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House Prices Rise 'only In Dublin'

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http://www.bbc.co.uk/news/business-24286436

House prices in the Republic of Ireland have increased by 2.8% in the year to August.

Almost all the gains are being driven by the Dublin market where prices are now 11% higher than they were in 2012.

Outside Dublin, prices are almost 3% lower than they were a year ago.

House prices in the Republic are still 49% lower than at their highest level in early 2007.

What's driving the market in Dublin?

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http://www.bbc.co.uk/news/business-24286436

What's driving the market in Dublin?

Could be that houses built for a target price of say €1M but never sold are now hitting the market for under €500k which is in reality a huge fall but pushes up the average.

I was travelling through Dublin last week and it certainly looked pretty busy to me. Ireland still has a trade surplus and historically low unemployment for professional and technical disciplines; retail and construction have taken the brunt of the recession.

Edited by Diver Dan

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What's driving the market in Dublin?

The desperate are driving it.

There is an acute shortage of property rental and residential in a city that still has thousands of empty flats and homes, which are owned by the government agency NAMA.

Current prices are based on very few transactions due to supply rationing.

1) The banks have not repossessed underwater property. Over 100,000 have not paid their mortgage for years, under normal circumstances these would be returned to the market forcing those bankrupted to live in cheaper areas. This clearance has not happened.

2) Little has been built since 2008.

3) Hype and propaganda.

4) During the boom, few family homes were built in Dublin, it was mostly flats.

5) Poor public transport meaning that it is difficult to commute so you are more likely to want to live in Dublin if you work there.

It is interesting to not that the over 25yr old population continues to decrease due to emigration so therefore any rises are not due to population increases. I also find it interesting how wildly prices can fluctuate between two areas that are just a few miles apart.

I find here in Glaway that there is little new building, but the massive overhang of cheaper old houses that get refurbed or the empties that get completed are continuously adding to the supply.

One thing you also have to remember is that more than the UK, the Irish only know property and boom and bust economics. I have recently seen a house being constructed on a road where 1/2 dozen half finished properties lye half completed and empty.

Ultimatley I believe the biggest factor in Dublin's price rises, much like London is that due to lots of industry being lost country wide, people have migrated towards Dublin effectively causing a squeeze on resources there and hollowing out the rest of the country. t's like productive individuals moving from Newport to London, causing upward momentum in London and further hollowing out Newport.

Well that's my take on it anyway. I am still seeing prices fall further where I am as 'nobody' has the credit or money to pay 2008 prices. In fact with higher taxes and some stagflation affordability reduces year on year.

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Just to add.

There was quite a lot of pent up demand since there were lots who could not or would not buy a house ar the ridiculous 2008 prices. Even with 50% off most areas where there is work are still not cheap.

It is also interesting to note that almost without exception all major cities are currently experiencing property hyperinflation.

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There were some good value properties for sale when we arrived here in early 2012. Most of those were sold last year in the rush to beat the deadline for the end of mortgage interest relief.

The market now has very little stock. By stock I mean properties that are priced at what the market can afford to pay.

We are not in a hurry to buy as renting here is quite economical compared to back in the UK, I estimate is costs us €2000 per year over buying a house, which IMO is a little amount to pay for the flexability incase of job losses etc. (or deciding to move back to the UK after a HPC)

Within a 5 mile radius of my house in an area that has few empty properties there are over 30, and that's the ones I know about.

It is quite annoying passing these partially constructed and abandoned properties that lye rotting in fields, that cannot be bought as banks will not take proceedings against the owners. The owners of the empties in most cases have either fled to the UK or it is not worth while finishing off an underwater property that is in NE.

Ho, humm - tick tock.

btw, rent for a 4 bed bungalow on 1/2 acre 9 miles (20 mins) from the city center is €700pcm with no council tax or water rates.

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There is an acute shortage of property rental and residential in a city that still has thousands of empty flats and homes, which are owned by the government agency NAMA.

Curious about this.

Are you saying that there are thousands of empty flats in Dublin owned by this NAMA which are not being rented out?

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Curious about this.

Are you saying that there are thousands of empty flats in Dublin owned by this NAMA which are not being rented out?

Yes, that is correct - It's not just Dublin, but country wide.

If you added to that supply potential mortgage arrears repos then you would have low prices and plenty of stock. It's out old banker friend market manipulation.

http://www.finfacts.ie/irishfinancenews/article_1026172.shtml

Irish_mortgage_arrears_Q1_2013.jpg

Irish home mortgage arrears 90 days+ above 12% in Q1 2013

The Central Bank today published Q1 (first quarter) 2013 data on mortgage arrears, repossessions and restructures, which shows that there were 95,554 (12.3%) private residential mortgage accounts for principal dwelling houses (PDH) in arrears of over 90 days at end-March 2013, up from 92,349 accounts (11.9%) at end-December 2012. Buy-to-let arrears were almost 20%.

The Bank said that at end-March 2013, there were 774,109 private residential mortgage accounts for principal dwellings held in the Republic of Ireland, to a value of €109.9bn. Of this total stock of accounts, 95,554, or 12.3%, were in arrears of more than 90 days. This compares with 92,349 accounts (11.9% of total) that were in arrears of more than 90 days at end-December 2012. The outstanding balance on PDH mortgage accounts in arrears of more than 90 days was €18.1bn at end-March, equivalent to 16.5% of the total outstanding balance on all PDH mortgage accounts.

The divergent trends in early arrears and longer-term arrears continued in Q1. There was a quarter-on-quarter decline of 0.7% in the number of accounts in arrears of less than 90 days, which stood at 46,564 at end-March, or 6% of the total stock. Meanwhile, the number of accounts in arrears of over 360 days increased by 7.4% during Q1. At end-March 2013, 54,135 PDH accounts, or 7% of the total stock, were in arrears of over 360 days. Just under half of these were in arrears of more than 720 days. The outstanding balance on PDH accounts in arrears over 360 days was €10.8bn at end-March, equivalent to 9.8% of the total outstanding balance on all PDH mortgage accounts.

A total stock of 79,689 PDH mortgage accounts were categorised as restructured at end-March 2013. This reflects an increase of 1.8% from the stock of restructured accounts reported at end-December 2012. Of the total stock recorded at end-March, 53% were not in arrears.

A total of 24,706 new restructure arrangements were agreed during the first quarter of the year.[3] Interest only arrangements and reduced payment arrangements (interest plus some capital) continue to account for the majority of all restructures in place, although their share fell to 55% of total restructures at end-March, compared to 59% at end-December 2012.

Buy-to-Let

At end-March 2013, there were 149,395 residential mortgage accounts for buy-to-let properties held in the Republic of Ireland, to a value of €30.9bn. Of this total stock of accounts, 29,369, or 19.7%, were in arrears of more than 90 days. This compares with 28,366 (18.9% of total) that were in arrears of more than 90 days at end-December 2012. The outstanding balance on BTL mortgage accounts in arrears of more than 90 days was €8.6bn at end-March, equivalent to 27.7% of the total outstanding balance on all BTL mortgage accounts.

The number of accounts that were in arrears of more than 180 days was 24,760 at end-March 2013, reflecting a quarter-on-quarter increase of 4.9%. This compares to an increase of 7.2% recorded in Q4 2012, relative to Q3. Meanwhile, the number of accounts in arrears of over 360 days increased by 8.4% during Q1 2013. At end-March 2013, 18,199 BTL accounts, or 12.2% of the total stock, were in arrears of over 360 days. The outstanding balance on these accounts was €5.7bn at end-March, equivalent to 18.3% of the total outstanding balance on all BTL mortgage accounts. There was an increase of 5.2% in the number of early arrears cases during the first quarter of the year. The number of BTL mortgage accounts in arrears of less than 90 days was 10,002 at end-March, or 6.7% of the total stock.

.............

Legal Proceedings and Repossessions

There were 447 BTL properties in the banks’ possession at the beginning of Q1 2013. A total of 77 properties were taken into possession by lenders during the quarter, of which 30 were repossessed on foot of a Court Order, while the remaining 47 were voluntarily surrendered or abandoned. During the quarter 45 properties were disposed of. As a result, lenders were in possession of 479 BTL properties at end-March 2013.

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Yes, that is correct - It's not just Dublin, but country wide.

If you added to that supply potential mortgage arrears repos then you would have low prices and plenty of stock. It's out old banker friend market manipulation.

http://www.finfacts.ie/irishfinancenews/article_1026172.shtml

Irish_mortgage_arrears_Q1_2013.jpg

Struggling to understand this very well.

Let's see.

Let's say a bank has 10,000 mortgage loans on it's books with an approximate value of, say, 150,000 Euros each. The relevant properties are in reality worth, say, 120k Euros each so the bank is 300 million Euros in the red, but on the books they show the values as 160k Euros so the bank is in theory 100 million Euros in the black.

If NAMA has 1500 empty properties worth 120k Euros and allows them to fall into disrepair and become valueless, that is a loss of 180 million Euros but it is no longer on the banks balance sheet. If they are released onto the market and begin selling at, say 90-100k Euros then NAMA will receive 150 million Euros from the sales but all the other 10,000 properties on the bank's books have to be marked down and the bank is 600 million Euros or more in the red and probably bust, the government would have to step in again..

So the bank (and thus the government) is better off having the properties bulldozed or just left.

Lovely.

Or have I misunderstood?

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It is a can kicking exercise.. Economic reality does and common sense not come into it. I think that many in government would like to bring out the bulldozers, but they cannot really bulldoze an asset that is mark to make belief as they will be mark to non-existant.

I am sure this little lot will get cleaned up at the next bail out/in or default. It's cant be long now...

the government will soon announce that they are a great success, the bailout has been exited and austerity worked. On paper, perhaps but in reality the exact same problem still exists - No progress has been made what the country really needs is a debt write down and it will be able to get back on it's feet. In reality that is going to be a bail in when the next orchestrated panic/collapse happens ooooh around 2015.

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