It is a fallacy that house prices are too high in Ireland

cremeegg

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We do have a serious problem with high house prices throughout the country.
Do we? Are house prices high ? What is your basis for this rather extraordinary claim, I know that's what it says in the papers, but that does not really mean it is true.

The average house price is in the region of €300,000, the monthly repayments on a loan for this house is approx. €1,200, this is 18% the gross income of a couple both working full time on the average wage.
 

Brendan Burgess

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Do we? Are house prices high ? What is your basis for this rather extraordinary claim,

Good question. And, in fact, I have taken your side of the argument in public debates a few years ago.

For example, people have argued that the "average house price in Dublin is €x" and that is too big a multiple of the average earnings. To which I replied, that First Time Buyers do not buy the average house. They buy a starter home. And I went in to one radio debate with a list of the houses which could be bought for under €300k in Dublin.

But it's a very good point which I will move to a separate thread.

Brendan
 

Brendan Burgess

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Here is a report from E&Y on the topic which suggests that for most people, getting the deposit together is the big problem. It's a good report, but it is based on the median house price.


The evidence suggests that lack of affordability is driving house buyers out of those key markets and leading to increased activity in other, more rural, housing markets. This will present significant challenges for the five major cities whilst at the same time potentially providing a boost to the urban areas of other counties. However, looking beyond the main urban centres, the issue of unaffordability seems more widespread. Ultimately, out of Ireland’s 26 counties, nine of them were unaffordable on the basis of the ability to raise a deposit of 10% of the median house price: seven were deemed unaffordable based on the ability to repay the mortgage should buyers be successful in gaining the deposit (on the basis that it would be more than three and a half times first-time buyers’ gross household income).
 

cremeegg

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According to that EY report if I understand it correctly it takes between 3 and 4 years for a FTB renting to save the deposit for the median house, 4.3 years in Dublin.

That does not strike me as excessive.

At age 24, 2 years out of college/3 years a qualified tradesperson, I decide I want to buy a house, aged 29 I have the deposit saved and can afford the mortgage. That is paying rent all the while. Is that a sign that house prices are too high ? I don't think so.
 

kinnjohn

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According to that EY report if I understand it correctly it takes between 3 and 4 years for a FTB renting to save the deposit for the median house, 4.3 years in Dublin.

That does not strike me as excessive.

At age 24, 2 years out of college/3 years a qualified tradesperson, I decide I want to buy a house, aged 29 I have the deposit saved and can afford the mortgage. That is paying rent all the while. Is that a sign that house prices are too high ? I don't think so.
When my Daughter moved to Austria to get the best /special interest rate she had to save over five years, in the area, she intended buying
I think part of the reasoning is they can plan/know how much housing is required in each area 5 years before buying,

The landlord's tenancy agreement would be built around the expected date of termination of the lease and moving to new home,
 
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Protocol

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In rural Ireland, prices are okay.
It is the cities where the problem is.

I know of a modest 4-bedroom detached house on an okay estate, in a town of maybe 5k-10k in Tipperary, that sold for 215k approx during the last 12 months.

That price is fine.

The problem is that the same house within 20km of Galway or Dublin is nearly double that.
 

Protocol

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According to that EY report if I understand it correctly it takes between 3 and 4 years for a FTB renting to save the deposit for the median house, 4.3 years in Dublin.

That does not strike me as excessive.

At age 24, 2 years out of college/3 years a qualified tradesperson, I decide I want to buy a house, aged 29 I have the deposit saved and can afford the mortgage. That is paying rent all the while. Is that a sign that house prices are too high ? I don't think so.


The problem is that as rents are so, so high (relatively higher than house prices), it is nearly impossible to pay Dublin rents and save for a deposit.
 

Protocol

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Rents are way too high.

Two example: 2-bed small apt near NUIG = 1280 pm - this should be more like 800 pm

Modest 3-bedroom house in Moycullen = 1350 pm - this should be more like 800 pm
 

cremeegg

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Rents are way too high.
That would be my perception also.

Rents are way too high.

Two example: 2-bed small apt near NUIG = 1280 pm - this should be more like 800 pm
Why should it be 800pm. Why not €1,280, or indeed higher as I think it actually would be.

This one


is for sale for €250,000, is that a fairly average 2-bed apt in Galway? €800pm is a 3.8% return before any costs and before taxes, no one would be a landlord for that kind of return.
 

PGF2016

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The problem is that as rents are so, so high (relatively higher than house prices), it is nearly impossible to pay Dublin rents and save for a deposit.
But people can and do save for deposits. There's no shortage of people with deposits and mortgage approval. There aren't enough houses for those people and bidding wars are pushing the prices up.

There isn't enough supply to satisfy all those with deposits.
 

noproblem

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That would be my perception also.


Why should it be 800pm. Why not €1,280, or indeed higher as I think it actually would be.

This one


is for sale for €250,000, is that a fairly average 2-bed apt in Galway? €800pm is a 3.8% return before any costs and before taxes, no one would be a landlord for that kind of return.
In fairness, that apartment is not a private treaty sale, it's for sale by Public Auction. Going by what something similar sold for in Donnellan and Joyce's public auction last week (a few hundred yards away) this could sell for €300,000.00 plus.
 

The Horseman

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House prices are based on costs of input. Why is it so difficult for people to understand this? Somebody has to pay for these costs. We have become paralysed trying to please everyone and ending up pleasing no one.

If we import raw materials we can't dictate prices we pay. Raw material costs have increased. Lower building regs which should lower build costs.

For example why do all houses need to be an a ber rating?. Why not have a lower rating and work up that. I know personally my house is a mid 70's build and is far from that. At best it's a c rating but it's perfectly habital.
 

Purple

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House prices are based on costs of input.
House prices are based on what the market will stand. House costs are based on input costs. The difference is the profit or loss.
Why is it so difficult for people to understand this? Somebody has to pay for these costs. We have become paralysed trying to please everyone and ending up pleasing no one.
Just about everything else has become cheaper to make over the last 50 years. Why are houses so much more expensive? (and no, it's not because standards are higher). The problem is that the construction sector internationally is dysfunctional. That's been covered in detail elsewhere.
If we import raw materials we can't dictate prices we pay. Raw material costs have increased. Lower building regs which should lower build costs.
Not by much. Site costs, taxes and charges and the cost of finance are bigger issues and easier to fix. The fact that around 30% of construction materials that are delivered to a construction site end up as waste tells us that the problem is not the cost of materials. Factory built houses generate around 5% waste.
For example why do all houses need to be an a ber rating?. Why not have a lower rating and work up that. I know personally my house is a mid 70's build and is far from that. At best it's a c rating but it's perfectly habital.
Yes, but higher BER houses produce lower carbon emissions over their lifetime.
 

NoRegretsCoyote

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Here is a list of per square metre prices for 41 north European cities. Ireland is not particularly high: Dublin (13), Cork (32), Limerick (36). The latter two cities are cheaper then the Baltics, which are pretty low-wage places. Dublin is on a par with Liverpool, very much a second-tier UK city economically.

Of course for rents it's a different story. But prices themselves are medium-low by comparison with peers.

 

Purple

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Here is a list of per square metre prices for 41 north European cities. Ireland is not particularly high: Dublin (13), Cork (32), Limerick (36). The latter two cities are cheaper then the Baltics, which are pretty low-wage places. Dublin is on a par with Liverpool, very much a second-tier UK city economically.

Of course for rents it's a different story. But prices themselves are medium-low by comparison with peers.

Prices are being kept lower here by the Central Bank lending rules. That's a good thing.
 
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