Dublin’s Housing Prices are Growing Faster than Income

A new report released by credit analysts from Moody’s states that Dublin house prices have grown approximately nine times the rate that employees’ wages have grown in the last six years. This is adding to the housing market difficulties causing many native Dubliners to either move or live on the streets. Many factors can be credited to the rising house prices including; the rise of multinational cooperation’s settling in Dublin coupled with the rapidly growing population. The Moody’s report concluded that Dublin’s population has grown by 21% since 2000 which, makes it the fasted growing city of all European capitals.

It ultimately comes down to the shortages of properties available in Dublin that are driving up the demand for housing, while the supplies stay consistent. Moody’s Investor service released a ranking for the European cities that its inhabitants can least afford to buy a home. Dublin was among the group of cities distinguished for being a hard and expensive city to find housing among many European countries. Additionally, the price to pay ratio for Dublin that determines how much money …

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Property prices may fall, but finance prices won’t

Unless you are a cash buyer it isn’t a good idea to focus on property as a single cost, in a transaction there are two costs, that of the asset and then that of the finance for the asset purchase. I have done a few comparisons on costs where in two years time where a property has fallen a further 20% from where it is today.

As we expect margins on lending to rise considerably we have factored that in, along with moderate base rate increases. What we have done here is to take a view that prices may have fallen 40% from the peak to now, but they will fall a further 10% p.a. for the next two years, a further 20% from today or over 50% from the peak.

Purchase in 2010 €200,000 90% mortgage over 25yrs [€180,000] @ 4.5% [10yr fixed] base rate 1% margin c.3.5% repayment per month: €1,000 total cost: €300,000 balance after yr. 10: €130,785 Total Interest Paid by year 10: €70,845 …

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