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Property Valuation

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Comments

  • #32
    Eglinton
    Closed Accounts Posts: 992 ✭✭✭Eglinton


    One person I know is paying €1200 for a very nice 3 bed semi d in Knocklyon with front and rear gardens. Knocklyon could be considered a higher end working class area - say average industrial wage earners for example. So probably a 12 factor on the 12/20 calculation.

    Let's compare the 12/20 calculation with the 5 times salary mortgage lending criteria.

    12/20
    Rent 1200 per month
    12 months x €1200 x factor 12 = €172,800

    5 times salary
    Average indust wage = €35K
    5 x 35k = €175,000

    Pretty comparible figures so perhaps each system has it's advantages. You could argue that Dublin prices could be based on a slightly higher factor or average wage.

    Also the 5 times salary rule would be what the mortgage lenders will give you so you'd need 10%+ for the deposit, which would take the value up over 190K


  • #33
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    just to be clear

    in 91 i was 16 and earning £2.50 per hour = £5,200 per anum

    the 4 bed semi i lived in in dundrum was worth £77,000 thats 14.8 times my (childs) wage

    compare that with min wage 1 earner now and you get €266,000 which is a huge amout less than that house would be "priced to sell" at today

    prices are gonna smash

    i wasd offered a 4 bed semi in sligo for 110 and while i was thinking about it they rang back with €100,000

    instead; i'll rent


  • #34
    spockety
    Moderators, Education Moderators Posts: 5,484 Mod ✭✭✭✭spockety


    Eglinton wrote: »
    One person I know is paying €1200 for a very nice 3 bed semi d in Knocklyon with front and rear gardens. Knocklyon could be considered a higher end working class area -

    *cough* *splutter*

    Sorry, have to stop you there. Knocklyon... WORKING CLASS?! How dare you?

    SOUTH DUBLIN don't you know.

    Lottery winners and professional couples only please.


  • #35
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    spockety wrote: »
    *cough* *splutter*

    Sorry, have to stop you there. Knocklyon... WORKING CLASS?! How dare you?

    SOUTH DUBLIN don't you know.

    Lottery winners and professional couples only please.

    Lol, I needed a laugh......


  • #36
    Blackjack
    Registered Users, Registered Users 2 Posts: 3,615 ✭✭✭Blackjack


    are we there yet?.


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  • #37
    SLUSK
    Closed Accounts Posts: 1,156 ✭✭✭SLUSK


    amacca wrote: »
    Just wondering what peoples opinions of a method of valuing property I have seen bandied about quite a bit recently(by people like David McWilliams etc).

    The method stipulates that the way to value a property is to multiply its annual earnings potential by 14.

    eg: say a property rents a €800 pm => €9600 per annum (not taking into account expenses such as insurance etc)

    This would give a property value of €9600 x 14 = €134,400

    My thoughts on this:

    I'm unsure how realistic a method of property valuation this is. Is this method primarily applicable to the US (where construction costs might be cheaper? people are not as attached to property perhaps?)

    Would you have to add much more to the value of the property if it was in a noted good area, had an extra bedroom, bigger garden on top of the multiple of its earning power.

    On the flipside I remeber a member of my family selling a 6 bedsit house in dublin in 95 for around 70k pounds at the time so maybe this method is not too far off the mark.

    The reason Im asking is because I'm considering buying anytime in the next couple of years (I'm in no rush) but I would like to be able to calculate what a realistic price for a property is.

    eg: at the moment Im looking at a 4 bedroom semi D in midlands town. Owners have an asking price of €280k, its in a nice area, If the house was be rented I reckon (after some research) it would make around €800 a month and therefore according to the method above its true value is around €135k which is just over a 50% discount on the owners asking price and just under a 65% discount on what the houses asking prices were about 2~3 years ago. (I believe some of them sold at the €370k-€380k mark back then at the height of the madness) It seems like a massive discount and Im sure some properties will be discounted by this amount but will decent houses in good areas go this low also.

    Again, Im prepared to wait, Im not one of these a house is a home type people (in otherwords Im not willing to pay way over the odds for a house just because I like it and intend to live in it, renting is fine for me) but I also dont want to stick to an unrealistic method of valuation and I cant quite decide how realistic this method is.

    I would appreciate informed and unbiased replies (if thats possible at all) and would like not to get a flood of "a house is worth what someone is willing to pay for it" or "you should just go ahead and buy it if you like it type" comments. Im interested in what people think of the method.

    Why should you have a 14x multiplier? Sounds quite high to me.


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