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paulbds

House Prices South Ireland --prices Keep Rising

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For the last 10 + years the Celtic tiger has been roaring along in Ireland. Despite a smaller economy, smaller population than UK, little maunfacturing cf UK, prices keep rising with no negative voices form the financial papers, journo's etc.

Most people their continue to be optimistic and never discuss the possibility of prices going south.

What do they have that we in the Uk don't have? is it the Euro?, is it low interest rates?, is it etenral optimism? I just wish I knew what it was. Just out of interest, a new 1 bedroom flat in a fairly nice suburb of Dublin (Clontarf) is going for Euro 500,000!. I just cannot believe what is going on over there. They have certainly benefiited from joining the EU and possible embracing the Euro. Also, I understand Stamp duty there is a whacking 5% on anything over Euro 200,000. These huge price rises aren't just limited to the major cities, prices have gone up all round the country - -absolutely amazing

Yes, I have bought a holiday home over there (not a BTL but somewhare to escape to and take advantage of the benefits when I retire) - -BTW, first time buyers are exempt from Stamp duty! Paul.

Anyone from S Ireland contribute to this site?

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There are plenty of lessons from Japan, Hong Kong, Singapore, small islands where prices could only ever go up.

Ignore history at your peril.

I'm just very glad interest rates in the UK are 4.5%, otherwise we'd also have the same madness over here.

Edited by BandWagon

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I'm just very glad interest rates in the UK are 4.5%, otherwise we'd also have the same madness over here.

Better hope we don't join the Euro then. Or any other IR cuts. I thought experts here agree that even if interest rates dropped here the prices would still crash?

Edited by Spoony

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Hard to judge with it being the Euro but from what people are telling me - Southern Ireland is a beautiful place. I think this is contributing to the high prices. With the horror stories we hear about buying property in Spain and France I would be interested to know what proportion of house sales are for second homes?

I agree that if interest rates are rediculously low then this promotes spending NOT preventing it. The arguement is weak that if you put up interest rates it will stop spending and be damaging. But if you bought on a credit card you are spending money you dont have anyway?

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1. 120% mortgages are available in Ireland. So instant negative equity... :o

2. The mortgage provider can add up the spare bedrooms in the house and estimate how much these would rent out for. They can then add this "income" onto your actual income so as to increase your on paper income, and thereby increase size of mortgage available...

3. Parents re-mortgage their home to provide their children when cash to "invest" in the purchase of their house...

4. It appears to be unimportant if your "investment" property actually creates a yield after taking expenses into account. As long as it's breaking even on a 0% yield, that's the main thing. Why? - because it's gonna go up in value stoopid...

5. Houses are so expensive because of the immigrants from Eastern Europe. Because all those guys from Estonia who work in the meat factories are actually millionaires. Explains the €500,000 one bedroom flats <_<

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5. Houses are so expensive because of the immigrants from Eastern Europe. Because all those guys from Estonia who work in the meat factories are actually millionaires. Explains the €500,000 one bedroom flats <_<

Indeed, you just know something just isn't quite right when they're having problems building a motorway near Dublin, a motorway! This troubles me! Things just aren't right. :huh:

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yeah theres a few lurkers here from the rip off republic. my view is that the irish property boom has legs yet- 18mths before a top? prices in certain parts of dublin are in the process of, as some call it, 'going japanese'. for reasons discussed elsewhere, property prices in ireland, or rather the general publics perception of prices, will not be allowed to fall. thats right 'allowed'. after the market peaks, a stagnation scenario will be engineered. irelands inc. runs on the basis of a small network of well connected people at the highest levels of business and politics, always has. in next few budgets watch for things like government subsidises for mortgage holders (higher tax free allowances etc), we'll also start hearing rumours and allusions to property swaps between big players at private prices, and as higher ECB rates start to hurt we'll also witness the phemoneon of offspring moving back in with parents rather than sell. prices will stagnate for years and years, just as they've done in the past. todays teenagers will be forced to either live in their parents property(s), rent or emigrate.

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...prices keep rising with no negative voices from the financial papers, journo's etc. [paulbds]

See any one of a number of articles from David McWilliams:

http://www.davidmcwilliams.ie/Articles/

'How secure will you be when the credit runs out?' [August 2005]:

http://www.davidmcwilliams.ie/Articles/vie...p?ArticleID=292

Let's examine how the credit system works, how loose credit reinforces the upward pressure on house prices and how the banks ultimately become the slaves, rather than the masters, of the housing monster. It might also be helpful to entertain what could happen and who might pick up the tab when things go pear shaped.

'Property frenzy dominates Irish horizon' [May 2005]:

http://www.davidmcwilliams.ie/Articles/vie...p?ArticleID=282

In Ireland, we are experiencing the same dilemma faced by California in 1849. Back then, real businesses were judged, not against benchmarks such as profitability, robustness and market share, but rather against the absurd capital gain promised in gold.

The subtext really was that if you weren't into gold in some way, you were a bit of an eejit. Similarly, in modern Ireland the same type of mentality applies: if you are in businesses other than land, many regard you as a bit of a simpleton.

'Middle classes are hung out to dry' [March 2005]:

http://www.davidmcwilliams.ie/Articles/vie...p?ArticleID=275

In Ireland, we operate a land standard, where all lending is backed by property.

So banks lend, and house prices go up.

This creates the impression of a stronger balance, against which they can create more money. They lend this new money to the housing market, and house prices go up again. This allows the banks to create more cash and lend more again.

In most countries all this demand for new cash would force the interest rate up, because there is typically only a limited pool of savings from which the banks can borrow/create money.

Because we can borrow in euro currency from any of 200million odd EU savers, the four-million-strong Irish market can borrow all it wants at rock-bottom interest rates. Thus the banks and the housing market become indistinguishable.

Because the banks and the property market are so interdependent, it is hard to know what is driving what. Is the price of property being driven by bank credit, or is bank credit being driven by property prices?

Either way, the financial system and the Irish property gluttony are umbilically linked. As long as credit is cheap, the banks will lend. Arguably, the behaviour of the banks is the main reason that house prices remain high, and the banks' future is so tied up in land that if they stopped lending now, prices would fall.

Any fall in prices would lead to bad debts, profit warnings, share price collapses and bank takeovers.

Therefore, instead of being the guardians of prudence, the banks can become the agents of profligacy.

What do they have that we in the Uk don't have? [paulbds]

For a concise explanation see 'Economy of the Republic of Ireland':

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

Because Ireland is a member of the EMU, it cannot dictate its own interest rates, these are set by the ECB. At present the ECB has set a very low interest rate -- to try and stimulate the German and French economies -- however Ireland's economy is already growing at a very fast rate. This has led to increased house price inflation as many, especially young couples, take on large mortgages, and the wealthy buy investment properties.

They have certainly benefiited from joining the EU and possible embracing the Euro. [paulbds]

The former possibly, but the latter has been a disaster for the Republic. For a discussion see 'Ireland's race against inflation can't be won with the euro':

http://www.euro-know.org/telegraph/dt000821.html

With interest rates at 4.25%, inflation at 6.2%, and house price rises at 25%, the sensible course for households is to borrow and buy, buy, buy.

More from McWilliams....

'Pay to your grave' [sept. 2004]:

http://www.davidmcwilliams.ie/Articles/vie...p?ArticleID=250

We are drowning in a sea of credit and we wonder why the price of everything in Ireland is rising. Prices are rising faster here than anywhere else because money is flowing in here from outside faster than anywhere else, fuelled by our borrowing, which is more profligate than anywhere else.

Until this fact is appreciated, the debate on rip-off Ireland and subsequent worries about competitiveness will go nowhere.

This week, another report said we were the most expensive country in Europe.

[...snip...]

Latest figures from the Central Bank reveal that in July alone we borrowed over €3.3 billion, that's €825 for every man, woman and child in the country. Personal borrowing is rising at 25 per cent in Ireland. This is five times the EU average. This figure does not include mortgage lending.

[...snip...]

Cash is the lubricant of inflation. So ultimately, Ireland's unenviable position as being the most expensive place in Europe is a reflection of our insatiable appetite for borrowing other people's money to spend today on every conceivable thing.

[...snip...]

The bigger picture relates to competitiveness. In the old days, progressive increases in inflation would have led to a run on the currency. The falling currency would have rectified the competitiveness of Irish exporters.

This is exactly what occurred after the 1993 devaluation. With the euro, that's not possible today. At some stage, we are going to experience a massive switch away from Ireland to a country with much lower inflation and costs.

[...snip...]

The timing of this is impossible to predict, but when it happens the tidal wave of free cash will be replaced by an economic earthquake the tremors of which will have profound effects that will go far beyond affecting the share price of our liberating banking sector.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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