Irish Indo

[undersupply]

ill the property bubble burst at this rate?

Monday January 30th 2006

QUESTION OF THE WEEK

I AM thinking of investing in a rental property. Obviously, the outlook for interest rates and the future performance of the property market is a major concern.

Where are rates likely to go over the next year or so? Also, everybody is talking about a "bubble". But is it going to burst?

Not all bubbles burst. In fact, only 40pc of them do, according to economists.

Is this bubble one of the exploding variety?

All we can do is look at economic forecasts - and most predict further steady growth in the property market in the year ahead.

Last year, property grew by 7pc - and this year it is likely to do slightly better at 8pc, according to the latest outlook from IIB Bank.

The bank's economist, Austin Hughes, said a major new influx of immigrants will shore up the property market.

Earlier in the year, Permanent TSB published its economic outlook and predicted growth of 6pc-8pc for the property market.

Those forecasts are pretty typical - although on the downside, we do get periodic dire warnings from the Central Bank, which is concerned about the level of borrowing out there.

It's much harder to get a prediction about the prospects for the housing market beyond the current year.

That's when the clouds start to appear on the horizon.

Firstly, interest rates will be rising through the year - by 0.5pc-1pc, which will make servicing payments much more expensive.

Did you factor this in?

Payments are likely to go up by €136 per month for a €250,000 mortgage for every 1pc rise in rates.

Everyone will be feeling the pinch, with a corresponding impact on the property market.

Another possibility is that in a few years' time, the major influx of immigrants may decide to go elsewhere, which would hit the rental market hard.

So, the overall outlook for the rental market and property prices generally is good for the year ahead - but there are clouds on the horizon after that.

You could cushion potential future blows by fixing your mortgage.

NIB has held its fixed rates at the same levels they were at before the last rise - ie at 3.45pc over three years, which is below most variable rates, even though interest rates are on the rise. (BT)

[ronnie]

ill the property bubble burst at this rate?

Monday January 30th 2006

QUESTION OF THE WEEK

I AM thinking of investing in a rental property. Obviously, the outlook for interest rates and the future performance of the property market is a major concern.

Where are rates likely to go over the next year or so? Also, everybody is talking about a "bubble". But is it going to burst?

Not all bubbles burst. In fact, only 40pc of them do, according to economists.

Is this bubble one of the exploding variety?

All we can do is look at economic forecasts - and most predict further steady growth in the property market in the year ahead.

Last year, property grew by 7pc - and this year it is likely to do slightly better at 8pc, according to the latest outlook from IIB Bank.

The bank's economist, Austin Hughes, said a major new influx of immigrants will shore up the property market.

Earlier in the year, Permanent TSB published its economic outlook and predicted growth of 6pc-8pc for the property market.

Those forecasts are pretty typical - although on the downside, we do get periodic dire warnings from the Central Bank, which is concerned about the level of borrowing out there.

It's much harder to get a prediction about the prospects for the housing market beyond the current year.

That's when the clouds start to appear on the horizon.

Firstly, interest rates will be rising through the year - by 0.5pc-1pc, which will make servicing payments much more expensive.

Did you factor this in?

Payments are likely to go up by €136 per month for a €250,000 mortgage for every 1pc rise in rates.

Everyone will be feeling the pinch, with a corresponding impact on the property market.

Another possibility is that in a few years' time, the major influx of immigrants may decide to go elsewhere, which would hit the rental market hard.

So, the overall outlook for the rental market and property prices generally is good for the year ahead - but there are clouds on the horizon after that.

You could cushion potential future blows by fixing your mortgage.

NIB has held its fixed rates at the same levels they were at before the last rise - ie at 3.45pc over three years, which is below most variable rates, even though interest rates are on the rise. (BT)

it gets worse, houses up 22% last year and wages up only 4%,bubble keeps expanding

Dublin house prices up 22% in 2005

January 30, 2006 12:06

Figures from estate agent Douglas Newman Good (DNG) show that house prices in Dublin rose by an average of nearly 22% last year, the first time since 2002 growth has been above 20%.

DNG's house price gauge showed that prices of second-hand homes in Dublin rose by 4.3% in the final three months of 2005, double the rate for the same period in 2004.

DNG economist Paul Murgatroyd said the second half of 2005 was stronger than the traditionally busier period before the summer.

[tryingtobepatient]

All we can do is look at economic forecasts - and most predict further steady growth in the property market in the year ahead.

well, that's all they would like us to do.