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House prices to continue rising in 2006

Friday November 25th 2005

AN INCREASING number of Irish economists are revising upwards their forecasts for house price growth this year and next year - despite the warnings from the UK Economic Intelligence Unit for the Irish market.

Permanent TSB is the latest bank to come out with a higher forecast for this year's price growth - and is now pitching for 8%.

This follows upward revisions by AIB to 7% and an even more dramatic revision by Bank of Ireland (BOI) to 10%.

The predictions spell bad news for buyers and good news for sellers. Both could see as much as €19,000 added to house prices next year bringing the average national house price to €287,000.

Similar growth in Dublin looks set to boost prices by an average of €24,700 by the end of next year to more than €381,000.

David Duffy, of the Government's think tank the Economic and Social Research Institute, is not quite as bullish. Nevertheless he has upped his forecast to 7% for this year.

He has also revised upwards his forecast for next year from a sluggish 3% to as much as 5%. This is in line with the 5% being forecast by BOI. However these two are below the forecasts of both PTSB and AIB which are 6% and 7% respectively.

Duffy says that a key factor underpinning next year's price growth will be the use of SSIA savings by home buyers.

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House prices to continue rising in 2006

Friday November 25th 2005

AN INCREASING number of Irish economists are revising upwards their forecasts for house price growth this year and next year - despite the warnings from the UK Economic Intelligence Unit for the Irish market.

Permanent TSB is the latest bank to come out with a higher forecast for this year's price growth - and is now pitching for 8%.

This follows upward revisions by AIB to 7% and an even more dramatic revision by Bank of Ireland (BOI) to 10%.

The predictions spell bad news for buyers and good news for sellers. Both could see as much as €19,000 added to house prices next year bringing the average national house price to €287,000.

Similar growth in Dublin looks set to boost prices by an average of €24,700 by the end of next year to more than €381,000.

David Duffy, of the Government's think tank the Economic and Social Research Institute, is not quite as bullish. Nevertheless he has upped his forecast to 7% for this year.

He has also revised upwards his forecast for next year from a sluggish 3% to as much as 5%. This is in line with the 5% being forecast by BOI. However these two are below the forecasts of both PTSB and AIB which are 6% and 7% respectively.

Duffy says that a key factor underpinning next year's price growth will be the use of SSIA savings by home buyers.

And the worst part, Im sorry to say, is they're all going to be proved right. Dublin/Ireland property prices will astound in the next few years, the following economic collapse will be even more astounding.

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I agree. So many will blow their SSIA on overvalued property that it will probably support the market and neuter the effect of interest rate rises - in the short term anyway. ;)

On the radio the other day, an "expert" - I think from the EBS Building Society - was suggesting that while the ECB will raise rates in December, it will be the ONLY RISE for the forseeable future and that people should not worry.

Faced with muppetry like that, is it any wonder that house prices are still rising?

Keep the public drinking from the vat of cheap money and they will remain too drunk to see what is really going on.

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With net yields of 2% on investment property; consumer debt at nearly 200% of annual disposable income (The highest in the world I think) ,plummeting foreign direct investment and falling manufacturing employment, the Irish have conspired to place a debt anchor on future growth for a generation.

The Irish economy is best likened to a windmill driven by a V8 petrol engine, utterly ludicrous but oddly captivating.

From here its just a matter of time.

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From here its just a matter of time.

UK peak was mid-2004

Dublin/Ireland peak mid-to-late 2006?

In Ireland, there will never be a dawning reality that house prices are too high BEFORE the peak occurs. The concept of property prices ever being 'too high' will remain an alien concept until we're well past the peak.

The peak here will be a qualitatively different one than in other bubble countries. It will be an 'involuntary' sort of highwater mark. It will be marked by the last approved, panicked mortgagees managing to squeeze themselves onto "the property ladder" just before rates rise yet again. There'll be a "race against rates" so to speak, and many will feel very fortunate to have secured themselves a fixed rate mortgage. At the peak, demand will dry up not because would-be-buyers will withdraw from the market in disagreement with prices, but rather because many will be simply unable to borrow the required amounts....

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Speaking to Irish mates who work as surveyors in dublin, all think my arguments over a substantial price correction are rubbish. These are intelligent people who work in the sector, yet are somehow blinkered, as if some magic ring protects ireland from macroeconomic forces. They state factors such as the growth in human capital, american investment etc etc. I always point out the massive House price to av earnings differential there, but they claim the figures are distorted by poor out of town area's. Mind you, until prices start to drop, they wont listen to me.

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Speaking to Irish mates who work as surveyors in dublin, all think my arguments over a substantial price correction are rubbish. These are intelligent people who work in the sector, yet are somehow blinkered, as if some magic ring protects ireland from macroeconomic forces. They state factors such as the growth in human capital, american investment etc etc. I always point out the massive House price to av earnings differential there, but they claim the figures are distorted by poor out of town area's. Mind you, until prices start to drop, they wont listen to me.

This is the psychie - 99% of people just don't see it as a problem. Despite the fact that Dublin now makes the cote d'azur look cheap. I wonder sometimes if the rest of the world realises quite how bad things have got in Dublin.

Rental yields are now just 2% in some areas. How expensive does property have to get relative to renting?

This is where the immigration argument falls over. If more people were really flooding in than the property market could cope with, rents would be going through the roof. They are not - quite the opposite, they have fallen substantially due to oversupply.

Demand for property is still insatiable - demand for shelter is negligible, in comparison.

Is property in Ireland the most overvalued in the world? (sounds like one for another thread) Or, put another way, is there anywhere in the world you can rent a property more cheaply relative to its value? (The price/rent ratio is now over 40!)

Edited by Flash

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UK peak was mid-2004

Dublin/Ireland peak mid-to-late 2006?

In Ireland, there will never be a dawning reality that house prices are too high BEFORE the peak occurs. The concept of property prices ever being 'too high' will remain an alien concept until we're well past the peak.

The peak here will be a qualitatively different one than in other bubble countries. It will be an 'involuntary' sort of highwater mark. It will be marked by the last approved, panicked mortgagees managing to squeeze themselves onto "the property ladder" just before rates rise yet again. There'll be a "race against rates" so to speak, and many will feel very fortunate to have secured themselves a fixed rate mortgage. At the peak, demand will dry up not because would-be-buyers will withdraw from the market in disagreement with prices, but rather because many will be simply unable to borrow the required amounts....

The government will do all in their power to get re-elected in 2007.

The SSIA money comes from august 2006.

Crash will come late in 2007, and what a crash it will be ;)

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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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