Comments on: Irish residential property continues to become more affordable

By: Dennis

Dennis — Wed, 23 Jan 2013 12:44:09 +0000

I agree with seniorpropertyobserver that the price:income ratio is not stable over time and has less predictive value now compared to the past 30 years—-’this time is different’ and access to credit (retail and wholesale) are relevant factors but impossible to model.

Rent yields appear more enlightening especially when compared to Government borrowing costs. The best housing econometric work is at the IMF now. Government policy will take years to adjust. I fear the seniorpropertyobserver’s pessimism is well-founded.

Forbearance may be an appropriate social choice today but it delays the unavoidable re-allocation of wealth and resources. Just examine the PTSB and KBC mortgage portfolios—deadmen walking.

By: seniorpropertyobserver

seniorpropertyobserver — Wed, 23 Jan 2013 12:03:16 +0000

Reaching the “fundamentals”(insert “affordable”)has now been quoted by Ronan Lyons on a previous Frontline programme and has been taken up by Irish independent.But of course no one has defined what the fundamentals are or on what they are based.We could also say as I have espoused in the past that the “fundamentals” of Property prices obtained from 1959 to 1996 when the average 3 bed semi was approx. 2.5 times the average industrial wage (i.e. the purchasing power required to buy a house like in Waterford)).Today that would equate to €32,000 x 2.5 = €80,000.This,it is argued is the “fundamental” (affordable)price a 3 bed semi should be and a long way off the current €150,000 odd, price the CSO statistics are producing.So it would appear (to me at least) that a fall of about 50% from current prices will leave prices at the “fundamental”.Of course as many commentators are now also saying(in which I am in agreement with) the overall state of the economy will dictate the pace and extent of the property crash over the next 3 years.With around €11bn. to be taken out of the economy at around €3bn.per annum,what resources will be left to pay mortgages or indeed take out new ones even if they were available.
We ain’t seen nothing yet.

By: conchubhairb

conchubhairb — Wed, 23 Jan 2013 10:04:09 +0000

A significant further “soft” factor must surely be the uneven distribution of significant (relative to total purchase price) cash deposits across the house buying population. While we have little of the old money / russian/arab oil money that skews the demand curve in London, there colloquially is still a significant hangover of cash rich buyers from the boom years, eg. those who sold and rented or who were more conservative in the hoarding of the gains of property specultation. It would seem logical that these cash buyers are placing a floor particularly underneath the upper end of the residential market, such that it is reasonable to suggest that prices in that area of the market are not a true reflection of the hard factors that should determine proper functioning of the market.

Havn’t seen any research specifically relating to cash buyers – know of any?

By: KOR1

KOR1 — Tue, 22 Jan 2013 22:24:04 +0000

There is a problem in using Gross Salary. Public servants, for example, are subject to a 6.5% pension levy which applies to all income, not just pensionable income, so is really a pay cut. These sorts of distortions make comparisons over time difficult, and complicate the international comparisons too.

By: JR

JR — Tue, 22 Jan 2013 15:31:49 +0000

ah bless, god be with the days…
http://www.independent.ie/unsorted/property/shortfall-of-new-homes-in-capital-may-be-24000-399328.html

substitute 2019 for 1999….