbull]

Can you guys tell me who will win the 3:30 in Cheltnum today seeing as you can see the furture?

Unbelievable arrogance without any facts stated.

Bear> Name where there is room!
You claimed some figure for units zoned in Ireland yet never stated how you knew the number of units when only land is zoned and planning tells you what houses may be built. DId you get zoned and permission mixed up?
Riddicule any view that doesn't agree with yours yet state your views as fact.
All these houses that can be built in Dublin where is all the sewage works and the like going to go? The rules changed we can't dump it on another council area. You never stated where all these appartments were being built on knocked down houses
Fine to have an opinion but you run away scared when asked for facts.
I have a fair knowledge of city planning guides and EU regulations. I would love to see where and what you are talking about to see if it is even possible under current laws and regulations. Green spaces in Dublin or very important and it will be interesting to see how much planning persmission will actually be granted for what remains.

the 300,000 figure is zoned yes.
where is there room? the room is above our heads.we have to and will build up and fill in spaces in the city which arent green areas
theres room to build higher in many areas of dublin,planners are going for higher density eg new 30 storey tower at heuston station etc,theres many old factories and sites being knocked down and developed and many other locations that can be developed.smaller lower density office blocks/development will be knocked down and developed and the amount of housing and densities will increase a lot in dublin.this wont happen overnight but in next 20 years we will have a much higher skyline,this has to happen if the government wants the economy to prosper as dublin is the centre of the economy,every other country in the world manages to fit many millions of people into area's not much bigger than dublin too

 

[gearoidmm]

in an economy growing at 2% its normally 4-5%.look at uk its growing at close to eurozone at present(2.5%) and their rates are still at 4.5%.usa is growing at 3% and rates are 200basis points higher than that there too.

That's fair enough if interest rates could be directly linked to GDP growth. The ECB tells us, however, that their main aim is price stability and without rising inflation, they have no excuse for raising rates much more than their current level.

 

[bearishbull]

That's fair enough if interest rates could be directly linked to GDP growth. The ECB tells us, however, that their main aim is price stability and without rising inflation, they have no excuse for raising rates much more than their current level.

But.. inflation isnt only consumer price inflation, asset price inflation is a concern for them too,they realise that house prices have been booming in france spain and other areas which isnt justified by economic growth there.

 

[Loki]

the 300,000 figure is zoned yes.

Proof? As I said property is not zoned by anybody so that is why I doubt the figure as it doesn't make sense.

where is there room? the room is above our heads.we have to and will build up and fill in spaces in the city which arent green areas

Where have they knocked down

theres room to build higher in many areas of dublin,planners are going for higher density eg new 30 storey tower at heuston station etc,theres many old factories and sites being knocked down and developed and many other locations that can be developed.smaller lower density office

Again you can tell the furure how do you know what the planners will do.?
Currently Dublin has a height limit and that restricts supply. THe insdustrial sites need to be re-zoned from industrial to residential. The industrail sites I have seen changed are no higher than the original building in th sub-urbs

blocks/development will be knocked down and developed and the amount of housing and densities will increase a lot in dublin.this wont happen overnight but in next 20 years we will have a much higher skyline,this has to happen if the government wants the economy to prosper as dublin is the centre of the economy,every other country in the world manages to fit many millions of people into area's not much bigger than dublin too

For any of your vision to happen population needs to keep increasing and Irish mentatlity of home ownership needs to change. Dublin has to remain as the centre or Irish employment anything else that must happen for your vision? Your opinion of what has to happen is restricted to one vision of the future. Irish people are opposed to high rise and appartment living as general view.