Boycott Of The Housing Market

miju

whizzbang wrote:

needed or wanted I think is the core question...

ding , ding, ding , it's the majority of people wanting rather than needing causing this demand (as in i NEED a roof over my head but i don't NEED to buy a house in order for that to happen)

sure it's circles and roundabouts but i'll agree with you FillSpectre and to be honest BOTH sides make valid points , i'm just of the opinion that the points made by the bears side are much more valid / real

anyways , i said i'll butt out of these threads (as they're spreading all over boards like a virus LOL ) and i'll try

lomb

no one knows what will happen, the bottom line is changes in any of these things effect price , no one can predict what will happen but il give it a shot
confidence- this is human and is so variable no one can predict
employment- who knows
interest rates/ banks liquidity position- looks not bad considering ability to fix for 5 years at reasonable rates
SUPPLY/DEMAND - i can predict this and say thel be too much soon
market trends apartments or houses- i think apartment demand is hyped, no one really wants suburban apartments

thats my 2 cent anyway

Afuera

FillSpectre, I've shown you examples of markets that have crashed due to sentiment and that there doesn't have to be a big event to cause a crash.

If you don't want to believe that that could happen in the modern Irish property market then fine. I'm not here to persuade you one way the other, just to show you that markets are very open to sentiment, with rational thought often going out the window.

FillSpectre wrote:

Did you miss the home buying adult age?

No, I went back through 30 years of statistics to take that in to consideration. Before 1971 we had a negative population growth rate.

FillSpectre wrote:

It is over replacement rate now but that will change.

This is exactly the crux of the point. At some stage the new output will have to slowdown to the level of natural demand. The population growth rate includes immigration and if you want to see what a developed countries population growth looks like check out France or the UK which have 0.35% and 0.28% respectively. These countries have had divorce and single parent families for longer than Ireland yet they still have an average household size above 2.

If the upcoming natural demand in Ireland can be estimated to be about 20,000 or so houses a year then that means that the construction industry would need to shrink to about 25% of it's current size. A loss of 75% of people working in the construction industry would amount to an increase in unemployment of about 10% for the whole country. This is not even taking into account indirect jobs such as banks or real estate agents who would also have a lot less business in a slowdown.

The fact that we are currently building 4-5 times the natural amount required only means that we will reach the stage where it has to slow in the very near future. Also, it greatly increases the chances that we will have an oversupply (if we haven't already).

chump

Afuera wrote:

A loss of 75% of people working in the construction industry would amount to an increase in unemployment of about 10% for the whole country.

I think we need to distinguish between home-construction and general construction. Just yesterday...
http://www.rte.ie/business/2006/0710/construction.html

Anyway Fillspectre, once again you criticise messengers while ignoring their points.

Most of the people talking don't have a proper understanding of economics and have little or no knowledge of property. I think things will change but people here only think one type of change will happen and don't really think beyond that or the effects.

Are you quite honestly discounting the points put forward in the numerous threads by anyone but yourself?
You've yet to actually accept any argument put forward that suggests a crash 'could' occur. Instead you continually criticise in a mostly unintelligible manner.

I think the size and scope (or even occurance) of a crash will depend on a few factors, that no one here knows the answers to yet.

The extent and pace of ECB hikes
The borders being opened in the rest of the EU to the recent accession states. -> level or inward/outward migration
The loss of irish competitiveness caused by inflationary pressures, patnership agreements, etc. -> level or inward/outward migration
The quantity of IO investors currently in our market.
The ability (permission granted) of our lenders to create ever more exotic mortgage products.
Future planning permission decisions.
Home-builders accepting declining build-rates are needed.

and that's all I can think of at the minute. Feel free to add

FillSpectre

chump wrote:

Anyway Fillspectre, once again you criticise messengers while ignoring their points.

Name points I have ignored that I haven't already discussed!

I criticise what appears to me to be unfounded comments or do you beleive Gurgles conspiracy?

I actually have said prices changes are likely but not a crash and I think you will find I dismiss people who give no reason for a crash other than an increase in price. Find where I dismissed a reason for a crash other than the claim price rises will do it

Afuera

chump wrote:

I think we need to distinguish between home-construction and general construction. Just yesterday...
http://www.rte.ie/business/2006/0710/construction.html

Fair point.

chump wrote:

I think the size and scope (or even occurance) of a crash will depend on a few factors, that no one here knows the answers to yet.

The extent and pace of ECB hikes
The borders being opened in the rest of the EU to the recent accession states. -> level or inward/outward migration
The loss of irish competitiveness caused by inflationary pressures, patnership agreements, etc. -> level or inward/outward migration
The quantity of IO investors currently in our market.
The ability (permission granted) of our lenders to create ever more exotic mortgage products.
Future planning permission decisions.
Home-builders accepting declining build-rates are needed.

and that's all I can think of at the minute. Feel free to add

Changes to government policies such as stamp duty, investor relief, etc.
Overly positive/negative sentiment of reporting in media

FillSpectre

Afuera wrote:

FillSpectre, I've shown you examples of markets that have crashed due to sentiment and that there doesn't have to be a big event to cause a crash.

Sorry I should keep repeating myself exactley untill you answer. Show a property price crash that happened due to prices rising alone. Florida was land speculation in case you suggest otherwise.

Afuera wrote:

If you don't want to believe that that could happen in the modern Irish property market then fine. I'm not here to persuade you one way the other, just to show you that markets are very open to sentiment, with rational thought often going out the window.

The point is you are suggesting the market is entirely speculitive and consider all property as the same. You don't need to persuade me but you aren't making a valid point. I don't think the market will continue to rise indefinitely but I can't see why you think it will crash as you can't seem to tell me a reason. THe other point is you have contradicted yourself.

Afuera wrote:

This is exactly the crux of the point. At some stage the new output will have to slowdown to the level of natural demand. The population growth rate includes immigration and if you want to see what a developed countries population growth looks like check out France or the UK which have 0.35% and 0.28% respectively. These countries have had divorce and single parent families for longer than Ireland yet they still have an average household size above 2.

Actually this is the bit you keep missing. a house built in Athlone will still not be worth the same as one in Dublin. Go to LOndon and PAris and check out the housing stock. I can tell you that there is property for single people. Masses of Victorian London have had the house split into seperate places. Paris has had smaller places for 100s of years. 100,00 small places built in Ireland is a different housing stock that Dublin has been lacking. You don't seem to get this as concept hence all the figures you are relying on are grossly inaccurate.

You live in Spain, right? Now my friends who live there live on their own with their own space but if they lived here they would have to share.

Afuera wrote:

The fact that we are currently building 4-5 times the natural amount required only means that we will reach the stage where it has to slow in the very near future. Also, it greatly increases the chances that we will have an oversupply (if we haven't already).

As I say the type of property has changed so does not hit the mark you are talking about. Different supply is not over supply. Demographic changes mean people don't buy a house and live there forever move up the ladder is the way people do it now. Single people buying on their own and later on buying together.

I think you are missing social changes and misunderstanding how ststistics are actually derived and their meaning. I don't feel like dragging your details a part as it is alittle difficult to figure out how you are working out your figures

Afuera

FillSpectre wrote:

Sorry I should keep repeating myself exactley untill you answer. Show a property price crash that happened due to prices rising alone. Florida was land speculation in case you suggest otherwise.

Nobody ever said that property can crash due to rising prices alone.

FillSpectre wrote:

The point is you are suggesting the market is entirely speculitive and consider all property as the same. You don't need to persuade me but you aren't making a valid point. I don't think the market will continue to rise indefinitely but I can't see why you think it will crash as you can't seem to tell me a reason. THe other point is you have contradicted yourself.

I never suggested that the entire market was speculative.

I've given multiple reasons for a crash such as lack of affordability, change of sentiment, oversupply etc. but you seem incapable of taking these ideas on board.

Are you sure you're not making some wild assumptions and misunderstanding the apparent contradiction?

FillSpectre wrote:

Actually this is the bit you keep missing. a house built in Athlone will still not be worth the same as one in Dublin. Go to LOndon and PAris and check out the housing stock. I can tell you that there is property for single people. Masses of Victorian London have had the house split into seperate places. Paris has had smaller places for 100s of years. 100,00 small places built in Ireland is a different housing stock that Dublin has been lacking. You don't seem to get this as concept hence all the figures you are relying on are grossly inaccurate.

You live in Spain, right? Now my friends who live there live on their own with their own space but if they lived here they would have to share.

Don't be absurd. There have been bedsits and single bedroomed appartments in Ireland for years. If they were lacking then the rents for them would be skyrocketing.

FillSpectre wrote:

As I say the type of property has changed so does not hit the mark you are talking about. Different supply is not over supply. Demographic changes mean people don't buy a house and live there forever move up the ladder is the way people do it now. Single people buying on their own and later on buying together.

So first you say that single people have to share in Ireland... But now you're saying that they buy on their own. I dunno, sounds like a contradiction to me!

FillSpectre wrote:

I think you are missing social changes and misunderstanding how ststistics are actually derived and their meaning. I don't feel like dragging your details a part as it is alittle difficult to figure out how you are working out your figures

And I think you're incapable of understanding simple sentences so figures must be way beyond your grasp.

DublinWriter

Gurgle wrote:

A soft landing will result in the need for building falling off, an increase in supply of semi-skilled and unskilled labour, lower pay rates (increased competition) for factory jobs and another boom in our manufacturing industry*.*Barring global recession

Barring global recession indeed.

But to those who cry "oh there's 50,000 people in the building trade...house price crash...mass umemployement" I'd retort by asking have you actually ever tried to get a good plumber, plasterer, brickie or chippie to do anything around your house recently?

It's next to impossible because most, if not all, are sub-contracted out, working on new developments. Now *if* there is a crash (hardy-har, etc), not only is there a pent-up backlog of punters waiting for trademen to do for them, but there's also the prospect of the 'SSIA effect' which will worsen the situation.

Pa ElGrande

DublinWriter wrote:

Barring global recession indeed.

But to those who cry "oh there's 50,000 people in the building trade...house price crash...mass umemployement" I'd retort by asking have you actually ever tried to get a good plumber, plasterer, brickie or chippie to do anything around your house recently?

It's next to impossible because most, if not all, are sub-contracted out, working on new developments. Now *if* there is a crash (hardy-har, etc), not only is there a pent-up backlog of punters waiting for trademen to do for them, but there's also the prospect of the 'SSIA effect' which will worsen the situation.

LOL. just one small point there are 250,000 directly employed in the construction sector, with a further 80,000 service jobs dependant on them and there will be an estimated 100,000 available over the next few years to fix all the stuff they bodged in the first place. But forget about getting a plumber this year they are working flat out to complete up to 100,000 dwellings this year. FYI: rates for plumbers are approx. €60/hr in Dublin and €45/hr in the rest of the country.

SkepticOne

FillSpectre wrote:

Sorry I should keep repeating myself exactley untill you answer. Show a property price crash that happened due to prices rising alone. Florida was land speculation in case you suggest otherwise.

All of them basically crash due to prices being way above fudamental values. While you can often point to a trigger (not always c.f. Florida Real Estate Bubble), the real cause is overvaluation due to speculative frenzy. If it were not for this overvaluation then the trigger would only have a minor, temporary effect since, for the most part, it does not change the long term fundamentals of the market.

The first question to ask , therefore, is whether whether prices in Ireland are inflated beyond values suggested by the fundamentals. If they are, then the market will crash unless those fundamentals catch up with the inflated prices and fast.

Answer: Yes, prices are above those suggested by the fundamentals.

If it turns out that prices are not reflecting fundamentals then the second question is whether or not they will catch up before the crash.

Answer: No. We can not point to a situation where the fundamentals will catch up to justify the overvaluation. In the past we could. For example, entering the Eurozone, it was fairly obvious that interest rates would go down substantially thereby causing a rise in prices. What is it this time?

Gurgle

DublinWriter wrote:

But to those who cry "oh there's 50,000 people in the building trade...house price crash...mass umemployement" I'd retort by asking have you actually ever tried to get a good plumber, plasterer, brickie or chippie to do anything around your house recently?

Of those 50,000 people, theres probably 2000 good plumbers, plasterers, brickies and chippies, 2000 engineers, quantity surveyors, foremen, and site managers and 46,000 labourers. The labourers are the ones who will find themselves going from €40-€80k salarys to minimum wage + shift allowance.

daveirl

This post has been deleted.

Gurgle

daveirl wrote:

This post has been deleted.

Since having a miscellaneous Bachelors degree is regarded as a general requirement for practically every management/supervisory position in practically every industry.

E.g. I know a civil engineer (ex quantity surveyor) who runs a taxi firm, an electronic engineer who runs a co-op shop, another who used to run a Centra.

And btw, a large percentage of people who lost there job in the dot.com burst were 'engineers' by job description, not by qualification. Many of the actual qualified engineers who cashed in on dot.com are still working in the software industry as they weren't the one-trick ponies who knew html and nothing else.

D'Peoples Voice

FillSpectre wrote:

Sorry I should keep repeating myself exactley untill you answer. Show a property price crash that happened due to prices rising alone. Florida was land speculation in case you suggest otherwise.

From the Third Bacon report on IRISH property

This suggests that individuals are increasingly buying houses in anticipation
of a capital gain. This effect has the potential to make the market unstable. For example, if
something causes a temporary rise in house prices this year (such as a temporary hold up in
new developments) house prices would continue to rise next year, even if the temporary shock
has disappeared. Thus a temporary shock to the house market can have effects that persist
even after the original cause of the shock has dissappeared.page 65


The combined effects of the reduced price elasticity of demand and the increased impact of
previous year’s prices on current prices would have a significant impact on the outcomes, if
uncorrected. Recall that in the same way that previous price rises feed strongly into current
prices the same would be true for a price fall – it would impart quite a sharp reaction.
This means that a pronounced correction may be possible, but also implies that the price falls could easily overshoot a target level and fall below the mortgaged value of some properties.

This means that a pronounced correction may be possible, but also implies that the price falls could easily overshoot a target level and fall below the mortgaged value of some properties. In other words, getting the supply response wrong might have very serious implications, in the sense
that supply overshooting underlying demand growth could result in significant price reversal. page 66/67

http://www.environ.ie/DOEI/doeipub.nsf/0/3f3ff45854888bbb80256f0f003db97f/$FILE/baconreport.pdf

FillSpectre

D'Peoples Voice wrote:

From the Third Bacon report on IRISH property

What everybody is missing here is the differenece between what they are saying and what actual experts say.

Note there are no certainities mentioned in an expert report but here we get

SkepticOne wrote:

If they are, then the market will crash unless those fundamentals catch up with the inflated prices and fast.

This is the kind of thing to expect here, where people know the future and can tell us why people are doing things and how they will react. Not only that it is assumed on many unknown figures such as the number of investors in the market.

The fundemnetals people are talking about are all finanacial fundementals whcih misses the point of property investement and the versatility of it. Before people say there are no other fundemnetals than finacial that means art and fashion can't be worked out ever.

People have used very simplistic understanding of housing stock and show little insight into the nature of property. Property is finite and it doesn't matter that there is room for more property diffenerrent stuff is being built to suit different needs.

Rental property has changed a lot in the last 10 years. Bedsits are extremely uncommon now and the type of rental property that was traditionally used to convert is and has been bought up and redeveloped.

On this thread I tried to point out all the other possibilities of the market. THis thread is not about property it is about when a crash will happen.

Read the bacon report and note the language and all the considerations. Generally people here can only see one thing and are refusing to look at any factors.

Saying the price rising will cause a crash , it doesn't matter how it has been worded (fundementals not been cover etc..) you are saying it is due to prices rising and inability to afford to buy. It's actually inability to pay for what you have. Fundementals not been met just means it makes us vounrible. Nobody is actually giving a reason. It is fair to say we are in danger but the assumption a crash is the only outcome and that it is a bubble is not one any proper economist would say. Media is to entertain and sell things so often not actual proprer information.

THe only fundementals to worry about are supply and demand. People are living further and further out, the want (demand) less commute times and larger properties. Those renting and waiting still want property (demand). PLanning permission has fallen off (low supply). If you live in Ashbourn in aan appartment but work in Dublin CC it doesn't matter about the property supply you want a differenet place.

I see a price adjustment I just don't understand why people are convenced it will be huge drop and country wide.

hmmm

FillSpectre wrote:

This is the kind of thing to expect here, where people know the future and can tell us why people are doing things and how they will react. Not only that it is assumed on many unknown figures such as the number of investors in the market.

The fundemnetals people are talking about are all finanacial fundementals whcih misses the point of property investement and the versatility of it. Before people say there are no other fundemnetals than finacial that means art and fashion can't be worked out ever.

Seriously, I haven't a clue what you're on about, that isn't even English. Are you the same guy from askaboutmoney that kept up a 50 page thread by insisting that there was no property bubble because you could keep infinitely dividing houses to create more property?

FillSpectre

hmmm wrote:

Seriously, I haven't a clue what you're on about, that isn't even English.

What don't you understand?
Somebody made a statement about what will happen I am pointing out that is a stupid thing to say as you can't predict the future.

Afuera

FillSpectre wrote:

Property is finite and it doesn't matter that there is room for more property diffenerrent stuff is being built to suit different needs.

Oil is finite. Property is not.

FillSpectre wrote:

Rental property has changed a lot in the last 10 years. Bedsits are extremely uncommon now and the type of rental property that was traditionally used to convert is and has been bought up and redeveloped.

A search on Daft shows 49 Matches for bedsits/studios in Dublin alone. While not as common as 2 bedroom apartments, I wouldn't go so far as to say they are "extremely uncommon".

FillSpectre wrote:

On this thread I tried to point out all the other possibilities of the market. THis thread is not about property it is about when a crash will happen.

Read the bacon report and note the language and all the considerations. Generally people here can only see one thing and are refusing to look at any factors.

Saying the price rising will cause a crash , it doesn't matter how it has been worded (fundementals not been cover etc..) you are saying it is due to prices rising and inability to afford to buy. It's actually inability to pay for what you have. Fundementals not been met just means it makes us vounrible. Nobody is actually giving a reason. It is fair to say we are in danger but the assumption a crash is the only outcome and that it is a bubble is not one any proper economist would say. Media is to entertain and sell things so often not actual proprer information.

THe only fundementals to worry about are supply and demand. People are living further and further out, the want (demand) less commute times and larger properties. Those renting and waiting still want property (demand). PLanning permission has fallen off (low supply). If you live in Ashbourn in aan appartment but work in Dublin CC it doesn't matter about the property supply you want a differenet place.

I see a price adjustment I just don't understand why people are convenced it will be huge drop and country wide.

This is a fair point and nobody can accurately say when or if it will crash. Everyone is just stating their opinion on the matter here and trying to look at the available statistics to attempt a guess at what could possibly trigger something like that.

I don't think anyone would dispute that the market is at a vulnerable stage, as the fundamentals are certainly out of line. One of the problems at the moment is trying to come up with a scenario that would allow the fundamentals to correct themselves without causing a crash.

The only one I've heard has been the soft landing theory, but this doesn't sound very believable as the figures coming from estate agents show a high involvement of investors in the market. Also I can't see how you can guide a market to a soft landing without being able to control interest rates.

SkepticOne

Afuera wrote:

The only one I've heard has been the soft landing theory, but this doesn't sound very believable as the figures coming from estate agents show a high involvement of investors in the market. Also I can't see how you can guide a market to a soft landing without being able to control interest rates.

Generally, estate agents and others simply state that prices will slow to a soft landing or a more sustainable rate of growth etc. Is there any theory of how it might work that I might have missed?

miju

FillSpectre wrote:

What don't you understand?
Somebody made a statement about what will happen I am pointing out that is a stupid thing to say as you can't predict the future.

well i'm gonna point out the fact that you've been saying something is NOT going to happen , so your argument is a bit self defeating there

Wanderer222

Gah the whole situation is a bit nuts, I mean the planning permission for almost half of the developments in the country was turned down last year, often for spurious or nonsensical reasons. That sounds like an artificial shortage of supply to me! The whole planning process needs a serious overhaul. Is it true that anyone in the country can still object to any development in any other part of the country? :mad:

Pa ElGrande

Wanderer222 wrote:

Gah the whole situation is a bit nuts, I mean the planning permission for almost half of the developments in the country was turned down last year, often for spurious or nonsensical reasons. That sounds like an artificial shortage of supply to me! The whole planning process needs a serious overhaul. Is it true that anyone in the country can still object to any development in any other part of the country? :mad:

There was a bit of a rush last year to get in the last of the applications for section 23 investments, coupled with a significant number of the applications not corresponding with the building regulations or local council guidelines (surprising but true, some architects and engineers don't keep up with the building codes), so its not surprising that a high number were rejected. Then there's An Taisce ('nuff said, these people don't even like cows farting), but take a gander over to this forum some time. If you want to know how to make an appeal check out planning matters.

SkepticOne

FillSpectre wrote:

SkepticOne wrote:

If they are, then the market will crash unless those fundamentals catch up with the inflated prices and fast.

This is the kind of thing to expect here, where people know the future and can tell us why people are doing things and how they will react. Not only that it is assumed on many unknown figures such as the number of investors in the market.

The fundemnetals people are talking about are all finanacial fundementals whcih misses the point of property investement and the versatility of it. Before people say there are no other fundemnetals than finacial that means art and fashion can't be worked out ever.

People have used very simplistic understanding of housing stock and show little insight into the nature of property. Property is finite and it doesn't matter that there is room for more property diffenerrent stuff is being built to suit different needs.

Rental property has changed a lot in the last 10 years. Bedsits are extremely uncommon now and the type of rental property that was traditionally used to convert is and has been bought up and redeveloped.

OK, so from your point of view there are other fundamentals other than financial. Art and fashion, you say are examples of non-financial fundamentals. Also the versatility of the housing stock e.g. dividing into apartments or bedsits and various other conversions.

As far as art and fashion are concerned, I would argue that they are not fundamentals (financial or otherwise) simply on the basis that they come and go. What is valuable one year becomes worthless the next. How much is a Tracy Amin piece worth now? How much in ten years?

The modifying of property is more intersting. In some situations, you might be able to, say, split an ordinary house into two apartments. As a landlord you may be able to rent the two apartments out for more than the rent you were getting on the original house. Here you are changing the actual financial fundamentals of the house. You are increasing its value as a business proposition.

Is this what you are talking about?

FillSpectre

miju wrote:

well i'm gonna point out the fact that you've been saying something is NOT going to happen , so your argument is a bit self defeating there

If you paid attention you would notice what I have been saying is a crash is not the only possibility. I have been also pointing out that the assumption it is a bubble and how people will react is flawed. This bassically the theory all crash people are stating as fact. I have been saying a price adjustments of sort is likely but it doean't have to be a crash.

SkepticOne wrote:

As far as art and fashion are concerned, I would argue that they are not fundamentals (financial or otherwise) simply on the basis that they come and go. What is valuable one year becomes worthless the next. How much is a Tracy Amin piece worth now? How much in ten years?

Financial fundementals can be applied to anything the problem is it means little outside of stocks and shares and even then it does really mean that much as that is really complete speculation. Investemnet companies invest in art

SkepticOne wrote:

The modifying of property is more intersting. In some situations, you might be able to, say, split an ordinary house into two apartments. As a landlord you may be able to rent the two apartments out for more than the rent you were getting on the original house. Here you are changing the actual financial fundamentals of the house. You are increasing its value as a business proposition.

You don't need to be a landlord you can sell them seperately. 4 and 5 bedroom houses might just too big in the future for anybodies needs. How many modest georgian houses even remain in a single unit now. Style and needs change.

People have said property is a bad investment becasue you can get a better return. Now if you buy a place to rent it out and only get 2% rental yield and you could be getting 4.5% from another investement it sounds great. THe difference is the 2% is on more money and after the mortgage is done you get higher returns and have an asset. I don't understand why people insist property has to be a bad investment if rent is not making a profit immediately. THere is an element of financial sense although I would not advise it in the current market it is not complete maddness and multiple reasons above financial gain can also be factored in.

whizzbang

FillSpectre wrote:

If you paid attention you would notice what I have been saying is a crash is not the only possibility. I have been also pointing out that the assumption it is a bubble and how people will react is flawed. This bassically the theory all crash people are stating as fact. I have been saying a price adjustments of sort is likely but it doean't have to be a crash.

As a matter of interest what would you consider a "Crash" to be, percentage wise and timewise? Also what do you think would have have to change to cause a crash to happen in the near future (next year to 18 months)?

FillSpectre

whizzbang wrote:

As a matter of interest what would you consider a "Crash" to be, percentage wise and timewise? Also what do you think would have have to change to cause a crash to happen in the near future (next year to 18 months)?

Good point I would think 10+% drop beyond normal seasonal changes within a 2 month period without any recovery for a year or more. What would you classify as a crash?
I have no idea what would cause a crash what do you think will casue a crash? A price adjustment in baddly serviced areas I think is likely with a further 1% intrest hike

I generally think you need highly moveable people for crashes to really effect most people, the effects on the economy not withstanding.

SkepticOne

FillSpectre wrote:

You don't need to be a landlord you can sell them seperately. 4 and 5 bedroom houses might just too big in the future for anybodies needs. How many modest georgian houses even remain in a single unit now. Style and needs change.

The reason it is worth more is because the the fundamentals have changed. If you feel this is the way to go then go for it. Your risk. As an investor (not a speculator) your fundamentae ls are mainly based the yield on the property. What you may be able to do is turn a yield of say 2% into 2.5% or something by converting the house.

People have said property is a bad investmenmat becasue you can get a better return. Now if you buy a place to rent it out and only get 2% rental yield and you could be getting 4.5% from another investement it sounds great. THe difference is the 2% is on more money and after the mortgage is done you get higher returns and have an asset. I don't understand why people insist property has to be a bad investment if rent is not making a profit immediately. THere is an element of financial sense although I would not advise it in the current market it is not complete maddness and multiple reasons above financial gain can also be factored in.

But if 2% is bad with non-borrowed money it is bad with borrowed money also. Only with the assumption of continued capital gain does it make any sense. You are not getting that borrowed money for nothing.

If you are only getting 2% then it makes more sense to take your deposit and put it into a decent investment account adding in the equivalent of your monthly mortage payment per month (subtracting your rental income). The figures have been worked out on this very thread. Work it out for yourself though.

The point here is that there's no need to borrow a huge amount to end up with the same amount at the end of the day.

This is the thing people can't seem to get their heads around. They can't work out the effect of compound interest combined with monthly payments over time.

Please prove me wrong. But do so with proper calculations, not simply dismissals.

whizzbang

FillSpectre wrote:

Good point I would think 10+% drop beyond normal seasonal changes within a 2 month period without any recovery for a year or more. What would you classify as a crash?
I have no idea what would cause a crash what do you think will casue a crash? A price adjustment in baddly serviced areas I think is likely with a further 1% intrest hike

I generally think you need highly moveable people for crashes to really effect most people, the effects on the economy not withstanding.

I would take a more sustained downturn to be a crash, for example a sustained drop totaling maybe 5% to 10% a quarter for a minimum of 2 quarters. ( I would see a sudden drop and then leveling off as more of a correction than a crash, but that just a matter of opinion)

I think that a further 1% interest rate rise will tip the balance on a lot of recent investors (<2 years) who would then move to sell. This increase of availability will pull prices down to a level where investors who bought 3 or 4 years ago will start seeing negitive equity and so then they get on the markert and dragging prices further down. In the end only the hard core investors are left.

I take your point about needing movable people to allow this to happen but that is why I think the high numbers of allegedly empty investment properties are such a risk. If there is really no-one living there is makes the properties much easier to sell. Ie everyone in Ireland could stay living where they are and the empty properties alone could pull the market down on their own. IE no movement of people needed.

edit; of course some areas will be hit harder than others, the old addage "Location, location,location" still applies

Gurgle

whizzbang wrote:

I think that a further 1% interest rate rise will tip the balance on a lot of recent investors (<2 years) who would then move to sell.

Most investors, or at least their financial advisors, aren't in the business of burning money. If they aren't getting the money they want/expect for their house, they're not going to sell.

Buy dear, sell cheap has never been a good business plan.