House Price Advise

JamBur

Hi guys,
Any opinions on THIS house? What would you think is an appropriate price?

mari2222

maybe 4 to 5 times average wage?

JamBur

That begs the question, what is the current national average wage? Would you say 5 times total household income, or 5 times primary income?

Monty Burnz

I'd say 150k as an absolute max, unless we default and leave the euro. In which case it will be worth pennies.

JamBur

Monty Burnz wrote: »

I'd say 150k as an absolute max, unless we default and leave the euro. In which case it will be worth pennies.

I wish it was available at the 150 mark. Offer of 195 was rejected

Monty Burnz

JamBur wrote: »

I wish it was available at the 150 mark. Offer of 195 was rejected

They will probably regret rejecting that in 12 months. Hold your fire, my friend. House prices will not rise in real terms for between 5 years and a decade.

mari2222

asking prices are still 50% above what they should be! Without the bubble, average in ireland should be circa €160,000 per "expert reports".

Diddler1977

195,000 is still too high imo. Walk away. Come back in a year with a bid of 140,000.

Idbatterim

hold your nerve Op! Id say they will regret you declining your offer in a few months! I live in Dublin 14, a house beside me started off at 350k 1 month ago it dropped to 320, 2 weeks ago to 270k! they way they way over shot on way up I reckon same will happen on way down... the amounts sound small now compared to the boom, but it is still very significant money!

JamBur

Thanks for the advice guys, much appreciated. I don't really have the luxury of waiting a year though, circumstances mean a move away from my lovely 2 bed rented apt is called for:) However despite my need, I wont rush into any decisions............. theres plenty of fish in the sea

washman3

use McWilliams simple formula--- if the rent in Glanmire for say, a 3 bed semi is €600 a month, multiply this by 14yrs. ie 600x12x14 that comes to €101,000, and his formula was based on good times. as some other posters said, walk away.!! And come back in 12 months with €95,000 in my view. (serious squeeky bum-time will have set in with most sellers by then.)

Monty Burnz

JamBur wrote: »

Thanks for the advice guys, much appreciated. I don't really have the luxury of waiting a year though, circumstances mean a move away from my lovely 2 bed rented apt is called for:) However despite my need, I wont rush into any decisions............. theres plenty of fish in the sea

If you need three bedrooms, then rent a three-bed place. Nobody has to buy. Good luck!

OMD

washman3 wrote: »

use McWilliams simple formula--- if the rent in Glanmire for say, a 3 bed semi is €600 a month, multiply this by 14yrs. ie 600x12x14 that comes to €101,000, and his formula was based on good times. as some other posters said, walk away.!! And come back in 12 months with €95,000 in my view. (serious squeeky bum-time will have set in with most sellers by then.)

The formula is bullsh1t and as I have said so often, other countries do not have house prices that follow this formula. The idea that Ireland is somehow different to all other Western countries is rubbish. A more normal formula is 16-20 times rent. Pick 18 times for average. Rent in Glanmire is €850 for a 3 bed house based on Daft today. So 850X12X18 is €183,600. Also that house looks better than the ones for rent and may get more.

mari2222

April 2010 : "A house price-to-income ratio value calculation used by chartered surveyors is to take the rental income potential of the property for one year, multiplied by a 15-year investment life span: 12 x months rental income x 15 years = property value.
Adjust for taxes, potential vacancy periods, repairs and rent fluctuations. The model stands up as a way of estimating value beyond the buy-to-let market.
Our application of this model (see panel) shows some property prices are still overvalued by up to 60 per cent.
Investment/income
(Rental yields)
Closely related to the model above, rental-yield income calculation was arguably one of the biggest red flags that property has been over-valued here. It looks at the return on investment from the rental yield a property would give, based on its current price.
For a property on the market with asking price of €200,000 and a rental income of €600 per month: (€600 x 12 gives €7,200 a year), this represents a yield of 3.6 per cent.
Though rent yields plummeted to unprecedented levels in the boom, buyers didn't care. Property prices were soaring ever higher and investors were confident of scoring big rewards from capital appreciation in the long run, which was madness, as any economist will tell you. And so it turned out to be.
"Rental yields across the economy are up but they're still well short of where you'd like to see it, at 5.5 to 6 per cent," said Davy economist Rossa White. They have risen from 3 per cent to around 4 per cent." published in Irish Independent

OMD

How many countries in the western world have property prices 15 times annual rent? 100%? 50%? 25%? 10%? or is it about 1%? Because unless it Can be applied to 50% of countries it doesn't really hold water.

Based on Daft today, average asking rent for a 3 bed house in Glenmire is €850. So 850X12= €10,200. Buying this house for €200,000 would imply a return of just over 5% which would be ok. I am not saying the OP should buy it but the asking price does not seem as over the top as people are implying.

Edit:
Looking at figures across Europe you can see the 15 year rule doesn't apply and the 14 year one certainly doesn't.
http://www.globalpropertyguide.com/Europe/price-rent-ratio/
Out of 35 countries looked at only 4 have prices 15 times annual rent.

Same applies to rental yields:
http://www.globalpropertyguide.com/Europe/rent-yields/

Likewise USA & Canada
http://www.globalpropertyguide.com/North-America/rent-yields/

And even the Caribbean
http://www.globalpropertyguide.com/Caribbean/rent-yields/

mari2222

April 2011 report -

It says the fall in rebuilding costs means that the cost of rebuilding a typical 3-bedroom semi-detached 95 sq m house in Dublin has fallen €149 per sq metre or from €204,056 last year to €189,132, this year, a fall of some 7.3%.

Once again Dublin has the most expensive rebuild costs across all house types. In Cork the cost of rebuilding the same type of house fell €133 per sq metre or from €162,636 last year to €149,232 this year, a fall of 8.2%.

OMD

mari2222 wrote: »

April 2011 report -

It says the fall in rebuilding costs means that the cost of rebuilding a typical 3-bedroom semi-detached 95 sq m house in Dublin has fallen €149 per sq metre or from €204,056 last year to €189,132, this year, a fall of some 7.3%.

Once again Dublin has the most expensive rebuild costs across all house types. In Cork the cost of rebuilding the same type of house fell €133 per sq metre or from €162,636 last year to €149,232 this year, a fall of 8.2%.

Obviously you have to add the cost of the land to this price to use it as a basis for house valuation.

Monty Burnz

OMD wrote: »

Based on Daft today, average asking rent for a 3 bed house in Glenmire is €850. So 850X12= €10,200. Buying this house for €200,000 would imply a return of just over 5% which would be ok. I am not saying the OP should buy it but the asking price does not seem as over the top as people are implying.

You realise that Ireland is bankrupt? So why a house should be expected to yield less and cost more in little old bankrupt Ireland than in rich and stable Germany is a total mystery to me.

OMD

Monty Burnz wrote: »

You realise that Ireland is bankrupt? So why a house should be expected to yield less and cost more in little old bankrupt Ireland than in rich and stable Germany is a total mystery to me.

I am not saying that. People are saying house prices in Ireland should be either 14 or 15 tunes annual rent. I am saying that us nonsense and has no basis in reality.
Others were saying it should be based on a rental yield or over 5.5%. I am simply pointing out that this house is not far off this mark.
I wouldn't buy this house, but simply making up figures doesn't really help the op. Based on international average yields, based on international norms of house prices as a multiple earnings and based on rebuild costs + land price this house does not seem as over valued as people are making out.

By the way house prices in Ireland are less than Germany

johndaman66

OMD wrote: »

Obviously you have to add the cost of the land to this price to use it as a basis for house valuation.

I would imagine mari2222's figures certainly do take the cost of land into account. As per mari2222's figures the cost of rebuilding a typical three bedroom 95 sq metres semi-detached in Dublin had fallen to €189,132 this year. While the cost of rebuilding the same house in Cork has fallen to €149,232 this year. Looking at the figures in isolation is enough to suggest that they do take the price of land into account but the difference of an odd €40k between Cork and Dublin is a dead give away. Labour costs may be higher in Dublin but certainly not that much higher. Building materials would possibly come in cheaper if anything in Dublin, realistically probably no real difference but they certainly wouldn't be more expensive to that extent.

washman3

OMD wrote: »

The formula is bullsh1t and as I have said so often, other countries do not have house prices that follow this formula. The idea that Ireland is somehow different to all other Western countries is rubbish. A more normal formula is 16-20 times rent. Pick 18 times for average. Rent in Glanmire is €850 for a 3 bed house based on Daft today. So 850X12X18 is €183,600. Also that house looks better than the ones for rent and may get more.

Is this a vested intrest or not we are reading.?? sounds so much like the great Jim Power of Friends First when he preached about the "soft landing" and has now completely changed his tune.!!
For a start anyone (especially a family) willing to pay €850/month for a 3 bed semi in Glanmire needs serious help, forget Daft.ie (even the name is ironic) Just look at what an €850/month mortgage can actually BUY now and what it will buy in 1 or 2 yrs.
Secondly we can actually throw all our formulas in the bin now,i was just using McWilliams because he was correct 10yrs ago,correct 5yrs ago and i've no reason to believe he's wrong now. in case you have'nt noticed Ireland is now run by IMF/ECB.
Have to agree totally with mari2222 comments,who has obviously followed this very closely and clearly has no vested intrest.

OMD

johndaman66 wrote: »

I would imagine mari2222's figures certainly do take the cost of land into account.

Well you would imagine wrong

Treehouse72

OMD wrote: »

How many countries in the western world have property prices 15 times annual rent? 100%? 50%? 25%? 10%? or is it about 1%? Because unless it Can be applied to 50% of countries it doesn't really hold water.

Based on Daft today, average asking rent for a 3 bed house in Glenmire is €850. So 850X12= €10,200. Buying this house for €200,000 would imply a return of just over 5% which would be ok. I am not saying the OP should buy it but the asking price does not seem as over the top as people are implying.

Edit:
Looking at figures across Europe you can see the 15 year rule doesn't apply and the 14 year one certainly doesn't.
http://www.globalpropertyguide.com/Europe/price-rent-ratio/
Out of 35 countries looked at only 4 have prices 15 times annual rent.

Same applies to rental yields:
http://www.globalpropertyguide.com/Europe/rent-yields/

Likewise USA & Canada
http://www.globalpropertyguide.com/North-America/rent-yields/

And even the Caribbean
http://www.globalpropertyguide.com/Caribbean/rent-yields/

OMD, I think that site pulls figures out of the air to be honest. I have never seen a reason to believe what they say. If you look for their sources for their figures, it links to their own site! They say:

What are the sources of the Guide´s price data? Can these sources be trusted?

We draw our figures from our own, in-house analysis. Our research is based on a simple yet effective method - we systematically scan web advertisements for residential property, looking at offers for sale, and offers for rent, of good (but not new) apartments.

Despite its simplicity, with care and commitment to consistency this method can produce quality results. We begin by defining key upper-end rental districts in the capital city. We take care to keep a database of where the properties are located, so as to ensure consistency in subsequent years. We carefully select appropriate price ranges. We take average prices, rejecting deviant outliers. Buyers of the full data set have access to these comparability specifications.

The data measures up well to data provided by national statistical organizations, where these are available for comparison, and usually performs better than multi-housing organization data.

http://www.globalpropertyguide.com/faq/square-metre-prices-rentals-and-yields

Not good enough. Not by a long, long way.

..................................

But let's not get hung-up or side-tracked by that debate...in general I agree with you that it's a bit silly to look for 10% yields. I like to use a nice, neutral 6% gross yield figure. That might prove to be way too low in the coming years, but it is very unlikely to prove way too high meaning it should give us a reasonable, conservative guesstimation. I also think it is the figure Ronan Lyons uses, and he's a rather conservative chap who tends to the bullish side. So it's unlikely to be a wildly OTT figure.

On that basis, based on your €850 rent figure, that gives us a €155,000 valuation. That amount happens to be about 3x an average Irish household income for 2009 of c. €56,000:

http://www.independent.ie/national-news/debts-mounting-up-after-family-incomes-shrink-euro4000-in-a-year-2437246.html

....which in turn is in line with long term traditional lending multiple for Irish mortgages. I also happens to be broadly in line with long-term trend if you go to StatusIreland's house price graph and just, by eye, look to where prices should be if there had been no bubble. All those things seem to cross-corroborate each other around the €155,000 figure, assuming Glanmire people have an "average" household income for the country and that €850 rent is sustainable....

...which leads me to this caveat: those figure I think are fair as a snapshot for Spring 2011. As it stands, today. If the country were to continue economically as it is now, then I think that's a fair guess. But I could not stand over that valuation for Spring 2014, because I think things still are going to get worse wrt disposable income, rental allowance and thus rent floors, IR's, employment, migration, firesales etc.

OMD

Treehouse72 wrote: »

OMD, I think that site pulls figures out of the air to be honest. I have never seen a reason to believe what they say. If you look for their sources for their figures, it links to their own site! They say:

http://www.globalpropertyguide.com/faq/square-metre-prices-rentals-and-yields

Not good enough. Not by a long, long way.

So show us the true figures then. It is a bit pointless saying these figures are wrong so I am going to ignore the point completely. What are the true figures for rental yield

Treehouse72 wrote: »

But let's not get hung-up or side-tracked by that debate...in general I agree with you that it's a bit silly to look for 10% yields. I like to use a nice, neutral 6% gross yield figure. That might prove to be way too low in the coming years, but it is very unlikely to prove way too high meaning it should give us a reasonable, conservative guesstimation. I also think it is the figure Ronan Lyons uses, and he's a rather conservative chap who tends to the bullish side. So it's unlikely to be a wildly OTT figure.

On that basis, based on your €850 rent figure, that gives us a €155,000 valuation. That amount happens to be about 3x an average Irish household income for 2009 of c. €56,000:

But again you are saying price should be based on 15 times anual rent. If this is a world wide formula or even Europe wide, then over the medium to long term say 20-30 years (average mortgage term) the majority of countries will average prices 15 times rent. I don't believe you but I am happy to be proved wrong. So proove it.

Treehouse72 wrote: »

...which leads me to this caveat: those figure I think are fair as a snapshot for Spring 2011. As it stands, today. If the country were to continue economically as it is now, then I think that's a fair guess. But I could not stand over that valuation for Spring 2014, because I think things still are going to get worse wrt disposable income, rental allowance and thus rent floors, IR's, employment, migration, firesales etc.

I have no problem with people feeling prices are going to fall more and indeed I believe they will as well. I have a problem with people who feel Ireland is different. International norms don't apply to us. Silly formulas can be applied to Ireland that cannot be applied to other countries. But, most of all my back really gets up when people quote that idiot former economist McWilliams whose only claim to fame is causing even more disaster to this country than Seanie Fitzpatrick.

Monty Burnz

OMD wrote: »

But, most of all my back really gets up when people quote that idiot former economist McWilliams whose only claim to fame is causing even more disaster to this country than Seanie Fitzpatrick.

That would be McWilliams, who was warning about the bubble when people like you were getting up to the gills in debt to buy property?

The same guy whose warnings would have prevented the whole disaster in the first place, had anyone in authority bothered to listen?

OMD

Monty Burnz wrote: »

That would be McWilliams, who was warning about the bubble when people like you were getting up to the gills in debt to buy property?

The same guy whose warnings would have prevented the whole disaster in the first place, had anyone in authority bothered to listen?

The guy who convinced Lenihan to bail out the banks. The guy who said Lenihan didn't want to do it but McWilliams kept him up all night to convince him. McWilliams is the guy who by his own admission (in his book) caused the bank bailout and therefore the guy who caused the country to become bankrupt.

Also I am not up to my gills in debt. I didn't listen to McW 10 years ago. I bought my house. I have a tracker of 0.75% above ECB rate. I have paid substantially less to own my house than I would have paid when rents went through the roof. Even now my mortgage is a fraction of waht people who listened to McW will have to pay. I can now avail of the PTSB offer for an extra 10% off my mortgage with my savings. And I am still getting TRS. Yeah McWilliams raelly got that one right. By the way even McWilliams did't listen to himself. He bought during the boom.

Monty Burnz

OMD wrote: »

The guy who convinced Lenihan to bail out the banks. The guy who said Lenihan didn't want to do it but McWilliams kept him up all night to convince him. McWilliams is the guy who by his own admission (in his book) caused the bank bailout and therefore the guy who caused the country to become bankrupt.

That's one way to spin it.

OMD wrote: »

Also I am not up to my gills in debt. I didn't listen to McW 10 years ago. I bought my house. I have a tracker of 0.75% above ECB rate. I have paid substantially less to own my house than I would have paid when rents went through the roof. Even now my mortgage is a fraction of waht people who listened to McW will have to pay. I can now avail of the PTSB offer for an extra 10% off my mortgage with my savings. And I am still getting TRS. Yeah McWilliams raelly got that one right. By the way even McWilliams did't listen to himself. He bought during the boom.

So you bought during the bubble. And now you are railing against falling prices? Colour me surprised!

By the way, I think McWilliams could well afford to ignore his own advice, unlike 95% of the public.

OMD

Monty Burnz wrote: »

That's one way to spin it.

So you bought during the bubble. And now you are railing against falling prices? Colour me surprised!

By the way, I think McWilliams could well afford to ignore his own advice, unlike 95% of the public.

You have some agenda here. Are you really saying McWilliams is not the one who convinced Lenihan to bail out the banks?

You have not listened to a thing I have said. I believe house prices are falling. I am not saying they have stopped falling. To judge the value of the house we are discussing here I am saying it is fair to look at average rents (as most people seem to agree). On Daft rents for 3 bed house in this area is €850 a month or just over €10,000 a year. So based on that what is a reasonable price to pay? Average yields in Ireland at present are 4% so based on average yields that house would be worth €250,000. Now I believe 4% is too low but I think 5% is more reasonable and fits with international norms. At 5% that would value the house at €200,000 which is what you would expect to pay for a house with an asking price of €220,000. However I think 18 times annual rent would give a better indication so about €180,000 would be a fairer price.

Now you disagree with this, fine but you are doing it by picking figures from your backside.

washman3

McWilliams has been and still is a thorn in the side of vasted intrests,developers,speculators and politicians alike. anyone who has read his books will know that. and anyone who read his last book will know what he really told Lenihan that night in Sept 2008. Lenihan did not do as he told him and has spent a lot of time since trying to discredit him,just as he has told us of what went on at the IMF/ECB meetings. Read that chapter of the book.!! McWilliams has no reason to lie. he has been there,done that. in today's Indo, Shane Ross strongly recommends him for 1 of Enda's 11 Seanad nominees but of course that will not happen,those positions will go to "nodding dogs" who will go along with the vested intrests in the Finance Dept. For the record,it makes no difference if he bought during the "boom" which i dont recall he ever said he did.
Typical Ireland, shoot the messenger.!!!

OMD

washman3 wrote: »

McWilliams has been and still is a thorn in the side of vasted intrests,developers,speculators and politicians alike. anyone who has read his books will know that. and anyone who read his last book will know what he really told Lenihan that night in Sept 2008. Lenihan did not do as he told him and has spent a lot of time since trying to discredit him,just as he has told us of what went on at the IMF/ECB meetings. Read that chapter of the book.!! McWilliams has no reason to lie. he has been there,done that. in today's Indo, Shane Ross strongly recommends him for 1 of Enda's 11 Seanad nominees but of course that will not happen,those positions will go to "nodding dogs" who will go along with the vested intrests in the Finance Dept. For the record,it makes no difference if he bought during the "boom" which i dont recall he ever said he did.
Typical Ireland, shoot the messenger.!!!

McWilliams is an idiot. If you cannot see that I am not going to convince you. What he is saying about the bailout is that he convinced Lenihan to do it but told him not to renew it.

But this is getting way off the point. Why don't you give us some figures to back up your points. Show us the countries around the world that have prices 14 times rent. I'll help you out there are none (or next to none). Now give us your reasons (with links) why you think Ireland is different.

Treehouse72

OMD wrote: »

So show us the true figures then. It is a bit pointless saying these figures are wrong so I am going to ignore the point completely. What are the true figures for rental yield

Er, I didn't ignore it completely: I stated 6% as a reasonable figure to work off.

Ronan Lyons uses 5% - 6%:

http://www.ronanlyons.com/2009/06/19/yields-on-residential-property-point-to-scale-of-the-challenge/
http://www.ronanlyons.com/2010/05/25/rents-stabilise-during-the-first-months-of-2010/

Yields in London - where property prices are certain to rise over time - are 5.38% for December 2010, and 5.35% for Scotland:

http://www.findaproperty.com/rental-index.aspx

The same article says that Paragon Mortgages make the UK average yield on BTL is 6.4% (and up to 7.4% in the UK Midlands).

This crowd - londonpropertywatch.co.uk - show that 6% isn't by any means out of line:

http://www.londonpropertywatch.co.uk/average_rental_yield.html

ProperyWire says that in the UK's university towns, yield is close on 10% for 2008:

http://www.propertywire.com/news/europe/rental-yields-possible-uk-cities-200808221510.html

This Sunday Times article talks about UK yields in a range of 4.4% to 7.3% depending on property type:

http://property.timesonline.co.uk/tol/life_and_style/property/article6995740.ece

I haven't a clue what "true" yields should be, but in this craphole of a country with property prices tanking, I doubt there is a serious investor out there willing to take less than 6%. Even allowing for an ownership premium, I feel very comfortable working off a 6% yield for valuing Irish property.

washman3

time to take off the blinkers man.;)
i have no intention of doing any research figures/formulas and presenting them to you. take a look around you.! like i said previously formulas and figures can go in the bin,we are not in normal times now. As the "great" Ben Dunne always says "the value of something is what you get when you HAVE to sell it" not what people think it might be!!
we have reached that stage, the IMF are putting the squeeze on.
Its a nice evening, go for a walk to clear the head.:)

johndaman66

OMD wrote: »

Well you would imagine wrong

Back up your statement with facts and figures please

Idbatterim

op why dont you just rent? with the current uncertainty I think buying now is possibly more mad than ever. At least in the boom, ignorance was an excuse! the situation here seems to be getting worse by the day! was reading in indo today, that a poll was carried out 47% i think it was, of people thought prices had hit the bottom!They way prices overshot on way up, Im sure they will overshoot on way down... As a buyer you shouldnt care about what a "fair" price is, just about how cheap they will potentially become! If buyers act together and wait the prices will keep on dropping, exactly the opposite of situation during boom with buyers climbing over each other for any property, thus increasing the prices... supply and demand!

washman3

Idbatterim wrote: »

op why dont you just rent? with the current uncertainty I think buying now is possibly more mad than ever. At least in the boom, ignorance was an excuse! the situation here seems to be getting worse by the day! was reading in indo today, that a poll was carried out 47% i think it was, of people thought prices had hit the bottom!They way prices overshot on way up, Im sure they will overshoot on way down... As a buyer you shouldnt care about what a "fair" price is, just about how cheap they will potentially become! If buyers act together and wait the prices will keep on dropping, exactly the opposite of situation during boom with buyers climbing over each other for any property, thus increasing the prices... supply and demand!

good to hear an intelligent comment without any bluster.!!:)

gigino

Treehouse72 wrote: »

....which in turn is in line with long term traditional lending multiple for Irish mortgages. I also happens to be broadly in line with long-term trend if you go to StatusIreland's house price graph and just, by eye, look to where prices should be if there had been no bubble. All those things seem to cross-corroborate each other around the €155,000 figure, assuming Glanmire people have an "average" household income for the country and that €850 rent is sustainable....

...which leads me to this caveat: those figure I think are fair as a snapshot for Spring 2011. As it stands, today. If the country were to continue economically as it is now, then I think that's a fair guess. But I could not stand over that valuation for Spring 2014, because I think things still are going to get worse wrt disposable income, rental allowance and thus rent floors, IR's, employment, migration, firesales etc.

good point, well said. With interest rates, property tax etc set to increase, there is unfortunately only one way property can go in the next few years...and thats down, thanks to the absurdly bad way the country has been run eapecially 2000 to 2008. There will be a lot of pain for a lot of people unfortunately. The sad thing is that our grandchildren will still be paying for the mess....while they send money home from Beijing and eat Irish takeaways + sing songs in Irish pubs there.

OMD

Treehouse72 wrote: »

Er, I didn't ignore it completely: I stated 6% as a reasonable figure to work off.

Ronan Lyons uses 5% - 6%:

http://www.ronanlyons.com/2009/06/19/yields-on-residential-property-point-to-scale-of-the-challenge/
http://www.ronanlyons.com/2010/05/25/rents-stabilise-during-the-first-months-of-2010/

In the example you linked Ronan Lyons uses 17.4 times anual rent. ie Rent X12X17.4 I was using rentX12X18. It is pretty much the same thing but I have no problem using the lower figure. It's all guesswork anyway.

Treehouse72 wrote: »

Yields in London - where property prices are certain to rise over time - are 5.38% for December 2010, and 5.35% for Scotland:

http://www.findaproperty.com/rental-index.aspx

The same article says that Paragon Mortgages make the UK average yield on BTL is 6.4% (and up to 7.4% in the UK Midlands).

This crowd - londonpropertywatch.co.uk - show that 6% isn't by any means out of line:

http://www.londonpropertywatch.co.uk/average_rental_yield.html

ProperyWire says that in the UK's university towns, yield is close on 10% for 2008:

http://www.propertywire.com/news/europe/rental-yields-possible-uk-cities-200808221510.html

This Sunday Times article talks about UK yields in a range of 4.4% to 7.3% depending on property type:

http://property.timesonline.co.uk/tol/life_and_style/property/article6995740.ece

I haven't a clue what "true" yields should be, but in this craphole of a country with property prices tanking, I doubt there is a serious investor out there willing to take less than 6%. Even allowing for an ownership premium, I feel very comfortable working off a 6% yield for valuing Irish property.

You said my links to property yields did not stand up to scrutiny. These figures you linked certainly don't. Anyway all they show is some areas of UK have yields above 6%. That is pretty obvious. I mean some parts of Ireland have yields above 6%. All of inner city Dublin is averaging about that now. My point was how valid is it as a rule for valuing property? Average property in UK does not follow this rule. Average property throughout Europe does not follow this rule.

Anyway Treehouse you and I are not too far away on this property. You were saying you would value it at around €155,000 based on yield of 6%(or €168,000 if somehow this was the average house in Ireland.). My figure came to €180,000 based on 18 times annual rent. Thank you for taking the trouble to go through the figures rather than simply spout nonsense as others have done.

OMD

johndaman66 wrote: »

Back up your statement with facts and figures please

What facts & figures. It is rebuild price

spockety

Based on the recent Allsops auction, you really should be looking at yields of around 9% in the current market.


:eek:

RATM

spockety wrote: »

Based on the recent Allsops auction, you really should be looking at yields of around 9% in the current market.


:eek:

Too right. You'd need a minimum of 9% in the current market to cover an investors risk against inevitable ECB interest rate hikes. It's just not worth an investors while getting back into property at the moment, especially when the likes of Apple are announcing growth in profits of 20-25% nearly every 3 months at this stage.

I know that calculation used in the thread is used by a lot of people and in 'normal' times it may very well stack up, at least to some degree without having to resort to historical financial data, predictive modelling, etc. But to be honest I don't feel we are in 'normal times', in fact relatively speaking there hasn't been normality in the Irish economy since around about 1999.

I declined taking as much notice of rental yields as an indicator of house value about 6 months ago as I reckon the market is off kilter in this area. But what I instead follow is unemployment / Live Register figures which are still staggeringly high at 14.7%. When you add in all the various training schemes that hide the true figure I reckon its in the ball park of 18-20% unemployment. And as far as I know no economy has ever come out of a property depression so long as 1 in every 5 people of working age can't find work. I don't see prices stabilising one iota until the unemployment crisis is solved and this 'Jobs Initiative' being announced tomorrow is clearly just a false flag operation so FG/Lab can claim at the next election that they did something about it.

johndaman66

OMD wrote: »

What facts & figures. It is rebuild price

Well your as brazing as to make a statement that I'm automatically incorrect but all the same you have not proved as such. I'd like to see cold hard facts to back up your statement please? The onus is on you my friend.

washman3

RATM wrote: »

Too right. You'd need a minimum of 9% in the current market to cover an investors risk against inevitable ECB interest rate hikes. It's just not worth an investors while getting back into property at the moment, especially when the likes of Apple are announcing growth in profits of 20-25% nearly every 3 months at this stage.

I know that calculation used in the thread is used by a lot of people and in 'normal' times it may very well stack up, at least to some degree without having to resort to historical financial data, predictive modelling, etc. But to be honest I don't feel we are in 'normal times', in fact relatively speaking there hasn't been normality in the Irish economy since around about 1999.

I declined taking as much notice of rental yields as an indicator of house value about 6 months ago as I reckon the market is off kilter in this area. But what I instead follow is unemployment / Live Register figures which are still staggeringly high at 14.7%. When you add in all the various training schemes that hide the true figure I reckon its in the ball park of 18-20% unemployment. And as far as I know no economy has ever come out of a property depression so long as 1 in every 5 people of working age can't find work. I don't see prices stabilising one iota until the unemployment crisis is solved and this 'Jobs Initiative' being announced tomorrow is clearly just a false flag operation so FG/Lab can claim at the next election that they did something about it.

best quote i've read in quite some time, well done, have to agree with everything you say. actually when i offered those unemployment figures on a different thread i was slaughtered, (obviously by people with political agendas)

JamBur

I was just having a look at some of my old threads. This one gave me a chuckle. Every expert was so adamant on collapse and average house prices going to the floor. Its a pity how far in the opposite direction it has gone.