Irish property market bound for recovery

John_999

Well done yeah I read that ...why didnt you post my response to it. I think the blinkered view of the pessimists amongst us can be added to the list of cons for buying aswell I have been open and upfront about this and I did look all pros and cons and for me in the situation and with the deal I am getting it is worth the punt. I dont advise people to buy willy nilly. You have to research and see how the pros work in your specific case and how the cons go against you..

gurramok

Oh boy, lets tackle this.

John_999 wrote: »

You cant have it both ways Diumud dont buy as rents are coming down. Dont buy as house prices are coming down. If people dont buy what do they do they rent so there is more demand for rental which will stablize or keep rent prices above interest repayment prices. This is going to go back now to migration and other ****e that has really feck to do with this discussion. At the end of the day there are too many unknowns out there with regard for property speculation. I for one am taking a punt I have bought and let the chips lie where they may. I am no expert but this is the first propety I have bought ..(I have bought 4 in total) in which I felt I wasnt raped by the estate agent. I would advise first time buyers to go for it. As I say in 20 - 35 years do you think your property will have gone up in value thats the only questioh you need answering and I aint one to tell someone to do something that I am not prepared to do. I am taking a risk. Below is a list of pros and cons that have been put forward on this thread all with there own merrits but no one posing on this thread can forsee the future.
no upward demand for rental which is why the market rents go down. Think about this, if FTB's espeically go out and do what you say to buy, the rental market will seriously collapse

In the pros for buying a gaff you have

There is still an influx of foreigners to this country it has slowed but they are still coming in Alot are leaving too, rate of migration to here has decreased month on month, have you noticed?

Lisbon being passed Nothing to do with property

NAMA An attempt at market control which will fail

Decreasing property prices true

Low interest rates temporary, nor for 25 or 35yrs

Cost of living is getting cheaper Mostly due to mortgage repayments and lecky/gas which depends on oil prices. Oil prices go up and they will very soon and reverse will occur

Statistics show that the death vs birth rate is higher on the birth side.Babies don't buy houses. The amount of adults here has actually decreased. Irish brith rate declined bewteen 1981 and 1996 approx, thats the immediate pool of buyers in the future years. [source irisheconomy.ie] Relying on todays babies to buy in 30yrs time is a red herring, it all depends if they have jobs then like the 80's/90's generation, we don't know

Upturn in the worldwide economy a minor plus factor, sort out domestic re-alignment at same time for proper recoveryct

Upturn in US/Uk property marketnothing to do with here

The Cons for buying a gaff

Your dealing with a bank C.unts true

increased migration emigration you mean

uncertainty about future drops in house prices certainty

future drop in rent correct due to saturated rental market

ECB interest rate uncertainty true, only way is up

Job losses true, every day.

Wage cuts huge factor on affordability

Over saturated house market clear that overhang

Stamp duty true for non-ftb's

Budget still to come and a few more after that to re-align publc finances

Sorry if I have missed anything but I think people buying should just know the whole story not a one sided affair which is what is happening Rosetinted view.

mathie

John_999 wrote: »

As I say in 20 - 35 years do you think your property will have gone up in value thats the only questioh you need answering and I aint one to tell someone to do something that I am not prepared to do. I am taking a risk.

In the 25 years from 1980 - 2005 property went down in value in Japan.
Japan is the closest international example of us. Forget the US/UK.

Take a look ...

http://i52.photobucket.com/albums/g30/Joe-Blow/581px-EconomistHomePrices20050615x.jpg

John_999

See Gurramock I have come out with an even view...For instance how do you know Nama isnt going to work are you fortune teller??. See I can riducule you aswell and make you look stupid. I think my post was fairly even handed.
At the moment the Green party are being smoozled into consolidating the government and if that happens Nama is a done deal. What can be done to stop it?

And for what you came up for negatives for the pros ...I gave them cons underneath so they are offsetting ...

So how is it rose tinted???

Once again pessimism why cant people take the merits of a post and think before they reply?

John_999

Mathie how is Japan the closest. So the fact that Irelands property market has mirrored US for the last couple of decades has nothing to do with it. Guys look as I say proof is in the pudding when nama comes in watch. Did Japan do something simular no they let the property banks etc crash is that happening here no the gov is stepping in

gurramok

John_999 wrote: »

See Gurramock I have come out with an even view...For instance how do you know Nama isnt going to work are you fortune teller??. See I can riducule you aswell and make you look stupid. I think my post was fairly even handed.
At the moment the Green party are being smoozled into consolidating the government and if that happens Nama is a done deal. What can be done to stop it?

It ain't stupid. It won't work at controlling prices. They are overpaying for assets to shore up the banks balance sheets and expect to find buyers for them. They do not want firesale prices to get the real market values. Also the banks will still need a few billion to find on their own to shore up the balance sheets. See my sig for details.

John_999 wrote: »

And for what you came up for negatives for the pros ...I gave them cons underneath so they are offsetting ...

So how is it rose tinted???

Once again pessimism why cant people take the merits of a post and think before they reply?

Its based on fairytale assumptions, the worse been that the property market here will recover because the US/UK one will recover and also this expected wave of foreign investors within a year, thats hilarious.

mathie

John_999 wrote: »

Mathie how is Japan the closest. So the fact that Irelands property market has mirrored US for the last couple of decades has nothing to do with it. Guys look as I say proof is in the pudding when nama comes in watch. Did Japan do something simular no they let the property banks etc crash is that happening here no the gov is stepping in

From David McWilliams (http://www.independent.ie/opinion/columnists/david-mcwilliams/japans-housing-slump-was-scary-and-ours-could-be-too-1425159.html)

Japan of the late 1980s was experiencing a huge asset-price boom and stocks were going through the roof, allowing Japanese companies to buy trophy assets abroad such as the Rockefeller Centre and MGM.

Bulging Japanese banks dwarfed their European and US counterparts and threatened to dominate the City and Wall Street. Most spectacular of all was the Tokyo property market. In 1990, the land upon which the imperial palace in Tokyo was built was valued at more than the entire real estate of Canada, the second largest country in the world.

When I read the silly valuations in the 'Irish Times' property section, particularly the "Take 5 at €400,000" section, I am reminded of the Japanese Imperial Palace delusion. Clearly a two up, two down in Rialto is not worth the same as a seven-bedroomed house in the Dordogne. Now that prices are falling rapidly, the idea that pokey Irish houses are worth more than French chateaux will look increasingly daft.

The other problem for Ireland is the sheer extremity of the housing boom. Irish house prices have risen 380pc since 1996, compared with 260pc in the UK -- the next frothiest market. House prices fell in Germany and of course Japan in the same period. While in Switzerland -- Europe's technically most sophisticated economy -- house prices only rose by 5pc in the 12 years since 1996.

As a result of this binge, Ireland is the most indebted nation in Europe. Outstanding residential mortgage debt now amounts to 192pc of our total GNP! This is truly shocking and depressing when you consider that in Germany, outstanding mortgage debt only amounts to 3pc of GNP.

Even in the US -- where many disingenuous Irish commentators are suggesting this crisis originated -- outstanding mortgage debt only accounts for 44pc of GNP. We are way out of whack with the rest of the world and our dilemma is very much of our own making. Think about the chart again. Have a long look and consider that in the past 10 years residential loans per capita in Ireland increased by 552pc. This is miring us in an ocean of debt. We got into debt five times faster than the average profligate American and, extraordinarily, 50 times faster than the parsimonious Germans.

With our British neighbours, we managed to lose the run of ourselves completely. In the UK, where billions of Irish euros were spent in the past five years, there is carnage on the high street. According to the estate agents Allsops, the real weakness is being seen in the thousands of new docklands-style developments which mushroomed all over British cities.

Many of these investors were Irish and most apartments are now trading at a 30pc to 40pc discount to prices originally paid in 2005. The British have the comfort of a falling exchange rate determined in London, we on the other hand are stuck to the Germans.

This is why the personal debt comparisons with Germany are so instructive. The German has no property-related debt to speak of. This means that the average Gunter doesn't really mind if European interest rates rise, as it will make no difference at all to his budget at the end of the month.

In contrast, the average Paddy, who has seen his personal property indebtedness rise by over 500pc since the late 1990s, will be roasted by a rise in rates.

So will Irish house prices follow the Japanese model and fall by 70pc from the peak? Maybe. Who knows? However, the similarities are too striking to be ignored.

It is clear the Japanese market didn't freeze, as during the slump there were still distressed sellers and opportunistic buyers who thought they had bought at rock bottom, only to see prices fall again.

Overall, however, in the 13-year slump there was not one period of six months when any sustained rally was recorded.The lesson being, when things start falling, they drop like a stone.

Take a look at the chart again. Not a pretty sight.

ZYX

Diarmuid wrote: »

the mortgage term absolutely does count. (EDIT to prove it to yourself go into AIB and offer to take out a 35 year mortgage at the 10 year rate. )

I swear to God, I knew Irish people didn't know what they were getting into 5 years ago with the irresponsible debts they were taking on, but I'd have thought they would have learned their lesson by now! Clearly not.

Yes Diarmud, clearly you do not understand. The cost of the mortgage is the interest. The rest is a repayment. If you want to use the whole repayment then you have to accept that at the end of the mortgage you own the property. With renting you own nothing. So the term does not count.

John_999

It ain't stupid. It won't work at controlling prices. They are overpaying for assets to shore up the banks balance sheets and expect to find buyers for them. They do not want firesale prices to get the real market values. Also the banks will still need a few billion to find on their own to shore up the balance sheets. See my sig for details.

OK so what can be done to stop it? Look I am not for Nama. I hope it doesnt come in. As ok I have taken a personal risk in buying. But if it does go pear shaped I will be kicked in the balls twice.

I have posted on what the gov will do with properties in default. They will be slip streamed into the market therefore reducing supply. If nama is passed they have the ability to do this.

I am not for Nama/banks/Gov I am dealing in facts here guys

Its based on fairytale assumptions, the worse been that the property market here will recover because the US/UK one will recover and also this expected wave of foreign investors within a year, thats hilarious.

I never said anything about a recovery I have said time and again the question to ask when or if buying do you think the price your paying for a property will go up in value in 20 - 35 years or whatever the term of your mortgage is. Forget the fluctuation in the market. Neither you or I can know whats going to happen. I have said first time buyers should get in now before investors come back..If you think the country is ****ed then why are you still living here I think your really an optimst at heart

John_999

Once again Mattie you never mention the fact that the gov didnt step in to stabilize the market A.k.a nama

mathie

John_999 wrote: »

Once again Mattie you never mention the fact that the gov didnt step in to stabilize the market A.k.a nama

Do you think that NAMA will actually work?

If you can;t see that it's a bailout for the banks and the builders and a shafting of Johnny Taxpayer then you're clearly beyond help.

When Nobel Prize winning Economists think something is a bad idea and the current government think it's a good idea I know whose side I'm on.

http://www.independent.ie/business/irish/state-should-have-let-banks-fail-says-nobelwinning-economist-1907525.html

John_999

I am totally against Nama hate the idea of it. But its coming and nothing you, I or the man in the moon, or Nobel Prize winning economists can do to stop it. So let me ask you when it does come in how different will Ireland be against Japan model? Answer completely different.

John_999

The other question here Mathie is what other ecconomies have been bailed out well UK/US

what is happening there at the moment property prices have gone up in the last 3 months even if only by a small amount its still gone up

ZYX

Diarmuid wrote: »

the mortgage term absolutely does count. (EDIT to prove it to yourself go into AIB and offer to take out a 35 year mortgage at the 10 year rate. )

I swear to God, I knew Irish people didn't know what they were getting into 5 years ago with the irresponsible debts they were taking on, but I'd have thought they would have learned their lesson by now! Clearly not.

Actually Diarmuid, I will explain it to you more easily. If you get the mortgage from AIB. On a 20 year mortgage costs are 6.40 per thousand borrowed. So €1664 a month. Multiply this by 12 then by 20 you get €399360 which is the total cost to you. If you assume prices in 20 years are the same as they are now and property is still worth €260,000 that means the total cost to you is €399360 minus €260,000 or €139,000. If you also assume rents did not go up over the 20 years (which of course they would have) that means you would have paid €216,000 in rent. Again you would be substantially better off by €77,000

Obviously if rents rise in that time or if house prices rise then the savings are much greater.

gurramok

John_999 wrote: »

OK so what can be done to stop it? Look I am not for Nama. I hope it doesnt come in. As ok I have taken a personal risk in buying. But if it does go pear shaped I will be kicked in the balls twice.

I have posted on what the gov will do with properties in default. They will be slip streamed into the market therefore reducing supply. If nama is passed they have the ability to do this.

I am not for Nama/banks/Gov I am dealing in facts here guys

Writing in bold does not make it true either. Nothing can stop Nama except political failure hence we watch what happens with Greens etc. If it doesnt go through, the market will continue to fall as it is. What they are doing is a delaying tactic to the inevitable, Japan style.

They cannot control 2nd hand property, understand?

John_999 wrote: »

I never said anything about a recovery I have said time and again the question to ask when or if buying do you think the price your paying for a property will go up in value in 20 - 35 years or whatever the term of your mortgage is. Forget the fluctuation in the market. Neither you or I can know whats going to happen. I have said first time buyers should get in now before investors come back..If you think the country is ****ed then why are you still living here I think your really an optimst at heart

You did say it in post #80. Words like UK property and market here what give you away on this point.

John_999 wrote: »

Ireland have historically mirrored the US ecconomy with a lag. The U.S is now in an upturn ditto the main players in Europe Sure the U.K have had there 3rd monthly rise in property prices this year. The market is bottoming out here guys.

You see, you have serious faith in these hordes of foreign investors to push prices back up. Take a step back and realise what you are saying.

I'm here because i still have a job and want to stay here as I want to be close to family/friends. I survived 3 rounds of redundancy with uncertainty still in the air. Multiply that by many and thats the reality out there.

mathie

John_999 wrote: »

I am totally against Nama hate the idea of it. But its coming and nothing you, I or the man in the moon, or Nobel Prize winning economists can do to stop it.

You believe that as it's the 'only show in town' right? :rolleyes:
Wow someone actually fell for the FF spin.

John_999 wrote: »

So let me ask you when it does come in how different will Ireland be against Japan model? Answer completely different.

Yes our national debt will be doubled overnight. Japan didn't have to deal with that.

John_999 wrote: »

The other question here Mathie is what other ecconomies have been bailed out well UK/US

what is happening there at the moment property prices have gone up in the last 3 months even if only by a small amount its still gone up

Please provide proof of this.

John_999

Gurrumock sorry was writing in bold just to distinguish the difference still have not learned how to use the quotes apoloigies

My point is your so sure Nama is going to fail on what basis are you basing this on. Its not delaying what are they delaying for the country is fecked the property market is currently on its knees they are trying to get nama through asap. If you mean delay the price drop well thats what Nama will do it will more than likely stop it all together. But once again we are not prophet so we cant see the future

And they will have the ability to control 2nd hand if they go into default

My view on the recovery is that I think there will be one. But once again I cant say for certain there will be one. The recovery cannot be measured on a real time basis. So I came up with calculations in cash that make sence to the average layman about buying vs renting. If your not buying you are renting and you save more money on buying FACT.

As for the mirroring part. This has been documented that Ireland has mirrored the US now we did go way above with the prices granted, but the prices have dropped sharper here than the US aswell also mirroriing it.

As for the foreign investors...they will look at the market now its either at the bottom or will be shortly a true speculater will try and get in there as its coming to the bottom and be ready for the bounce. Thats all I was saying first time buyers get in there and if it doesnt go back up in the short term if you have a mortgage you have 20 - 35 years for it to get back to the price you paid for it and you will save on dead money for renting.

Sorry to hear about the job situation. Didnt mean to be offensive and I hope things start to improve for you.:)

John_999

Well if there is another show in town do tell cause I aint seen it yet. Lisbon was a chance to stick 2 fingers up at that fat c.unt Cowen and it was passed. I voted no by the way.

Mathie google uk property prices Q3 2009 and look for yourself.

I am pointing out the obvious my one thing I will stick by is I think its a good time for First time buyers to buy. As you spend less dead money than rent and if you have it over 20 -35 years you have that for at the very least for the property price to break even.

Also yeah Japan is one ecconomy that bucked the trend with regard to property prices in the last 20 years..How many countries are there in the world???

mathie

John_999 wrote: »

but the prices have dropped sharper here than the US aswell also mirroriing it.

Am I hungover is this 100% oxymoronic?

John_999

Your hungover

Your arguing we are more inline with Japan and you have given your reasons but never mentioned the shinny pink elephant in the room which is Nama.

I am arguing and if you look that we have mirrored the US in property prices now ours skewed in the last 5 years given but over the last number of decades when the US went up we went up when they went down we went down.

Plus the fact that Japan is the only country in the world to buck the trend of property increases throughout the world over the last 20 years

Calina

John_999 wrote: »

Gurrumock sorry was writing in bold just to distinguish the difference still have not learned how to use the quotes apoloigies

Then please learn because it makes your posts almost impossible to read.

John_999 wrote: »

My point is your so sure Nama is going to fail on what basis are you basing this on. Its not delaying what are they delaying for the country is fecked the property market is currently on its knees they are trying to get nama through asap. If you mean delay the price drop well thats what Nama will do it will more than likely stop it all together. But once again we are not prophet so we cant see the future

You really don't understand, do you? NAMA is to do with capitalisation problems relating to the banks not because they lent too much to the plebs like you and me to buy property but because they lent too much to the developers to create that property.

Let's take 2 examples. John Fleming and Liam Carroll. John Fleming was lucky. He got examinership to try and trade his way out of difficulties at a time when his debts were something akin to 1.8billion euro. We had the spectacle of Liam Carroll's companies fighting tooth and nail for their survival through the court system for the last I don't know 2 months or something with debts over 2 billion euro. Three banks are now appointing receivers. NAMA is to cover the holes in balance sheets caused by this, not by overlending to mortgagees who bought places to live in.

NAMA is buying debts which may or may not be performing - the definition is fluid because of interest rollovers - but which do have a minimum value of 5 million and they are asset backed by developer securities which, in this country, for the most part, are 1) landbanks 2) unfinished estates 3) unsellable estates.

Again, this does not involve second hand property on the open market.

John_999 wrote: »

And they will have the ability to control 2nd hand if they go into default

If you are implying that NAMA can do this, I'm sorry, you are incorrect in this assertion. It can only control the supply of new property, a market which is already utterly decimated because - for example - apartments are not selling except to people like yourself.

John_999 wrote: »

My view on the recovery is that I think there will be one. But once again I cant say for certain there will be one. The recovery cannot be measured on a real time basis. So I came up with calculations in cash that make sence to the average layman about buying vs renting. If your not buying you are renting and you save more money on buying FACT.

I see this argument on a regular basis. Ultimately if I were to buy I would be spending more on commuting, and I would be at the mercy of increased road tax, fuel tax and tolls, and, in fact, weather events. I would have a severely decreased quality of life. Go away and do your little cash calculations. The fact remains you can't factor every single consideration for every person into your calculation.

John_999 wrote: »

As for the mirroring part. This has been documented that Ireland has mirrored the US now we did go way above with the prices granted, but the prices have dropped sharper here than the US aswell also mirroriing it.

I don't believe they have, actually.

John_999 wrote: »

As for the foreign investors...they will look at the market now its either at the bottom or will be shortly a true speculater will try and get in there as its coming to the bottom and be ready for the bounce.

The market is unlikely to be at the bottom at this stage. In certain regions, maybe yes, in other regions, almost certainly not. In my opinion it's got another 20-40% to go based on the available pool of buyers.

John_999 wrote: »

Thats all I was saying first time buyers get in there and if it doesnt go back up in the short term if you have a mortgage you have 20 - 35 years for it to get back to the price you paid for it and you will save on dead money for renting.

Sorry to hear about the job situation. Didnt mean to be offensive and I hope things start to improve for you.:)

You are being offensive in this respect. I have pointed out to you and to Euroland that there is a monumental amount of uncertainty about jobs along with salary cuts - I'm looking down the barrel of both myself right now and it is unwise to assume you can base a reoccurrence of property price inflation on this situation.

With respect to FTBs, the advice is only valid if they are in property which doesn't require a trade up in under 5-10 years, which means it's only valid for property that suits - for example - family life. In the Dublin area, this precludes anything with fewer than 3 bedrooms in my view.

Currently, the prices of same are still too high for the average FTB.

Please get real. I see you have your investment; I hope it works out for you, but the assertions that you are making vis a vis the market do not have any basis in the reality for most of the rest of the population in particular first time buyers.

Calina

mathie wrote: »

Am I hungover is this 100% oxymoronic?

I would go with "contradiction in terms" my self.

John_999

Calina lets be clear on things here...I am not trying to up Nama banks or anything else. My main points I suppose I have 2. Everything else I have said has been in defense of these 2 points and I may have been wrong.

Now you seem to have your head screwed on.

point 1

I think its a good time for first time buyers to buy (note the words I think) and I did the calculation of dead money over 10years between renting and buying and you are significantly better off buying as pointed out by ZYX in his last post.


point 2

I think Nama will be going through - if it does its not in the governments interest to have property continue to go down and they will be able to control this, maybe I am wrong in this.

As a side note I advised anyone buying or looking to buy to look at all pros and cons.

As for your 20 - 40% whats your basis for that they are down to 50% as is?

Calina

John_999 wrote: »

Calina lets be clear on things here...I am not trying to up Nama banks or anything else. My main points I suppose I have 2. Everything else I have said has been in defense of these 2 points and I may have been wrong.

Now you seem to have your head screwed on.

point 1

I think its a good time for first time buyers to buy (note the words I think) and I did the calculation of dead money over 10years between renting and buying and you are significantly better off buying as pointed out by ZYX in his last post.


point 2

I think Nama will be going through - if it does its not in the governments interest to have property continue to go down and they will be able to control this, maybe I am wrong in this.

As a side note I advised anyone buying or looking to buy to look at all pros and cons.

As for your 20 - 40% whats your basis for that they are down to 50% as is?

You're missing the point. NAMA cannot control second hand property. This has been pointed out several times and you keep on ignoring this point.

As for the deadmoney argument, I disagree with it not purely on maths grounds but on other grounds mentioned above.

The_Conductor

Guys- I'm getting blue in the face- no personal comments or remarks. If you disagree with what someone else posts- refute the post, without attacking the poster. No agression, abuse or comments which might be wildly construed by anyone as racist will be allowed- regardless of whether its intended as humour or a jibe. Another temp ban has issued on this thread.

Regards,

SMcCarrick

john_boy_123

I think the other John made good sense with his whole argument did you read his comparison of a guy who is a pessimist renting for 900 a month and then the place next to it going for 295 it makes a complete mockery of what your trying to say Calina. Also have a look at zyx's comments.

As for control of 2nd hand property if they go into default where do they go Nama...who controls Nama the gov therefore indirectly they do control 2nd hand property that go into default.

john_boy_123

smmcarrick who was banned and why there was no attacking by anyone there?? over todays threads anyway there wasnt? Can you point out which thread it was so I know what I can say and not say

Diarmuid

john_boy_123 wrote: »

I think the other John made good sense with his whole argument did you read his comparison of a guy who is a pessimist renting for 900 a month and then the place next to it going for 295 it makes a complete mockery of what your trying to say Calina. Also have a look at zyx's comments.

Unfortunately for zyx, his figures are pie in the sky stuff.

john_boy_123

Maybe I didn't check them I did check the ones John_999 did and they looked solid

spockety

john_boy_123 wrote: »

Maybe I didn't check them I did check the ones John_999 did and they looked solid

These are the figures which come from a guy who reckons that on a ~270K mortgage, interest rates going up to 20% only increase the monthly repayment by about 450 euro????

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