Pricing Houses/land in the country

Thespoofer

Hi

Just as the title suggests, what is the correct method to price a house or site a few miles outside the major cities for example.
I know a lot of estate type houses can be compared to 'a similar one up the road sold for such and such a price' ( this was the cause of the problem during the boom too of course ) but the type I'm trying to calculate a correct ball park figure are cottages, bungalow, sites etc, and also do ye think that these type of properties have still far to fall ?
Does the formula '3.5 x times a persons salary' even come into it with the above type properties ?
Granted there is a difference given the over supply of 'legoland houses' ( as described here recently ) and the price falls here will be a lot more but there must be a rough guide to it.

Regards

The Spoof

johndaman66

This is a subject I'd also like to see discussed further. It was a question that was raised here at least once before but I don't recall any constructive debate or input of ideas to any great extent following the initial question.

The OP raises the query of whether or not the income multiplier is a relevant or significant figure (I feel it most likely is). However, I feel that the rent multiplier formula is generally of little or no relevance in calculating the value of such properties...reason being is that there is generally a very poor or non existant rental market for such properties.

I think if supply and demand were on a pretty even footing that rebuild costs would play a significant part in determining the value of such one off builds in the countryside. However, we know that such is not the case. Rebuild costs played no part in it up to 4 or 5 odd years ago and I'm sure the converse is the case now. Also, rebuild costs do not take into account the value of a patch of land as against a patch of land the same size in a different location...As such my hypothesis probably raises more questions than answers.

There is no doubt in my mind that all other things being equal there is healthy demand for such property. I value my privacy and owning a house that was not build to accommodate the masses. The next person is probably going to call me a hermit with regards my frame of mind but we all have differing outlooks I suppose.

Balmed Out

Its a very difficult question to answer and really depends on the location. Im living between clonakilty and bandon in county cork and looking at the local situation its really impossible to say. There may be 70 houses fitting that bill in the wider area with only one sale every 6 months and asking prices that dont seem to be coming down to a reasonable level. However there are differences depending on whether a property is on the city side of each town and whether its somewhat coastal or moving more inland. Most houses seem to have asking prices plucked from the air and none off them seem to realise how expensive they are compared to other areas of the country.
People seem to think that houses should be priced at levels corresponding to the city which is a bit of a joke considering supply demand etc.

I think the only way to gauge is when there has been a significant level of activity for at least 6 months and to gauge by what other people have paid if your able to find out. No activity has little to do with bank mortgages and lots to do with a lack of value. Dont let yourself be rushed, renting a home makes a lot more sense and probably will for a long time to come.
I know most of us want someplace that we can call our own and feel free to decorate etc etc anyway we want. I first looked into buying 12 years ago and waited impatiently for the bubble to burst and am waiting even more impatiently for it to deflate. Relax though because its better to rent another 3 years then to spend the totality of your salary in that time on an overpriced house.

the_syco

The income multiplier is how much the bank will give to the customer.

The price of a house is up to how much someone will pay for it. Supply and demand dictates the price.

In saying that, the amount someone can get for a house is affected by how much someone else can get a mortgage for. But as we don't live in communist Russia, peoples wages differ, and thus some people will be able to afford higher mortgages than others.

Thus if the house is nice enough, someone may go for it.

The_Conductor

It used to be commonplace to use a rental multiplier as a guide for pricing property. Aka- as a rule, it used to be the case that any given property was worth 95-100 times its monthly rent. So- a property that was generating EUR1000 a month- had a headline pricetag of EUR100k (and so on). This neat little way of calculating prices- had the benefit of automatically taking location into account- i.e. somewhere with less demand, generated less rent, and was therefore worth less.

The US measure (according to the Economist) is 90 times monthly rent- we were always a little ahead of this- based on population densities etc.

By this measure- all our housing units are at least double what they should be at......... Meanwhile rents look set to fall significantly with the across the board deflator thats being proposed by Finance for all RA and RS schemes......

Interesting times.......

Snakeblood

smccarrick wrote: »

It used to be commonplace to use a rental multiplier as a guide for pricing property. Aka- as a rule, it used to be the case that any given property was worth 95-100 times its monthly rent. So- a property that was generating EUR1000 a month- had a headline pricetag of EUR100k (and so on). This neat little way of calculating prices- had the benefit of automatically taking location into account- i.e. somewhere with less demand, generated less rent, and was therefore worth less.

The US measure (according to the Economist) is 90 times monthly rent- we were always a little ahead of this- based on population densities etc.

By this measure- all our housing units are at least double what they should be at......... Meanwhile rents look set to fall significantly with the across the board deflator thats being proposed by Finance for all RA and RS schemes......

Interesting times.......

Is there a link to anyone making noises about the reduction proposed by Finance? I mean, I've seen people on the Propertypin and elsewhere talking about it, but I've not seen anyone from Finance mention it. I think it'd be a good idea, like.

The_Conductor

Snakeblood wrote: »

Is there a link to anyone making noises about the reduction proposed by Finance? I mean, I've seen people on the Propertypin and elsewhere talking about it, but I've not seen anyone from Finance mention it. I think it'd be a good idea, like.

I don't think there is anything official out there- it was the case during the boom that an across the board 'inflator' was applied to all budget subheads- and plans were made accordingly. The current noises are about the levels of a deflator that might be applied to the different budget subheads- not the existence of a proposed deflator- but at what level it might be set (and what the effects of different levels of cuts might be on provision of services)......

I don't think there will be anything officially mentioned, before the estimates.

Thespoofer

In response to Johndaman66, I think the rebuild costs + land price are probably the way to go with it alright. I'm not too sure on the prices per sq ft to build these days, I've heard local builders charging approx ( € 70/ft2 ) ( I can vaguely remember ) and this guy really is top of his game, very particular.
You mentioned people might refer to you as a hermit, well I would eventually like to have a place a little bit out for my family and I ( not too far though ) and too would like a little privacy.

The one thing which would concern me a little is I hope a '2 tier' market does not develop, meaning houses for the masses end up dirt cheap and the ones I'm referring to still out of reach to the majority. Granted they probably will and deservedly so command a higher premium for what you get ( privacy, patch of land, etc ) but hopefully not way too out of reach.

Godge

smccarrick wrote: »

I don't think there is anything official out there- it was the case during the boom that an across the board 'inflator' was applied to all budget subheads- and plans were made accordingly. The current noises are about the levels of a deflator that might be applied to the different budget subheads- not the existence of a proposed deflator- but at what level it might be set (and what the effects of different levels of cuts might be on provision of services)......

I don't think there will be anything officially mentioned, before the estimates.

I agree with you that there will be a general deflator.

Labour have promised not to cut social welfare rates but there has been a promise made to the EU/IMF that the social welfare bill will be cut. While you cannot cut the fixed rates under that promise, you might be able to cut the fringe benefits and/or change rules/entitlements. Options include:

- cut rent allowance/cut mortgage support
- tax child benefit
- tax all social welfare payments
- incorporate benefits (free travel, medical card, fuel allowance etc.) into the rates
- means test child benefit
- remove some benefits from some
- don't pay carers allowance to those on social welfare
- stricter rules including removing those not seeking work
- reduce payment of single parents allowance e.g. not pay past a certain age

I am sure there are others that finance will think of but rather than cut the rates, it is things like the above that will happen in December's budget.