Housing Bubble Bursting

bangersandmash

A week ago we had this...

http://www.independent.ie/lifestyle/property-plus/why-its-my-time-to-buy-1771015.html

Today in the SIndo another piece of shameless PR...

http://www.independent.ie/national-news/lisa-and-gareth-waited-before-buying-1782439.html

Lisa and Gareth said they got fed up waiting and chose to buy last month. They bought a house in Rathfarnham, south Dublin, that last year was priced in excess of €600,000. They bought for €385,000.

"We could have sat on the fence forever worrying about whether the price would fall further after we bought. We are going to live in this house for at least the next 10 to 15 years. So, I'm not going to worry over €20,000 that may or may not have come off the price"

luckat

It's not necessarily "shameless PR" - most journalists simply cover the story that's happening at the time. There's seldom an agenda at work.

Last year the story was an endlessly rising property market, and the journalists wrote about that; this year it's a crashing market, and they're writing about that too.

If you want to blame anyone in a reporting or commenting role, blame those economists who predicted that the market would continue to rise endlessly. But even they weren't in the know about the interlinked capital that was about to come tumbling down all over the world.

As for this "Irish people never do well" nonsense, it's just that - it's a rent-a-sneer comment that came from Britain in the days when uneducated Irish people emigrated there and tried to make a living with few advantages to start with.

It wasn't even true then - many, many Irish people did very well, both at home and abroad - and it's certainly not true now.

Grawns

"Lisa and Gareth said they got fed up waiting and chose to buy last month. They bought a house in Rathfarnham, south Dublin, that last year was priced in excess of €600,000. They bought for €385,000.

"We could have sat on the fence forever worrying about whether the price would fall further after we bought. We are going to live in this house for at least the next 10 to 15 years. So, I'm not going to worry over €20,000 that may or may not have come off the price"

I think they missed a 0 there. Imagine they got fed up waiting for house prices to stop dropping! Twats.

bangersandmash

luckat wrote: »

It's not necessarily "shameless PR" - most journalists simply cover the story that's happening at the time. There's seldom an agenda at work.

But where exactly is the 'story' in either of the above articles? I suppose they could be vaguely called 'human interest stories'. But if you take such articles collectively over recent months two messages repeatedly appear: 'there's value out there' and 'there's no point waiting for the bottom'.

It's hard to say that there's no agenda in property supplements - they exist as a vehicle for property advertisements, that's their function.

asdasd

Another 100K may come off, but I think they got that house at an OK price. There will come a time when being too pessimistic is the wrong choice. Probably in more than a year.

amacca

Grawns wrote: »

I am currently looking at house prices in Dublin and subtracting 50% based on waiting another 2 years to buy. I think that is very realistic but I am extremely fortunate that the only property I own is a house by the sea in West Clare, ( bought with my parents to get me on the property ladder and used all year round!). I paid £70'000 for it in 1998. Even than I went viewing in Dublin and thought I'm not paying those prices for that ****hole. I have been following property prices with interest for the last 10 years and never considered buying at the prices around.

This government have a hell of a lot to answer for ( greed is good eh!) and as for the gullible who voted for them time and again. For Fecks Sake! Hopefully they will be out of power soon and stay there until house prices recover to 2005/2006 levels - sometime in 2030

That took a hell of a lot of discipline. If I had been in a position to consider buying around 1999-2005/2006 I think I would have been gullible enough to fall for the constant claptrap being fired at me from all angles about getting on the property ladder.

Thankfully I was being educated and had to spend what little money I was earning in rent etc. It didn't seem like at the time but it was a blessing in disguise. Didn't think there were many people that looked at a property in those times and decided it simply wasn't worth it when everyone was telling you it would be worth another €30,000 next year.

Grawns

amacca wrote: »

That took a hell of a lot of discipline. If I had been in a position to consider buying around 1999-2005/2006 I think I would have been gullible enough to fall for the constant claptrap being fired at me from all angles about getting on the property ladder.

Thankfully I was being educated and had to spend what little money I was earning in rent etc. It didn't seem like at the time but it was a blessing in disguise. Didn't think there were many people that looked at a property in those times and decided it simply wasn't worth it when everyone was telling you it would be worth another €30,000 next year.

It helped that I lived in Brussels for a while where beautiful houses and apartments were cheap cheap cheap and still people wouldn't buy.

spockety

asdasd wrote: »

Another 100K may come off, but I think they got that house at an OK price. There will come a time when being too pessimistic is the wrong choice. Probably in more than a year.

What house? Where is the house they bought?

For that price, probably in Whitechurch! (no offence to anyone from Whitechurch).

asdasd

No, it is in Rathfarnham.

spockety

asdasd wrote: »

No, it is in Rathfarnham.

Whitechurch is in Rathfarnham.

In fact, there are a lot of areas currently asking in the 300K's in Rathfarnham where I'd wager there's a good chance you'll be living next door to a joyrider or junkie.

(I'm aware these places are full of 'decent people' too etc.)

luckat

spockety wrote: »

Whitechurch is in Rathfarnham.

Whitechurch is a council estate at the foothills of the Dublin Mountains above Rathfarnham. I know there are many nice people there, but I wouldn't be rushing to buy there, actually.

spockety

luckat wrote: »

Whitechurch is a council estate at the foothills of the Dublin Mountains above Rathfarnham. I know there are many nice people there, but I wouldn't be rushing to buy there, actually.

:eek:

haha. The official postal address of Whitechurch is "Whitechurch, Rathfarnham, Dublin 14/16".

Anyone selling a house in Whitechurch will tell you it's Rathfarnham.
Any Estate Agent with a house for sale in Whitechurch will say it's in Rathfarnham.
Anyone who's just bought a house in Whitechurch will tell you it's Rathfarnham.

About the only people who will tell you that Whitechurch isn't in Rathfarnham, or something like Whitechurch is a council estate at the foothills of the Dublin mountains above Rathfarnham are the owners of houses in other areas in Rathfarnham!

It's Rathfarnham.

My main point being, that I would suggest that one of the few places in "Rathfarnham" where you can buy a house for under 400k is Whitechurch, Loreto, or somewhere bordering them.

luckat

Sorry, I probably wasn't being clear. Of course Whitechurch is part of Rathfarnham as an area; it's above Rathfarnham village, I meant.

ntlbell

whitechurch is pretty much the same as buying in jobstown/kilnarden heights and calling it wicklow

if someone paid 385k for a 3 bed in any of those areas you would be looking to get them committed.

spockety

Eh, just to clarify, I'm not saying that the house in question was bought in Whitechurch.

I'm just taking up asdasd on his assertion that 385K is 'an OK price' because the house in is Rathfarnham. Show us the house, then let us judge. As you say, there are some areas of Rathfarnham where 385K would be an obscene price to pay.

asdasd

I dont know the area, however from what people say, it probably was not Whitechurch because last year the price was 600K

spockety

asdasd wrote: »

I dont know the area, however from what people say, it probably was not Whitechurch because last year the price was 600K

If you don't know the area, never mind the specific house involved, how on earth can you possibly say that 385K represents an "OK" price, just because it once asked 600K?!

I give up.

bangersandmash

asdasd wrote: »

I dont know the area, however from what people say, it probably was not Whitechurch because last year the price was 600K

I would take the figures published in that article with a very large grain of salt.

ntlbell

I miss bobbiw

bobbiw

bangersandmash wrote: »

A week ago we had this...

http://www.independent.ie/lifestyle/property-plus/why-its-my-time-to-buy-1771015.html

Today in the SIndo another piece of shameless PR...

http://www.independent.ie/national-news/lisa-and-gareth-waited-before-buying-1782439.html

What a load of crap, ive never heard anything like it in my life.

We are not going to worry about 20k, which of course is 5% of their purchase price.

Given that prices are set to fall by more than than this quarter I think they were being rather dumb.

Who knows were prices will go, but for the future they are headed down.

Im just watching this, I have no interest in buying Irish property as I am on the other side of the planet. If I was going to invest anywhere it would be las vegas, its widely accepted that the homes there are undervalued by 30-40%.

That means that they will come back.

Irish prices were way overvalued. Ireland isint New York and it certainly isint London.

But I guess the economy is getting better right!

amacca

bobbiw wrote: »

What a load of crap, ive never heard anything like it in my life.

We are not going to worry about 20k, which of course is 5% of their purchase price.

Given that prices are set to fall by more than than this quarter I think they were being rather dumb.

Who knows were prices will go, but for the future they are headed down.

Im just watching this, I have no interest in buying Irish property as I am on the other side of the planet. If I was going to invest anywhere it would be las vegas, its widely accepted that the homes there are undervalued by 30-40%.

That means that they will come back.

Irish prices were way overvalued. Ireland isint New York and it certainly isint London.

But I guess the economy is getting better right!

Crap now I have to do research on how to buy property in Vegas.

Happy121

but I don't want to live in Vegas, I want to live in Ireland!

amacca

Vegas is a great town, you could get a cheap gaff and spend what you saved on its purchase vs similar overpriced dive here on gambling hookers and class A illegal substances and still have your mortgage paid off in a reasonable amount of time on what a appears to be a solid investment.

This is the american dream. I cant figure out why you want to stay in Ireland.

big syke

Obviously Ireland isnt New York or London, Ireland is a country not a city. Many of Dublins properies and (their locations, views etc) are highely sought after and as such many prices are up there with the likes of London.

oceanclub

big syke wrote: »

Obviously Ireland isnt New York or London, Ireland is a country not a city. Many of Dublins properies and (their locations, views etc) are highely sought after and as such many prices are up there with the likes of London.

Well, I don't know if you haven't noticed, but these properies are not highely sought after anymore, which is the problem. The reason they were highly sought after was because people presumed their price would go up forever.

P.

gurramok

Then big_syke, kindly explain why the prices of these grandiose properties are plummeting?

big syke

Well obviously a lot has to do with the decrease in demand but a lot of that can be attributed to the inability for many to get credit.

Duckjob

big syke wrote: »

Well obviously a lot has to do with the decrease in demand but a lot of that can be attributed to the inability for many to get credit.

Sadly, there is some truth to this.

I've no doubt that even in the current climate, and even now with widespread recognition that prices went nuts here, there are still plenty of morons that, if they could only get credit would still happily run out and drop 400,000+ plus on a pretentious 2 bed apartment in the next "up and coming" development in Ballymacf**kingnowhere.

When it comes to property, lots of people in Ireland still have blinkers on when it comes to gauging value, of lack of it.

big syke

Duckjob wrote: »

Sadly, there is some truth to this.

I've no doubt that even in the current climate, and even now with widespread recognition that prices went nuts here, there are still plenty of morons that, if they could only get credit would still happily run out and drop 400,000+ plus on a pretentious 2 bed apartment in the next "up and coming" development in Ballymacf**kingnowhere.

When it comes to property, lots of people in Ireland still have blinkers on when it comes to gauging value, of lack of it.

100% Agree. Thats why i dont think the prices will level off at a reasonable price. The prices may and probably will drop for the next 18 months but i think that when (and if) banks start giving out credit with less strict lending procedures then the prices will creep back up. They probably wont go up to the shambles of the prices they where during the "boom" :rolleyes: but i think they will indeed creep back up.

We are too obsessed with owning property that, as you said, if many people could only get credit they would buy over the odds for their home. Thats not saying i dont want to own a home, i hate renting but cannot afford a deposit yet and wouldnt get a mortgage of more than 100k.

London Irish

big syke wrote: »

We are too obsessed with owning property that, as you said, if many people could only get credit they would buy over the odds for their home. Thats not saying i dont want to own a home, i hate renting but cannot afford a deposit yet and wouldnt get a mortgage of more than 100k.

I'd say if you bought in the last 5 years, renting was a better option by far. You may have paid as much as you would have paid in rent (for arguments sake) - only while renting you didn't commit to a huge outlay to service a large committed debt. Essentially your money went nowhere in a mortgage, just like rent.

But if I rent, the mortgage I indirectly pay is not my own, and rent is open to market forces.

And even with interest rates at a historic low, people are in trouble right now.

Do I want to buy? Of course! But only at a price that allows me and my family the most disposable income right now, at any given point in time. This money is worth more now than later. Would I rent the rest of my life? If it frees money to sufficiently invest in other assets that I trust, then perhaps yes...

So house prices come down and your savings go up. Eventually there is a sweet spot where you believe you are taking up the minimum debt you need to. This is my plan. This is all that history teaches you anyway. In fact, I'd try to buy when interest rates are at a historic high. If I can pay the mortgage with those rates, then I should always be able to pay it. And interest-rate surprises should, in general, work for me (downwards).

But I won't do this in Ireland. We can't dig stuff out of the ground and sell it. Instead our main resource, and what we sold to the world, was our workforce. Our resource is too expensive for what it produces. It's going to an extremely painful experience to make us competitive again - especially now that Easter Europe, India and China have so established themselves on the scene.

So I didn't buy then and I think it's criminal for someone to buy now. You really need to be arrested even if you think about it. Especially if you have a family. Seriously. Is it painful to rent? Get over it. This country is going into the ****ter and you don't want to hold property. The interest on the national debt alone is going to suck the life out of the country more than it did it in 70s and 80s.

I stayed out of the market because I thought it was completely crazy. What I didn't expect, after renting, and living a pretty good, but not OTT life, was that I was coming out 10s of thousands ahead of my friends who went all in, into the property market. Why? I just saved money.