David McWilliams predicts further 50% fall in house prices

oceanclub

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?

So you honestly think we're going to see Celtic Tiger Mark 2 in a few years time, with 10% per annum property price increases again??

P.

SouperComputer

Photojoe wrote: »

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.

I didnt quite mean it that literally!

As a sidenote, probably the best thing most people can do "negeq" or not is pay their Mortgage off as quick as they can. Add up all your payments for the full term of the mortgage and you might find that the "equity" you are loosing is the least of your worries!

The_Conductor

SouperComputer wrote: »

I didnt quite mean it that literally!

As a sidenote, probably the best thing most people can do "negeq" or not is pay their Mortgage off as quick as they can. Add up all your payments for the full term of the mortgage and you might find that the "equity" you are loosing is the least of your worries!

If you sit down and factor in negative inflation- everything else being equal- your mortgage is 6-7% more per annum, in real terms, the opposite to using inflation to bring down the value of your outstanding mortgage.

You are right though- if people can afford it- they should use the current low interest environment to knock lumps out of their principle, if they can afford to do so. With inflation of -7% and interest rates ~2%- its a no brainer....

enry

Developers, auctioneers and bankers these boys were treated like some kind of gods in this country they were a shower of fools

The auctioneers put up prices like no tomorrow they sold houses to people under the pretence that others were bidding against them even when they weren't (disgraceful behaviour)

Those smart developers bought property and it simply went up in value they had to do nothing, these boys have no brains there only builders.

The bankers handed out the money like no tomorrow they had their sales meeting every week and clapped each other on the back everytime they lent out another million. think about it these lads are bring there customers in to tell them how to trade during a recession and they spent the last ten years building up assets within there own business that are currently worth fu*k all.

So to be honest I hope Paul Williams is right because what is for worse then the above are all those people who went out and bought into the bullsh*t and purchased a 2 bed house in Dublin 24. for 350,000. these are the fools who ultimately destroyed our country and its only right that their assets are worth nothing considering the rest of us are going to end up paying for it.

SoupyNorman

enry wrote: »

So to be honest I hope Paul Williams is right because what is for worse then the above are all those people who went out and bought into the bullsh*t and purchased a 2 bed house in Dublin 24. for 350,000. these are the fools who ultimately destroyed our country and its only right that their assets are worth nothing considering the rest of us are going to end up paying for it.

Is that because they all became criminals of the underworld and were covered by Paul in the Sunday World?

I think you may have your Williamz's a little confused!

enry

SoupyNorman wrote: »

Is that because they all became criminals of the underworld and were covered by Paul in the Sunday World?

I think you may have your Williamz's a little confused!

Thanks soupynorman for pointing that out its been a long day.

whats the Sunday World ?

D3PO

spockety wrote: »

Ignore it.

I have never, ever, EVER seen someone who argues against the likelihood of various price drops back up their argument with any logical reasoning whatsoever.

You are wasting your breath.

try reading my earlier posts on the subject. i think my points are valid. tell me what is illogical about what ive said

D3PO

smccarrick wrote: »

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

Well its not just something to brainwash people into buying, it can and is true (obviously not all the time)

i did a quick calculation of rent versus owning my house to see which would be better

assuming €600 per month rent my rent would have totaled €27,000

Ive paid approx €41,000 to the bank in interest in that period

So straight up id be €14,000 worse off

However take away the TRS ive recieved minus what Id get in rent refief approx €5,000

making me €9,000 "worse off"

Ive partaken in rent a room scheme which has yeilded me €21,000

So straight up Im €12,000 better off owning my own property than if I rented for the same period.

So rent can be dead money or can be financially viable depending on the situation

Jack479

I've just read this entire thread from start to finish. jesus it's late.......

Still thinking of buying a 2 bed m50 apartment though

SoupyNorman

enry wrote: »

whats the Sunday World ?

A brand of toilet paper that is only sold on Sunday.

The_Conductor

D3PO wrote: »

Well its not just something to brainwash people into buying, it can and is true (obviously not all the time)

i did a quick calculation of rent versus owning my house to see which would be better

assuming €600 per month rent my rent would have totaled €27,000

Ive paid approx €41,000 to the bank in interest in that period

So straight up id be €14,000 worse off

However take away the TRS ive recieved minus what Id get in rent refief approx €5,000

making me €9,000 "worse off"

Ive partaken in rent a room scheme which has yeilded me €21,000

So straight up Im €12,000 better off owning my own property than if I rented for the same period.

So rent can be dead money or can be financially viable depending on the situation

If you factor a large fluctuation in asset value into the equation- it destroys your figures though....

My apartment is officially at 2000 values for mortgage purposes (according to Bank of Ireland- who despite insisting on an independent valuation by a valuer from their approved panel- are now knocking another 30% off their values)........ I bought in 2000- its now worth what I paid then (and it was overpriced even then, to be totally honest).

When did you buy?

sneakyST

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)

I would consider myself a positive sort amidst the cynics but I have to disagree on the above.
I dont think we are educated enough in the right areas. Think about R&D , Science etc, a lot of young lads went into the building trade to earn the money. I would like to see the stats on the take up of these courses in universties over the boom years

In relation to infrastructure- Well its still pants. The roads are crap, there is a brutal train service - the dart is a glorified monorail, trams arent too bad, Metro is a waste of money and wont be used, buses are still unreliable and you cant get a bus from the northside to the southside etc without going through town....it take forever to drive anywhere.....where do you stop.

Competitiveness is long gone - with upcoming high (income, property, carbon)taxes, roads tolled to the hilt, high price on goods and service -its going to make things tricky. Cost of living is still high compared to the UK for example......wages are high .......

Dob74

SoupyNorman wrote: »

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

Only problem the light we see is a train coming at us:(

luckat

The price people can pay for their houses depends on how much they're earning. At the moment, that's dropping - especially for the self-employed who are a huge chunk of the house-buying population.

While public servants are facing effective cuts of 10%, many - probably most - self-employed people have lost 30% of their fees.

As for McWilliams "bidding on houses" and writing sensationally; no. He writes plainly, which is unusual for an economist; no jargon. And he researches empirically - what better way to find out the real price houses are selling for than to bid on them?

Now, real house prices. If you go back through the reports of sales, you'll find that a decent three-bed semi in a reasonably upmarket section of the Dublin suburbs would have sold for £30,000 in 1987.

By 1989, this had doubled to £60,000. And by 1995, it was up to an astonishing £100,000.

The same house two years ago would have cost €900,000.

By last year it was down to €700,000, and now it's edging back towards €500,000.

If you look at the average wage of the people buying those houses, in 1987 two people working were probably earning £28,000 or so between them. By 2007 they would have been making some €100,000 between them.

(One of the forgotten reasons for the bubble, by the way is that up to the 1970s a one-salary household was the norm; suddenly the household income was doubled, or at least one-and-a-halfed, and house price rises reflected this from the mid-80s or so.)

I'd listen very carefully to what McWilliams says. He's been right on an awful lot of economic things.

partyguinness

Does it really matter how much valuations fall in real terms?

If there is nobody able to purchase then the valautions are just a moot point.

The_Conductor

luckat wrote: »

While public servants are facing effective cuts of 10%, many - probably most - self-employed people have lost 30% of their fees.

After the latest levy and PRSI increases on the 1st of May its just over a 19% cut in net take home pay in the public sector (depends on a number of factors though- its higher in many cases, and lower in others). You wouldn't know it from whats reported in the media though!

Instead of playing with tax rates, levies, PRSI etc- wouldn't it make a lot more sense to simply give everyone in both the public and private sectors a blanket 30-40% cut in gross pay across the board. It would restore competitiveness overnight, and position us nicely to make the most of a recovery if/when one is to happen in the international arena.

D3PO

smccarrick wrote: »

If you factor a large fluctuation in asset value into the equation- it destroys your figures though....

thats absolutly true. I should have specified that im talking about long term renting (over a 15 - 25 year period)

one of the posters mentioned better to rent for 25 years then buy a hous efor cash. I dont think thats financially the best option is all Im saying.

your right though with asset values dropping it does blow my figures up short term.

ntlbell

D3PO wrote: »

thats absolutly true. I should have specified that im talking about long term renting (over a 15 - 25 year period)

one of the posters mentioned better to rent for 25 years then buy a hous efor cash. I dont think thats financially the best option is all Im saying.

your right though with asset values dropping it does blow my figures up short term.

I never stated it was a better option.

I said it's A option and will depend a lot on personal circumstances.

I also stated it's very hard to put a figure on it.

I never said it was better.

Read the posts more carefully.

mdebets

D3PO wrote: »

Well its not just something to brainwash people into buying, it can and is true (obviously not all the time)

i did a quick calculation of rent versus owning my house to see which would be better

assuming €600 per month rent my rent would have totaled €27,000

Ive paid approx €41,000 to the bank in interest in that period

So straight up id be €14,000 worse off

However take away the TRS ive recieved minus what Id get in rent refief approx €5,000

making me €9,000 "worse off"

Ive partaken in rent a room scheme which has yeilded me €21,000

So straight up Im €12,000 better off owning my own property than if I rented for the same period.

So rent can be dead money or can be financially viable depending on the situation

Your calculation is totally flawed. You are only comparing rent vs. morgage payments. Morgage payments are however not the only costs you have if you own a hous.
You have to buy furniture and replace it now and then (esp. if you have a lodger staying with you who might not be as carefull with your stuff).
You need to pay all th repairs for your house, insurance for the house, maintaining your garden (if you have one).
You might have to pay management fees (which are only going to increase, with people not being able to afford them).
And there are many more payments to be made, which you don't have to do if you are just renting.
And then you have the other benefits of renting.
In your calculation, you don't need to share your house with a third person.
What are you going to do if the owner of the house next to you is going to rent it out to people who have parties every night until 6 in the morning and their landlord won't do anything about it. If you are renting, you can just move, not so if you own the house.
You are not flexible anymore. What are you going to do if you loose your job tomorrow and the only offer for a new job is in Cork. You might have problems selling or even renting your house. When you rent; you can just move.
What are you going to do if you have a family and need a bigger house? In the current climate, you are very unlikely to be able to sell your house, so you can't move.

And after all, with the current climate you are not even guaranteed that you'll own your house at the end. You might end up loosing it, because you can't afford the morgage payments anymore.

D3PO

mdebets wrote: »

Your calculation is totally flawed. You are only comparing rent vs. morgage payments. Morgage payments are however not the only costs you have if you own a hous.
You have to buy furniture and replace it now and then (esp. if you have a lodger staying with you who might not be as carefull with your stuff).
You need to pay all th repairs for your house, insurance for the house, maintaining your garden (if you have one).
You might have to pay management fees (which are only going to increase, with people not being able to afford them).
And there are many more payments to be made, which you don't have to do if you are just renting.
And then you have the other benefits of renting.
In your calculation, you don't need to share your house with a third person.
What are you going to do if the owner of the house next to you is going to rent it out to people who have parties every night until 6 in the morning and their landlord won't do anything about it. If you are renting, you can just move, not so if you own the house.
You are not flexible anymore. What are you going to do if you loose your job tomorrow and the only offer for a new job is in Cork. You might have problems selling or even renting your house. When you rent; you can just move.
What are you going to do if you have a family and need a bigger house? In the current climate, you are very unlikely to be able to sell your house, so you can't move.

And after all, with the current climate you are not even guaranteed that you'll own your house at the end. You might end up loosing it, because you can't afford the morgage payments anymore.

like i said it depends on the circumstances as to weather it is beneficial or not.

re insurance - you should be paying insurance as a renter aswell very little different in renters insurance and full house insureance in monetary terms

personally i dont have garden maintenace costs bar a few watts of electricity for the electric mower

i dont have management fees

so again it depends on the specific circumstances

there are a lot of what ifs both to renting and to buying

of course I could apply what ifs scenarios to renting as well

what if you had to move to cork for a job as its the only one you could get and couldnt continue your fixed term lease in dublin.

your gong to get saddled with the costs of renting 2 places

and so on so forth.

Neither has a any right to claim to be a better solution until you look at the personal circumstances.

My point was to show that you cannot argue that renting is without a doubt 100% the best option thats all

ntlbell

D3PO wrote: »

My point was to show that you cannot argue that renting is without a doubt 100% the best option thats all

no one did, so mute point.

D3PO

ntlbell wrote: »

no one did, so mute point.

dont you mean moot point

The_Conductor

Lol....
Nice to see I'm not the only one who repeatedly mixes that one up!

oceanclub

Interesting graph on Japanese land prices:

http://spreadsheets.google.com/pub?key=rnpOhXIAkU_OdUTjAPbT46Q&oid=2&output=image

They are now back where they were in 1979.

And that's a country 6 times more densely populated that Ireland:

337/km2 (30th) - (http://en.wikipedia.org/wiki/Japan)

Ireland — Population Density: 59/km2 (http://www.astd.org/membership/international/findGlobalChapters/Ireland.htm)

P.

ntlbell

D3PO wrote: »

dont you mean moot point

I'll clear it up.

moronic pointless argument.

spockety

ntlbell wrote: »

I'll clear it up.

moronic pointless argument.

lol, eloquent as ever 'bell

D3PO

ntlbell wrote: »

I'll clear it up.

moronic pointless argument.

ouch somebody got out of bed the wrong side today. or maybe they just had to deal with ntl on the phone

i could say the same about your suggestion to rent for 25 years then buy in cash but id rather argue my point pointless as it may seem to you.

ntlbell

D3PO wrote: »

i could say the same about your suggestion to rent for 25 years then buy in cash but id rather argue my point pointless as it may seem to you.

Again I'll ask you to read the post again.

I'm not suggesting people should do it, I was pointing out where the 25 years of "freedom" comes from regardless.

I'm a home owner, I'm not trying to single handedly bring down the housing market.

now stop talking utter nonsense.

asdasd

If you look at the average wage of the people buying those houses, in 1987 two people working were probably earning £28,000 or so between them. By 2007 they would have been making some €100,000 between them.

That is certainly not the average dual income in Ireland. From a report in 2006 the average industrial is about 32K , with average household income about 38K.

That was 2006. You cant double income for household because women dont earn as much as men, nor are all households dual income.

asdasd

assuming €600 per month rent my rent would have totaled €27,000

Ive paid approx €41,000 to the bank in interest in that period

So straight up id be €14,000 worse off

However take away the TRS ive recieved minus what Id get in rent refief approx €5,000

making me €9,000 "worse off"

Ive partaken in rent a room scheme which has yeilded me €21,000

So straight up Im €12,000 better off owning my own property than if I rented for the same period.

Why isnt the rent 21K for you for the period, as that is what you are charging the guy?

Anyway you would have saved the drop in house prices and interest in the meantime. Not buying is useful in many situations.

The renting of the room? What if that dries up? Rent is going to fall and that guy may get his own place for a song soon.