House prices in Charlesland.

DTinthegrove

Tom, how dare you mention that house prices are coming down!! You will be called Dr Doom before you know it!!;)

People were suggesting a 3-5% price increase by Dec 07, not going to happen! What do people think now?

All I know is that on a good six figure salary and not wanting to go over a 20 year mortage or be up to my eyes in debt I would struggle to be buying a 3 bedroom house. They have a long way to come down as far as i can see.

loyatemu

eh - 6 figure salary? assuming you can get a 3 bed for 500k (and I'm sure you can) you'd easily be able to afford the repayments on a 100k+ salary. Though I do agree that prices are probably going to come down further next year.

FindingNemo

loyatemu wrote: »

eh - 6 figure salary? assuming you can get a 3 bed for 500k (and I'm sure you can) you'd easily be able to afford the repayments on a 100k+ salary. Though I do agree that prices are probably going to come down further next year.

You'd be surprised,
what if you could only get a 450k mortgage, repayments on that over 20 years is Approx 3k.
100k salary leaves you with Approx 5.5 - 6k a month.
what if you pay a creche 1k a month,
it all adds up and people assume a salary of 100k is extreme nowadays and everything is easily affordable, not so for alot of circumstances.

I too, think the housing market is going to come down quite significantly in the new year.

DonJose

61 Charlesland Grove has been reduced from €530k to €490k, thats a 7.5% drop.

http://www.myhome.ie/search/property.asp?id=LGMUG337950&np=&rt=search&searchlist=

http://irishpropertywatch.110mb.com/REPORTS/09NOV_3WEEKS.htm

DonJose

Hammiepeters wrote: »

3 beds peaked at about 555K and thats where they stayed. 2 bed houses about 405k and same. A ten per cent drop would be about -50K. I dont think so! estate agent bs. I think also that we are a first time buyer estate and the stamp duty uncertainty will have stalled things. Personally I am not worried and would expect Charlesland values ti increase 3-4% this year.

Do you still believe "Charlesland values ti increase 3-4% this year"?

There are 4 x 3 bed semis on sale at Daft priced 2 @ €525k, 1 @ €535k, 1 @ €538k. So it seems the value of these homes is roughly €525k, thats €30k off your estimates, so they have really decreased in value by over 5% this year, thats not taking into account that inflation is running at 5%.

DTinthegrove

loyatemu wrote: »

eh - 6 figure salary? assuming you can get a 3 bed for 500k (and I'm sure you can) you'd easily be able to afford the repayments on a 100k+ salary. Though I do agree that prices are probably going to come down further next year.

3 bedroom currently valued at 500-535k. As an example then, say borrow 450k over 20 years = repayments around 3k a month about 55% of a 100k salary (after income tax). 55% of you salary seem a lot to me! And borrowing 4.5 X income is heavy as well. Oh and i forgot about stamp.

Make that 45% of a 100k salary if you took it to 30 years, bargin! As someone else said here 100k get you nothing these days. Unless you are prepared to get your self in a level of debt that i personally do not want to get in.....especially as house prices fall futher.

SlinkyToo

Well said, there are too many people already in majorly debt in this country. I look around everyday and see people on the verge, with a nice 07 car and nice house but only 50c in their pockets.

I am renting an apartment in Charlesland at the moment and to be honest its very nice and I am seriously considering buying one. However I wouldnt buy a house there, its too concrete jungle for my liking.

I have one question though. Why are people selling up, looking at dooleys, daft and remax, you would think the plague had broken out there.

daraghm

SlinkyToo wrote: »

I have one question though. Why are people selling up, looking at dooleys, daft and remax, you would think the plague had broken out there.

Perhaps because the vast majority of the homes are 2 bed starter homes (be they houses, apartments, duplexes etc.), great for having the first kid, but if you want a bigger family you have to look further afield.

Hammiepeters

DonJose wrote: »

Do you still believe "Charlesland values ti increase 3-4% this year"?

There are 4 x 3 bed semis on sale at Daft priced 2 @ €525k, 1 @ €535k, 1 @ €538k. So it seems the value of these homes is roughly €525k, thats €30k off your estimates, so they have really decreased in value by over 5% this year, thats not taking into account that inflation is running at 5%.

Whilst some of the gloom merchants' forecasts have not come true. EG interest rate increases etc. It is apparent that things have stalled(not crashed) in the property market. In my owh neighbourhood, I know of several people with signs outside just testing the market. This is providing a glut at present with people holding off with suspicion that stamp duty may be reformed and that prices will drop further. In the meantime, rents are spiralling and people are pouring money into other peoples mortgages and the economy has almost stalled as well. Garrett Fitzgerald predicted 0 growth in the times lately for 2008. And as a man who bankrupt the country and ran the economy at less than 0 growth; he has great experience. As soon as people on 100k salaries start whinging about affordibility; you know something is wrong. If you are earning 100k, can things be really that bad?

Tom123

Hammiepeters wrote: »

If you are earning 100k, can things be really that bad?

Yes they can! These days a 100k salary will allow you to buy very little.

100k gives you a monthly take home pay of around 5,500. If you want to spend 40% of your income (which in my opinion is still far too high) on a mortgage.

40% allows for 2,200 for monthly mortgage repayments and with that you still wouldn't be able to buy a house in Dublin. 2,200 would probably cover a mortgage of 400,000 at this moment in time. Just less than the price of the average house in Dublin.

This is the root of the issue. If someone on a 100,000 cannot afford to buy the average home in the capital then prices are simply too far too high.

I just don't understand how people can't see this!

SlinkyToo

Ok heres a bit of brain dump... after reading this thread...

The culture sure has changed. Time was when you would live with your mammy and save for a deposit before you went and bought. Now its seems that 90% to 110% mortgage is the norm.

Perhaps if mortgages were restricted to those with a good savings record, people would not place themselves in precarious situations.

In the last few weeks my wife and I have been visiting properties and while the prices have been advertised at one level, the agents freely admit you can knock between 5-20k off the price depending on the property.

I know of one property in Applewood heights that is on for 630k because they wanted a realistic chance of selling, while the properties around them are on for 700-800k. However, they still can't sell the 630k house.

I think that house prices in Charlesland still have about 20-30k of a drop to take place to get the market there on an even keel.

There needs to be a major shift in peoples thought processes, so they are realistic about the value of their home, likewise the Estate Agents need to stop providing impossible valuations on houses in the vain hope of getting a higher commission.

Having just sold a house in the UK, just in time, the downward trend was very apparent there. We lived in a quite neighbourhood with long term home owners. 1 week after our house sold, there were 5 houses for sale on the same road, panic selling started. The house prices dropped in the area by 20k over night.

It seems the same thing is happening here, with people 'testing the waters'. If people want to know how much their house is worth get it valued, thats cool. But once you stick a sign up in a road with 5 other properties for sale you can knock at least 10k off the price, due to supply and demand.

daraghm

SlinkyToo wrote: »

I think that house prices in Charlesland still have about 20-30k of a drop to take place to get the market there on an even keel.

It's hard to define or even predict what is an even keel. Even at current prices, Charlesland is less expensive than most other houses in Greystones. A mate of mine just sold a 2 bed 75 sqm (detached) house with a tiny garden (smaller than the 2 bed terraced in Charlesland) in Redford for €520k. I like Redford, it's quiet and less dense than Charlesland, but if I was buying a starter home, and could buy in Charlesland at say €380 to €390, that's a big saving on €520k!

I have my 2 bed terraced townhouse on the market because I want to move on to a bigger house, and have a bigger family. Maybe quite a few people feel the same given the age profile of some parts of the estate (Charlesland Wood) is over 3 years for the early section of it anyway. Maybe there are investors who are nervous and trying to get out, ironically flooding the market and driving prices down further! To buy a bigger house in Greystones to have more than 2 kids in would largely involve well over €550 to €600k I imagine. A lot of money. But in the scheme of things I don't think Charlesland is particularly overpriced in comparison to many other areas.... Anyway, time will tell I suppose....

Fiachra2

[
This is the root of the issue. If someone on a 100,000 cannot afford to buy the average home in the capital then prices are simply too far too high.

I just don't understand how people can't see this![/QUOTE]

I think you have made a very valid point there. It is not uncommon now to come across people on salaries that are multiples of the figure you are talking about yet living in (relativly) modest homes. The reason being presumably that to move into really big houses involves a mortgage of say €1M and while they are earning an lot of money this would simply consume an unacceptably high proportion of it. This would seem to be a very clear indication that the commodity is overvalued.

I also think the situation is rather worse than you paint as I think your estimate of take home pay is a bit high. Most people on that level of salary are making substantial contributions "off the top" eg pensions, vhi etc leaving them with a rather smaller take home.

Hammiepeters

SlinkyToo wrote: »

It seems the same thing is happening here, with people 'testing the waters'. If people want to know how much their house is worth get it valued, thats cool. But once you stick a sign up in a road with 5 other properties for sale you can knock at least 10k off the price, due to supply and demand.

My point exactly. many of those with for sale signs dont really want to move and have no idea where they will move to in the event of a sale. In the meantime, their' panic is affecting the value of other genuine sellers' properties.

Hammiepeters

Fiachra2 wrote: »

[
This is the root of the issue. If someone on a 100,000 cannot afford to buy the average home in the capital then prices are simply too far too high.

I just don't understand how people can't see this!

I think you have made a very valid point there. It is not uncommon now to come across people on salaries that are multiples of the figure you are talking about yet living in (relativly) modest homes. The reason being presumably that to move into really big houses involves a mortgage of say €1M and while they are earning an lot of money this would simply consume an unacceptably high proportion of it. This would seem to be a very clear indication that the commodity is overvalued.

I also think the situation is rather worse than you paint as I think your estimate of take home pay is a bit high. Most people on that level of salary are making substantial contributions "off the top" eg pensions, vhi etc leaving them with a rather smaller take home.[/QUOTE] I think a million would get you a pretty nice house dont you? If your friends are earning multiples of 100k per annum and living in modest houses;well then I think they may have expensive lifestyles(fair play) and save little. Although you say they are making off the top contributions. Personally I think that off the top ammount would have been well invested in property in recent years. But thats a choice and hardly a problem.

SlinkyToo

Exactly. I wonder who is gonna buy the new 5 bed houses being built in Phase 2. Dooleys is marketing them as trade ups for families. If people cant afford a 2 bed house how they gonna afford a 5 bed starting at 900k.

300% mortgages here we come.

fishdog

many of those with for sale signs dont really want to move and have no idea where they will move to in the event of a sale. In the meantime, their' panic is affecting the value of other genuine sellers' properties.

Im sorry but this is just rubbish! Having people view your house is a major inconvenience. It also costs money to put a house on the market, myhome.ie charge a few hundread euo to advertise. Why would you put yourself through this if you did not want to sell? To get it valued?? I dont think so. I would be easier just to ask new buyers or look at prices of houses and see if they are selling or not.

I think a million would get you a pretty nice house dont you?

Depends on where. In Greystones I dont think you can get value for money with that budget. Look in Greystones, you will not get a pretty nice house for a million. An Applewood Heights house will not leave you much change out of €1M once you have spent a few bob modernising and paid stamp duty.
For this money you are still living in a housing estate. Dont get me wrong, I live in an estate, but if I spent €1M on a house I would not be happy living in one!

A mate of mine just sold a 2 bed 75 sqm (detached) house with a tiny garden (smaller than the 2 bed terraced in Charlesland) in Redford for €520k

This speaks volumes!

SlinkyToo

People are putting their houses on sale to see how much they can get. It is a very modern occurence for people to do this in a fit of panic when they see their neighbours selling.

Its not rubbish, rather you don't agree with the opinion.

Fiachra2

I think a million would get you a pretty nice house dont you? If your friends are earning multiples of 100k per annum and living in modest houses;well then I think they may have expensive lifestyles(fair play) and save little. Although you say they are making off the top contributions. Personally I think that off the top ammount would have been well invested in property in recent years. But thats a choice and hardly a problem.[/QUOTE]


Unfortunatly (or perhaps fortunatly), Hammie they are not friends. I come across them through work. My two points were:

1. 100K salary does not necesairly leave someone with 5.5K per month if for example they are making AVC's of 15-20%, This would be a pension contribution not property investment. Making pension contributions is indeed a choice but its one that many people on a salary of that size are likley to make given the age that they are likely to be.

2. A €1M euro mortgage over 20 years would eat up about 150K of annual gross salary. I would speculate that even people on very large salaries (say 250-400K per anum)appear to be taking the view that they are not prepared to spend that kind of money.

I would agree that €1M does get you a very nice house but not the kind of trophy home that might be expected to go with the salaries I was thinking of (ie your Burnaby-type mansion)

I accept however that this is all very speculative. I think the salient point was the original one that when someone on 100K p/a has to think twice about buying a house then it suggests thatthere is something wrong with house prices.

jackal

Hammiepeters wrote: »

Whilst some of the gloom merchants' forecasts have not come true. EG interest rate increases etc. It is apparent that things have stalled(not crashed) in the property market.

The only reason that interest rates stopped climbing was because of the subprime fallout in the states. If you think this is a good thing, then you are in trouble, though obviously it eases the pain for irish mortgage owners for the time being.

A stall suggests that the status quo is being maintained. i.e. prices are remaining static. This is not the case. Prices are falling - on average 10%. Inventory is not remaining static either, its increasing.

In my owh neighbourhood, I know of several people with signs outside just testing the market.

Freinds of mine have said the same thing. They know that the market is in bits, so they dont expect to sell, but hope to.

This is providing a glut at present with people holding off with suspicion that stamp duty may be reformed and that prices will drop further.

A lot of the properties for sale in charlesland would be FTB properties. Stamp duty should not be an issue for them. Nobody could possibly be "trading up" to a 2 bed apartment now could they, unless they are currently the prowd owner of a shoebox. Of course people are holding off buying because now that the "property only goes up" spell has been broken, people are going to wait for the market to bottom out. The frenzy factor is gone, as the fear that you wont be able to buy the property in a month cos it will have gone up has dissapeared. In fact, its now replaced with people looking at the next level up from what they were previously able to afford and thinking.. a few more months and that will be in my range.

In the meantime, rents are spiralling and people are pouring money into other peoples mortgages and the economy has almost stalled as well.

Rents are spiralling? Up or Down? Rents have dropped over the past few months. There is a glut of property for rent now and more on the way, as buy-to-letters who previously let the property lie empty are no longer seeing capital appreciation. Also people who have traded up without selling their starter home are now unable to sell it and are resorting to renting it to service the double debt. You are kidding yourself if you think renters are paying other peoples mortgages. Rents are nowhere near covering equivalent mortgage repayments on properties. This model only worked when interest rates were 2%.

As soon as people on 100k salaries start whinging about affordibility; you know something is wrong. If you are earning 100k, can things be really that bad?

The first salient point you have made in this post.

Just because someone can afford a large mortgage doesent mean that they bale in with all the other sheep. People who make big money are often intelligent and look for value for their money. Most will see no value in property at the moment. A 100k job is not guaranteed to be there for 35 years - a huge mortgage is.

Greystones today on myhome.ie...

DTinthegrove

Jackel I think your post was very well argued. Indeed I am one of thousands of people looking for value to come back in the market. For me, a "high earner" thats a drop of 20-30% but value is very personal.

Rents are now sprialing etc etc is the next phase of the agrument for people still confident in property.

But I find it difficult to belieive as- there has been a large increase in rental supply in recent months; a 3 bed house in Charlesland could be let for €1,500 but the mortgage on €450k (not even €520k- the current asking price) would cost you more than €2,000; In general, rental yeilds are below inflation.

SlinkyToo

Rent is starting to rise as less people can get on the property ladder or more likely hold off from buying to watch how the market goes (as we are doing).

The only way an investor will make money off a rental property immediately is if they bought it a low price and the rental charge increases beyond the mortgage payments. This may well be the case for people letting out properties in Charlesland as they bought in when the prices were much lower.

However it is important to understand that buy to let is not necessarily about making a profit immediately off the mortgage payment Vs rent. Its about long term investment.

In my view it is better to do buy to let and get at least 3/4 of the mortgage payments paid for by rent and then pay the exta yourself. This means you have an ever decreasing mortgage and a property to sell come retirement, to bolster your pension.

We are seriously considering buying one or two apartments in seabourne and letting them, especially with the decreasing prices.

The model of rent increasing as people as less able to buy is demonstratable in many economies.

jackal

SlinkyToo wrote: »

Rent is starting to rise as less people can get on the property ladder or more likely hold off from buying to watch how the market goes (as we are doing).

The only way an investor will make money off a rental property immediately is if they bought it a low price and the rental charge increases beyond the mortgage payments. This may well be the case for people letting out properties in Charlesland as they bought in when the prices were much lower.

However it is important to understand that buy to let is not necessarily about making a profit immediately off the mortgage payment Vs rent. Its about long term investment.

In my view it is better to do buy to let and get at least 3/4 of the mortgage payments paid for by rent and then pay the exta yourself. This means you have an ever decreasing mortgage and a property to sell come retirement, to bolster your pension.

We are seriously considering buying one or two apartments in seabourne and letting them, especially with the decreasing prices.

The model of rent increasing as people as less able to buy is demonstratable in many economies.

Can you give me an example please?

SlinkyToo

At a rudimentery and simplified level, the increase in rental charges can be explained by Supply and Demand. The house buyers have been priced out of the market and therefore fall back on the second best approach, to rent. As more people become unable to buy they will rent thus increasing demand and decreasing supply and causing rental charges to rise.

This trend is now very apparent in the Irish market.

Some links to examples in the UK Economy.

http://www.assetsure.com/news-120907.htm
http://www.yourmortgage.co.uk/showPage.html?page=3624688

jackal

True - simple supply and demand.

However, the rent increase story is from june of this year, and is out of date. Events have moved on as I described above, more and more BTL properties are hitting the rental market to make them wash their faces, now that capital appreciation is no longer making empty apartments make money.

But what about the increase in rental supply, which should meet, and surpass the demand. In that case, rents will stagnate/drop. As house prices fall/bottom out, rental demand will decrease also as buyers return to the market.

Latest daftwatch rental supply graph:

SlinkyToo

As with everything there are peaks and troughs, currently rental prices are on the up, no one knows for how long and house prices are on the drop.

No doubt it will go the other in 5 to 7 years. In the meantime, any with money will buy in the downturn and reap the rewards.

It is the same approach as sharedealing, buy in a slump not a rise, yet 99% of the population cant understand this.

jackal

Thanks for the rudimentery and simplified lessons, its good to know the top 1% are on top of things and keeping an eye on us.

Lads, d'ja hear this, its Buy low, Sell high, I knew there was something wrong with my Buy high, Sell low policy.

As for "any with money will buy in the downturn and reap the rewards", that only applies if you buy at the bottom, not on the way to it. Who knows what the true value of Irish property is. By any comparable standards our property is overvalued, especially in the capital. This is not New York, London or Tokyo, its a small capital city in a small country, a country with very low population density. Prices should never have got as high as they did, and I very much doubt this is a temporary downswing. Its more the beginning of a return to a realistic price based on salary multiples(PPR) or yields(Investors).

SlinkyToo

Thanks for the praise. I am always happy to help those struggling with the complexities of life or indeed the simplicities.

jackal

Hammiepeters

SlinkyToo wrote: »

People are putting their houses on sale to see how much they can get. It is a very modern occurence for people to do this in a fit of panic when they see their neighbours selling.

Its not rubbish, rather you don't agree with the opinion.

Exactly. It does happen.