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ronnie

Dublin

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here in dublin the house prices are mad,they are still growing at over 10% a year. the average house in dublin is now around 250k sterling and for that you wouldnt get a 3 bed terrace anywhere near the city unlesss you bought a former council house in a rough area.the rental yields are around 3% or less for more expensive houses ,all the banks media etc are saying prices will keep rising for years.its madness i tell thee

check out dublin on www.myhome.ie

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here in dublin the house prices are mad,they are still growing at over 10% a year. the average house in dublin is now around 250k sterling and for that you wouldnt get a 3 bed terrace anywhere near the city unlesss you bought a former council house in a rough area.the rental yields are around 3% or less for more expensive houses ,all the banks media etc are saying prices will keep rising for years.its madness i tell thee

check out dublin on www.myhome.ie

Most indebted nation in Euroland = Most overvalued housing in Euroland

It's as simple as that.

Ok. So Austin Hughes (IIB), Dan McCloughlin (BOI), Niall O'Grady (Perm Tsb) will all tell us it is due to the booming economy, rise of immigration etc. That's rubbish.

Most immigrants arrive from Eastern Europe with hardly a Euro in their pocket, let alone the deposit for €350k shoebox in Dublin. They have to rent. But hang on, rents are falling. They have been falling consistently for the last three years. This tells us that demand for housing - real demand that is, ie. for shelter - is falling. Large swaythes of property now sit unoccupied.

Ireland (Republic) is 50,000 sq km, the size of Holland and Belgium combined. It has a population less than that of Yorkshire. It can cope with a few more immigrants yet, before it gets a bit congested.

House prices are a matter of opinion. And, right now the prevailing opinion in Ireland is that you must borrow the maximum you can NOW to get on the ladder, or you might never be able to. After all that is what the banks say, so it must be true.

Oh, and don't worry about interest rates.

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It's a house of cards but many believe the whole thing can be kept standing for a few more years as the government stands back and the banks are allowed to flood the economy with cheap credit.

As far as I can gather, the buy-reasoning here is if HP inflation continues at current rates for a few more years then even if the market corrects down the road, you would still be better off buying now rather than renting. i.e the correction is so remote that it is unlikely to bring prices back even to today's levels.

It has to be said that this strategy - buying into a market that is reported as overvalued - has continued to prove correct since 2000 when the Irish central bank first warned on house prices !!

IMHO, the only thing that'll break it, barring some unforeseen economic shock, is the ECB pushing rates up throughout 2006/7.

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I've spent a fair bit of time in Dublin, and was at first very surprised at local attitudes towards house prices (now I just keep my big English mouth shut!).

There is definitely a culture of 'you have to borrow as much as you can as soon as possible, or you'll miss the boat'; it feels more frenzied than the UK was at its peak.

It's seems very common when you move not to sell your old house, but to hold onto it and rent it out. Those I know don't seem to have much trouble finding tenants, but that can't last; eventually the market will saturate.

Although I don't have any data, rental prices already seem lower than mortgage repayments - I suspect many part-time LLs don't mind though as it's capital growth they want. I haven't met one Dubliner who thinks that it won't go on for ever - Crash? Never!

IRs are lower than they probably need to be, but there hasn't been a housing crash in recent memory (no UK-style Irish bubble in the eighties) - so I reckon it's a more innocent market.

I think it will end in a crash, but wouldn't like to say when....anyone else care to speculate?

Anto

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I've spent a fair bit of time in Dublin, and was at first very surprised at local attitudes towards house prices (now I just keep my big English mouth shut!).

There is definitely a culture of 'you have to borrow as much as you can as soon as possible, or you'll miss the boat'; it feels more frenzied than the UK was at its peak.

It's seems very common when you move not to sell your old house, but to hold onto it and rent it out. Those I know don't seem to have much trouble finding tenants, but that can't last; eventually the market will saturate.

Although I don't have any data, rental prices already seem lower than mortgage repayments - I suspect many part-time LLs don't mind though as it's capital growth they want. I haven't met one Dubliner who thinks that it won't go on for ever - Crash? Never!

IRs are lower than they probably need to be, but there hasn't been a housing crash in recent memory (no UK-style Irish bubble in the eighties) - so I reckon it's a more innocent market.

I think it will end in a crash, but wouldn't like to say when....anyone else care to speculate?

Anto

the big problem is ireland is tied into euro interest rates which are 2.25% if we had control over our monetary policy they would be around 6% as the economy is growing at 5%perannum (at least). the ecb seems to be in a series of rate rises but these will at most go to 3.5% in next 18 months which wont be enough to deter people and the bubble will continue for a bit longer ,artificially low interest rates and a booming economy and booming housing market arent a good mix to ensure rational property prices,the thing is construction is 20%of the irish economy so when the house price increase stalls the economy will be hit by lowered construction spending lowered retail sales etc

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the ecb seems to be in a series of rate rises but these will at most go to 3.5% in next 18 months which wont be enough to deter people and the bubble will continue for a bit longer

If rates go from 2% to 3.5%, it's game over. That would add around €500 per month to the AVERAGE mortgage.

Anecdotal:

I was having the "where are rates going?" conversation with an acquaintance recently. He's really mortgaged-up, I would guess he owes around €600k and so is probably paying almost €2,000 per month in interest alone.

When I said that it is possible, that we could be in for at least another 3 rate rises, over the next year to 18 months, he did go a bit white. But then he perked up and said that if that happened, he would "just sell the house".

"To who?" I thought.

Edited by Flash

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There is definitely a culture of 'you have to borrow as much as you can as soon as possible, or you'll miss the boat'; it feels more frenzied than the UK was at its peak.

It's seems very common when you move not to sell your old house, but to hold onto it and rent it out. Those I know don't seem to have much trouble finding tenants, but that can't last; eventually the market will saturate.

Although I don't have any data, rental prices already seem lower than mortgage repayments - I suspect many part-time LLs don't mind though as it's capital growth they want. I haven't met one Dubliner who thinks that it won't go on for ever - Crash? Never!

IRs are lower than they probably need to be, but there hasn't been a housing crash in recent memory (no UK-style Irish bubble in the eighties) - so I reckon it's a more innocent market.

I think it will end in a crash, but wouldn't like to say when....anyone else care to speculate?

I think you've wrapped it up nicely there Anto (very Dublin name btw).

Nothing to add or subtract.

the big problem is ireland is tied into euro interest rates which are 2.25% if we had control over our monetary policy they would be around 6% as the economy is growing at 5%perannum (at least). the ecb seems to be in a series of rate rises but these will at most go to 3.5% in next 18 months...

There are 2 factors you need to consider here Ronnie

1 - If rates increase from 2.25% to 3.5% thats something like an increase of 60% in interest payments. Most people dont realise this.

2 - Ireland has a scheme similar to an ISA in the UK called an SSIA. About 4 years ago the government agreed a £1 bonus for every £5 put into this account. The first accounts mature this year. An expected £4 billion will enter the economy and prolong a boom that should have died long ago.

How this will end, I have no idea, but I cant help thinking it will be messy.

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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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