Big Price Drops in Southside Apartments today

ntlbell

Pete4779 wrote: »

The thing is, you should be looking at 3.5x average wage in an average area. You want 2x average wage in a nice area for the same property. Years ago banks wanted 7x average wage in an average area.

I think 65k is unrealistic in a nice area - by that I mean Blackrock, Dalkey, etc.,. If they were, half the country would try and buy it, demand goes up and price sells for 300-400k. That is how it works.

However, there are plenty of properties for sale for your price range, just as in London there are 1 ebds that cost £1 million, there are 3 beds for £150k.

Right now there is a 3-bed in Dublin 11 for €120k. There is probably also a 3-bed in Dalkey for €2 million. People will have to adjust there expectations and buy, if they want, something within their budget or not at all.

I'm not talking about Dalkey/blackrock/D4/Foxrock

I'm talking about an avg 3 bed house in your average "nice" area.

Glasnevin,Temelogue,Rathfarnham,Dundrum, parts of Tallaght like Old Bawn/glenview/Firehouse/knocklyon/orwell

There's lots of "nice" areas besides dalkey and blackrock..

bangersandmash

spockety wrote: »

Figures of 175k for a house in south dublin seem to be the bone of contention. You'd need to be earning at least 58k a year to cover that with a 3x multiple. That is nowhere near the average wage.

Not that I disagree with many of your arguments. But I think it would be fair to say that the average wage in South Dublin is considerably above the national average, whether we're talking Dalkey or Rathfarnham.

D3PO

spockety wrote: »

Who said anything about average industrial wage?

Figures of 175k for a house in south dublin seem to be the bone of contention. You'd need to be earning at least 58k a year to cover that with a 3x multiple. That is nowhere near the average wage.

Why would you need to be earning that ?

1. 100% mortgages are a thing of the past. 92% is a better place to work from so a 175k house would only require €161k mortgage

2. 4X is a better rule of thumb to use for mortgage lending. therfore €40k being the industrial wage needed for a 175k house.

3. the average industrial wage in this country is €38k last time I checked its fair to say the average wage in Dublin is higher than that.

4. the 3x / 4x mortgage rule (which is a good one) is old hat and generally was from a time when the man worked and the women stayed at home, you need to update that and consider most couples buying these days will both be in employment or certainly both seeking employment.

with that in mind I think the true value when things bottom out should be an average price of circa €260k

Eglinton

This is a previous post of mine in another thread. What do you lot think?

Eglinton wrote:

Given the current climate and the return of proper lending practice this is what I think based on a basic semi-d.

National Average Industrial Wage = 35K approx.

Normal lending criteria - 5 times single salary = 175K

Dublin surplus: +20% = 210K for basic standard average area in Dublin

Aspirational Area: +50%, 210K + 105K= 315K
Desirable Area: +25%, 210K + 52K = 262K
Less Desirable Area: -25%, 210 - 52K = 158K
Undesirable Area: - 50%, 210 - 105K = 105K

People will argue with the above figures but if Irish people were not so insane when it comes to property these figures would be reasonable. However you can't account for stupidity and speculation so asking prices in Dublin are a lot higher. Whether it remains this way or returns to the norms, we will have to wait and see. Your interpretation of where/what is a desirable area etc. may be different to mine too. The longer your house goes unsold, the more likely it is to drop in value.

D3PO

Eglinton wrote: »

This is a previous post of mine in another thread. What do you lot think?

i dont think your too far off the mark im probably 10% above you in terms of what I think but its close enough.

spockety

D3PO wrote: »

Why would you need to be earning that ?

1. 100% mortgages are a thing of the past. 92% is a better place to work from so a 175k house would only require €161k mortgage

2. 4X is a better rule of thumb to use for mortgage lending. therfore €40k being the industrial wage needed for a 175k house.

3. the average industrial wage in this country is €38k last time I checked its fair to say the average wage in Dublin is higher than that.

4. the 3x / 4x mortgage rule (which is a good one) is old hat and generally was from a time when the man worked and the women stayed at home, you need to update that and consider most couples buying these days will both be in employment or certainly both seeking employment.

with that in mind I think the true value when things bottom out should be an average price of circa €260k

I'd probably agree with that alright, and at least you show us a thought process that brings about a conclusion, which is more than can be said for a lot of people who are finding it hard to accept that prices have a lot further to fall.

I guess my main point was that the madness of the last few years really has got a lot of people thinking that Templeogue is the equivalent of Bel Air, and that the equivalent of 1 million dollars plus for a 150 sq metre 4 bed semi in those kind of areas is an acceptable market, because of the 'prestige' associated with them.

Whatever about Donnybrook, Ballsbridge, or Dalkey, there are still absurd prices being asked for very normal properties in what would be considered very normal areas in any other major city.

Mugatu

Eglinton wrote: »

This is a previous post of mine in another thread. What do you lot think?

Interesting, but if you take these examples:

Aspirational Area: +50%, 210K + 105K= 315K
Desirable Area: +25%, 210K + 52K = 262K

I'm guessing Blackrock up to Dalkey. Do you not think people looking to buy in those area's are not the folk on 150k to 500k+. VP's of business divisions, senior management etc etc........... I think their buying power will ensure these area's never fall that low.

D3PO

spockety wrote: »

I guess my main point was that the madness of the last few years really has got a lot of people thinking that Templeogue is the equivalent of Bel Air, and that the equivalent of 1 million dollars plus for a 150 sq metre 4 bed semi in those kind of areas is an acceptable market, because of the 'prestige' associated with them.

.

Im originally from Templeogue and I know what it is and what is its not. And it sure ain't Bel Air

your right about the madness in the last few years, I included got sucked up into it. But back in 05 when I bought I really hadnt a great grasp of economics or the forsight to understand what the future would hold.

Im a realist though. Even though Im not in negative equity now (i wasnt silly enough to take a 100% mortgage or even anything close) I realise that by the time we hit the bottom I most likely will be.

Cest la vie, paper prices are great and all that but i purchased a home not a house. Yes of course Id have loved to purchase at next years prices but on the flip side when I trade up things will be easier for me so its still a win win situation.

Small Change

D3PO wrote: »

Im a realist though. Even though Im not in negative equity now (i wasnt silly enough to take a 100% mortgage or even anything close) I realise that by the time we hit the bottom I most likely will be.

So why not sell now, rent for a couple of years and then buy again?

The flip side of all the advice that this is a terrible time to buy is surely that it is a good time to sell assuming you are not already in N/E

quozl

Small Change wrote: »

The flip side of all the advice that this is a terrible time to buy is surely that it is a good time to sell assuming you are not already in N/E

Or even if you are in N/E but can borrow/fund the loss to get out.

The risk is that things will turn around and you'll have crystalized your loss and be unable to purchase before things rise again.
IMO this is not a realistic risk, but everybody needs to make their own decision on it.

I sold from a position of negative equity a number of months ago, and I am very happy that I did. It cost me all my savings, and I had to take out a small (relative) personal loan still, even after all my savings, to cover the difference from the mortgage.

If I was doing this today, I'd imagine I'd be taking out a much bigger personal loan. And even worse next month.

I'm not recommending this to anybody, everybody needs to decide what to do for themselves. I'm just pointing out that if you're in N/E, but can still arrange to sell, then it may be an option to consider.

I also totally accept that if the N/E is large enough, this may not be feasible anyway, but it's something to consider.

D3PO

Small Change wrote: »

So why not sell now, rent for a couple of years and then buy again?

The flip side of all the advice that this is a terrible time to buy is surely that it is a good time to sell assuming you are not already in N/E

a few reasons the mains ones being

1. Even with the reduction in price Ive worked out that the rental cost, professional fees for selling plus the fact id no longer be eligble for TRS when I repurchase would at best break even with the difference between my mortgage and negative equity.

2. Ive got a tracker mortgage so i have a very preferable rate right now. Its unlikely Id get a similar mortgage in future. Im sure banks will be very slow to start taking trackers on again after the last 12 months reductions

3. I like the house, it feels like a home. I like the security, i like the area there are intangibles you just dont get when your renting which I feel I have.

In essence what im saying is that the market value of a house and what its worth is to somebody are 2 different things.

And this is todays problem. People are valuing the market price for sale at the price the house is worth to them rather than what its worth to somebody else.

People will eventually realise these are different

Eglinton

Mugatu wrote: »

Interesting, but if you take these examples:

Aspirational Area: +50%, 210K + 105K= 315K
Desirable Area: +25%, 210K + 52K = 262K

I'm guessing Blackrock up to Dalkey. Do you not think people looking to buy in those area's are not the folk on 150k to 500k+. VP's of business divisions, senior management etc etc........... I think their buying power will ensure these area's never fall that low.

Good point but would a VP or Senior Exec of a large company on 150k-500K a year really want a 3 bed semi-d?

We're talking about normal houses; not those which highly paid successful people are likely to buy.

Pete4779

I wan ableedin fla near me mudder

ronbyrne2005

When calculating house price multiples you should use average household income which is close to 60k in Dublin. Given longer working lives, more double incomes, greater wealth then the old 3 times income multiple may be revised. I'd say 3-4 times average household income should be the price for an average house in Dublin so 180-240k. Now incomes are falling so that average could be closer to 150k over next few years.

ntlbell

ronbyrne2005 wrote: »

When calculating house price multiples you should use average household income which is close to 60k in Dublin. Given longer working lives, more double incomes, greater wealth then the old 3 times income multiple may be revised. I'd say 3-4 times average household income should be the price for an average house in Dublin so 180-240k. Now incomes are falling so that average could be closer to 150k over next few years.

not really.

when you have a household income of 60k and no kids etc it all sounds great.

now they decide to have kids you usually loose an income or your overall disposable income is dramatically reduced.

creche fee's child minders can cost anywhere to 800e-1600e a month.

then you have the actual cost of having a child and the extra mouth to feed etc etc

I think historically banks gave X amount of one earner and 1 multiple of the second.

plus with huge job losses etc the avg will be reduced and i think we'll see a return to the one job household.

someone posted an interesting video on one of these threads it shows how we now have less disposable income with two working than we did when one was working due to increase in house prices/health insurance/two cars/two insurances/two tax's/two maintences/child care/creche fee's etc

the whole thing is a bit of an illusion really.

TaxiManMartin

ntlbell wrote: »

When you can buy a solid(lol) 1 bed apt in a nice enough area at around 2X's the avg ind wage then we can start talking about some value..

so your looking realistically at around 65-75k for a 1bed apt.

Oh that would be fantastic.
Myself and the girlfriend think if we live on only my wage for 2 years, which would be easy because there would be no rent to pay anymore and pay all of hers off a mortgage it would take us about 2 years to clear a mortgage like that or if not very easily in 3 years.
A 3 year mortgage.
Heres to hoping.

ronbyrne2005

ntlbell wrote: »

not really.

when you have a household income of 60k and no kids etc it all sounds great.

now they decide to have kids you usually loose an income or your overall disposable income is dramatically reduced.

creche fee's child minders can cost anywhere to 800e-1600e a month.

then you have the actual cost of having a child and the extra mouth to feed etc etc

I think historically banks gave X amount of one earner and 1 multiple of the second.

plus with huge job losses etc the avg will be reduced and i think we'll see a return to the one job household.

someone posted an interesting video on one of these threads it shows how we now have less disposable income with two working than we did when one was working due to increase in house prices/health insurance/two cars/two insurances/two tax's/two maintences/child care/creche fee's etc

the whole thing is a bit of an illusion really.

Yeah but over the 25-35 years of a mortgage a couple's kids wont be childminded for more than several years and many people can get relatives to mind kids and also work part time. Not every couple is paying massive amounts for childminding for majority of mortgage's life. I'm just saying these factors mean a straight 3 times average industrial wage ratio might not be best ratio. Also women are not gonna go back to staying at home while hubby works.

ntlbell

ronbyrne2005 wrote: »

Yeah but over the 25-35 years of a mortgage a couple's kids wont be childminded for more than several years and many people can get relatives to mind kids and also work part time. Not every couple is paying massive amounts for childminding for majority of mortgage's life. I'm just saying these factors mean a straight 3 times average industrial wage ratio might not be best ratio. Also women are not gonna go back to staying at home while hubby works.

That's true, but what good is being able to afford years 20-30 when you can't afford 5-20?

Not everyone will have kids, not everyone will always have work.

I don't really think they're is a "best" ratio people need to figure out what they can comfortably afford based on the LIFESTYLE they wish to live.

for example a couple not planning on having kids, don't drink, don't smoke don't have any expensive hobbies go out once a month or whatever

have a hell of a lot more spending power than a couple who want to have 4-5 kids, smoke 300 smokes a week between them, go to the pub 6-8 times a month, want to go on 2/3 holidays a year want to renew their car every 2-3 years etc

there's just too many elements, so it's not really up to a bank to work out what can afford or how one wants to live it's up to those individual's to work it out

unfortunate most people have a seriously retarded view towards owning a home and don't take anything into consideration bar we want the biggest house in the best area the bank will allow us..

so we need to come with these ridiculous 2x/3x wages to stop those retards hurting themselves.

it's that simple really

TaxiManMartin

ntlbell wrote: »

unfortunate most people have a seriously retarded view towards owning a home and don't take anything into consideration bar we want the biggest house in the best area the bank will allow us..

so we need to come with these ridiculous 2x/3x wages to stop those retards hurting themselves.

it's that simple really

Well if myself and the gf can buy somewhere and have it all paid off in 3 years i'll pat you on the back and buy you a pint


Might even just save for the next 3 years and buy it for cash when it comes down to the level you are predicting.

I hope you have money with Paddy power on that kind of drop.

ntlbell

TaxiManMartin wrote: »

Well if myself and the gf can buy somewhere and have it all paid off in 3 years i'll pat you on the back and buy you a pint


Might even just save for the next 3 years and buy it for cash when it comes down to the level you are predicting.

I hope you have money with Paddy power on that kind of drop.

well you can get a 3 bedroom in tallaght for 99k or so _today_

you could always move to germany and buy a house for about 20k and have it paid off tomorrow

your slight argument seems to be it won't happen because of the amount of years you will have to pay

your not making a lot of sense.

people won't be able to buy it over 3 years as a huge amount of them won't have a job, people that do will be paying huge taxes and will be suffering pay freezes and cuts and down to 3 day weeks etc

if you're a taxi driver i'm sure you have noticed the changes in your take home

you're looking at houses in a vacum

the housing bubble is not bursting, the economy is.

Mugatu

ntlbell wrote: »

people won't be able to buy it over 3 years as a huge amount of them won't have a job, people that do will be paying huge taxes and will be suffering pay freezes and cuts and down to 3 day weeks etc

And here was me thinking that even the most pessimistic predications about unemployment will still mean 83% of the population will still have jobs. :rolleyes:

ixoy

Mugatu wrote: »

And here was me thinking that even the most pessimistic predications about unemployment will still mean 83% of the population will still have jobs. :rolleyes:

Yes but those 83% will have much less money because their taxes will need to help out the unemployed 17%. That's what ntlbell is saying.

I'm wondering if people are going to be a bit trapped now when they buy a bargain and then, in two years times, watch interest rates creep right up and seriously crimp their savings. Means testing harshly would help this but I've a feeling some people will still be surprised that the (eventual) upswing in the Eurozone might damage people with rising ECB interest rates.

AARRRGH

Mugatu wrote: »

And here was me thinking that even the most pessimistic predications about unemployment will still mean 83% of the population will still have jobs. :rolleyes:

That predicton was by the ESRI.

They have been wrong about absolutely everything so far, so I expect them to be wrong about this too.

ntlbell

Mugatu wrote: »

And here was me thinking that even the most pessimistic predications about unemployment will still mean 83% of the population will still have jobs. :rolleyes:

those predictions were made for the end of 09 do you think the problems will magically all stop jan 10?

leonardjos

The open viewing for Wyckham Point on Sunday attracted a very good crowd. It was almost like the property boom days again! However I'm sure anyone thinking of buying will be more careful and cautious nowadays. I'd be interested to hear the opinions of anybody else who went to apartment viewings in the Southside this weekend.

I'm renting nearby and went down for a look around. The apartments are nice but a little on the small side. I viewed some of the available non-showhouse apartments. These are the empty ones as you would be getting them, with chipboard floors. That's when you really start to think that you'd be paying 339k for a glorified box!

I also went to view a nice relatively modern 3 bed semi in Sandyford this weekend, it was new on the market. The asking price was 420k, not exactly a bargain but significantly less than comparable houses at the moment. It was a real surprise to see about 15 other couple show up to view it, it must have seemed like a showhouse at a new development!

I distinctly recall the estate agent telling the assembled viewers that 'in 2 or 3 years time we'll be wondering what we were ever worrying about'!

I'm not talking up the market or anything here. But i'd be interested to know how much of these people viewing are just watching and waiting, or is there a significant number ready to buy at recently revised price levels?

ionapaul

leonardjos wrote: »

I distinctly recall the estate agent telling the assembled viewers that 'in 2 or 3 years time we'll be wondering what we were ever worrying about'!

I hope you instantly discounted whatever he / she said on the subject; 1) what backround in economics could he / she possibly have to allow speculation on recovery and 2) EAs rightfully don't care about buyers and just want to sell! Giving any weight to EAs sales talk is like running out a buying a 42" flat screen TV because a Harvey Norman ad says they are 'incredible bargains' for this weekend only.

niceirishfella

leonardjos wrote: »

I distinctly recall the estate agent telling the assembled viewers that 'in 2 or 3 years time we'll be wondering what we were ever worrying about'!

LOL - what a freekin tool.:rolleyes: