House Market Weakening?

[bearishbull]

Boundaries of affordability have nearly been reached? terms not able to go much longer,interest only getting more expensive as are all mortgage rates. Could be just seasonal with world cup etc but im not so sure.

 

[Howitzer]

The very fact that estate agents are on the front of the Independent telling us that everything is not 110% perfect with their get-rich-now scheme is absolute dynamite. There is something going on.

No dynamite here I'm afraid. The story actually says that the rate of increase was 7% in the 2nd quater as opposed to a whopping 10% in the 1st quarter. These aren't annualised figures either. So that's a 17% increase so far this year (17.7% actually).

If I was a property investor I'd be only delighted to see stories like that every day of the week. A ridiculous increase following an absolutely foolhardy increase does not sound like a property market crashing to me.

 

[room305]

Such conflicting views as well. In the same paper estate agents are moaning that poor planning regulations mean not enough homes will be built to satisfy demand over the next few years. With consequent knock-on effects for prices etc. etc.

People should learn not to confuse "demand" with "requirement".

I would imagine also that there will be an upswing in rental costs but it willl be nothing compared to the downward swing in housing prices over the next few years.

 

[walk2dewater]

No dynamite here I'm afraid. The story actually says that the rate of increase was 7% in the 2nd quater as opposed to a whopping 10% in the 1st quarter. These aren't annualised figures either. So that's a 17% increase so far this year (17.7% actually).

If I was a property investor I'd be only delighted to see stories like that every day of the week. A ridiculous increase following an absolutely foolhardy increase does not sound like a property market crashing to me.

In La La Land where there's precious little plain-talking about property, the mere hint of something amiss is absolute dynamite. I thought the Indo had a big property porn Wed edition to sell?

The promise/expectation of a soft-landing is PRECISELY what’s kept prices going up. Don't they realise this?

 

[bearishbull]

The "demand" in Dublin contains a lot of speculative demand,when price growth slows to low single figures or negative figures for several months a lot of this investor demand will fall off and prices will be further impacted and feed into a negative self perpetuating cycle. Rents may rise a bit but if there is as mant empty properties lying around as the anecdotal evidence suggests then when these are put on the market rents might not rise while prices of properties fall.

 

[Remix]

I wouldn't rule out a period of falling house prices and falling rents.

falling house prices => falling housing starts => falling construction employment

I can't imagine the armies of foreign construction workers (renters) staying in Ireland with little or no work. Construction based immigration in recent years may also be a reversible bubble.

 

[SteelBlue05]

I would expect to see a rise in rents as Landlords up the rent due to Interest rate increases. I have noticed this on Daft already, rents are 50 euro more on average in Lucan for a typical 3 bed house now....they were at around the 1100-1150 and now 1200-1250....

 

[bearishbull]

I would expect to see a rise in rents as Landlords up the rent due to Interest rate increases. I have noticed this on Daft already, rents are 50 euro more on average in Lucan for a typical 3 bed house now....they were at around the 1100-1150 and now 1200-1250....

The market decides if landlords can pass on the interest rate rise not the landlord himself.

 

[jpd]

That's asking rents - what are actual rents doing ?

 

[conor_mc]

As for rents falling? These salemen haven’t a clue. If the demand to purchase is falling, this will put upward pressure on rents. Rents should rise, or at least stop falling, if Ireland’s young stop being property fodder. Dimwits in expensive suits.

Not necessarily. You're assuming that all properties are destined for occupation, either by owner-occupiers or renters.

But of course this warped property bubble of ours means that, for little or no hassle, you can just buy a property and leave it empty for a couple of years and then voila! you've made a killing. This speculative element departing from the market will be the first part of the downturn, in turn making more housing stock available to FTB's at more reasonable prices.

Of course, there will be those who get stuck with their speculative purchases and with the vista of rising interest rates and little or no capital appreciation, they'll be forced to either sell up at a loss or else find a way to make some money out of their property, hence more rental properties become available.

Until the vast overhang of unoccupied property (see census figures of approx 200k units) is cleared into the market, I don't think we'll see much upward pressure on rents generally.

 

[SteelBlue05]

If most\all landlords start increasing asking rents then its quite likely the actual rents will go up too. A lot of tenants dont even try to negotiate on rents....

 

[Guest107]

Until the vast overhang of unoccupied property (see census figures of approx 200k units) is cleared into the market, I don't think we'll see much upward pressure on rents generally.

You may check the figures by emailing census2006@cso.ie and confirming with them


1. the number of apparently habitable permanent dwellings in the state in April 2006 from which no form was returned completed
2. the number of habitable permanent dwellings from which a form was returned complete.

 

[room305]

The "soft landing" scenario is fervently subscribed to by the real estate agents and indeed the government itself. It seems unlikely to me as it appears to rely on investor altruism (essentially asking investors not to all sell their properties at once so the price neither drops nor increases).

Is there are any historic data on the "soft landing" theory - i.e. has it ever actually happened?

At the moment what I'm hearing is fuelled by what vested interest want to happen, rather than any interpretation of what is likely to occur.

 

[ivuernis]

The very fact that estate agents are on the front of the Independent telling us that everything is not 110% perfect with their get-rich-now scheme is absolute dynamite. There is something going on.

Estate agents will make their money either way. Maybe a drop in prices and a rush of investor sell-off would be welcomed by them.

 

[Guest107]

Herd behaviour in reverse is what I expect . The government/ banks / vested interests want a "soft landing" but are unlikely to get it .

 

[Calina]

I think that's because rents have been low or lowish for the last while - the lack of negotiation, I mean. If they start to rise in a crazy fashion, then there could be problems...

That being said, I was interested during the weekend to notice the lack of difference between rents in the outlying areas versus rents closer to the city. If you had 1300E to spare, worked somewhere in the north city/county area, are you going to pay 1300E in Swords when you could pay the same in Dublin 9? For me the answer is no. So if rents in towards the city don't go up, I don't expect rents outside the city to stay where they are.

I don't think that you need to start negotiating really, it's a question of looking at what your money will buy you by way of rental property if you're a renter. Again, 900E for a one bedroomed apartment in D9 versus the same in Swords? If you look around and find better value else where, the market will change. A lack of interest does nasty things to the market

The other point is, all landlords asking increased rent can only work if there's an excess of tenants over landlords. TBH, I'm not sure there is, even now. I've no trouble finding houses at the moment, but I can have issues finding house-sharers. I think there's more property than tenants at the moment, and I think the ones who are looking to reduce their exposure to subsidising their tenants are in for a nasty shock. 1300E in Dublin 9, because so little of it is new, may well be more than profitable for the landlord because they were bought much longer ago than people buying into new estates, taking rental hits because property values will go up and absorb that.

IMO, it'll be interesting to see what happens when some investors realise that capital appreciation won't offset their rental losses, particularly those ones who don't bother renting out their property because they thought that capital appreciation was all they needed. They'll either 1) sell fast or 2) start renting. In the latter case, they'll be coming into a market which is already shored up courtesy of the HSE payments and which is already oversupplied with property and undersupplied with tenants. If the number of immigration construction workers takes a hit too the number of tenants will further fall (not fully convinced about the latter courtesy of infrastructure building which continues to go on).

My guess is that sometime shortly a lot of them will sell out, with two effects: 1) drop in some property sales values and 2) drop in rental property availability. I expect rentals to hit equilibrium a bit before property prices do, but frankly, that's based on a gut instinct and could well be wrong. I'm just not convinced about the desirability of those properties as an FTB. I've looked at far too many concrete jungle poorly designed badly laid out estates with less than perfect apartments in them. I'm interested in seeing what's going to happen.

 

[liteweight]

I wonder how accurate the census figures are. Recently a friend told me that his landlord asked him not to fill in the census form and not to answer if they called to the door!! I was flabergasted but it got me thinking...I wonder how many landlords do that and how many other people don't answer the door for various reasons e.g. illegal immigrants have to be living somewhere.

 

[minion]

Its the indo sensationalizing again. Nothing more. Its not the asking price of a house that difines its price, its the purchase price. I could ask €500K for my €300K house and have to drop the price to get it. But i'm only dropping the price to what people will pay.

Addison Park are asking too much and people arent paying it. They are chancing their arm and not getting it. Doesnt mean people arent willing to pay 10% more than the same property sold for last year.

Therefore Property prices have not gone down at all. The indo are always at this rubbish. And you can bet that if the EAs are helping them with their story that they expect somthing in it for them too. EAs have an evil plan in there somewhere or they wouldnt be saying this.

 

[Remix]

I wonder how accurate the census figures are. Recently a friend told me that his landlord asked him not to fill in the census form and not to answer if they called to the door!! I was flabergasted but it got me thinking...I wonder how many landlords do that and how many other people don't answer the door for various reasons e.g. illegal immigrants have to be living somewhere.

That would involve quite the conspiracy as it would also require the landlord to ask the tenants to hide from their neighbours for several months prior to the census and have no post delivered to the house etc.

For a house to be classified as vacant, the census gatherers need feedback from neighbours. If neighbours report seeing signs of life the house is classified as 'no answer' and not 'vacant'.

 

[conor_mc]

I wonder how accurate the census figures are. Recently a friend told me that his landlord asked him not to fill in the census form and not to answer if they called to the door!! I was flabergasted but it got me thinking...I wonder how many landlords do that and how many other people don't answer the door for various reasons e.g. illegal immigrants have to be living somewhere.

Did your friend realise that he was committing an offence in order to probably protect his landlord from the taxman......