David McWilliams predicts further 50% fall in house prices

ntlbell

spockety wrote: »

The monthly cost of renting increases over the years in line with inflation (or booms and busts )

The monthly cost of a mortgage is relatively fixed, so by the end of a 25 year term the monthly repayments should be relative pittance compared with the cost of renting the same property for a month.

This is not something that people seem to take into account when they say "renting is cheaper than buying". It might be, if you compare monthly repayments in the first year of the mortgage/lease.

The above assumes normal economic conditions and historic levels of inflation

you have to balnce it off with various other costs

maintenance of the house
management fee's
all sorts of insurance.
non financial costs like the freedom to move as you change jobs etc

it really is a very personal thing and very hard to put figures on

SoupyNorman

eoinshan wrote: »

Another option is to just act if you think the market is going to drive prices further down. If you're worried about prices falling more, why not just offer what you think/fear it might be worth when prices do reach the bottom? The worst that can happen is rejection.

The air is still full of blind ignorance, for one reason or another sellers are sticking to their guns, for example 2beds in Cannon hall are starting at €269k. I looked at these in January out of interest, recently the GF inquired about availability and she was nearly pulled through the phone by the agent for a viewing.

So what would you advise here, offer €100k less then the asking? It wouldnt be accepted in a million years but for me it's not worth €169k but if the asking price was €169k then you might get me half interested as then you start your offers in the €145 area.


Bottom line is, why should I strain myself running around looking for a bargain when I believe both the current market forces and time will do it for me.

sneakyST

I think the only "regret" I have in buying is not clearing the mortgage when I had the chance. I worked out that if the wife and I had of put 2k a month into it - it would have been cleared in 8 years. Oh well we had a ball instead

eoinshan

SoupyNorman wrote: »

Bottom line is, why should I strain myself running around looking for a bargain when I believe both the current market forces and time will do it for me.

Fair enough. It depends on your circumstances and I'm sure a lot of people are happy to wait. I am too actually, but I'm still going to make a low offer when I find the right place. The market dictates the prices. Whenever buyers are comfortable offering what they feel a house is worth, prices will follow. Vendors still have the right to refuse, withdraw the property from the market, etc.

It might seem ridiculous given where we were three years ago, but there's nothing to stop you saying to an estate agent "That house is listed at 380k. I'll give you 220k for it - take it or leave it. If the vendor wants to wait a year to get a better offer, they can, but then it could be worth 200k"

SoupyNorman

eoinshan wrote: »

It might seem ridiculous given where we were three years ago, but there's nothing to stop you saying to an estate agent "That house is listed at 380k. I'll give you 220k for it - take it or leave it. If the vendor wants to wait a year to get a better offer, they can, but then it could be worth 200k"

You could adopt that approach with almost any new build property at the moment but you'd probably never get an offer accepted, you are essentially trying to overtake market prices but to be fair the prices are hurtling downward at breakneck speed as it is. It may not seem that way to the impatient because it's big news and we are analyzing it on a daily basis but had you been locked in cupboard since last August and came out today you'd collapse, not only from malnutrition but from what you'd see as an epic drop in property prices.


If you are patient, you'll be rewarded.

seven-iron

Fear not. Anyone facing negative equity should'nt worry as long as they can meet the repayments for the next two-four years. Prices will pick up.

If you have a good property in a good location even better. Yes supply outweighs demand, yes many people are unemployed and straddled with debt but once Foreign Direct Investment picks up and is directed back into Ireland jobs will be created. FDI is cycical and Ireland is still one of the best places to do business. Low tax rates allows multi-nationals to organise their business in a way that pays the least tax. We speak English. We're close to both Europe and America. Also because our Govt. are not indebting future generations means we will be one of the first countries to benefit from the upturn.

oceanclub

seven-iron wrote: »

Fear not. Anyone facing negative equity should'nt worry as long as they can meet the repayments for the next two-four years. Prices will pick up.

If you have a good property in a good location even better. Yes supply outweighs demand, yes many people are unemployed and straddled with debt but once Foreign Direct Investment picks up and is directed back into Ireland jobs will be created. FDI is cycical and Ireland is still one of the best places to do business. Low tax rates allows multi-nationals to organise their business in a way that pays the least tax. We speak English. We're close to both Europe and America. Also because our Govt. are not indebting future generations means we will be one of the first countries to benefit from the upturn.

Da fundamentals are sound?

FDI is "cyclical"? So tell me in what circumstances will multinationals pull out from Eastern Europe and come back to Ireland? Only if house prices do not "pick up". That's the last thing we need.

P.

partyguinness

seven-iron wrote: »

Fear not. Anyone facing negative equity should'nt worry as long as they can meet the repayments for the next two-four years. Prices will pick up.

If you have a good property in a good location even better. Yes supply outweighs demand, yes many people are unemployed and straddled with debt but once Foreign Direct Investment picks up and is directed back into Ireland jobs will be created. FDI is cycical and Ireland is still one of the best places to do business. Low tax rates allows multi-nationals to organise their business in a way that pays the least tax. We speak English. We're close to both Europe and America. Also because our Govt. are not indebting future generations means we will be one of the first countries to benefit from the upturn.

I have the feeling that the pensions timebomb and the bank bailout is doing just that.

seven-iron

Apart from Dell, how many multi-nationals have gone to Eastern Europe?
How many Multi-nationals have stayed. Those that are thinking about it are probably already too late and have decided to stay. Would I be incorrect to take that as a good endorsement for this country investment wise.

oceanclub

seven-iron wrote: »

Apart from Dell, how many multi-nationals have gone to Eastern Europe?
How many Multi-nationals have stayed. Those that are thinking about it are probably already too late and have decided to stay. Would I be incorrect to take that as a good endorsement for this country investment wise.

"already too late" for what?

P.

rorysllvn

we will soon be able to buy houses 2 a penny :D

seven-iron

to late to get the required ROI from decentralisating operations.

oceanclub

seven-iron wrote: »

to late to get the required ROI from decentralisating operations.

I'm baffled as to what has to do with the chance of multinationals leaving Ireland in the next 5 years due to costs still being ahead of other countries. What is "decentralisating"?

P.

SoupyNorman

oceanclub wrote: »

I'm baffled as to what has to do with the chance of multinationals leaving Ireland in the next 5 years due to costs still being ahead of other countries. What is "decentralisating"?

P.

Seven-Iron has me just plain baffled.

whizzbang

seven-iron wrote: »

Fear not. Anyone facing negative equity should'nt worry as long as they can meet the repayments for the next two-four years. Prices will pick up.

If you have a good property in a good location even better. Yes supply outweighs demand, yes many people are unemployed and straddled with debt but once Foreign Direct Investment picks up and is directed back into Ireland jobs will be created. FDI is cycical and Ireland is still one of the best places to do business. Low tax rates allows multi-nationals to organise their business in a way that pays the least tax. We speak English. We're close to both Europe and America. Also because our Govt. are not indebting future generations means we will be one of the first countries to benefit from the upturn.

Am I reading you right that you think house prices will be back to where they are now in 4 years? Or just that we will have turned the corner in 4 years?

oflahero

seven-iron wrote: »

to late to get the required ROI from decentralisating operations.

Maybe that applies to Intel with their eye-wateringly expensive FABs, but what's to stop them just building the next one yonder eastwards? And that's on the extreme end of the scale. Other multinationals are far more mobile than them anyway and wouldn't blink at, eh, 'decentralisating'.

It needs to be hammered home time and again: cheaper housing = lower costs = higher competitiveness = higher attraction for FDI.

seven-iron

Am I reading you right that you think house prices will be back to where they are now in 4 years? Or just that we will have turned the corner in 4 years?

Yes, I think if your property is in a good location (as in a city or even close to it) and is a good property, it will have increased in value by 35/40%. Why?

1. FDI is cyclical. Jobs will be created in the next four years. OK Poland does have a lot cheaper labour but its CT rate is nearly 20%. And there labour rates are cheap for a reason. Ireland has one of the most educated workforces in the world due to free third level education.

2. Im betting if it is hasn't happened already, Eastern European countries will put a remittance ON MN's profits that can be repatriated because they want these funds to stay in the country and to stimulate development in order to pay back their credit lines they have used from the IMF.

We may not have seen the bottom just yet but prices will recover. Keep the chin up and chest out. Do your best to meet the repayments. Dont become fearful from listening to DMW's et al, they may be right yes in a lot of cases but they are paid to sell newspapers dont forget that.

It needs to be hammered home time and again: cheaper housing = lower costs = higher competitiveness = higher attraction for FDI.

Relatively speaking, we are still very competitive. We've a diverse, educated workforce. Low CT rate and have an infrastructure (i.e. roads, IT) that is the envy of most of our competitors (Poland, Malta, Belarus to name a few)

gurramok

spockety wrote: »

The monthly cost of renting increases over the years in line with inflation (or booms and busts )

The monthly cost of a mortgage is relatively fixed, so by the end of a 25 year term the monthly repayments should be relative pittance compared with the cost of renting the same property for a month.

This is not something that people seem to take into account when they say "renting is cheaper than buying". It might be, if you compare monthly repayments in the first year of the mortgage/lease.

The above assumes normal economic conditions and historic levels of inflation

Renting does not rise or fall with inflation, its based on supply and demand. Renting was expensive 10 years ago with regards to buying based on supply shortages.
Falling population of immigrants along with greater supply of gaffs is forcing rents down.(this may continue for many years as we are in for a long recession)

With mortgages, you are assuming they will be a re-run of the big inflation that our parents enjoyed. If inflation averages around 2%(thats the ECB goal), then the burden is not decreased with those 35yr mortgages.

seven-iron wrote: »

Yes, I think if your property is in a good location (as in a city or even close to it) and is a good property, it will have increased in value by 35/40%. Why?

1. FDI is cyclical. Jobs will be created in the next four years. OK Poland does have a lot cheaper labour but its CT rate is nearly 20%. And there labour rates are cheap for a reason. Ireland has one of the most educated workforces in the world due to free third level education.

2. Im betting if it is hasn't happened already, Eastern European countries will put a remittance ON MN's profits that can be repatriated because they want these funds to stay in the country and to stimulate development in order to pay back their credit lines they have used from the IMF.

We may not have seen the bottom just yet but prices will recover. Keep the chin up and chest out. Do your best to meet the repayments. Dont become fearful from listening to DMW's et al, they may be right yes in a lot of cases but they are paid to sell newspapers dont forget that.

Relatively speaking, we are still very competitive. We've a diverse, educated workforce. Low CT rate and have an infrastructure (i.e. roads, IT) that is the envy of most of our competitors (Poland, Malta, Belarus to name a few)

Out of all this, i laughed at the mentioning of Malta and dictator ruled Belarus as competitors plus the fact that none of our cities are connected by motorway yet!!

oflahero

seven-iron wrote: »

We may not have seen the bottom just yet but prices will recover.

Prices ARE recovering. Just in the correct, downward direction. This process is freeing up capital that can be used for productive purposes rather than being swapped around within the economy for pure speculation. Net result: boosting domestic industry, job creation, increased wealth, which will lead *eventually* to increases in house prices, which must first find their market level, and stay there until some semblance of "the fundamentals" is restored.

seven-iron wrote: »

Relatively speaking, we are still very competitive. We've a diverse, educated workforce. Low CT rate and have an infrastructure (i.e. roads, IT) that is the envy of most of our competitors (Poland, Malta, Belarus to name a few)

We are, but I'm sure I don't have to mention our recent axeing of said free 3rd-level education and education cutbacks in general. Plus, the firm where I work here in town employs many people in highly-skilled positions working here from all three countries above, and they have brains to burn. No shortage of an educated workforce out East!

Photojoe

seven-iron wrote: »

Yes, I think if your property is in a good location (as in a city or even close to it) and is a good property, it will have increased in value by 35/40%. Why?

1. FDI is cyclical. Jobs will be created in the next four years. OK Poland does have a lot cheaper labour but its CT rate is nearly 20%. And there labour rates are cheap for a reason. Ireland has one of the most educated workforces in the world due to free third level education.

2. Im betting if it is hasn't happened already, Eastern European countries will put a remittance ON MN's profits that can be repatriated because they want these funds to stay in the country and to stimulate development in order to pay back their credit lines they have used from the IMF.

We may not have seen the bottom just yet but prices will recover. Keep the chin up and chest out. Do your best to meet the repayments. Dont become fearful from listening to DMW's et al, they may be right yes in a lot of cases but they are paid to sell newspapers dont forget that.




Relatively speaking, we are still very competitive. We've a diverse, educated workforce. Low CT rate and have an infrastructure (i.e. roads, IT) that is the envy of most of our competitors (Poland, Malta, Belarus to name a few)

You are deluding yourself. The govt. are arguing that only 250K more jobs are going to be lost this year. What banks are going to lend money in that environment? And where are we going to get 400K jobs in the 4 years after that?

TaxiManMartin

Photojoe wrote: »

You are deluding yourself. The govt. are arguing that only 250K more jobs are going to be lost this year. What banks are going to lend money in that environment? And where are we going to get 400K jobs in the 4 years after that?

Wow. Someone who believes something the government tell us on the economy. A rare breed.
Id be careful of this. Our government really dont have aclue about the economy. They pull figures out of each others arses.

Photojoe

TaxiManMartin wrote: »

Wow. Someone who believes something the government tell us on the economy. A rare breed.
Id be careful of this. Our government really dont have aclue about the economy. They pull figures out of each others arses.

That is my whole point, they were arguing the figures down to suit themselves. A previous independant report put them much higher than that.

seven-iron

And where are we going to get 400K jobs in the 4 years after that?

did you not read my posts.

but I'm sure I don't have to mention our recent axeing of said free 3rd-level education

it doesnt mean people will hand back the qualifications and experience they've already obtained.

i laughed at the mentioning of Malta

people laughed at the mention of Ireland in the early 90's.

Photojoe

seven-iron wrote: »

did you not read my posts.

So you think we are going to create at least 100K jobs a year once this recession has 'corrected'? nearly 10K jobs a month? Come off it.

enry

SoupyNorman wrote: »

Where does it say he is buying up property?


To be fair,

You're a Taximan whose sister has a friend whos friends with the authors wife..


Purple-monkey dishwasher, tbh.

TAXIMAN PURPLE-MONKEY DISHWASHER

Hilarious

Mugatu

I think this is worth a read:

http://www.daft.ie/report/


Basically beware of the economists and especially the keyboard economists saying with certainty where prices are going.

Not that peoples input and opinion on boards like this are not interesting and also thought provoking.

seven-iron

People, is it at all possible that you are only looking for reasons as to why we cannot come out of this slump.

So you think we are going to create at least 100K jobs a year once this recession has 'corrected'? nearly 10K jobs a month? Come off it.

Nobody will know when the recession will be 'corrected', it is not one single event or day in time. We will be well into a period of growth before we realise were out of it. However I do believe many jobs will be created yes. Once investment starts to flow back in small amounts, it will have a larger affect on the rest of the economy. It is called the multiplier effect. More profoundly though, once this starts to occur, people like yourself may actually believe there is a light at the end of the tunnel and that each individual can make things happen for themselves and improve their situations, as long as their not doing because their neighbours getting rich.

SouperComputer

smccarrick wrote: »

'Rent-is-dead-money' is another one that comes to mind (blood slowly beginning to boil)........

I guess in a way its now true. If you are expecting rental income that is.

Photojoe

SouperComputer wrote: »

I guess in a way its now true. If you are expecting rental income that is.

I would nearly laugh but some of those who have bought and have spouted that line at renters for years have now taken their own lives.

SoupyNorman

seven-iron wrote: »

People, is it at all possible that you are only looking for reasons as to why we cannot come out of this slump.



Nobody will know when the recession will be 'corrected', it is not one single event or day in time. We will be well into a period of growth before we realise were out of it. However I do believe many jobs will be created yes. Once investment starts to flow back in small amounts, it will have a larger affect on the rest of the economy. It is called the multiplier effect. More profoundly though, once this starts to occur, people like yourself may actually believe there is a light at the end of the tunnel and that each individual can make things happen for themselves and improve their situations, as long as their not doing because their neighbours getting rich.

There is light at the end of the tunnel, but it's a long tunnel.