The Slowing Growth of Property Prices

The cost of property throughout Ireland has skyrocketed over the last 20 years. With the uncertainty in regard to Brexit, prices of homes are said to increase by less than recent years. Slower growth in price of homes may appear to be beneficial for the Irish housing market, but in reality costs of property are still trending to increase in price. Prices rose by 3.9 per cent compared to 4.3 per cent one month earlier. The increase is about four times less than the average percent growth increase of past years in Ireland.

So how will Brexit effect the housing market in Ireland? Some individuals believe that if the deal goes through, Ireland could play a more significant role in Europe. This trend is becoming prominent in Dublin. Massive companies like Facebook, Google, Paypal. eBay and Microsoft have moved their headquarters to Ireland. This change over the last few years means that there will be an increase in jobs and thus an influx of people. The more people means demand for housing will only further increase. If there is …

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The Dublin property market in a word… Farcinating

I looked up ‘farcinating’ because it’s a mash of ‘farcical’ and ‘fascinating’. Thankfully the internet always delivers.

How prices in Dublin can go up 8% YoY when the market is half cash beggars belief. It’s a false signal, if and when we are wrong about this we’ll apologise, but let’s take a look at some key issues that support this view.

1. Put a blank county & address search into the Property Price Registry for 2013 and you’ll find that there were 13,320 transactions this year. At the same time the IBF/PWC data indicate that there was 5,297 mortgages drawn down this year. That would indicate a market that is transacting in cash to the tune of 60% or more. (clear issue being late registration could mean some 2012 transactions crept into 2013 but probably not enough to fundamentally change this point).

2. Something that mainstream commentary has missed out on is that the ‘low supply’ in Dublin is …

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Property recovery: Stratified and Pockmarked

I can’t believe I’m about to say it…. But today I’m writing about niche recoveries in the property market, not the ‘whole’ market but rather that of giving an example of where we are seeing opportunity from an investment perspective. It is lonely territory because I have been so totally bearish on property for so long that a hint of bullishness is uncomfortable for me at this stage!

Recovery isn’t a destination, its part of a larger cycle, for every boom there is a bust, and for that reason we have spoken in the past about what recovery ‘might look like’ rather than ‘when’ it will occur.

The hallmarks of what a residential property recovery might look like are, in our opinion: property price stability in a range that is closer to traditional multiples of the average wage of the prospective buyer, a return of some inflation, rent price stabilisation (ideally tracking inflation) with yields at or above 6 to 7% and supply/demand dynamics in balance.

We don’t have any of those …

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New trends in underwriting and credit

It is 2009 and one of the things we need to look at (at least from the mortgage market perspective) is the availability of credit. Many associations such as ISME and politicians such as Joan Burton have voiced strong opinion on the need for credit to be extended to small businesses. The same credit contraction is happening in lending for property.

While our firm, and almost everybody involved in the mortgage market accept that we are not at market clearing levels, the unavailability of credit for those who do wish to buy and are capable repaying their loans is going to cause an unnecessary distortion which will drive prices down further than is rational. Without getting too deeply into the reason for the credit contraction/deleveraging process which we have covered many times here before, the point of interest is the new brand of underwriting we are likely to see.

In the past people within the financial industry were looked upon favourably, not only due to the fact that they normally represented a …

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'For what it's worth' the concept of property prices.

There is an unusual disparity at the moment in the property auction market versus the rest of the market, and that primarily lies in the level of houses being withdrawn from auction, in the Irish Times there was a list of properties up for auction, of note, and what wasn’t mentioned in the story was the degree to which properties are being withdrawn. Out of the 32 properties listed 20 were withdrawn, and that means approximately 62.5% must not have been meeting their required price.

of the 12 properties listed in South Dublin only 1 sold, this could be looked at several ways, on one hand the properties in on the South side may be priced into a market that is not accessible to most people to begin with (one listing was €12 million), another is that perhaps the prices there are just too high and they appreciated too fast.

In North Dublin and West Dublin every property listed sold, and again, this can be interpreted different ways, on one hand the prices are …

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‘For what it’s worth’ the concept of property prices.

There is an unusual disparity at the moment in the property auction market versus the rest of the market, and that primarily lies in the level of houses being withdrawn from auction, in the Irish Times there was a list of properties up for auction, of note, and what wasn’t mentioned in the story was the degree to which properties are being withdrawn. Out of the 32 properties listed 20 were withdrawn, and that means approximately 62.5% must not have been meeting their required price.

of the 12 properties listed in South Dublin only 1 sold, this could be looked at several ways, on one hand the properties in on the South side may be priced into a market that is not accessible to most people to begin with (one listing was €12 million), another is that perhaps the prices there are just too high and they appreciated too fast.

In North Dublin and West Dublin every property listed sold, and again, this can be interpreted different ways, on one hand the prices are …

Read More