At what point will house prices turn and fall significantly? ie More than 20%

whizzbang

DublinWriter wrote:

Whether that triggers a wider drop is anyone's guess, but it's worth watching the apartment market because when/if the dip happens, it will happen there first.

I bet that when that happens we will see state agents saying "yes, appartments were a little over valued and this is just an adjustment, houses are still an excellent investment"

any takers?

Afuera

FillSpectre wrote:

No not clearly they are at diffenrent level of risk.

A different level of risk implies that one is at a higher risk level than the other. Since buying to let puts Neighbour A at a greater risk of reaching negative equity in the situation I described you can see that they would be at a higher risk due to it. Whether you can see that clearly or not, I don't know.

FillSpectre wrote:

I can say it is unlikely becasue it is extremely unlikely that production cost won't rise in the period and house prices keep going down. People often misunderstand or underestimate construction costs.

House prices can go down for many years as has been witnessed in Japan. Construction costs wouldn't come into it as much of construction would stop altogether.

FillSpectre wrote:

Not really I am taking it that they would buy in an area that will support rent. You are assuming that I consider rent as a income continuely. It is still an asset and a possible revenue source that one doesn't have.

Yes they would have a asset which they can try to offload into a falling market. You can make guesses about what areas will support rents but it is only a guess and could dry up in the future.

The original case you made for Neighbour A not being at much risk by investing doesn't hold up under all cases. It's quite possible that it could get them into trouble. They would have a lot less worries if they reduced their mortgage and/or other debts rather than releasing equity to leverage themselves further.

FillSpectre wrote:

as time goes on the mortgage reduces.

In nominal terms yes but not necessarily in real terms. In major downturns a currency can deflate.

DublinWriter

Afuera wrote:

Look a 40% drop could happen over a period of 5 years (8% drop every year) or it could happen over 15 years (2.6% drop every year). It's massively extreme but then so is the current mania so you can't say that it's unlikely or beyond the realms of reality.

I would say it's wildly beyond the realms of reality.

40%? ppssshhhh.

whizzbang

DublinWriter wrote:

I would say it's wildly beyond the realms of reality.

40%? ppssshhhh.

happened in the UK in the 80s, why not here? wikipedia link

I think a lot of people just can't face it as a reality rather than having any reason why it couldn't happen. (I'm not saying it will, just that it could)

DublinWriter

whizzbang wrote:

happened in the UK in the 80s, why not here?

Oh yeah, and just look at all the bargains to be had around the London area now!

The thing about crashes are they are basically short-term adjustments.

The_Conductor

DublinWriter wrote:

Oh yeah, and just look at all the bargains to be had around the London area now!

The thing about crashes are they are basically short-term adjustments.

Not always.
Property in Tokyo is still over 35% cheaper now (in todays Yen) than it was 20 years ago...... (it is increasing- but will likely take a few more years to hit its haydays of the late 80s)

It is impossible to claim that a boom or a bust will be a short or a long term adjustment. If it were possible to decipher these things- we'd all be millionaires.....

lomb

undoubtadly there could/will be crash, but on the balance of probability it wont happen for another 5 years, but i forsee trouble ahead, by the time the storm comes theyl be up another 50-60 percent though around dublin.
the first to get hit will be the property not around large cities, poorly serviced property, overpriced suburban apartments, the AAA property will be the last to get hit.
part of it is the human problem of greed and greed like any other emotion has a price to pay. greed results in cycles, where assets are both overbought and oversold. people like warren buffett who buy when others sell and sell when others buy know all about greed and have used it in their favour. however shares and property are very different animals. people need property and not paper so greed and cycles show alot more in shares and trading companies .

id still buy houses and city apartments only at current prices though, i dont think you can go wrong but who knows for sure. definately worth the gamble at current levels especially if you are renting/need a roof.
alothough in 5-10 years, there could be massive supply from the docklands area so city apartments may not be immune WHEN the cyclical downturn happens.

whizzbang

DublinWriter wrote:

Oh yeah, and just look at all the bargains to be had around the London area now!

The thing about crashes are they are basically short-term adjustments.

short term adjustments taking on average 5 years to hit the bottom... I'll wait the 5 years

Gurgle

whizzbang wrote:

short term adjustments taking on average 5 years to hit the bottom... I'll wait the 5 years

lol, enjoy your life in rentsville

whizzbang

Gurgle wrote:

lol, enjoy your life in rentsville

Im having a great time in rentsville, I hear you are moving to Bally-Negative-Equity ?

FillSpectre

smccarrick wrote:

Not always.
Property in Tokyo is still over 35% cheaper now (in todays Yen) than it was 20 years ago...... (it is increasing- but will likely take a few more years to hit its haydays of the late 80s)

It is impossible to claim that a boom or a bust will be a short or a long term adjustment. If it were possible to decipher these things- we'd all be millionaires.....

The problem with using japan to indicate what will happen in the Irish markets is many
1) We can't control our intrest rate (they could, did and that is part of their problem)
2) We can't control or currency (they could, did and that is part of their problem)
3) The scale of building here is not even close theirs at the time.
4) It isn't all speculation here.

One very noticable thing is there aren't tons of empty properties and there are tons of adults still living with their parents. We have always been a property obssessed people. There are a lot of people actively hoping for a crash so they can buy. That is a constant pressure for more property and reserve of buyers. A 28 year old will think very differently at 30 when it comes to getting a property especially after waiting 2 years. I know a lot of people who tried to wait out the market. Some don't own and where they were renting moved home to save for a place the rest eventually bought. They put out all the arguements here before but things change very quickly.

ambro25

Gurgle wrote:

lol, enjoy your life in rentsville

Au Royaume des Aveugles, les Borgnes sont Rois

= In the Kingdom of the Blinds, One-eyed are Kings

Gurgle

whizzbang wrote:

I hear you are moving to Bally-Negative-Equity ?

When the Bally-housing-market crashes to 30% of current values on the house I've owned for 7 years.:rolleyes:

Doesn't keep me awake at night.
btw, you couldn't rent a one bedroomed apartment in the arsehole of Leitrim for my mortgage.

Afuera

FillSpectre wrote:

The problem with using japan to indicate what will happen in the Irish markets is many
1) We can't control our intrest rate (they could, did and that is part of their problem)
2) We can't control or currency (they could, did and that is part of their problem)
3) The scale of building here is not even close theirs at the time.
4) It isn't all speculation here.

I don't think that anyone is using it to show what WILL happen in Ireland. It just shows that it's possible for prices to go down as well as up.

FillSpectre wrote:

One very noticable thing is there aren't tons of empty properties and there are tons of adults still living with their parents.

Are there any figures to back this up? When the results of the recent census comes out it'll make for some interesting reading.

FillSpectre

Afuera wrote:

I don't think that anyone is using it to show what WILL happen in Ireland. It just shows that it's possible for prices to go down as well as up.

People are saying it is possible here. I am just pointing out that what created the situation there isn't possible here. It is the only example I am aware of where a property boom has not recovered.It was used to show how property can remain negative for long times and I was just pointing out that it isn't a good example.

Afuera wrote:

Are there any figures to back this up? When the results of the recent census comes out it'll make for some interesting reading.

No as I stated it is noticable. I don't know of any masses of empty property yet I do know of masses of adults living at home.

aniascor

FillSpectre wrote:

I don't know of any masses of empty property yet I do know of masses of adults living at home.

Maybe that is more to do with where you are from, or who you know. I'm not originally from Dublin, even though I live here now, and most of my friends are the same - so all of us rent (with the exception of the one or two who have bought). And in all of the apartment complexes in various parts of the city that I and my friends have lived in for the past three years or so, there seem to be lots of empty apartments. These apartments remain empty for lengthy periods of time (more than 2-3 months). I have no figures to back this up - just a general observation that I have made during my years in Dublin.

Afuera

FillSpectre wrote:

People are saying it is possible here. I am just pointing out that what created the situation there isn't possible here. It is the only example I am aware of where a property boom has not recovered.It was used to show how property can remain negative for long times and I was just pointing out that it isn't a good example.

The point is that property can remain negative for long times if people loose faith in it. How the original overvaluation is arrived at is not really relevant.
Some property markets never recover (such as the gold-rush towns in the US).

FillSpectre wrote:

No as I stated it is noticable. I don't know of any masses of empty property yet I do know of masses of adults living at home.

This is subjective. I know many young single people who bought in recent times.

You are highlighting a major proplem in making an informed decision on the Irish property market though. Statistics showing buyer/seller profiles (as well as correct prices) are not easy to come by.

It's been said that the demographics of Ireland will support the property market yet it can't be ruled out that many parents may have already bought property for their offspring.

miju

just to stick my oar in here for a moment, if anyone read the indo today and saw the figure of 25,000 houses being in demand this year but the supply not meeting that amound and saw the source for this figure is directly from the builders

got me to thinking?? how is this number for demand reached? any other official sources for this demand figure so asked over on AAB and from what i and they can gather thee's no where and the FIGURE is COMPLETE bull

so this figure is being bandied about by the builders (who obviously have their own interests) and joe public is going "ah sure jaysis the oul law of supply and demand this is a winner" when in actual fact it seems somewhat of a massive falacy which people are probably starting to see with the high amount of unoccupied properties

gurramok

According to here http://www.ireland.com/newspaper/property/2006/0608/512065133RPHOLDEN.html

"There are currently 104,000 investment properties sitting vacant around the country, and these are not holiday homes . . . at the same time, we still have huge waiting lists of people who just want somewhere to live."

Alot of speculators making alot of money via appreciation on vacant properties while alot of people looking for somewhere to live are screwed.

aniascor

This is why I think investment properties and primary residences should be assessed differently for tax purposes and for stamp duty. I would be all in favour of a property tax on investment properties.

garred

gurramok wrote:

According to here http://www.ireland.com/newspaper/property/2006/0608/512065133RPHOLDEN.html

"There are currently 104,000 investment properties sitting vacant around the country, and these are not holiday homes . . . at the same time, we still have huge waiting lists of people who just want somewhere to live."

Alot of speculators making alot of money via appreciation on vacant properties while alot of people looking for somewhere to live are screwed.

Why not? It is afterall an investment by them.

garred

aniascor wrote:

This is why I think investment properties and primary residences should be assessed differently for tax purposes and for stamp duty. I would be all in favour of a property tax on investment properties.

Again I have to say why. Because they have invested in a commodity that over the last 50 years has proven to be a good investment. Investors have to pay stamp duty, 42% on profit on rental income and CGT....personally I think they are taxed enough. A lot of these investment properties are pensions at the end of the day.