People's thoughts on house prices

jank

Ok i put this in after hours specifically.

So what do ye think about the current property situation and what do you think will happen a few years down the road.

Will the growth be sustained or will it all go tits up as interest rates increase (remember we have no control over them at present)

My opinion is the later that we are so in debt that a 1 or 2 % increase in interest rates will add major headaches to young families and couples who are trying to get their own homes. I think a crash is very likely (even though the banks say nay, but then agin it is in their interest to borrow money off them)

Many leading economists share the same stream of thought, so what do ye think can it continue!

All views welcome

flogen

its bound to crash if it keeps up as it does, demand can only continue for so long as prices rise.

flogen

woosaysdan

prices are gone through the roof!!!

keu

It looks like it will be sustained (as much as many people here would benefit from a crash, it probably won't happen)


and I wold think that in ten years time, there's going to be a load of repossesion too.

Dub13

I can not see prices going down as most people are under 25 and they will be looking to buy houses when they are in there lae 20s.Once there is a demand the prices will stay high

Flukey

The price of houses are absolutely ridiculous, a scandal. Small houses with a garden not much bigger than a windowbox and you are paying several hundred thousand euro for them. They should only be a fraction of the price.

silverside

Prices have already fallen in Australia. They are levelling off in the UK and the market has slowed. I think they will fall by a small amount here (20% or so) but that would only bring them back to where they were 2 or 3 years ago.

Someone has a sig with a 'house price crash' site in it, it has a few articles (Economist etc) which are interesting to read.

Tommy Vercetti

Hopefully they will keep increasing to make me wealthier (on paper, at least) and to keep the scum in the ghetto.

jank

The thing is most new house's are being bought by investers
A new development near me has just sold 18 of its town house's Only 2 are new house buyers the rest are investers.

This is ture all over the country expecially in the cities

Where is the money coming from for these 500,000 house's?

Investers dont put there money in the banks any more (why would you with 2% return :rolleyes: )
They are putting there money in real estate and this is true all over the world (There was an intesting articale in newsweek a few weeks back on this)

The reason for this is record low interest rates but there lies the problem, when money is cheap everything else becomes so expensive

Yes there is alot of demand for houses but the key here is affordability
Can a young couple afford a mortage for a 250,000 house presently,

Hmmm just about I say and a report says that these people are comfortable at present,
what if interst rates go up... absolutly not
Interest rates will go up sooner or later (I think they will near 5% in the next3-4 years thats almost an extra 2% which means a very big increase in monthly repayments, Investers will want to cash in as to not be stuck making larger repayments for property that is after cooling down on growth, young people wont be able to afford new houses because money is now expensive so what happens...

Demand decreases and supply increases which leads to a reduction in price
How quickly and steeply these reductions happen could be regarded as a crash

Thats my theory anyway could be a load of **** but I think it makes sense
The key is the interst rates( remember interest rates in the 80's were at 18% :eek: ) so a mild increase to 5 or a bit more does not sound unreasonable at all

Calibos

There better be a crash or else I'll be living with me mammy and daddy....FOREVER!!! :D

elivsvonchiaing

I think unless there is a major economic crisis - Microsoft/Intel pull out of the country - prices will be stable. But I think my place will only be worth 10-15% more in ten years as opposed to 100- 150% more if the trends in the late 90's applied. This, taking inflation into account would probably be negative equity. We will see this one way or another. I would bet my shirt on it.

luckat

I don't see how it can be sustained - house prices are in a ridiculous relationship with wage levels at the moment. Rents are already starting to slide. If they slide badly a lot of people who have bought houses that will supposedly pay for themselves in rent are going to take a big hit. And if that happens they'll be trying to sell in a declining market, and the rest of the market could follow them down.

Then there's the question of all the people buying abroad. If international tax treaties are arranged, some of these people might find themselves paying tax on property that's currently sitting there quietly drinking a bit of money but basically paying for itself. Then there'd be a rush to get these properties off their hands...

God be with the days when people used to save up for a house before they got married!

EKRIUQ

Tommy Vercetti wrote:

Hopefully they will keep increasing to make me wealthier (on paper, at least) and to keep the scum in the ghetto.

here, here thats what I like to hear

Imposter

Luckat wrote:

I don't see how it can be sustained - house prices are in a ridiculous relationship with wage levels at the moment.

I agree with this and it introduces a wider problem. Are the current wages being paid to people in Ireland sustainable? If they are then fine but if not then wages will have to drop (or at least not keep up with inflation), thereby causing people to have less money for everyday spending. Ok those that have houses won't need extra money for their mortgage but chances are that they will need extra money for everyting else. I think this will put enough pressure on enough people to cause house prices to fall (there would also be less people in a position to buy as well). And none of that takes even a small rise in interest rates into account.

Stephen

I hope it collapses, or else I think i'll be renting for the rest of my life.

ur mentor

Number one topic of conversation all over the country. Some evidence lately that rental of residential propertties has returned a bit. This usually means that potential buyers have decided to wait before they buy as they are expecting house prices to stabilise or even fall. IF enough people believe this then it will happen.
Not sure if investors are buying as much as indicated above. In general they appear to be fairly quiet in this neck of the woods.
Pretty sure there are more hosues being built than ever before. this will push prices down as supply and demand rules all!!!

ferdi

yeah i hope it collapses soon

Quatre Mains

- the keys here are

1. the increased supply of 'low end' accomodation
2. interest rates

- about 3 years ago there was a dip in the market, but this only had a minor effect on the low end compared to the high end because of the high demand for these places. If the market dips again, the low end will dip much more sharply now that supply is up.

As has already been pointed out, rises in interest rates are coming soon over the next couple of years. This will force people who stretched themselves too far with their mortgages(and I'm sure there's plenty of those) to sell. Investors will also sell quickly in order to protect their profit and also because there is a strong likelihood that they won't be able to increase rents too much seeing as there is so much rental property around.

Nonetheless, there won't be a spectacular crash IMO, I agree with silverside's estimate of circa 20% at most. Don't forget if a property was bought even as little as 2 years ago such a drop wouldn't bring about a negative equity situation, so it wouldn't be all that big a deal.

pyrogenx

the prices of property are certainly going to rise and rise on a long term bases.

But if any of those said investers is goin to have to sell off some of the houses again to get some loose cash, they might make a serious LOSS. As the prices seem (or should) to be going down in the next 2-5 years.
I'm sure in general the price will always go up after all, i mean much do u guys think is a house that costs 200K today gonna cost in about 50years !???!?!?!?? (assuming the humans will still exist)

boo4842

Supply is definately up.

In fact Ireland has been building at about half of the rate of the UK, despite the small fact that the UK has 14 times the population. I think supply has allready caught up, its just demand is incredible. Its not like people didn't have anywhere to live 20 years ago, or couldn't find a house to buy, just now investors are buying them up like theyare going out of style.

Buying a house is always a good investment if its for your home. Who cares about negative equity, as long as you can afford about the repayments, in the long term, prices should go up. Most people live in their houses for 20 years or more before even thinking of selling. Many more die still owning their home. Its the investors which will, and should lose out. They wanted to make the quick buck and hopefully a few of them get burned when the market is saturated, prices go down, rates go up, and there is no one to buy or rent these properties.

Interest rates are a huge thing. Interest rates are ARTIFICIALLY low in Ireland. They should not be at 2%. Its simply because we are tied to the Euro and that Ireland has a minimal effect on monetary policy in europe. This is working great at the moment, with soaring house prices, inflation, wages etc, and we still have low interest rates. If the Irish goverment still had control, rates would be higher than 5% by now. The bank of england rate is like 4.75%(not sure exactly) now and are expected to rise further, and their boom was nothing compared to ours.

Remember that this can work the other way. And if Germany and France are in a high inflation environment, and the ECB raises rates to 8% and the Irish economy is struggling, the government will be powerless to lower rates to stimulate growth. Homeowners will be forced to pay huge rates that don't reflect the countries economy. And I'm waiting for it to happen.

Gurgle

The only reason prices are so high here is due to the piece-meal zoning of land. The prices are kept artifically high by limiting the building. If you have a site, and manage to get permission, you can build a good sized 4 bed for €100k or so. The same house sold second hand would reach up to €300k. Thats €200k for a patch of dirt with planning permission.

Theres no reason to expect a crash though, as there is no chance of the planning authorities de-regulating.

jank

thats my point

Demand is huge at the moment but its the investors at the moment who are keeping the demand so high as the ordinary joe so cant afford the huge prices that are offered, so demand could be viewed as artifically high

Either that or we are turning into a landlord/tenant country like we were pre paranell

stevenmu

It's simple really. It's only in the last year or two that supply (of new houses built) has met demand, over the next few years supply is going to outstrip demand. Especially when the interest rates go up, less people are going to be able to afford to get a mortgage, many people already with one will be forced to sell, all this will put downward pressure on the prices. When the investors see this, they'll start to sell too, planning on rebuying when the prices hit bottom. Once this starts most investors will have to sell to protect their investment (and make more once the prices go up) so they'll flood the market with houses, builders will have to drop their prices to compete. Potential buyers will see the prices coming down and will hold off as long as possible before buying and the market will crash. This'll all happen in the next 3-5 years. After a year or so interest rates will drop and banks will be dying to give any eejit a mortgage so all us people who are renting (or with parents or wherever) will get a chance to get on the ladder. With mortgages going out left right and centre and investors using the cash from selling off earlier prices will shoot up pretty quick to somewhere near where they are today.

I think this is what economists call a "correction". It happens whenever ridicoulus prices are being charged for something, eventually people stop buying whatever it is and look for alternates. Like the way so many people get off-license nowadays instead of going to the pub, eventually pubs will have to drop their prices to compete or go bust (altough once I buy my nice cheap house at the bottom of the crash I should have enough left for a nice mini-bar in the garage )

bbbbb

Supply is controlled to some degree. One quirk of the Irish property market is that most new houses are sold off the plans (i.e. before they are even built!). Makes it much easier for the developers (is there a cartel going on here) to keep the prices up. Since most developers have long since made their fortunes, they can afford to sit on any development land they might still own.

pyrogenx

After all the short term up and down, i believe prices will double again within the next 15-20 years. Since good developement land is not something u can grow.

Gurgle

pyrogenx wrote:

After all the short term up and down, i believe prices will double again within the next 15-20 years. Since good developement land is not something u can grow.

There is an abundance of development land. Ireland is way under-populated by the standards of pretty much everywhere else.

Its the cynical land zoning strategy thats causing the massive prices. The government is whining about inflation due to house prices but they are entirely directly responsible for that inflation.

Sleepy

Gurgle wrote:

Its the cynical land zoning strategy thats causing the massive prices. The government is whining about inflation due to house prices but they are entirely directly responsible for that inflation.

Cynical? I'd call it corrupt. Just look at the guests in the Fianna Fail tent at the Galway races and you'll see that every major developer in the country was there sipping pints of Bass with Bertie et al.

stevenmu

Gurgle wrote:

There is an abundance of development land. Ireland is way under-populated by the standards of pretty much everywhere else.

House prices here are roughly the same as Holland even though we have about 6 times the land mass and less than one tenth the population.

Victor

stevenmu wrote:

House prices here are roughly the same as Holland even though we have about 6 times the land mass and less than one tenth the population.

Erm.

Ireland
Population: 3,969,558 (July 2004 est.)
Area: 70,280 sq km

Netherlands
Population:
16,318,199 (July 2004 est.)
Area: 41,526 sq km

pyrogenx

Victor wrote:

Erm.
Ireland
Population: 3,969,558 (July 2004 est.)
Area: 70,280 sq km

Netherlands
Population:
16,318,199 (July 2004 est.)
Area: 41,526 sq km

I guess stevenmu got the numbers a bit mixed up there.


Still i didn't actually know that holland is that small in size compare to Ireland!
For those who don't have a calculator (nevermind the one on ur OS) :
Population dencity:
Ireland : ONLY 57p/sqkm
Holland : 385

Hugh difference, i guess the higher the dencity the more property CAN cost ?

stevenmu

pyrogenx wrote:

I guess stevenmu got the numbers a bit mixed up there.

hmmm.. I guess I should have checked those figures first. I got them from a dutch person living here for a while so I just assumed they were ok. Th point still stands though, if somewhat reduced, assuming my information on house prices (same source) isn't also over stated.

IgnatiusJRiley

There might have been a chance of them dropping but with the SSIAs maturing next year, there should be another boom... hooray!!!

[EDIT]
... or is that 2006?

bean

This topic is about as useful as a Sky News Poll.....Why? Of couse high prices are bad.
It looks like most graduates in the next five years will NOT be able to afford to buy/own their own property.
Renting anyone? Thats fine, maybe we dont need to own a house but the cost of rent. Im payin 350 for a S*ITHOLE and i still need to take two buses. RIP OFF IRELAND STRIKES...

Unpossible

Maybe we need to look at europe, they seem perfectly happy to just own their own appartments. I know french/finnish people who were amazed at the size of houses here (as I was amazed at the size of houses there). It seems to be something drilled into us that we need to have a nice big house with a back yard.


PS a few months ago a frenchman told me his mother bought an appartment in a city (I think it was lyon but Im not sure) for €97,000

luckat

The relationship between salaries and house prices seems to have gone a bit crazy all right.

If Dublin Corporation goes ahead with its awful plan of selling off its flats (why?? why???) this will flood the market with new homes, which may make a difference.

There are plenty of unfashionable areas where houses aren't as criminally dear as more trendy places - it's hard, but if you buy in a cheap area and put up with a couple of years of renting rooms to help pay the mortgage, you'll end up as an owner.

Victor

luckat wrote:

If Dublin Corporation goes ahead with its awful plan of selling off its flats (why?? why???) this will flood the market with new homes, which may make a difference.

Not quite, as (a) it would also flood the market with demand (b) it doesn't create any free space as the people living in them need to live somewhere.