Will the property market pick up within the next 2 years

ZYX

travellerI wrote: »

OP


Lets look at the supply side. Depending on who you believe there are between 100,000 and 300,000 empty properties in Ireland.

Look at the demand side.

I dont know how many First Time buyers or trader uppers there are out there but I seriously doubt if the number comes any where close to the supply figures. Given that some of these unoccupied houses are on the side of mountain in the middle of nowhere - it is arguable that many of these properties are unsellable. Add in one bed apartments in cities to that equation and you have a big problem.


The above argument is a simple one, travellerI

It's a very simple argument. To sumarize
1 There are loads of properties for sale but I have no idea how many.
2 I have no idea how many buyers are out there but there must be very few.
Indeed some would say that is not an argument at all.

SimpleSam06

ZYX wrote: »

Both these points are pretty irrelevant except for the "mood" they create around the property market. We are realistically looking at at least a 1% drop in interest rates in next 12 months and more likely 2%.

ECB interest rates are becoming more irrelevant as they diverge from Euribor and Libor rates. That's why the banks closed the tap on tracker mortgages lately, and also why you haven't seen major drops in mortgage repayments for most people - the banks apparently have to "refilll their coffers" after their big scare.

ZYX

SimpleSam06 wrote: »

ECB interest rates are becoming more irrelevant as they diverge from Euribor and Libor rates. That's why the banks closed the tap on tracker mortgages lately, and also why you haven't seen major drops in mortgage repayments for most people - the banks apparently have to "refilll their coffers" after their big scare.

If mortgage rates fall by 0.2% that will negate the effect of the budget changes.

El Stuntman

ZYX wrote: »

If mortgage rates fall by 0.2% that will negate the effect of the budget changes.

yes but remember that the budget is already hopelessly inadequate (as Lenihan can't add or subtract)

there's a mini budget on the way early next year and expect more tax hikes to offset ECB reductions.

gurramok

ZYX wrote: »

Both these points are pretty irrelevant except for the "mood" they create around the property market. We are realistically looking at at least a 1% drop in interest rates in next 12 months and more likely 2%.

As said, it will help existing trackers as long as the govt 'don't claw it back' through other taxation methods. Public deficits of 7-10% of GDP are a phone call to IMF territory, expect many taxes/cut backs to occur which will further depress national income.

IR's of 1-2% less will not help prices recover. The banks use Euribor for their rates.
Even in the US, rates of less than 2% have not helped their housing market as the banks still charge 5%+ rates for borrowers.

To sum up, don't expect the banks to start offering 2-4% rates to borrowers here on the back of ECB rate cuts in the near future as they have serious bad debts to clear up and in simple language, they need every cent they can get.

So to OP, based on what has been detailed in the thread, it will be many years before prices recover on a steady upward track.

KhanTheMan wrote:

Good point.
I'd love to get an actual figure on the amount of properties above. They might as well just take them out of the supply list because im thinking that all of these in the like of leitrim, roscommon etc cant even be given away.

Yes they are. Alot in the major cities too. I've seen hundreds of empty apts myself.
The 300,000+ figure is based on ESB connections and CSO census data. I quote from 2Pack on the Pin:

The 350,000 figure is predicated on the ESB confirming that there are 2m domestic connections today ( + or - 10,000) .

The ESB domestic connections stats correlated very tightly with the census data .

The ESB Had 1.77m connection at end 2005 , the census 4 months later found 1.8m homes in total . We built the difference in that time

Sadly the most recent ( and previous years) ESB data is from End 2006 Here but the growth in Connections in 2006 together with construction completions since that date points to 2m Domestic Connections right now , Q4 2008 .

Yet our population of 4.43m and at 2.7 persons per household (because average household sizes drop .1 every 2.5 years and was 2.8 at census time 2.5 years ago) only requires 1.64m homes .

This points to 360k empties but allowing for ESB ' connections' that are not really habitable it should be about 350k .

The only way it could go lower than 350k is if net immigration increased but it is now likely that net immigration is , in actual fact , negative

earlyevening

Did I hear correctly on the radio that AIB are expecting a 40% further fall in value of undeveloped land and a 30% further fall in residential property. It also said their share price fell 17% on the back of this.

If thats what they admit to, expect worse.

I say sell, sell, sell (if you can find a naive enough buyer).

quote: from Irish Times
AIB said its €10.7 billion portfolio of residential development in Ireland had seen a more severe deterioration and it does not expect a recovery in this market until 2011. It expects a fall in values of 40 per cent for undeveloped land, of which the bank has a €7 billion loan book and 30 per cent for residential houses which account for the remainder.

SimpleSam06

gurramok wrote: »

So to OP, based on what has been detailed in the thread, it will be many years before prices recover on a steady upward track.

And even that will be a shallow slope.

bangersandmash

KhanTheMan wrote: »

Im havent time to write out the figures for you here but its easy to work out for yourself.
Go look up some starter homes in reasonable areas and then work out how much a couple will pay on a 90% mortgage or less including all of their interest relief.

Pity. I've done the figures myself now and in the past. They don't even remotely stack up for 3+ beds in "reasonable" areas.

As a prime example look at Phibsboro, an average area with plenty of small family homes. You can buy a 3 bed mid terrace for 585k (previously 630k). Assuming a deposit of 58k, BOI will currently give you a 35 year mortgage for €2,756.13 per month before interest relief. Alternatively you can rent a similar 3 bed redbrick midterrace around the corner for €1200 per month. Neither represent good value in my mind as they're both in relatively poor condition, but the comparison stands.

There's nothing special about Phibsboro in this example. You'll find the same thing in Windy Arbour or Cabra. You'll find more exteme cases in Ballinteer or Raheny. And if you want real entertainment, look at buy versus renting comparisons for the likes of Monkstown, Rathgar, Howth, Sandymount etc etc.

The only examples I've seen in the media for Dublin are 1-2 beds in certain poorly-built developments in Ballymun, Finglas or Tallaght, or occasionally small apartments in certain parts of the inner city that command high rents due to convenience. If that's what you mean by a starter home in a reasonable area, fair enough. But at least be up front about it.

KhanTheMan

bangersandmash wrote: »

Pity. I've done the figures myself now and in the past. They don't even remotely stack up for 3+ beds in "reasonable" areas.

As a prime example look at Phibsboro, an average area with plenty of small family homes. You can buy a 3 bed mid terrace for 585k (previously 630k). Assuming a deposit of 58k, BOI will currently give you a 35 year mortgage for €2,756.13 per month before interest relief. Alternatively you can rent a similar 3 bed redbrick midterrace around the corner for €1200 per month. Neither represent good value in my mind as they're both in relatively poor condition, but the comparison stands.

There's nothing special about Phibsboro in this example. You'll find the same thing in Windy Arbour or Cabra. You'll find more exteme cases in Ballinteer or Raheny. And if you want real entertainment, look at buy versus renting comparisons for the likes of Monkstown, Rathgar, Howth, Sandymount etc etc.

The only examples I've seen in the media for Dublin are 1-2 beds in certain poorly-built developments in Ballymun, Finglas or Tallaght, or occasionally small apartments in certain parts of the inner city that command high rents due to convenience. If that's what you mean by a starter home in a reasonable area, fair enough. But at least be up front about it.

You pick those areas. I can tell you now. Average First time buyers will never be able to afford any house in those areas you specified. But i expected that kind of argument. If you're not going to be realistic in your definition of a starter home is a reasonable area then there is no point even trying to argue with you at all.

Just as a matter of interest - could you not find any 3 bed house for less than €585K in phibsboro? There are plenty.

Seems to me you went out of your way here to suit your side of the fence here. Waste of time even trying to get you to look for some facts yourself isnt it.

for the record. im guessing house prices will fall further. im just pointing out one scenario in a specific market segment. the facts are there if you care to look them up without the bias you've used in your example above.

bangersandmash

KhanTheMan wrote: »

You pick those areas. I can tell you now. Average First time buyers will never be able to afford any house in those areas you specified. But i expected that kind of argument. If you're not going to be realistic in your definition of a starter home is a reasonable area then there is no point even trying to argue with you at all.

Can you read? I wasn't suggesting that an FTB was going to go buy in Sandymount. I listed a range of areas at different price ranges pointing out that there are rent V buy discrepancies across Dublin.

So which reasonable areas are you talking about exactly? Does your definition rule out 90% of the city?

With the greatest respect, Phibsboro is a working-class area full of what would have until very recently been called starter family homes for average wage earners (ie not an area consisting solely of 1-2 shoeboxes).

KhanTheMan wrote: »

Just as a matter of interest - could you not find any 3 bed house for less than €585K in phibsboro? There are plenty.

Sure I picked a house at €585k. For renting to be cheaper in that area than buying you'd have to quick an equivalent 3 bed for about €280k at the very most (ie 50%+ lower) . Have you found one? Maybe €440k, but certainly nothing 50% lower.

KhanTheMan wrote: »

Waste of time even trying to get you to look for some facts yourself isnt it.

The funny thing is you haven't provided any facts whatsoever. I've yet to see where these starter homes exist that are in "reasonable areas", that aren't 1-2 bed apartments, and that are "a hell of a lot cheaper to buy than to rent".

KhanTheMan

bangersandmash wrote: »

Can you read? I wasn't suggesting that an FTB was going to go buy in Sandymount. I listed a range of areas at different price ranges pointing out that there are rent V buy discrepancies across Dublin.

So which reasonable areas are you talking about exactly? Does your definition rule out 90% of the city?

With the greatest respect, Phibsboro is a working-class area full of what would have until very recently been called starter family homes for average wage earners (ie not an area consisting solely of 1-2 shoeboxes).


Sure I picked a house at €585k. For renting to be cheaper in that area than buying you'd have to quick an equivalent 3 bed for about €280k at the very most (ie 50%+ lower) . Have you found one? Maybe €440k, but certainly nothing 50% lower.


The funny thing is you haven't provided any facts whatsoever. I've yet to see where these starter homes exist that are in "reasonable areas", that aren't 1-2 bed apartments, and that are "a hell of a lot cheaper to buy than to rent".

Dont know about you but i would consider Phibsborough a very sought after area, but thats neither here nor there.

you're getting a bit defensive here.
All im asking you to do is go and work out the figures for yourself. It might stick a bit better if you do it yourself instead of going la la la la la.

Heres a little help for you.

Lets just take an ordinary scenario for a couple wanting to buy a house in Dublin, who are renting a 2 bed apartment or house for €1200 - €1300 or so.

A couple buying their first home would be looking for a 2 or 3 bed house or apartment that they can afford to buy.

So, just for arguments sake, do a search in Dublin for 2 and 3 bed houses and apartments for under €300k. Im sure there will be a lot more available under that price too in the coming year too.

So now they are looking for a mortgage of about €270k after they pay their deposit. What are they paying after mortgage interest relief? What will the effect of the expected 1 - 2% interest rate reduction over the next year be?

Just an example. Millions of other scenarios.

Rent can be higher or lower.
House price can be higher or lower.
Deposit may be higher or lower.
Term of mortgage may be shorter or longer.


I know it pains you, but would you not say that its possible for a couple to buy a house in Dublin for less than it is costingI them to rent it?

BendiBus

How about Crumlin as a battleground for you both?

2 end of terrace houses pretty close to each other.

One for sale at 300K (would accept 270K?) 10 Lismore Road

One for rent at 1150pcm 78a Monasterboice Road

Someone do the sums for me as I can't be arsed

JuliusCaesar

BendiBus wrote: »

Someone do the sums for me as I can't be arsed

You don't have to do the sums! jeacle will do them for you!

http://www.jeacle.ie/mortgage/ie/

250K over 20yrs at 5.2% = 1668pm

BendiBus

JuliusCaesar wrote: »

You don't have to do the sums! jeacle will do them for you!

http://www.jeacle.ie/mortgage/ie/

250K over 20yrs at 5.2% = 1668pm

Over 25 years is 1490. What's the interest relief? €133?

Say €1350pm to buy versus €1150 to rent? Only €200pm to own rather than rent?

2 random houses, back of envelope calculations etc. but that's interesting. And surprises me!

martian1980

BendiBus wrote: »

Over 25 years is 1490. What's the interest relief? €133?

Say €1350pm to buy versus €1150 to rent? Only €200pm to own rather than rent?

2 random houses, back of envelope calculations etc. but that's interesting. And surprises me!

'twould be well and good if every bank and economist wasn't shouting from the rooftops that things have further to fall...

IanCurtis

What is a "manket"?

Look how far the 'r' and the 'n' are on a keyboard...that's a shocking error. These are the future Graduates of this country....oh God.

spockety

IanCurtis wrote: »

What is a "manket"?

Look how far the 'r' and the 'n' are on a keyboard...that's a shocking error. These are the future Graduates of this country....oh God.

He could be dyslexic.

I think everybody knew what the OP meant.

Geology

This guy is a troll. I was looking at Personal Issues last night and he got banned.

KhanTheMan

BendiBus wrote: »

Over 25 years is 1490. What's the interest relief? €133?

Say €1350pm to buy versus €1150 to rent? Only €200pm to own rather than rent?

2 random houses, back of envelope calculations etc. but that's interesting. And surprises me!

Or more commonly a mortgage over 30 years and maybe pay a few grand more down. And with a couple its interest relief x 2

I still dont think houses are good value at the moment, but i was just posing the question of what effect something like this will have on people renting when more people realize its possible (as you can see though, clearly some havent realized its possible at all yet).

Interesting situtaion though isnt it. Going to become more apparent as prices fall further and interest rates fall too.

gurramok

7,800 interest in first year. They will not get full 133 relief as its not 10k. (http://www.jeacle.ie/mortgage/)

I think what matters is that the rent is too high in poorer areas for 2beds or less hence it looks a tad bit better to buy per mth using that 30yr term than in any other area.(still more expensive though!)

ronbyrne2005

gurramok wrote: »

7,800 interest in first year. They will not get full 133 relief as its not 10k. (http://www.jeacle.ie/mortgage/)

I think what matters is that the rent is too high in poorer areas for 2beds or less hence it looks a tad bit better to buy per mth using that 30yr term than in any other area.(still more expensive though!)

yeah, social welfare rent payments will put a floor under rents in poorer areas

ZYX

BendiBus wrote: »

How about Crumlin as a battleground for you both?

2 end of terrace houses pretty close to each other.

One for sale at 300K (would accept 270K?) 10 Lismore Road

One for rent at 1150pcm 78a Monasterboice Road

Someone do the sums for me as I can't be arsed

Cost of interest on property of €270k at 5.2% is 1170 per month. Take away from that the interest relief and it should come in around 1100 which is cheaper than renting. This doesn't include other costs such at furniture, insurance etc.
By the way €270k for a 667 square foot 2 bedroom house in Crumlin is mad.

ronbyrne2005

Don't forget the costs of ownership such as insurance/maintenance/mangement fees etc which renters dont pay. These expenses can add up to many thousand a year.

gurramok

ZYX wrote: »

Cost of interest on property of €270k at 5.2% is 1170 per month. Take away from that the interest relief and it should come in around 1100 which is cheaper than renting. This doesn't include other costs such at furniture, insurance etc.
By the way €270k for a 667 square foot 2 bedroom house in Crumlin is mad.

Where did you get 1170 before TRS?

From http://www.jeacle.ie/mortgage/ its 1478 per month at 5.2% for 30 yrs on 270k.
Interest per yr is 8,428 so relief is probably 140 for a singleton or 280 for married couple.

ZYX

gurramok wrote: »

Where did you get 1170 before TRS?

From http://www.jeacle.ie/mortgage/ its 1478 per month at 5.2% for 30 yrs on 270k.
Interest per yr is 8,428 so relief is probably 140 for a singleton or 280 for married couple.

You shouldn't include repayments of principal. The cost is the interest payment. 5.2% of €270,000 is €14,040 which is €1170 per month.

gurramok

I see. Interest is alot higher indeed, was looking at wrong payment year.;)

KhanTheMan

there are many permutations but it is definitely getting more common to actually be able to buy a place and pay less than you would in rent for a similar place. And there is another few quid off that figure today. I just wonder what will happen when people find they are paying more to rent than they would to own , even with the expense and responsibilty of owning. Will they then decide it's time to buy. Who knows

gurramok

Plus rents are coming down and i expect them to plummet due to oversupply and lack of tenants( the factor of immigrants + Irish leaving).
So it may get cheaper to buy due to falling house prices and falling mortgage rates, one needs to dig deeper to do the figures to see if it is really cheaper due to falling rents.

KhanTheMan

gurramok wrote: »

Plus rents are coming down and i expect them to plummet due to oversupply and lack of tenants( the factor of immigrants + Irish leaving).
So it may get cheaper to buy due to falling house prices and falling mortgage rates, one needs to dig deeper to do the figures to see if it is really cheaper due to falling rents.

Rents are nowhere near as volitile as house prices though. up and down by the off €50. look at the huge swing in interest rates though. Of course it could go the other way too. but not likely for the time being

SimpleSam06

KhanTheMan wrote: »

there are many permutations but it is definitely getting more common to actually be able to buy a place and pay less than you would in rent for a similar place.

The first time I saw this phenomenon was back in 2006 at the peak, one bedroom houses, I can't recall where exactly. The second time I heard of it was recently on one of the threads here. Two occurences in as many years doesn't make it common.