McWilliams Ireland: Are we in a property bubble? (2nd November 2017)

David McWilliams’s show ‘Ireland’ looked at the issue of property prices here and asked if we are in a ‘bubble’. He spoke to Karl Deeter from Irish Mortgage Brokers about this who made two points. The first was that we are too late to change the outcome of the property cycle, the second was that the biggest land hoarders in the state is the state itself and that Government should release land to flood the land market and drive down the primary costs of construction.

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Irish Independent feature Irish Mortgage Brokers

We were asked for comment on housing recently by the Irish Independent and had this to say on social housing: Karl Deeter, of Irish Mortgage Brokers, suggests that sites be released for social and affordable housing schemes, or private homes, in return for equity. Developers would have little cause for complaint.

“On a vacant site (in Dublin city centre), you could build an eight-storey building with 75pc of the building rented at 20pc below market, and for the rest you have a guaranteed upward-only rent review of 2pc a year,” he says. “If we do it on a build to sell, or build to rent, we share the profits..

“We need to flood the land market. People want to talk about the law of the jungle, but you can’t be a lion, and when a rhino comes along you complain.

The general view in our opinion is that much of the malaise always comes back to the base element of housing which is land.

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Government spending more than planned to help the housing crisis

With the government paying about €260 million in the first half of 2017 above the previous first half of 2016, it means the government is trying to throw money at helping the housing crisis.

The Department of Housing has spent around €312 million during this time. The rapid increase is said to be in main part because of the Government’s housing programme.

The Minister of State from the Department of Finance, Patrick O’Donovan has responded that the impact from the increased government spending has already been seen through the amount of commencement notices being filed. Since a commencement notice has to be filed when someone has begun construction of a new home it is a good indicator of the health of the housing market. The previous 12 months from May, commencement notices have amounted to 15,579. This is up 42 percent of the previous twelve month period.

Recently there has been a housing shortage in Ireland that has taken over the housing market. It is making it harder to obtain a house and a mortgage.

The amount of total pre-approved …

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12 people become property millionaires each week

On average, a dozen people each week becomes property millionaires in Ireland. There are currently around 4,000 homeowners with property worth more than €1 million, and the rates at which new million euro homes are listed and sold are increasing rapidly.

 

Across the country, house prices have increased by 9.4% in the past year, and 40% in the past five years, turning many homeowners into property millionaires. While the average property value is currently around €230,000 and the average value in Dublin is around €350,000, many districts and counties have average values of 700,000 or more.

 

Sandycove in Dublin has an average property value of close to €800,000. An even more expensive street is Herbert Park in Dublin, where five homes have sold for more than €3 million in the past 2 years. A quick search on myhome.ie will reveal that around Dublin’s Ranelgh area, a couple houses are listed at more than €5 million. Other areas with the most expensive home prices include Foxrock and …

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The most expensive places to buy in Ireland

The most expensive property sold in 2017?

€8.4 million was paid for a house in Fintragh of Shrewsbury Road according to the Daft.ie. Five streets have had transactions of €3 million or more in the last 18 months: Shrewsbury Road, Ailesbury Road, Temple Gardens, off of Palmerston Road in Dublin and Westminster Road in Foxrock.

Only one percent of all homes in Ireland are worth €1 million and over according to the Property Price Register.

Highest number of over a million home transactions is Herbert Park in Ballsbridge.

Total spent on housing since 2016?

€800 million was spend on housing alone since 2016 according to the Property Price Register. That averages around €12 million every week paid for in housing. The average price for a house the first quarter of 2017 was €230,000.

Ten years ago, however, the average home was worth around €370,000. After the crash, the average price of a home was around €165,000 five years ago.

Total of all Ireland’s Property worth?

If you would combine all the valuations of all the properties in Ireland it will …

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An increase of housing demand for millennials in the US

Real estate is on millennials to do list despite the stalled wage growth and housing market fears in the United States.

The National Association of Realtors show that the amount of first-time home buyers increased 3 percent year-over-year. They made up of 33 percent of the home mortgage market in May.

First-time home buyers can be categorized as someone who has not owned a home in the past three years.

Fannie Mae statistics shows that first-time home buyers make up of 42 percent of all home mortgages from January to April which is up 2 percent from 2016.

As interest amongst the millennials is rising in home buying, whether or not that will be a good idea is at question. The Federal Reserve just raised their interest rates which will affect the millennials in search for a …

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A construction agency has seen a boom in business since the Help-to-Buy scheme

Abbey, a property developer, has high hopes for the Irish housing market.

They are seeing huge gains as the house prices keep increasing. They are especially reaping the benefits from the Help-to-Buy scheme. That’s why they are against the review of the scheme.

The intention of the Help-to-Buy scheme was to encourage first-time buyers and to speed up new supply of houses. It can give first-time buyers up to €20,000 in tax rebates. The scheme, instead, has apparently increased home values than raise supply of new homes. This has raised concern for the Minister for Housing, Eoghan Murphy, which brought up the review of the scheme.

 

The Central Statistics Office published on Tuesday that the Irish housing prices went up by 11.9 percent in May from the previous 12 months, driven by a 12.8 percent increase outside of Dublin.

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Rate of expansion in construction activity slowed in June

In June, the rate of expansion in construction activity slowed in Ireland. The civil engineering division had a slight decrease while the housing and commercial divisions remained strong.

The latest Ulster Bank Construction Purchasing Managers’ Index (PMI) showed construction activity went from 63.6 percent in May down to 58.2 percent in June. However, if it is above 50 percent then that means the sector is growing.

Housing activity sector of the index went from 69.2 percent in May to 59.5 percent in June. Commercial activity reads at 60.8 percent in June from 65.2 percent in May. Civil engineering dropping from 51.8 percent in May to 48.4 percent in June.

Despite the sector growing, it still has not hit the target level of 25,000 new housing units every year, according to the Economic and Social Research Institute. Last year, the Department of Housing estimated a total of …

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Mortgage lending gets tougher in Canada

The Canadian housing market has been growing rapidly in the past few years. Currently, many experts fear that home in cities like Toronto and Montreal are greatly overvalued, a reflection on the general instability in the Canadian economy. While Bank of Canada has yet to announce its well anticipated interest rate hike that will curb the rapidly rising house prices, lenders have already begun tightening lending rules and raising mortgage rates.

 

Early this month, major lenders Bank of Montreal, CIBC and Royal Bank of Canada have all raised rates on various types of fixed rate mortgages. Both Bank of Montreal and Royal Bank of Canada raised mortgage rates by 0.2% and rates at CIBC raised by 0.05%. The higher rates of lending is thought to precede Bank of Canada’s anticipated rate hike, which may come as soon as tomorrow.

 

Accompanying the higher mortgage rates is a series of other lending restrictions put in place by Canada’s banking regulator, The Office of the Superintendent of Financial Institutions …

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