Soaring Cost of Living in Ireland

For a lot of people living in Ireland, considering the cost of living never really crosses their mind. They pay rent, buy groceries and live their lives. The price of all of it is just that, the price. For others who haven’t grown up here or have traveled outside the country, the everyday price of living is more prevalent. Compared to most European countries, and many countries around the world, Ireland is a very expensive place to live.

The European Union (EU) has a lot of cheap places to live nevertheless, such as Bulgaria and Poland. In order to find out how cheap or expensive, we look at the Cost of Living Index. Based off of Prague, which is the central reference city, we can statistically see just how expensive certain countries are to live in. Both Bulgaria and Poland received scores hovering around 80. This means its 20% less expensive to live in those two countries than the average in the EU. Ireland and specifically Dublin received a score of 202! This translates to a cost of living 102% …

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Rent prices pierce ceiling

Rent prices, something that seems to always be steadily increasing. In 2016, the Irish government began to take note of a fast moving, upward trend in certain zones and put a price ceiling on rent prices in an effort to regulate these changes. Areas that have a high likelihood to increase rent, specifically because of location and competition, are called Rent Pressure Zones (RPZ). 

These zones are primarily located in the larger cities, such as Dublin, Galway or Cork and have specifications that help to protect renters from exorbitant hikes in monthly prices. Any property within a Rent Pressure Zone are legally not allowed to increase their prices by more than 4pc each year. 

This ceiling in rent increases are intended to create a more affordable market for landlords and tenants so that they can have a good idea of how prices could rise; this is ideal for planning housing opportunities and finances in the future. This program worked for the most part, with many tenants seeing an increase of between 2.4 and 3pc a year from 2016 to 2018. 

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Inflation Rates Return to Normal

 

The current housing prices in Dublin have been talked about extensively recently. The newest trend shows that housing prices have reached peak affordability and now some of the wealthy classes of people are having trouble affording homes. Current house prices in Dublin are more than nine times the average salary making them unattainable for the majority of people because mortgages can only be 3.5 times your salary. Additionally, these numbers have not been seen since the Celtic Tiger Era, however, the central bank has been more careful this time and increased borrowing rules unlike during the Celtic Tiger Era. Prices are now beginning to slow down because simply nobody is able to afford them.

Inflation has also cooled off recently with a decrease from 12.4% last May to 2.8% a year later. Dublin has seen a significantly smaller inflation rate with an increase of prices from the current year to May of .6%.

The region of Dublin had the highest median price of 366,000 Euros which is just over 9 times more than its average salary of 40,000 Euros. …

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Dublin’s Airbnb market faces increasing regulations

As mentioned in previous articles, Dublin and its surrounding areas has been struggling to accommodate every person who is willing and able to purchase a home. Demand has stayed at levels significantly higher than that of supply, causing people all over the area to rethink their current living situations.

Local authorities are looking for possible causes and solutions to this shortage. The first possible factor that the government has decided to more heavily regulate in hopes of amending their housing issue is Airbnb.

Starting July 1, Airbnb lenders will be faced with increased water, insurance and commercial rate charges. Additionally, in areas where there is a high demand for housing there may be a temporary ban on the ability to do short term let outs of a property.

In the future, landlords will be restricted to renting out their properties for only 90 days of the year and will still require the acquisition of commercial planning permission. Furthermore, the bookings will only be allowed to extend up to 2 weeks before termination of stay, and these weeks …

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Regular wages and purchasing homes

In the current market, there is an increasing want and need for housing in Ireland, especially in populated cities such as Dublin. With this increasing demand, prices of homes and rent are rising each year. One problem that many soon-to-be or want-to-be home owners face now is the inability to effectively save for a home when they are paying high rent fees month after month.

The Central Statistics Office of Ireland notes that the average full time worker made around €45,611, while an average part time worker made around €16,600. Using surveys on these two numbers, we can say that the average worker in Dublin makes around €37,000 per year.

These numbers seem to allow a single person to be able to obtain a mortgage and afford a home, but if you were to add into the equation any additional expenses, such as children, rent or transportation, there would be a significant amount of money deducted from those average numbers.

The national average rent in Ireland is €1,122 per month. If you are interesting in living in Dublin, …

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New plot may lack space

Recently, a 125 acre plot of land in in Baldoyle, county Dublin has been given permission to plan for construction of at least 1,000 new residential units in the near future.

The land itself will be broken into two different sites; one will be used for a more expensive, modern type residence with a town center and grand landscaping. The other part will be used for a more residential area, with zoning estimations of up to 759 units on the land.

With an apparent lack in the amount of appropriate proportion of home buyers and sellers in Dublin, a shortage of housing has become one of the cities main focuses. This newly zoned area will continue adding to the already large capital city of Ireland.

Although there are many opportunities for growth within this huge chunk of land, I am personally quite skeptical of the livability of these areas. New developments are always shiny and clean looking on the outside, but can have a lot of inherent problems in actual habitation of these units.

If the …

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Airbnb claims it is not affecting long-term letting

In reference to Airbnb cannot beat revenue from long-term letting, company says by Colin Gleeson on 28 June 2017 in the Irish Times.

On Wednesday, Airbnb spoke to the Oireachtas housing committee claiming that their service does not affect the long-term letting in Dublin. The reason- on average an Airbnb host has to rent out their place well over 120 nights a year to beat the money made from long-term letting. This means hosts would rather long-term let their place than short-term let, if the goal was profit.

Critics of the company are claiming that property owners are ditching the long-term letting and going exclusively to short-term lets. This would not be helping Dublin in this case due to the massive housing shortage.

Patrick Robinson, the Airbnb director of public policy for EMEA, came to the committee with vast amount of information on hosts, statistics, …

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Slow growth economy stock returns

There is a growing body of work suggesting that many developed countries will cease to roar ahead at 3%+ growth rates in the future, that instead we are likely to see a growth rate of about 2% p.a. leading to a ‘steady state’ economy.

If you look at the USA the inflation rate was only 1.9% over the decade from 2000-2010. If you strip out the 2008 recession effect it still only comes out at 2.6%. This could mean that Bernanke’s approach of effectively putting a floor on stock prices could lead to a revision irrespective of intentions.

Take a look at the picture below.

This could mean that in the future the standard P/E expectations could drop and a corresponding dividend yield increase become the natural premium or expectation of stock market investment, strangely; this will be getting back to the original reason people invested in stocks prior to the 20yr secular bull of the 80’s-late 90’s.

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If we must have a banking enquiry then make it cheap and fast.

I should state from the outset that I am against a banking enquiry if it is the ‘9/11 style public enquiry‘ it was originally billed by Patrick Honohan as (pic related). I also believe the primary failure in Ireland was one firstly of regulation and governance over and above what went on within the banking system, it is after all, the responsibility of regulators to exert their control over the systemic aspects of banking rather than vice versa, however, it seems to be the popular choice to have an enquiry and thus I have outlined how a relatively cheap investigation might be set up.

The people of Ireland are calling for blood and it is no surprise that various powers now want to deliver on it, they join other leaders from antiquity such as Titus, Nero and Caesar in wanting to please the masses with blood-letting, sadly, we have a history of making any investigation extremely …

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Mortgage Question: I have no savings, can I borrow a deposit?

The majority of lenders now insist that your deposit comes from a non borrowed source, and will decline your application if you plan to borrow it. The lenders who will consider your application will assess your application with the new deposit loan as a financial commitment which decreases the amount you can borrow on the mortgage, and because it is a short term loan it will eat into borrowing capacity much more than you may expect.

[eg: €100,000 loan over 30yrs costs c. €420 before tax relief, but one tenth of that, €10,000 at personal loan rates over 3yrs will cost c.€313 per month which would reduce the amount you can borrow by approximately €80,000!]

Short answer: You should aim to have your own equity in the deal via savings, if you borrow a deposit then you are running an additional risk and our firm are of the belief that this is generally not in the best interest of the borrower.

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