Trump gamble pays off
Donald Trump wasn't the only winner last week - the owners of The Donald's childhood home are also "fist pumping".
The couple who own the modest Queens house in NYC took a gamble on Trump's win when, having lowered the asking price to $1.2m (€1.13m), they took it off the market last month. Now, according to the New York Post, the house is expected to get 10 times that sum when it goes on the auction block in December.
"I'd love to say we knew he'd win, but it was a gamble," said Misha Haghani, owner of Paramount Realty USA, the auction house handling the sale for current owner, restaurateur Isaac Kestenberg.
I wonder would Hillary buy it?
Rail services impact commuter belt prices
Irish Rail announced last week that it is losing money by the trainload and will look to discontinue some rural services. The flipside to this is the introduction tomorrow of the new direct commuter service to the city centre from parts of Co Kildare and western parts of Co Dublin.
Historically, surveys show that homes with good access to the rail network are more popular and often command higher values than those that don't have good access. A recent report carried out by daft.ie highlighted the fact that, on average, properties close to a train station cost between 5pc and 10pc more to purchase and up to 5pc more to rent.
In Dublin, due to the critical shortage of all house types and soaring sale and rental values, city-based dwellers are now looking at moving out to the commuter belt where they can secure larger homes for less money. In many cases the starting point for many will be properties located along the rail line, ie, with better accessibility to the capital. Only this week, the CSO released its latest Property Price Register figures which show that the biggest increases in values this year are outside Dublin with Midlands prices rising by up to 15pc.
These location are set to prove even more popular with the long overdue arrival this week of direct trains from Hazelhatch/Celbridge, Naas/Sallins and Newbridge to Drumcondra, Connolly, Grand Canal Dock, Pearse and Tara Street stations. The railway line which connects Heuston to Connolly is over 100 years old and has been upgraded to the tune of €13.7m to bring it up to the standards required for passenger traffic.
Previously, it had been used only for big match days at Croke Park, now it will provide genuine direct access to the city centre. There will be up to seven trains either way at rush hour which will also ease the pressure on the Luas red line. It means a potential saving of up to 30 minutes a day for a typical commuter working in the city centre or docklands - or 2.5 hours a week. It will be interesting to see the impact this has on housing trends in these areas. No doubt, demand will increase and there will be pressure on prices.
Mortgage review on way
Over the next week, the Central Bank will announce the result of its long-awaited review of mortgage lending restrictions. Fifty submissions to that process were received from interested parties across the spectrum.
Indications from governor Philip Lane are that minimal change is likely. The Central Bank has said the restrictions are needed to prevent the market from overheating. This is a prudent approach with real merit, especially when the figures released this week by the CSO show a national increase in values for the 12 months to the end of September of 7.3pc.
The Help-to-Buy incentives in Budget 2017 have addressed the 20pc deposit requirement for FTBs but not the 3.5 times earnings rule. But there remain some unfortunate victims of the Central Bank measures, ie, second-time buyers who bought at the top of the market and still have little or no equity in their home. As a result they are staying in their first home for longer which reduces the amount of stock coming to market. This stock could supply the huge shortage of rental stock available which is currently down nearly 50pc on 2014.
In preparing the review, it's unlikely the Central Bank will take into account the current lack of supply or crisis in the delivery of homes nationally. This is not part of their remit but the responsibility of Government.
What do industry commentators say?
According to Pat Davitt, CEO of the Irish Auctioneers & Valuers Institute (IPAV), "a two-tier process with different Loan-to-Value (LTV) and Loan-to-Income (LTI) in Dublin than the rest of the country" should be introduced. He also believes "the minimum residential price limit should be extended from €220,000 to €350,000 in Dublin" and "the LTI in Dublin should be extended to four times gross income".
"I'm hoping the limits will remain substantially in place," said Lorcan Sirr, lecturer in Housing at DIT. "They serve a purpose and have been proven to be effective in tempering house price inflation elsewhere. I think it more imperative that we examine the costs of building to make it more economically viable, rather than try to raise the price of houses. There may be a period of pain for some as they need to save more for a deposit. Everyone will benefit in the medium to long term."
"The CIF believes that the Central Bank's macro-prudential framework is a necessary policy lever in the Irish banking system," said CEO of the Construction Industry Federation (CIF), Tom Parlon. "Currently, the calibration of these rules is preventing people who can afford mortgages and have the ability to service mortgage debt from becoming viable FTBs.
"In our submission to the Central Bank review, we asked that the LTI ratio be increased from 3.5 times income to 4-4.5 times income. This would allow the viable cohort of FTBs to secure mortgages for existing starter homes. In addition, when these FTBs can actually access a mortgage, banks will be more likely to provide finance for homebuilders to deliver appropriate housing."
Michael Dowling, chair of Irish Brokers' Association mortgage committee, proposes that the limits be changed to "for FTBs, 90pc of the purchase price up to a purchase price of €350,000, 80pc of difference thereafter.
For second-time or subsequent buyers, 85pc of the purchase price. Banks should be allowed flexibility on the exemption limits so that an average over a three-year period should be used rather than strict limits of 20pc on LTI and 15pc LTV applying each year. The Central Bank report to Q3 2016 showed that the limits used were at 12pc and 11pc respectively at that stage."
Aine Myler, the new director general of the Society of Chartered Surveyors Ireland (SCSI), said that "house prices are still below build cost in certain parts of the country, so the rules apply mainly to urban areas where demand is highest and supply is very weak.
"There is no doubt that buyers are making choices based mainly on affordability, with long commutes and no local family support. We have continuously advised that increasing the supply of the right homes in the right locations is key to providing choice to buyers and tenants - it's in nobody's interest to see major house price or rental hikes, but recent increases are the direct consequence of the lack of supply after years of zero development or public investment in housing."
- Philip Farrell is a market commentator and property consultant