Housing Bubble Bursting

beeno67

martian1980 wrote: »

Beeno67, aren't you banned for a week?

Mistaken identity

Gurgle

Calina wrote: »

in parts of Dublin, we're not talking 20 times rent, we're talking 30-45 times rent. We're nowhere near between 12 and 20.

Yes, in parts of Dublin housing has been ludicrously over-valued.

In other parts of Dublin, and the rest of the country, property has been a little over-valued.

And yet so many here predict the greatest losses in the commuter belt, not in the south city.

ambro25

BigglesMcGee wrote: »

Supply and demand is what will cause the rent / cost of a house to settle wherever its going to settle. Not a stupid rule of thumb about multiples applied to an infinite number of situations.

Its the value to the people that want an item, and the value to the people they are in competition for it as well as the supply of the item that will effect a price.

The "stupid rule of thumb", as you term it, correlates fully (+/- 2 either way) with my real estate history over about 18 years, in terms of property purchase cost and gross RoI over variable term (some properties over just a year, other over most of that period) in 3 countries.

I only got out of the game when, as most of my assets were eventually in FR, out of the blue the Gvt decided that all us expatriates (living overseas but still with assets and revenue in country) were having too rosy and should be taxed "extra special" (on the first €0,01 instead of the thresholds applicable to residents) overnight. Avg return on 5 properties: 13%. With new tax: 5%. F*ck that for a game of soldiers :rolleyes:

beeno67 wrote: »

A multiple of 12 times rent makes little sense as it implies a return to investor of 8% a year plus capital appreciation less expenses. Investors in any business would be delighted with this kind of return

Have you ever invested/looked into investing in anything else than a standard financial saving product or property?

As I have already stated in my recent posts, capital appreciation should not be a factor in BTL-type property investment. It's a (very) nice bonus if it sustains during the term of ownership, but as the endowment policies "scandal" has proven in the UK, it is not a viable model for even long-term acquisition in a financial market that's increasingly volatile.

TBH (and I'm sure I've already posted this in here at some stage), all this already happened in Luxembourg 20-25 years ago. Same story all over again: mainly agricultural, "land/property is king" > Tiger effect (by EU) > lots of dosh sloshing about > everything gets stupidly expensive > market correction effects hard landing > self-levels after some years of yo-yoing.

Blackjack

SimpleSam06 wrote: »

Eh the four bedroom house well within the city of Galway I am renting at the moment is going for a grand a month. A one bed apartment in a similar area couldn't be rented, or at best would fetch €300 to €400, for a value of €50-60,000. And I'd still say thats overpriced for a one bed around here.

Sorry, should have specified, I was referring to anywhere in Dublin.

beeno67

ambro25 wrote: »

Have you ever invested/looked into investing in anything else than a standard financial saving product or property?

As I have already stated in my recent posts, capital appreciation should not be a factor in BTL-type property investment. It's a (very) nice bonus if it sustains during the term of ownership, but as the endowment policies "scandal" has proven in the UK, it is not a viable model for even long-term acquisition in a financial market that's increasingly volatile.

If you compare property to shares (a far more volatile market) then an 8% dividend with capital growth would be amazing.
I am unsure what capital appreciation and the "endowment scandal" have in common. Endowment policies have nothing to do with value of property.

Calina

The issue is that property is generally an illiquid market - ie cashing in and getting out is not always instantaneous. Given the lack of speed with which property is selling right now, comparing it to shares is not perhaps the wisest. Loss cutting there is generally a bit faster.

Laoisproperty

Methinks ye should all move to laois

johnnyskeleton

Laoisproperty wrote: »

Methinks ye should all move to laois

The smart money is on Portlaoise alright - the digital hub of the western world. And with 696 properties available on www.daft.ie (not to mention newbuilds) you're spoiled for choice. Best of all is the M7 which will bring you to Dublin in under 1 hour* and which brings all the Dublin - Limerick & Dublin - Cork drug traffickers through on a daily basis.









*under 3 hours between 7-10am and 4-8pm monday to friday, estimates are for illustrative purposes only

foxhill

Hi guys
I remeber in 2005, it was reported-
"non-national buyers represent up to 30 percent of new homes sales." quoted by one of the sales agent.

check it out here-
http://www.workpermit.com/news/2005_11_11/uk/new_immigrants_to_ireland_buying_homes.htm

I wondering what are the stats now?
how many Irish and how many Non-Irish are buying house now?

I m looking at daft.ie. rents are falling sharply....
I was reading on some other webpagethat now tennents are doing bargaining!!! few landlords are reducing rents as much as 20% price of asking rent price!!!
Is it true??


latest stats are showing sales of grocery & other products are falling....hence govt getting less VAT & Taxes...


I think govt. finally stopped immigrants to come to Ireland or immigrants arnt coming here!!

it ll be intresting to see immigration figures now.
wud they still be eager enough coming to Ireland now!!!

ionapaul

http://www.boards.ie/vbulletin/showthread.php?t=2055314809

18 months and not a single bid - I wonder do these sellers realise that price and not sentiment is the problem here! There will always be buyers if something is priced correctly.


Maybe not in Leitrim or Roscommon though.

Cantab.

Landlords are better off pitching 10-15% below market rate -- that way they get to choose their tenants.

Holding out for slightly above market rate means your property lies idle for longer, you've reduced negotiating power and you can't choose your tenants as carefully as you'd like.

Amateur landlords are going to have to learn this the hard way. My mate's dad own about 50 gaffs all over the country. He always charges very low rent -- the tenants don't expect the place to be kept 100% spick and span and they feel as if the landlord is "doing them a favour" and are less likely to wreck the place.

DonJose

Looks like the OPW couldn't get mortgage approval

OPW puts plans for Dublin skyscraper on hold

Plans to create Ireland's tallest building, a 32-storey skyscraper by Heuston Station in Dublin, are the latest victim of the downturn in the property market. Three years after securing planning permission to build the apartment block as part of a residential, office and cultural centre, the Office of Public Works has put the ambitious development on hold. The OPW is still saying the project could proceed, but with just two years left on the planning permission, industry sources say this is very unlikely in its present form. At the height of the property boom, the land with planning permission was estimated to be worth €100 million, but is unlikely to fetch that sum in current market conditions. A spokesman said the State body had not been in contact with any potential developers in the private sector about a joint venture, nor had it opened discussions with the HSE, Revenue Commissioners and Garda Síochána, which occupy part of the 4.5-acre site and would have to leave before development could begin.

http://www.ireland.com/newspaper/ireland/2008/0616/1213369963006.html

jdivision

Was in yesterday's Sunday Tribune. Irish Times nicking other papers stories now. Must have space to fill with all the property advertising they're missing!

gurramok

foxhill wrote: »

Hi guys
I remeber in 2005, it was reported-
"non-national buyers represent up to 30 percent of new homes sales." quoted by one of the sales agent.

check it out here-
http://www.workpermit.com/news/2005_11_11/uk/new_immigrants_to_ireland_buying_homes.htm

Yes, stats coming from estate agents who have been proven to have lied about sale prices.(Irish Times). They ran out of Irish buyers and then mentioned the immigrants who largely earn no more than their Irish counterparts where both cannot afford to buy.
I've never met an EE person who has bought here and i work with about 10 of them. They all rent or have bought in their home country.

foxhill wrote: »

I wondering what are the stats now?
how many Irish and how many Non-Irish are buying house now?

Good question. They've run out of spin since then 'to talk up the market'

foxhill wrote: »

I think govt. finally stopped immigrants to come to Ireland or immigrants arnt coming here!!

The latter. EE's are the largest group by a mile. Non-eu migrants will still come(health service comes to mind), they are not as numerous to affect stats.

foxhill wrote: »

it ll be intresting to see immigration figures now.
wud they still be eager enough coming to Ireland now!!!

See welfare.ie for latest issuing of PPS numbers, they are down approx 40% yr on yr..

johnnyskeleton

BigglesMcGee wrote: »

Supply and demand is what will cause the rent / cost of a house to settle wherever its going to settle. Not a stupid rule of thumb about multiples applied to an infinite number of situations.

Its the value to the people that want an item, and the value to the people they are in competition for it as well as the supply of the item that will effect a price.

Oh really? Is that why there is massive oversupply of property for sale on the one hand, and people wanting to buy but unable to afford current prices at the moment?

Keynes never figured on the third market force - Irish stubborness.

The rules about multiples do not dictate what prices are in the market, but they are a good indication of how they should be.

faceman

johnnyskeleton wrote: »

Oh really? Is that why there is massive oversupply of property for sale on the one hand, and people wanting to buy but unable to afford current prices at the moment?

What do you define as oversupply?

Re affordability, there are plenty of properties out there at affordable levels for FTB's. Thats not the issue though.

Lets look at the word affordable. What may be affordable to one person, may not be affordable to another. Also, not all properties are the same. Id imagine a 5 bed detatched in D4 would be unaffordable to many people including FTB's.

I dont subscribe to the affordability rule. Afterall during the boom times houses were on the increase, mortgage borrowings were high, yet people were buying like crazy, especially FTB's.

My first home was a huge price (to me at the time) and wasnt affordable to many i imagine at the time, yet i sold it at almost double the price. (To an FTB ironically)

ionapaul

You are 100% correct, 'affordable' is a bit of a buzzword when it comes to housing; the banks and EAs during the boom convinced a majority of potential property purchasers that if they could 'afford' the mortgage repayments, the property they were going to buy was both affordable and good value. Affordable and value are not so closely linked! Lots of us can afford to buy 1-beds in Ongar and 3-beds in Carrick-On-Shannon....they are affordable...they are terrible value. As is much of the property on sale in Ireland at the moment, affordable or not. Its been getting 'more affordable' now for two years and will continue to do so for another few years

Dmaurice

hi - we bought a 2 bed apartment in Island-key apartments East wall 2 years ago off the plans. It is due to be ready in August and there is loads of development going on in the area (spencer dock, point village, luas extention etc). We paid €340k for a 2 bed of 570sqft. We are still happy with the value and intend to rent it out in a couple of years once we can afford to buy a house. What do you guys think of the price we paid etc? thanks.

SkepticOne

faceman wrote: »

I dont subscribe to the affordability rule. Afterall during the boom times houses were on the increase, mortgage borrowings were high, yet people were buying like crazy, especially FTB's.

I too have problems with the concept of affordability. There's a large subjective element in the idea of affordability. As you say, during the boom, houses were purchased therefore they were afforded. In this sense they were affordable.

If I say I can't afford that 60 inch LCD tv it doesn't simply mean I don't have the money to buy it or that I coudn't get a loan to buy it and so on. What it means is that it is not worth it to me at present given the other things I could spend that money on.

The_Conductor

Dmaurice wrote: »

hi - we bought a 2 bed apartment in Island-key apartments East wall 2 years ago off the plans. It is due to be ready in August and there is loads of development going on in the area (spencer dock, point village, luas extention etc). We paid €340k for a 2 bed of 570sqft. We are still happy with the value and intend to rent it out in a couple of years once we can afford to buy a house. What do you guys think of the price we paid etc? thanks.

First of all- 570 square feet is tiny- its incredibly small.
Mortgage costs are EUR1,360 per month @ 4.8% APR to support a mortgage of 340k (before any other bills are taken into account, but exclusive of TRS).

Looking at DAFT- its a reasonable assumption that the interest component of the mortgage would be covered, should you decide to rent it out, but that is about it (a parking space, if you have one, will introduce a premium). You have to keep in mind that both prices and rental income are trending downwards.

Re: renting it out- and purchasing a house elsewhere- in the current climate no lending institutions will give you a loan to do this. It is highly probable that you would be forced to sell it. The days of leveraging off one apartment to buy another etc- are in the past.

faceman

SkepticOne wrote: »

I
If I say I can't afford that 60 inch LCD tv it doesn't simply mean I don't have the money to buy it or that I coudn't get a loan to buy it and so on. What it means is that it is not worth it to me at present given the other things I could spend that money on.

A tv is a good analogy actually. If i said to you, "i cant afford a tv". Your response to me would more than likely be "how big a telly are you trying to buy?"

gurramok

faceman wrote: »

I dont subscribe to the affordability rule. Afterall during the boom times houses were on the increase, mortgage borrowings were high, yet people were buying like crazy, especially FTB's.

My first home was a huge price (to me at the time) and wasnt affordable to many i imagine at the time, yet i sold it at almost double the price. (To an FTB ironically)

One thing that is forgotten on this affordability rule is that once your add 10-15years to a mortgage unlike over 5yrs ago, of course it will become more affordable on a month to month basis but end up alot costly in the long run:

Some buyers don't really realise that this is not actually affordable in the long term. :eek:.

Gurgle

faceman wrote: »

A tv is a good analogy actually. If i said to you, "i cant afford a tv". Your response to me would more than likely be "how big a telly are you trying to buy?"

If you bought a 60" TV today, would you expect to be able to sell it in 2 years at a profit?

BigglesMcGee

johnnyskeleton wrote: »

Oh really? Is that why there is massive oversupply of property for sale on the one hand, and people wanting to buy but unable to afford current prices at the moment?

Keynes never figured on the third market force - Irish stubborness.

The rules about multiples do not dictate what prices are in the market, but they are a good indication of how they should be.

Yes really.

I think others here have dealt with your comments on Affordability and oversupply.

mikemac

Dmaurice wrote: »

hi - we bought a 2 bed apartment in Island-key apartments East wall 2 years ago off the plans. It is due to be ready in August and there is loads of development going on in the area (spencer dock, point village, luas extention etc). We paid €340k for a 2 bed of 570sqft. We are still happy with the value and intend to rent it out in a couple of years once we can afford to buy a house. What do you guys think of the price we paid etc? thanks.

I don't realy know about prices for the area.
Ok area I suppose.

I don't understand square feet (get with the times people )but that's around 52 sq metres. Seems small, I've seen one beds larger than that.

faceman

Gurgle wrote: »

If you bought a 60" TV today, would you expect to be able to sell it in 2 years at a profit?

I think you missed the point i was making.

SimpleSam06

I think the "rule of twelve" doesn't have much to do with affordability, it has to do with value. Many properties are affordable in Ireland, but that doesn't mean they are anywhere near approaching good value. Paying a third of a million euros for a 50-ish square meter apartment for example, is not good value.

What some posters are saying is that people can afford it, so they will have to buy eventually. This is incorrect, most people are perfectly capable of waiting until they are getting what they perceive as good value, especially in a falling market.

There is a very long way to go before the bottom is hit.

Westwood

I lived in Dublin for many years with huge mortgages etc and then moved into rural Ireland where the living is calm and the mortgages relaxed. most if not all of you guys I take it are from Dublin?. people in the country look at the news and think to themselves emmm this doesn’t effect us, as our mortgages are so low. these programmes on RTE about the Celtic tiger is gone everyone needs to tighten there purse strings, the housing market is going to collapse nonsense. this is a Dublin thing and I actually feel sorry for anyone starting out at this stage trying to get on the property ladder. its virtually impossible, or you've no life. simple. MOVE TO THE COUNTRY!! decentralisation is the KEY!!!

bangersandmash

Westwood wrote: »

I lived in Dublin for many years with huge mortgages etc and then moved into rural Ireland where the living is calm and the mortgages relaxed. most if not all of you guys I take it are from Dublin?. people in the country look at the news and think to themselves emmm this doesn’t effect us, as our mortgages are so low. these programmes on RTE about the Celtic tiger is gone everyone needs to tighten there purse strings, the housing market is going to collapse nonsense. this is a Dublin thing and I actually feel sorry for anyone starting out at this stage trying to get on the property ladder. its virtually impossible, or you've no life. simple. MOVE TO THE COUNTRY!! decentralisation is the KEY!!!

You're joking, right? Did you not post elsewhere about the difficulties you were having in finding employment in your location? Mortgages may be somewhat lower in rural areas due comparatively lower prices, but so are salaries, and there is nothing relaxing about a young couple having to pay towards a €300k mortgage on a semi-d in Donegal if neither of them can find suitable employment in the area. If anything the substantial slowdown in the construction sector has been particularly felt in many rural areas, where it has been the staple of employment in recent years. Just look at new build figures this year in these areas, and the emergence of "ghost estates".

Gurgle

faceman wrote: »

I think you missed the point i was making.

Oh I got it, good point.
Affordability isn't a 'rule of 12' or 'intrinsic value', its about how much debt someone is willing to get into to buy what they want.

I just saw an opportunity to go off on a tangent and had to follow it.