Battle royale for last 'loan' houses
Battle Royale is a highly acclaimed but visceral cult film released in 2000 by the Japanese movie director Kini Fukasaku. Based on the novel of the same name by Koushun Takami, the plot has elements of William Goulding's Lord Of The Flies and must surely have provided some inspiration for the recent, more westernised Hunger Games franchise.
The story is set in a dystopian near future where each and every year a class of young secondary school children are dropped off on a remote island, supplied with different weaponry and let at each other in the annual "Battle Royale" televised game show event. They fight to the death until only one is left standing.
A most extraordinary thing is happening in the Dublin property market at the moment where a sort of battle royale is taking place at the lower end of the market for family sized houses. In some suburbs, the most affordable starter houses are surging in value at a pace not seen for years. Houses which have been coming to market priced at €245,000 are flying up rapidly to €280,000 and €290,000 to sale agreed. That's 8pc over a six or eight-week sales campaign. And 8pc would be considered a high rate of inflation over a 12 month period.
We're not talking about apartments, two-bed terraces, mid-priced three or four-beds or top-end homes. I refer only to cheaper three-bedroom houses - whether semis or terraces or upper duplex properties - essentially what Dubliners generally consider to be the minimum accepted space requirement in which to raise a family.
The result is that the next equivalent home which comes to market is starting off at €275,000 rather than €245,000 and then moving towards €300,000. Such homes would have sold for €190,000 to €210,000 a year ago.
Mid-priced properties in the same areas are selling steadily, but not rapidly. And in total contrast, at the very top end, the market is generally quite dead. Brexit, log jams in the trade-up chain and a fear of trading down amidst the competition has reduced the stock of high-end homes for sale to almost a third of what it was a year ago in some locations. Those which do come to market have tended to sit around for months.
But for three-bedroom houses priced between €200,000 and €250,000, an increasing rarity in the capital, the competition has gotten beyond fierce.
The panic bidding phase takes off as homes in this range begin to lift towards the magic €300,000 barrier. This is the general threshold beyond which average mortgaged couples become priced out for this home type.
Where this is happening, those couples are panicking and moving in desperation from one unsuccessful bidding session to another. Faced with the prospect of having to move out of Dublin to acquire a three-bed house, or stepping down the ladder to an apartment or a two-bed terrace, competing couples facing the three-bed affordability ceiling are changing tactic and going 'all in' to knock other bidders out of the process.
Fed up with spending weeks bidding up in dribs and drabs and losing out, while becoming extra fearful that inflation is rapidly catching up on their buying power, they are wading in and chucking the kitchen sink at anything that moves.
In the process, they are escalating the very same inflation that they are reacting to in the first place.
Estate agents are reporting bid increases of €10,000 and even attempted "knockouts" of €20,000, as bidders try to blow away the competition. Homes which have sat bidless for weeks are suddenly being picked up in bidding whirlwinds. Generally, its happening in any area wherever three-bed houses are priced under that €300,000 mark. Once they surpass that, bidding tends to cool again on these types of properties.
What we are witnessing is the last gasp attempts of the 'average' Dublin couple to secure an 'average' Dublin house.
The very same thing has happened in London over the past 10 years. Falling wages, increased living costs, tighter planning, increased construction costs, a shortage in homes caused by building cessation after the world crash and a tightening in lending all combined to see huge bidding battles take place for the last of the cheapest semis, then next for the former local authority houses and, finally, for the two-up and two-down terraces before average Londoners finally got priced out of houses.
It's also happened in New York and in many other 'western cities' around the world.
In the not too distant future, the target home in Dublin for the average couple will be the two-bed apartment or two-bed terrace - these or a distant commute from a three-bed in surrounding counties.
All in all, the dystopian effects of massive shortage and diminishing real salaries.