The Property market has reached the bottom!

leonardjos

From the property section of today's Irish Times:

The market has bottomed out but money is hard to come by says ISABEL MORTON

MANY HAVE hinted at it over the last couple of weeks, but I’m just going to say it: THE PROPERTY MARKET HAS REACHED THE BOTTOM!

Yes, it just had to be said. And out loud. And, now that it’s done, all those who have been carefully circumnavigating the subject, can relax. (You’re all off the hook now, as I’ll be taking the blame.)

Full Article here

So it looks like this is as affordable as it gets and we should hurry up and buy before property becomes unaffordable again! :rolleyes:

techdiver

I love the fiction that I can read in national property supplements, written and sponsored by estate agents/developers etc....

These are the same people who were claiming great afford-ability during the bubble years.

I really hope the Irish sheep herd don't buy into this bulls**t....

snubbleste

Oh it's only Isabel again

gurramok

Comedy forum that way

---

>!

SkepticOne

MANY HAVE hinted at it over the last couple of weeks, but I’m just going to say it: THE PROPERTY MARKET HAS REACHED THE BOTTOM!

Great stuff. I'm off to buy a gaff so before they are all snapped up.

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.

She's not wrong, this is a way better time to buy than all the other times she's told us to in the last few years.

At least this time you'd lose less )

and holy j3bus!

Some estate agents suggest that we are now experiencing a seesaw effect, as property prices have overcorrected of late. But then again, given that house prices are covered by the Data Protection Act, estate agents are the only ones who actually know what prices are being paid for property these days.

Paraphrased:
EAs are telling us this, and they're the ones who'd know as they see the real going prices, so better believe them.

Good thing EAs have never fibbed to us before. I love her, she's funnier than Bill Hicks.

The_Conductor

quozl wrote: »

She's not wrong, this is a way better time to buy than all the other times she's told us to in the last few years.

At least this time you'd lose less )

Thats almost reverse psychology, you know......

mrgaa1

interesting article - obviously previous posters didn't bother to read it as it highlights the well known issues with credit, job security etc... There has been a marked interest renewal in houses although I can see further price drops in areas that are still over priced. But there are areas where house prices will not drop any further - they will not increase either for quite some time. There are a lot of people fed up with dead rent money - the rent-to-buy schemes offer hope for those who wish to buy and live long-term in a home. Lets hope we are near there as our very fragile recovery relies heavily on the housing market moving in a postive way. Perhaps those who love to see our country on its knees would take a look and say to themselves perhaps our country needs support and encouragement - not faceless attacks.

quozl

LOL, I for one read it, and the fact that she mentioned credit is hard to get doesn't mean she's not talking out of her a$$ when she says we've reached the bottom.

You argument for it being the bottom is that people who disagree are un-patriotic.

That is a lazy ad homimem argument mrgaa1.

You give no reasons to support your argument? Here are some to actually support mine:

On-going job losses - 400K on the dole was predicted for end of this year, we've already passed that.
Tax increases in mini-budget in april. Lower affordability.
Pension Levy - Lower affordability.
Deaths, Divorce and Default, as mentioned by the lovely Isabel. These are forced sales which will set the market value of properties.
100 to 300K overhang of empty properties, depending on what estimates you believe. Even at lower end (which I don't believe) that is massive.
Developers currently propped up by banks, as banks can't afford them to go under. This can only be a tempoary measure. Developers will go under, and their stocks will be liquadated at whatever price can be fetched for them.

Perhaps those who love to see our country on its knees would take a look and say to themselves perhaps our country needs support and encouragement - not faceless attacks.

This is the most childish of arguments. What our country needs is for the housing bubble to be corrected.

The reason things are so bad is because the correction was so delayed and the bubble got so big.
The sooner we fix it, the sooner we can get back on our feet. Trying to delay the inevitable will only prolong things.

International norms are for mortgages to be 3 1/2 times salary. We had some of 10 times salary!

Do you truely believe that is a healthy state for a nation?

There is a reason we are the most indebted nation in europe, and debt is not wealth.

Lets hope we are near there as our very fragile recovery relies heavily on the housing market moving in a postive way.

You suggestion for getting out of this mess is that we need to return to being a property based economy? Who needs these new properties? How do we fund it? With more foreign debt?

Agent J

Ah so if they say it in CAPS LOCK then it must be true...

quozl

Agent J wrote: »

Ah so if they say it in CAPS LOCK then it must be true...

Exactly,. Note that they did also ISABEL MORTON in caps lock too, and that is her real name! So, I guess that supports your argument.

Sign me up

Mink

It has "advertisement-masquerading-as-informative-article" written all over it

Loxosceles

The property market has not yet even reached equilibrium for profit/loss let alone bottomed out. The price of a mortgage is not supposed to take up more than 30% of gross monthly income of any buyers, and the full price of a house should not exceed 125% of the combined yearly incomes of all buyers. If it does, the ratio of property value to actual employment and income value in the area starts to become unsustainable.

Ireland has a horrible problem with this: if you make 29 grand at the local medical widget factory, and your husband makes 35 grand at his car sales job, that means your house should sustainably cost no more than 80,000. But a house which is 80,000 anywhere else with a decent economy, is 160,000 plus even now in Ireland's foreign-investment-dependent economy, and the foreign investors are pulling out to provide jobs in their own countries or close due to loss of sales. It is absolutely certain that if sellers don't start adjusting now, there will be a shakedown of horrible proportions.

The price of property in Ireland is massively inflated even now because everyone is still sitting on their sales property waiting for a six-figure sell, and everyone looking to buy is still sitting on their behinds waiting for a five-figure buy. Right now it's a battle of wills, and in the meantime, the continued job losses in Ireland due to the recession will continue to lower the mean income of residents until desperation finally takes hold and foreclosure looms for many properties.

And, the horribly inflated six-figure mortgages bought two years ago have already started going into foreclosure as many people who bought are realising that they lose far less money if they foreclose, lose the current equity, file bankruptcy and wait to buy again, than if they continue to pay on the original sale price.

An acre of property in a sustainable and employable rural area of the United States currently cost, during the bubble and before the recession, in the neighbourhood of 35,000 dollars. In a suburban area that price would be for about a third of an acre. Then the cost of building a modest 3-bedroom home (and not a McMansion) on that property would be in the neighborhood of 50,000 dollars. This is for direct buyers paying for the land and getting a building contractor, so we're looking at about 85,000 for a decent middle income home on a third acre. If the home were built by a developer, the land would have been bought far cheaper and in large lots, and the contractor would have bid a far lower price due to cuts in cost for a large number of homes being built. So that 80-85 grand would still have about a $40K profit for the developer. Any estate developer should not get more than 50% profit per property with all costs figured in as a sustainable maximum.

But here in Ireland, property sellers and developers got unbelievably greedy. Sellers were asking six figures for a single acre and developers were looking for up to 200% profit on builds. And they still uphold that model now even though the bottom is dropping out, resulting in whole new-build estates around the country which are 90% uninhabited. Talk about stupidity.

Add into the fact that land in Ireland is often covered with rushes and marshy, the infrastructure of water and sewage service is questionable at best, and it's a hinky prospect for any semi-rural homebuyer with half a brain. The problem is, if you combine the Irish greed to get on the property bandwagon (not ladder) with the necessity to preserve landscape, culture and heritage, who want to offset the expense and greed of city sellers and builders, the strictness of land inspectors often creates an artificial sense of demand and pressure which drives the artificially inflated value of permitable land even higher. Time to stop, step back, and breathe.

The greed here in Ireland regarding land is a cultural stumbling block and not a practical investment. The Tiger got people who were poor for 800 years and then living in council estates between 1922 and the 1990s, buying houses at horrible prices after the Tiger finally got them a decent middle income. The rationale was that they finally got property of their own and they were willing to pay any price for it, and acreage sellers and developers jumped on it. But the problem is, you need a sustainable middle income property market, not what you have now.

And the reason that I know what I'm talking about is a) my income is in US holdings and development and b) I used to work at Bord Pleanála. The insanity and greed in Ireland that I saw the inspectors butting head to head, would make any good old American profit motive look like volunteering for the Red Cross.

It's no wonder the Travellers have turned their rejection of the Irish desire for property into a virtual religion. Personally, I don't need to, because I know what's unsustainable when I see it.

lox.

The_Conductor

mrgaa1 wrote: »

interesting article - obviously previous posters didn't bother to read it as it highlights the well known issues with credit, job security etc... There has been a marked interest renewal in houses although I can see further price drops in areas that are still over priced.

I read it- and I disagree with you.
The author is highlighting what she terms a see-saw effect- where she thinks property prices have over corrected and are now below fair market value. She is backing up this assertion with anecdotes about people checking out banks for mortgages and an increase in the number of hits on property websites (though she does acknowledge the vast reduction in the numbers of properties on estate agents books with sell orders on them.....)

She does not go into great detail about credit, job security etc- it barely warrants a mention in her report.

mrgaa1 wrote: »

But there are areas where house prices will not drop any further - they will not increase either for quite some time. There are a lot of people fed up with dead rent money - the rent-to-buy schemes offer hope for those who wish to buy and live long-term in a home.

Its unhelpful dragging up the 'rent is dead money' vitriol yet again- its been debated to death both in this forum- but also in the other forums such as propertypin and its ilk. Its simply not true- rent is paying money for a service. Getting a mortgage and paying interest on your mortgage is also paying money for a service- in the same manner. There are roughly 150,000 people out there who wished they had never bought into the rent is dead money frame of mind- some of them are even expecting a government bail-out to 'fix their negative equity'......

There may be a marked increase in interest in the properties on estate agents books- but if you factor into the equation that national estate agents now have on average almost 80% less property on their books than they had 2 years ago- its simply a case of a couple of extra people chasing far fewer properties. It does not mean a revival of the property market by any means- simply that a couple of people have hopped in again- however statistically its a blip, as there is insufficient volume on which to measure market activity.

The rent-to-buy schemes have been covered several times in this forum also. The fact of the matter is the big selling point of these- a guarantee by the builders to reduce the asking price to the most recent selling price in 2 years time, is wholly irrelevant when there is not open market trading of the units. So buyers are tying themselves into paying a price determined today in two years time. By my reckoning- people will be better off to view it as a rental of a new property- pay their rent and split after 2 years- as if they subsequently try to sell they are in for a hell of a shock....... I predict several people will be on this forum in 2 years time, bitching about being cheated........

mrgaa1 wrote: »

Lets hope we are near there as our very fragile recovery relies heavily on the housing market moving in a postive way. Perhaps those who love to see our country on its knees would take a look and say to themselves perhaps our country needs support and encouragement - not faceless attacks.

Our recovery does not and should not rely on the housing market- in any manner whatsoever. It must rely on building up indigenous industry- both manufacturing, but to a larger extent, our services industry. I do not love to see our country on its knees- on the contrary- I am very proud of my country, and hope that the mistakes of the past decade are never repeated in the future. I also hope that lessons are learnt from our current predicament- and that those institutions, which were once revered, such as our political system, our financial institutions, our entrepreneurs, are held to task and never again given the leeway to destroy our country in the manner in which they have done so.

Did you read the same article that I read at all?

ZYX

smccarrick wrote: »

There may be a marked increase in interest in the properties on estate agents books- but if you factor into the equation that national estate agents now have on average almost 80% less property on their books than they had 2 years ago- its simply a case of a couple of extra people chasing far fewer properties. It does not mean a revival of the property market by any means- simply that a couple of people have hopped in again- however statistically its a blip, as there is insufficient volume on which to measure market activity.

That does not sound true that estate agents have 80% less property on their books than 2 years ago. Maybe less sales.

The_Conductor

ZYX wrote: »

That does not sound true that estate agents have 80% less property on their books than 2 years ago. Maybe less sales.

Have a wander into any of the larger agencies- like Sherry Fitz and have a chat with any of the staff. Most of them will be happy to give you a snapshot of whats happening in their localities. It makes for a very depressing story........

ZYX

Loxosceles wrote: »

The property market has not yet even reached equilibrium for profit/loss let alone bottomed out. The price of a mortgage is not supposed to take up more than 30% of gross monthly income of any buyers, and the full price of a house should not exceed 125% of the combined yearly incomes of all buyers. If it does, the ratio of property value to actual employment and income value in the area starts to become unsustainable.

Where does the figure of 125% of income come from? It is just based on this Irish property values would probably always have been over valued.

quozl

ZYX wrote: »

That does not sound true that estate agents have 80% less property on their books than 2 years ago. Maybe less sales.

I doubt they do tbh,
here are stats harvested from daft over the last few years:
http://daftwatch.thepropertypin.com/daftwatch/static/sales_total.png

That would strongly suggest there are more properties for sale than there were 2 years ago.

Admittedly, more people could be selling individually, but, I doubt EAs have had that big a drop in number on book. Unless they're just not counting the 80% priced unrealistically

Which might well be the case, they may be describing 80%(+) less activity as 80% less on book in casual conversations. Who knows. Maybe Isabel, they tell her everything it seems

ZYX

smccarrick wrote: »

Have a wander into any of the larger agencies- like Sherry Fitz and have a chat with any of the staff. Most of them will be happy to give you a snapshot of whats happening in their localities. It makes for a very depressing story........

But not that much surely. In 2007 about 80,000 houses were sold. Daft today has 60,000 for sale.

subway

smccarrick wrote: »

Have a wander into any of the larger agencies- like Sherry Fitz and have a chat with any of the staff. Most of them will be happy to give you a snapshot of whats happening in their localities. It makes for a very depressing story........

http://daftwatch.thepropertypin.com/
from 13.5k in jul 06 to 73k today.
there are more houses for sale than ever before
and that doesnt fully include entire devlopments with 1 listing

ZYX

subway wrote: »

http://daftwatch.thepropertypin.com/
from 13.5k in jul 06 to 73k today.
there are more houses for sale than ever before
and that doesnt fully include entire devlopments with 1 listing

In fairness though, properties are slower to sell now, and Daft was a much smaller site in 2006 but I would doubt there has been any drop in number of properties per estate agent. If there has been a drop I would say it is a lot smaller than 80%.

The_Conductor

ZYX wrote: »

But not that much surely. In 2007 about 80,000 houses were sold. Daft today has 60,000 for sale.

However- the length of time it takes to sell a property is at a historic all time high. Its entirely plausible that at least some of the properties on the market have been for over 2 years (having been looking at property in the midlands for a few years- quite a number of the same properties are featuring from often a second or even third different estate agent).

There aren't reliable indicators available unfortunately- we are left to join up the dots ourselves from a myriad of different sources. The most telling of these sources is stamp duty income at the Revenue Commissioners- totally ignoring home bond registrations (which only factors newly constructed properties) and mortgage applications (which were seriously skewed by equity release packages).

subway

assuming daft has around 70% of the countries properties on its site (figure pulled from space to make calculations easier )
that means that there could be around 100k properties for sale in ireland.
an 80% drop suggests that around 500k houses were listed with EAs in 2006.

astrofool

People forget that daft was very much a growing site till recently, especially for sales (it has had renting sewn up for a while), with myhome.ie having most properties for sale. Even now, for south dublin, daft is definitely second fiddle to myhome.

They have only recently added items such as saved searches, and still don't have cookie based logins (absolutely ridiculous for a website in 2009, they should borrow some of boards.ie code).

petergdub

Property prices are a function of availability of credit.

While banks have indeed tightened up their criteria 2 other negative factors have only begun to kick in:
- unemployment
- wage drops

And a further 3rd factor hasn't been felt yet:
- increased taxation


I did a comparison over the weekend of the current Dublin REDUCED prices with Stockholm and with several German cities of similar size - we are still over double their prices.

Borzoi

petergdub wrote: »

I did a comparison over the weekend of the current Dublin REDUCED prices with Stockholm and with several German cities of similar size - we are still over double their prices.

A word of caution regarding German prices - typically in Germany you won;t get a mortgage for more than 70% of value, so yes you need at least a 30% deposit. This combined with good tenancy laws does help keep prices down.

MyHat.ie

Just like you gotta blame the State and failure to regulate for the extent of the crisis we're in, you gotta blame Isabel's editor in the property supplement and Madam herself for letting this kind of nonsense into the paper. Not only can her point be shown to be patently false (our weekly analysis of the market is still showing significant falls practically every week), the way she makes it is sadly lacking in clear thinking and logical expression. If the Times publishes that kind of rubbish, they might as well publish THIS kind of rubbish!

johnnyskeleton

mrgaa1 wrote: »

Perhaps those who love to see our country on its knees would take a look and say to themselves perhaps our country needs support and encouragement - not faceless attacks.

I sometimes wish the economy would break, as it would force Irish people to look around and see who it is that is running our country and how we have become. But that's a side issue. When I do think about how I would, were I so inclined, wreck the country, here's what I'd do:

1) deny that there are any problems in the face of evidence to the contrary.
2) try to prop up the existing order as much as I could
3) discourage house prices from dropping
4) refuse to make cuts in the public sector or social welfare
5) tax the bejaysus out of people, especially those on lower incomes
6) avoid any high level prosecutions
7) support the vintners, taxi drivers, farmers and any one else who wants to have a cozy cartel
8) alienate our european neighbours
9) fail to crush any rumours about leaving the euro, the IMF stepping in etc, while at the same time blaming the press for talking down the economy
10) as leader of the country that I am destroying, refuse to take any responsibility for destroying it.

To be honest, I learned from the master. My point is this though, that the more we try to keep house prices artificially high, the higher the chance of our country imploding. It is just one factor among 10 or so, but keeping house prices high is what the evil skeleton bastard in me wants to do. The more optimistic johnny wants to see house prices drop to a sustainable level.

Sesshoumaru

What an amusing article! Must buy property..... must get on ladder....

Seriously though for those of us who have a young family and want to buy.... When is this going to bottom out? or get close enough to make it worthwhile to buy???

Stheno

Sesshoumaru wrote: »

What an amusing article! Must buy property..... must get on ladder....

Seriously though for those of us who have a young family and want to buy.... When is this going to bottom out? or get close enough to make it worthwhile to buy???

How long is a piece of string?

I'd reckon three years at most for it to bottom out, two years of recession, one year of some economic growth, and then some movement in the market upwards?

buynow

Loxosceles wrote: »

The property market has not yet even reached equilibrium for profit/loss let alone bottomed out. The price of a mortgage is not supposed to take up more than 30% of gross monthly income of any buyers, and the full price of a house should not exceed 125% of the combined yearly incomes of all buyers. If it does, the ratio of property value to actual employment and income value in the area starts to become unsustainable.

Your figures don't add up here Loxosceles. Paying 30% of your income for a house that costs 125% means you are paying off a 100% mortgage in less than 5 years. This cannot be the maximum sustainable figure.
Whatever about the ridiculous 5 or 6 times a salary that people were getting this is going in the other direction. Where do you get your metric of "sustainable"?

And you are being disingenuous with regard to the US market, you wouldn't buy much for $85K where I am.