Housing Bubble Bursting

johnnyskeleton

ZYX wrote: »

Allowing for inflation it means prices here have fallen about 50% and in grander suburbs by much more. The argument would be that prices here are likely to fall less from now on than somewhere like Offaly or Roscommon, which fail to make the top ten.

So you think there has been ~13% inflation since the peak of the bubble? Yet we have seen deflation for about a year?

Also, if some places drop more it suggests that they have further to fall rather than that they have finished falling.

johnnyskeleton

mary70 wrote: »

Not sure how keen I would be buying a house that has been repossessed by the bank. I'd feel that the original owners would have huge resentment and feel that I was in 'THEIR' house. Maybe I'm superstitious but I wouldn't be happy about it.

Do you also feel the same way about the houses of people who have died?

It's all very well to say you would rather buy a house from a voluntary seller, but the main reason why houses are repossessed is because the people who bought them weren't able to afford them. So why should you be without a home even though you can afford it, while they get to keep theirs, even though they can't afford it?

bobbbb

whizzbang wrote: »

I don't think I'd have a problem with it, unless they moved in next door or something.

Especially if it was seized by the CAB

bangersandmash

oceanclub wrote: »

You're skeptical of an article in a property supplement, funded by estate agents, that quotes estate agents?

Hang on a minute, are you saying we can't rely on the Irish Times supplement for impartiality? :rolleyes:

http://www.irishtimes.com/newspaper/property/2009/0312/1224242730852.html

ZYX

johnnyskeleton wrote: »

So you think there has been ~13% inflation since the peak of the bubble? Yet we have seen deflation for about a year?

I said 13% to round overall figure 50%. Actual inflation from mid 2006 to now was closer to 8-10%, depending on when you say peak was.

johnnyskeleton wrote: »

Also, if some places drop more it suggests that they have further to fall rather than that they have finished falling.

Well today for example, on Daft, Roscommon has 2000 properties for sale. North County Dublin has 4500 properties for sale. So I think it is reasonable to assume prices have further to fall in Roscommon than North County Dublin.

quozl

If you survive all that, then you are ready to benefit from probably one of the best times in recent history to buy a property.

Well, you can't argue with that tbh. This is the best time to buy in years.

It's way way better than buying all the other times she's told you to in the last few years. At least this way, you'll lose less.

Bravo, I say, bravo!

bobbiw

All indications are that prices in Dublin will continue to fall. If you see a house and its 300k now, I would be it will be 200k soon enough.

But to have that happen people have to be in a position where they have to sell.

Like anything, the house is not worth what you paid, its what people will pay you.

I know a place in west dublin where one house is up for 270 or offers and the exact same house up the street is up for 310k.

There is also a 4 bed up for 300k. But they are only worth that at the time they are sold.

I wouldnt buy now, but then I am looking at investments, I honestly feel that you will be able to get decent apartments near the city for less than 100k in the near future

bobbbb

bobbiw wrote: »

All indications are that prices in Dublin will continue to fall. If you see a house and its 300k now, I would be it will be 200k soon enough.

But to have that happen people have to be in a position where they have to sell.

Like anything, the house is not worth what you paid, its what people will pay you.

I know a place in west dublin where one house is up for 270 or offers and the exact same house up the street is up for 310k.

There is also a 4 bed up for 300k. But they are only worth that at the time they are sold.

I wouldnt buy now, but then I am looking at investments, I honestly feel that you will be able to get decent apartments near the city for less than 100k in the near future

What indications?
What would the payments be on a mortgage for a 100k apartment? Say a loan of 90k after you pay your 10k down and after you interest relief?
Less than €500 per month? Less than getting an average car on HP?

Would you not think most of these places will be snapped up long before they reach that price?

bobbiw

You are right, but as I said, in 2006 if you saw some of the houses that are today 100k less you would say the same thing.

Its based on houses becoming less affordable. If unemployment continues to rise in Ireland then the goverment will need more than a 20 euro levy. Taxes will have to go up which will mean less disposable income.

They will also have to look at interest relief as well.

In the 90s you could get a house for 100k in south dublin, but they were still very hard to afford.

for prices to get that way again it has to be the same situation. Ireland is probobly in the worst situation of any developed country.

It was not a housing bubble, it was a baloon that the country depended on.

Property as a whole is a poor investment vehicle, it was good for a while but most investors know that propery on average grows very slowly in value.

One thing is absolutly for sure, there is no property ladder anymore. Prices will never go up again (at least not for 10 years) and most likely will fall further.

bobbbb

bobbiw wrote: »

You are right, but as I said, in 2006 if you saw some of the houses that are today 100k less you would say the same thing.

Its based on houses becoming less affordable. If unemployment continues to rise in Ireland then the goverment will need more than a 20 euro levy. Taxes will have to go up which will mean less disposable income.

They will also have to look at interest relief as well.

In the 90s you could get a house for 100k in south dublin, but they were still very hard to afford.

for prices to get that way again it has to be the same situation. Ireland is probobly in the worst situation of any developed country.

It was not a housing bubble, it was a baloon that the country depended on.

Property as a whole is a poor investment vehicle, it was good for a while but most investors know that propery on average grows very slowly in value.

One thing is absolutly for sure, there is no property ladder anymore. Prices will never go up again (at least not for 10 years) and most likely will fall further.

I dont think you'll make a good investor if you think that you'll ever be able to by a decent apartment near dublin city center for €100,000. You obviously have no concept of a floor in the market. Thats probably as bad as those that had no concept of a ceiling.

Thats less than €250 a month each for the mortgage for a couple.
Get real man. If they are that price , i'll take 2 please.
Dont forget too that recessions always end.

Ste.phen

bobbbb wrote: »

I dont think you'll make a good investor if you think that you'll ever be able to by a decent apartment near dublin city center for €100,000. You obviously have no concept of a floor in the market. Thats probably as bad as those that had no concept of a ceiling.

Thats less than €250 a month each for the mortgage for a couple.
Get real man. If they are that price , i'll take 2 please.
Dont forget too that recessions always end.

I know I haven't been following this thread in quite some time, but it might be worth noting this for posterity.

1 bed apartments have started dipping below 200k near the river, and even more between the canals but out a bit from the city. I don't see why a 1 bed apartment should be more than 100K, it's three times the average wage, and should be affordable for a single person or couple to move into.
Sure it's 500 a month for a mortgage at that rate, but that's also for 20 years or more, too!
Since renting one of those places would be 700-1000 euro a month, the rent/buy price differential would be fair enough at this level, the higher rent price comes with freedom to move, lower management costs and fewer commitments, the lower buy price comes with a long term commitment and management fees, etc.

oceanclub

http://www.irishtimes.com/newspaper/ireland/2009/0317/1224242946345.html

A possession order was also granted to Bank of Scotland (Ireland), after a substantial number of direct debits were returned unpaid, with just three monthly repayments discharged in 2007.

The court heard the apartment located by Dublin’s Phoenix Park, had a market value of €280,000, despite being purchased for €473,000. The owner had worked as a taxi driver but was involved in a traffic collision and was unable to work since. Granting the order for the two-bedroom apartment in Castleknock, Ms Justice Dunne said the “defendant had no doubt fallen on hard times”.

Amberman

bobbbb wrote: »

I dont think you'll make a good investor if you think that you'll ever be able to by a decent apartment near dublin city center for €100,000. You obviously have no concept of a floor in the market. Thats probably as bad as those that had no concept of a ceiling.

Thats less than €250 a month each for the mortgage for a couple.
Get real man. If they are that price , i'll take 2 please.
Dont forget too that recessions always end.

You assume interest rates wont go up. I think we'll see double digit interest rates to combat inflation from QE...2011-13.

How much will it be then in mortgage payments?

You obviously have no concept of cost of carry.

bobbbb

Amberman wrote: »

You assume interest rates wont go up. I think we'll see double digit interest rates to combat inflation from QE...2011-13.

How much will it be then in mortgage payments?

You obviously have no concept of cost of carry.

Explain it to us then genius.

Why dont you tell us all how much it will cost to service a loan to buy a €100k property if interest rates go up? How much would you like them to go up for your example?

And take into account mortgage interest relief while you're at it.

Or what about this.
Think about how much a couple would get on the dole between them. And then tell us what a stupid idea it is that a couple on the dole can afford the payments on a property close to the city center.

Knock yourself out.

asdasd

Firstly infract that Bobbb guy. For being fractious.

And then tell us what a stupid idea it is that a couple on the dole can afford the payments on a property close to the city center.

He probably means at interest rates of 10% they wouldnt.

I dont think that is even necessary. Prices actually fall to a level where the market "clears". The market is unconcerned as to what that level is.

Calina

bobbbb wrote: »

Explain it to us then genius.

Why dont you tell us all how much it will cost to service a loan to buy a €100k property if interest rates go up? How much would you like them to go up for your example?

And take into account mortgage interest relief while you're at it.

Or what about this.
Think about how much a couple would get on the dole between them. And then tell us what a stupid idea it is that a couple on the dole can afford the payments on a property close to the city center.

Knock yourself out.

You take my breath away.

1) how much it costs to service a loan depends on the terms of that loan but if interest rates go up, the interest portion of servicing that loan goes up also. In very recent times, this has been a monumental problem for people servicing interest only loans as each increase in the base interest rate hit them slightly harder than it did someone whose payments included capital repayments.

2) Mortgage interest relief is not guaranteed and in fact, could well be lost in the event that tax revenues for the country continue to decline. This has happened before. As such, relying on it to keep the wolf from the door is not advisable.

You clearly think it's stupid that low income people should be able to aspire to home ownership. I wonder why.

bobbbb

Calina wrote: »

You clearly think it's stupid that low income people should be able to aspire to home ownership. I wonder why.

Well if you could tell me when people with a low income were ever able to afford home ownership I might change my mind.

It's always been difficult to get to own a home. That is until the last few years, which was the cause of our current mess.

Come on. People here are suggesting that house prices will fall below what people get on the dole. You can't seriously think that will happen now.

Amberman

bobbbb wrote: »

Well if you could tell me when people with a low income were ever able to afford home ownership I might change my mind.

It's always been difficult to get to own a home. That is until the last few years, which was the cause of our current mess.

Come on. People here are suggesting that house prices will fall below what people get on the dole. You can't seriously think that will happen now.

Im not saying that. I was point out a basic flaw in your argument. Rents versus mortgage payments look out of whack right now. It won't if (I think when) interest rates rise 5, 10 ir more % to cool out of control inflation. The 500 euros a month for todays mortgage could easily be 2000 to 3000 a month if this pans out the way I think it will...but Ive been wrong before, though rarely on stuf flike this.

Once that is the cost of servicing a mortgage, what do you think will happen to home prices?


EDIT...."Poor" people wont be able to afford the repayments, so they'll still be kept out of the market, even as asset prices plummet.

ntlbell

bobbbb wrote: »

Well if you could tell me when people with a low income were ever able to afford home ownership I might change my mind.

It's always been difficult to get to own a home. That is until the last few years, which was the cause of our current mess.

Come on. People here are suggesting that house prices will fall below what people get on the dole. You can't seriously think that will happen now.

what makes you think the dole will be at it's current rate for the next number of years?

the dole pot has run out, so i wouldn't be suprised seeing a reduction in the current dole hand out being reduced in this budget and continuing to reduce over the next number of budgets.

Basing the fact that the bottom in the market is based on handouts from the government is truly bizzare kid.

bobbbb

People, get real about your expectations of being able to buy property. If you would not get mortgage approval over the last 3 - 5 years you definitely wont be buying property in the next few years - whether you want to or not.

Im using the example of the dole to emphasize how ludicrous it is that property will go that low. If thats the case i'll have 2 please.

Hands up then who things that you'll be able to buy any property close to Dublin city center for the same amount monthly as you would pay for a decent car?

ntlbell

bobbbb wrote: »

People, get real about your expectations of being able to buy property. If you would not get mortgage approval over the last 3 - 5 years you definitely wont be buying property in the next few years - whether you want to or not.

Im using the example of the dole to emphasize how ludicrous it is that property will go that low. If thats the case i'll have 2 please.

Hands up then who things that you'll be able to buy any property close to Dublin city center for the same amount monthly as you would pay for a decent car?

considering we're only at the start of the downturn and you can now buy a 3 bedroom in tallaght for 99k

not many people on the dole putting in bids tho?

www.daft.ie/120769

CiaranC

bobbbb wrote: »

People, get real about your expectations of being able to buy property. If you would not get mortgage approval over the last 3 - 5 years you definitely wont be buying property in the next few years - whether you want to or not.

Im using the example of the dole to emphasize how ludicrous it is that property will go that low. If thats the case i'll have 2 please.

Hands up then who things that you'll be able to buy any property close to Dublin city center for the same amount monthly as you would pay for a decent car?

You know they are talking about one bedroom apartments, right?

Amberman

CiaranC wrote: »

You know they are talking about one bedroom apartments, right?

Dont waste your breath, hes made up his mind and you;re not changing it.

ntlbell

Amberman wrote: »

Dont waste your breath, hes made up his mind and you;re not changing it.

we usually average about one person like this a month, they slowly come round.

Amberman

bobbbb wrote: »

Im using the example of the dole to emphasize how ludicrous it is that property will go that low. If thats the case i'll have 2 please.

Prices are only ludicrous at current interest rates in your example. Whatever 2.75 x average earnings is in Dublin, when the average house price hits that level, I'd be happy to buy.

You cant measure prices sensibly or profitably in terms like Euros...thats just crazy. House prices are measured in rental income, cost of carry and wages. to say "Its crazy if the hit X euros" is a silly argument.

bobbbb

Ok. Keep your heads in the sand then.
I too want prices to come down. The more the better.

But people seem to think its going to be easy to buy houses. Its not.

Its mad the way you had people thinking prices would never fall a few years ago. Now a worse sickness has appeared. People who think that house prices will get ridiculously low.

CiaranC

bobbbb wrote: »

Ok. Keep your heads in the sand then.
I too want prices to come down. The more the better.

But people seem to think its going to be easy to buy houses. Its not.

Its mad the way you had people thinking prices would never fall a few years ago. Now a worse sickness has appeared. People who think that house prices will get ridiculously low.

One hundred thousand euro for a small flat is not "ridiculously low".

People have lost all concepts of the value of money.

Amberman

bobbbb wrote: »

Ok. Keep your heads in the sand then.
I too want prices to come down. The more the better.

But people seem to think its going to be easy to buy houses. Its not.

Its mad the way you had people thinking prices would never fall a few years ago. Now a worse sickness has appeared. People who think that house prices will get ridiculously low.

2.75 times income after a bubble as big as the one we've had is pretty standard during a crash...go and research it yourself. I'm pretty sure you'll come to the same conclusion if you use history as a guide.

johnnyskeleton

bobbbb wrote: »

Ok. Keep your heads in the sand then.
I too want prices to come down. The more the better.

But people seem to think its going to be easy to buy houses. Its not.

Its mad the way you had people thinking prices would never fall a few years ago. Now a worse sickness has appeared. People who think that house prices will get ridiculously low.

The difference is, on the way up, people didn't care what price they paid because they assumed that prices would go up at ~10% p.a. indefinately i.e. there was no target on the way up. On the way down, however, there is a target. No one is suggesting that the average mortgage for the average house should be less than the traditional ratio of 3.5x first salary plus 1x second salary over a 20 year term. The idea of borrowing based on a teaser fixed rate based on a temporarily low interest rate over a period of 35 years is nonsense. It only makes sense to spend as much money as you can on property when you believe the price will go up indefinately.

bobbbb

Amberman wrote: »

2.75 times income after a bubble as big as the one we've had is pretty standard during a crash...go and research it yourself. I'm pretty sure you'll come to the same conclusion if you use history as a guide.

Prove it.
Show us your research then.
And make sure its average household income and not average income for one person.