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Ireland fears a new Dublin property bubble as prices rise 25% in the past year
Topic Started: 11 Sep 2013, 02:29 PM (4,525 Views)
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Ireland fears the unthinkable - a Dublin property bubble

By Padraic Halpin
DUBLIN | Wed Aug 28, 2013 1:56pm BST

(Reuters) - Five years after a huge property crash devastated the Irish economy, prices are finally stabilising, but a booming urban market where supply is scarce and competition fierce is raising concerns about a new bubble in the capital.

House prices quadrupled on a decade of easy credit during the boom years that earned Ireland the sobriquet Celtic Tiger, then fell by more than half from 2007, leading the country into an EU/IMF bailout, a costly bank rescue and leaving almost one in five homeowners behind on their mortgage payments.

While prices began to rise again annually in June, some urban pockets are driving the recovery, with properties in Dublin being sold for 8 percent more than a year ago and higher still in affluent areas where 30-somethings outbid one another.

Having built the wrong stock in the wrong places during the boom - huge apartment complexes and out of town housing estates - there is now a big lack of supply in the capital and need for a battered construction sector to take the heat out of prices that some estate agents say are rising by 1 percent a month.

"There's an element of craziness creeping back into it where people are getting frantic," said Scott, a 37-year-old father of two young children, after wading through the crowds to view a four-bedroom, semi-detached house in leafy south county Dublin.

"Friends of mine have bought and gotten into bidding wars. It feels like the olden days; it's kind of wrong."

It is families like Scott's, among the 305,000 households living in rented accommodation - twice more than five years ago - that are primarily behind the surge in demand, having waited patiently for prices to find a floor.

But the dearth of supply means the level of transactions has barely risen, and with cash buyers snapping up every second home, only one in every two mortgages approved are being drawn down, keeping Ireland's stricken banks from reaping the benefits.

Property consultants Savills Plc (SVS.L) say 20 percent of its buyers are from abroad - mainly Irish residents keen to move home - piling even more pressure on frustrated domestic buyers.

In Dublin, the number of properties for sale has more than halved to just 3,000, research from Ireland's biggest property website Daft.ie shows, giving rise to year-on-year price hikes of over 12 percent in sought-after spots.

"If you've got rapidly rising prices, up by 10, 15 percent year-on-year, something's wrong," said Daft chief economist Ronan Lyons, who sees further annual rises of between 5 and 10 percent as quite possible until more supply arrives.

"If you decide tomorrow to build, it's still going to be 18 to 24 months before we actually get the supply, so if things are already as bad as they are now, that's worrying."

LOW BASE

New builds are rising in Dublin, but from a very low base. Only 72 extra units were begun in the first five months of the year, but even that was a 25 percent year-on-year jump.

House completions throughout Ireland also hit a record low of just under 8,500 last year, down from an unsustainable 93,000 in 2006 but just a third of the 23,000 built on average a year during the 1970s, when Ireland was a much poorer country.

In a country back in recession, conditions for a renewal in house building are poor - construction costs are rising and finance for developers scarce. Finance Minister Michael Noonan is keen to use his upcoming budget to stimulate the sector, but many of his colleagues want him to ease up on austerity instead.

The state-owned National Asset Management Agency (NAMA), the "bad bank" set up to rid banks of soured property loans, will also have only a limited role to play as much of its stock of residential properties in need of completion are the apartment blocks and "ghost estates" that litter the countryside.

Ireland's big builders have mixed views. The incoming chief executive of CRH (CRH.I), one of the world's largest building materials providers, told Reuters last week it was vital "not to overplay the Dublin hand", with demand small and sporadic.

The CEO of building and home improvement supplier Grafton (GRF_u.I), however, said it was time to start building again now the "green seeds" of recovery were sprouting.

There are some signs of life among smaller players, too, according to estate agents who have begun to field inquiries into Greenfield sites for the first time since the crash.

"Developers have suddenly realised that there is a shortage of good quality houses in certain areas, so there has been a very strong focus on people looking for development land," said Michael Grehan, head of residential property at estate agents Sherry FitzGerald.

"How else do you get more supply out there? A lot depends on the type of stock that comes into the market from the banks."

Lenders long-overdue response to the country's crippling mortgage arrears crisis may hold the key to freeing up supply in the short term. Repossessions are set to increase from near non-existent levels after changes to the law, while some struggling homeowners may take up options to trade down.

How exactly this plays out and crucially whether it will unearth any prime Dublin supply is the big unknown.

Either way, Dublin needs targeted supply, and fast. A second property bubble in a decade, albeit confined to a few particular districts, would be unthinkable as Ireland emerges from its bailout.

"None of us want to go back to where it was; it's not sustainable," said Grehan.

Read more: http://uk.reuters.com/article/2013/08/28/uk-dublin-property-bubble-idUKLNE97R00S20130828
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skamy
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I wonder how long this bubble mongering will continue as the market recovers. It was a daft theory from start to finish.

Cue Veritas with his silly Ireland bubbleography theories and his "I know Ireland better than the Irish".
Edited by skamy, 11 Sep 2013, 06:30 PM.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Veritas
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skamy
11 Sep 2013, 06:24 PM
I wonder how long this bubble mongering will continue as the market recovers. It was a daft theory from start to finish.

Cue Veritas with his silly Ireland bubbleography theories and his "I know Ireland better than the Irish".
Skamy,

Don't make me did out that post where you described the Irish banking crisis as being the result of the subprime contagion in the US.

Your own posts have demonstrated how little you know about what happened in Ireland.

Perhaps this might have something to do with the supply problems in the Irish market? What do you think Skamy.

Take your time: I know your brain only has one gear.

Posted Image

Posted Image

Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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skamy
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Ya might wonder if the Irish might be kinda upset with the banks don't ya think.

According to Veritas and his la la land theories of cheap houses in the best areas of Perth, Ireland's house prices increased therefore they just had to drop like a stone and further Veritas assures us that this is the exact same thing that is gonna happen here in Australia and in all the other countries that saw house prices rise. According to Veritas all these other countries and especially Australia are gonna crash just like Ireland.

WA outpaced China in GDP growth and is wealthier per capita that the most of the richest countries in the world, but according to Veritas it is really just like Ireland which is a small economy finding its way back into the international community after 100 years of civil war.

I have been right every time on Ireland and you, young man, have been wrong- Why? because I am Irish and you are just an internet doom and gloomer brainwashed by your own dreams of cheap houses. Well ya sure got some egg on your face now Veritas with your silly predictions from last year. WA house prices are up by 11% and Ireland is thankfully leaving the GFC well behind.

You don't have a leg to stand on.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Veritas
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Quote:
 
Ya might wonder if the Irish might be kinda upset with the banks don't ya think.


Why? Because they want people to pay their debts?

Quote:
 
According to Veritas and his la la land theories of cheap houses in the best areas of Perth, Ireland's house prices increased therefore they just had to drop like a stone


They did drop like a stone you fool. Do you accept that Ireland had a property bubble? Do you know what a property bubble is?

Quote:
 
I have been right every time on Ireland and you, young man, have been wrong-


Like the time you blamed the Irish banking crisis on American sub prime lending and the contagion effect?

Do you stand by that statement?

for those that missed it, Skamy getting PWNED on Ireland: http://australianpropertyforum.com/single/?p=8398095&t=9881087

Don't believe out of this bullshiter's mouth.
Edited by Veritas, 11 Sep 2013, 07:38 PM.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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skamy
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Veritas
11 Sep 2013, 07:30 PM


Why? Because they want people to pay their debts?




They did drop like a stone you fool. Do you accept that Ireland had a property bubble? Do you know what a property bubble is?




Like the time you blamed the Irish banking crisis on American sub prime lending and the contagion effect?

Do you stand by that statement?

for those that missed it, Skamy getting PWNED on Ireland: http://australianpropertyforum.com/single/?p=8398095&t=9881087

Don't believe out of this bullshiter's mouth.
I love it when you post my previous words of wisdom to ya. It is funny that even with an 8% rise now for Dublin homes you still stick to your silly theory that if a line goes up it has to come down. House prices grow most of the time sometimes this is unsustainable and there is a correction or a crash, I think people will laugh at the bubbleographers and their oversimplistic analysis in a few years. After all the bubblographer's prediction record has been absolutely dire.
Edited by skamy, 11 Sep 2013, 08:54 PM.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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mel
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the one thing which seems certain is that 'these corrections' don't seem to last long, and when they do happen the yields don't turn to shit relative to market values. The GFC (often compared to 1929) wasn't that long ago and people are already crying bubble in some parts of the US and elsewhere. I don't own any IP's but lets just call it what it is. Buy now :lol
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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Veritas
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mel
11 Sep 2013, 09:44 PM
the one thing which seems certain is that 'these corrections' don't seem to last long, and when they do happen the yields don't turn to shit relative to market values. The GFC (often compared to 1929) wasn't that long ago and people are already crying bubble in some parts of the US and elsewhere. I don't own any IP's but lets just call it what it is. Buy now :lol
Ireland is five years into the deepest recession in its history.

No end in sight.

Dublin prices 50% so an 8% jump is fuck all.

And its a mirage: the foreclosures haven't even begun and the banking system is still totally screwed.

These are the facts.

If you want non-facts listen to Skamy.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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skamy
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Veritas
11 Sep 2013, 09:55 PM
Ireland is five years into the deepest recession in its history.

No end in sight.

Dublin prices 50% so an 8% jump is fuck all.

And its a mirage: the foreclosures haven't even begun and the banking system is still totally screwed.

These are the facts.

If you want non-facts listen to Skamy.
Aw go on with you Veritas, you have been bleating your nonsense on Ireland way past the doom and gloom use by date. How long can you stand being wrong all the time as you are too silly to listen to folk who understand situations better than you do?
If you are not preaching to the Irish about Ireland, you are telling successful property investors why they chose to invest and insisting you know the reason better than they do.

Sometimes you really take the biscuit Veritas, your arrogance is only beaten by your silliness.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Veritas
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Okay Moron.

Would you care to elaborate on the following statement please?

Quote:
 
the Irish crisis which was caused by mainly by the Irish banks exposure to corrupt banking in the US and the huge costs imposed upon the Irish economy to prop up these banks.


You wrote that.

I want to hear all about how the Irish crisis was caused by its banks exposure to US banks.

I cant wait actually, I love reading fiction.

I dare you. For once, stand by one of your many bullshit factoids. :lol

When you are done with your flailing response, I'll remind you AGAIN what actually caused the collapse of the Irish economy.
Edited by Veritas, 12 Sep 2013, 01:38 AM.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Profile "REPLY WITH QUOTE" Go to top
 
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