Property - down, down; how long until dead-cat bounce?

Dead cats don't bounce out here in the bogs, they just leave a cat shaped impression!

bnt

Some economics researchers have had a go at calculating the "fundamental" house prices in various countries, the prices houses would have been if not for irrational factors. It's not an exact science, and they aren't claiming that it is, but it does explain a lot, I think. The results are reported here.

The chart for Ireland is scary, and, if accurate, shows that prices have some way to go: down. Folks saying "prices are about to rise" don't appear to "get" just how bad the "property bubble" was in Ireland, and the way it sucked the life out of the rest of the economy.

One of the principals of house building is that the houses are built at a cost that is realistic for buyers to be able to afford to live in them.

That principal was thrown out the window in the late 1990's and people were allowed to borrow more than was they really should have, this meant that much of the housing was way overspeced relative to the incomes of the mortgage holders. Or for the unfortunate, the land a cheaply built house was built on was way overpriced!

Many of these houses will be worth significantly less than their original build costs, simply because todays buyers will have no chance to raise such a large mortgage.

Any dead-cat bounce will be from cash buyers snapping up "bargains".

Personally, I believe that a significant percentage of rural "mcmansions" are effectively worthless because of their remote location, the rising cost of fuel will continue to make living in remote places more and more expensive for commuters.

PS Oil prices have more than quadrupled since 2000 and could easily double again in the next five years!

OfflerCrocGod

bnt wrote: »

Some economics researchers have had a go at calculating the "fundamental" house prices in various countries, the prices houses would have been if not for irrational factors. It's not an exact science, and they aren't claiming that it is, but it does explain a lot, I think. The results are reported here.

The chart for Ireland is scary, and, if accurate, shows that prices have some way to go: down. Folks saying "prices are about to rise" don't appear to "get" just how bad the "property bubble" was in Ireland, and the way it sucked the life out of the rest of the economy.

This is a working link by the way. The chart implies another 16% drop from when the data ends, it's not clear when it ends but I would guess it's up to 2011 Q3, we have had a ~8% drop since then. So another 10% drop would bring it down to 'level', at least according to the chart.

There are of course multiple ways the two lines can meet, one is falling house prices the other is of course higher rental yields. From what I can tell rent is currently quite stable (or some very small increases) in Dublin so I would expect most of the movement from price falls.

The total fall implied would jive with the prices paid at the Allsop auctions, usually people pay in cash and people who afford to pay in cash don't tend to have that much money lying around because they are fools.

OfflerCrocGod

Messi54 wrote: »

Property prices won't hit bottom for at least another 2-3 years. Currently dropping by 15-20% per year. Predict at least 15% drop in 2012, followed by 7-10% in 2013, 5% in 2014. Might break even in 2015. Price crash will accelerate in the summer after house price register is released showing actual prices, not what estate agents tell everyone. Towards end of 2012 price drops might slow down due to people buying before Mortgage Interest Relief expires but in Jan/feb 2013 there will be a huge crash again.
Think it will bottom out with standard 3 bed semi detached outside Dublin worth E80,000 - E100,000. In Dublin a 2 bed apartment in good area on southside will be worth about the same. With property taxes and other charges coming in, cant see value of studios/one room apartments staying above E50,000 - E60,000 even in good areas in Dublin. There is a reason banks will only give 75% mortgages on one bed apartments - they're sure they will drop at least that much more. Any thoughts regarding musings?

I think those figures are below replacement cost so I could not see those prices lasting long, if in fact they would ever materialize. I am all for low house prices because I think property wealth is dead wealth but I can't fathom those low prices from a logical standpoint. Median household income of about €42,000 would imply a 3 bed semi-de to be only 2 times median household income. That's amazing affordability and would make Ireland one of the most affordable housing markets in the world. Don't get me wrong I think that would be a huge benefit for Ireland, especially it's youth. I just can't see that level being hit.

At around 3 times you may have more support so about €120,000 or thereabouts would be more reasonable.

Apartments for €50,000 is a multiple slightly above 1, you're basically giving housing away to the median household. You can achieve those prices at distressed auctions but they are not sustainable and I would class them as a steal.

OfflerCrocGod

Rabidlamb wrote: »

If this dead cat does show a flicker of life NAMA will flood the market & reverse the trend inside a few months.
I'm still waiting for the slow fluffy soft landing, 80% from peak.
How far did Japan drop, 90% ????.

Japan. Ireland is no Japan we would have to seriously set out to kill our housing market to achieve what Japan did.

CSO wrote:

Ireland’s population has continued to grow strongly since 2006, increasing by 348,404 to 4,588,252, and that the total number of non-Irish nationals has increased by 124,624 persons or 29.7 per cent from 419,733 to 544,357.

Ireland is not even close to being a Japan. We can produce population growth that most other developed countries would give their right arm for while undergoing one of the deepest, most severe recessions of any economy in the last few decades.

Don't look in the rear view mirror for an indication of the future of our housing market look at the future.
The future is full of more Irish people...and also far fewer new homes then we may expect.

This is simply not sustainable.

Homebond said just 45 new homes were registered across the country last month, down from 72 in January last year.

No new homes at all were registered in Dublin.

You overshoot on the way up and you overshoot on the way down...

OfflerCrocGod

OfflerCrocGod wrote: »

I think those figures are below replacement cost so I could not see those prices lasting long, if in fact they would ever materialize. I am all for low house prices because I think property wealth is dead wealth but I can't fathom those low prices from a logical standpoint. Median household income of about €42,000 would imply a 3 bed semi-de to be only 2 times median household income. That's amazing affordability and would make Ireland one of the most affordable housing markets in the world. Don't get me wrong I think that would be a huge benefit for Ireland, especially it's youth. I just can't see that level being hit.

At around 3 times you may have more support so about €120,000 or thereabouts would be more reasonable.

Apartments for €50,000 is a multiple slightly above 1, you're basically giving housing away to the median household. You can achieve those prices at distressed auctions but they are not sustainable and I would class them as a steal.

I don't think that it's a good idea to focus on the median income anymore, mainly because of the recent increases in taxation. Disposable income has declined quite dramatically over recent years as the cost of everyday goods and services have risen relative to gross incomes plus of course all the extra taxation & charges.

While the average punter's income remains depressed so will the average house price, the potential owners have to have the income before they can buy the house, house prices will fall until people can afford to buy.

OfflerCrocGod

OfflerCrocGod wrote: »

Japan. Ireland is no Japan we would have to seriously set out to kill our housing market to achieve what Japan did.



Ireland is not even close to being a Japan. We can produce population growth that most other developed countries would give their right arm for while undergoing one of the deepest, most severe recessions of any economy in the last few decades.

Don't look in the rear view mirror for an indication of the future of our housing market look at the future.
The future is full of more Irish people...and also far fewer new homes then we may expect.

This is simply not sustainable.



You overshoot on the way up and you overshoot on the way down...

Don't forget that the main problem is the fact that we have far too many houses built in the wrong places and a relatively immobile population due to many people being in houses in the wrong places.

These people are "trapped" because their current houses are unsellable due to their location and are nearly all in negative equity, until the banks bow to the inevitable and allow partial defaults and write off the negative portion of the mortgages these people will remain stuck.

Cities like Dublin really need new decent urban housing so commuters can live in the same place they work, commuting is such a large (and growing) drain on their income. Too many flats and not enough family homes were built.

Looking at the stats from the census (robbed from another forum) there's still a lot of slack in Dublin, meaning that more falls in prices are likely.

Dublin ( all councils)
A Occupied by usual resident(s) of the household (Number) 466,461
B Occupied by visitors only (Number) 2,982
C Unoccupied - residents temporarily absent (Number) 14,515
D Unoccupied - vacant house (Number) 17,597
E Unoccupied - vacant flat (Number) 25,333
F Unoccupied - vacant holiday home (Number) 777
G Total housing stock ( A+B+C+D+E+F ) (Number) 527,665
Vacancy rate (D+E+F) / G (%) 8.3

Dublin City
A Occupied by usual resident(s) of the household (Number) 207,847
B Occupied by visitors only (Number) 2,073
C Unoccupied - residents temporarily absent (Number) 7,120
D Unoccupied - vacant house (Number) 7,995
E Unoccupied - vacant flat (Number) 16,321
F Unoccupied - vacant holiday home (Number) 322
G Total housing stock ( A+B+C+D+E+F ) (Number) 241,678
Vacancy rate (D+E+F) / G (%) 10.2

ToddyDoody

I'm sure there's lots of interesting posts in this thread. Today i stopped in front of an estate agents and was genuinely suprised at how cheap some of the properties in galway were (considering how ridiculously expensive they used to be) in saying that, they're only cheap if you have or can get the money. (no small matter these days) which leads me to ask, niavely i'm sure, is there no stabilizing mechanism for property prices? Having prices swing so wildly is no way to run a market of any description. To me the property market is, and has been, simply out of control for a long time. Less a market, more a property casino.

ToddyDoody

ToddyDoody wrote: »

I'm sure there's lots of interesting posts in this thread. Today i stopped in front of an estate agents and was genuinely suprised at how cheap some of the properties in galway were (considering how ridiculously expensive they used to be) in saying that, they're only cheap if you have or can get the money. (no small matter these days) which leads me to ask, niavely i'm sure, is there no stabilizing mechanism for property prices? Having prices swing so wildly is no way to run a market of any description. To me the property market is, and has been, simply out of control for a long time. Less a market, more a property casino.

Yes, by regulating the banks to limit the amount of money available to lend!

A financial system that is utterly dependent on growth to function has been creating asset price bubbles in the (failing) hope that it lead to further growth for the infinite future.

Problem is, we live in a world with real hard limits and those limits have been reached! Just imagine a tree trying to grow in a flower pot!

grindle

ToddyDoody wrote: »

...which leads me to ask, niavely i'm sure, is there no stabilizing mechanism for property prices?

The only stabilising mechanism is an increased knowledge of economics, value, and a lack of greed (either on the part of developers, speculators, or the understandably numbers-obsessed nature of a politician).
So no, no true stabilising mechanism, just a blind (impossibly unlikely) hope that all these factors won't play out the same way again...
We sure do love pyramid schemes in this country though.
Luckily for the hardcore gamblers, the house took most of their money this time, so the next should either be much less pronounced, or just as bad, but very far away.

shangri la

saa wrote: »

Yeah funny how shocked people are when they discover their "investments" can do down as well as up or in this implode, my partner wants to get a mortgage to live somewhere nicer but both our jobs are freelance and not steady, I've seen plenty of nice gaffs for around the 200 mark, some for 170 ish that you'd need to put money into anyway and some for 90 k that you wouldn't live in (area wise) if you paid me all in Dublin suburbia that is.

can you give a link to a nice dublin gaf for 200k?

grindle

shangri la wrote: »

can you give a link to a nice dublin gaf for 200k?

Here.

KyussBishop

Interesting article on housing bubbles from a blog I read regularly; take a moment just to look at the graphs in the article (including Ireland's), quite interesting:
http://www.nakedcapitalism.com/2012/03/housing-bubbles-house-prices-and-interest-rates.html

So yea, I would judge just from those graphs alone, houses are still excessively overvalued (duh I guess) and have a long way to drop still.

OfflerCrocGod

Deleted User wrote: »

I don't think that it's a good idea to focus on the median income anymore, mainly because of the recent increases in taxation. Disposable income has declined quite dramatically over recent years as the cost of everyday goods and services have risen relative to gross incomes plus of course all the extra taxation & charges.

While the average punter's income remains depressed so will the average house price, the potential owners have to have the income before they can buy the house, house prices will fall until people can afford to buy.

'Equivalised disposable income' is higher in 2010 then in 2006, Disposable Income Per Person was higher in 2009 then 2006. Median gross household income is the norm by which house affordability is measured and it will continue to be. This time it isn't different, Ireland is no special case.

The average punter is no longer so free with his money or his credit, and long may that continue! I am not calling for a bounce higher in house prices just a stop in price falls; house prices and incomes can both stay flat, nothing impossible with that combination. House prices will fall until it makes no sense to sell, if a bank account yields half what renting the house yields then you would be stupid not to rent. I can offer €1,000 for a new Ferrari, that does not mean the dealer has to accept.

gurramok

grindle wrote: »

Here.

Who wants to live in Balbriggan? Note want, not have to.

Can you provide one in the burbs of Dublin that is not a rough area? There are a handful but curious what you would post

OfflerCrocGod

Deleted User wrote: »

Don't forget that the main problem is the fact that we have far too many houses built in the wrong places

This is a point I was making earlier, houses in the middle of a bog in the middle of nowhere do not affect house prices. You can buy houses in Detroit for a few thousand dollars, do you think that will depressed Dublin house prices? Of course not.

Deleted User wrote: »

and a relatively immobile population due to many people being in houses in the wrong places.

These people are "trapped" because their current houses are unsellable due to their location and are nearly all in negative equity, until the banks bow to the inevitable and allow partial defaults and write off the negative portion of the mortgages these people will remain stuck.

Negative equity mortgages are now being offered, and you can also move your tracker mortgage too. While I would prefer a sane bankruptcy system in this country we won't ever be seeing one so these schemes are the best we have, they should help get some flow going.

Deleted User wrote: »

Cities like Dublin really need new decent urban housing so commuters can live in the same place they work, commuting is such a large (and growing) drain on their income. Too many flats and not enough family homes were built.

So we will have total house prices collapse continuing for years while at the same time having a shortage of sensible housing...People need to live somewhere and if no new houses are being build they will chose what they must.

Deleted User wrote: »

Looking at the stats from the census (robbed from another forum) there's still a lot of slack in Dublin, meaning that more falls in prices are likely.

The vacancy rate is slightly down in the last 5 years.

CSO wrote:

Almost 290,000 homes were vacant on
Census night. As the total housing stock
grew to almost 2 million homes, this gives a
vacancy rate of 14.5 percent.
Although the number of vacant homes rose
by 23,000 since 2006, the vacancy rate
declined slightly by 0.5 percent.
Leitrim had the highest overall vacancy rate
with over 30 percent of homes vacant.
Donegal was next with a vacancy rate of
29%. South Dublin had a vacancy rate of
5%, the lowest in the country.

Again I don't think people will commute from their holiday homes in Leitrim to work in Dublin. With the total death of new housing, obsolescence destroying housing and a growing population we may see a squeeze in a few years time...

OfflerCrocGod

KyussBishop wrote: »

Interesting article on housing bubbles from a blog I read regularly; take a moment just to look at the graphs in the article (including Ireland's), quite interesting:
http://www.nakedcapitalism.com/2012/03/housing-bubbles-house-prices-and-interest-rates.html

So yea, I would judge just from those graphs alone, houses are still excessively overvalued (duh I guess) and have a long way to drop still.

As I said about 16% of which we have taken a drop of ~8% already.

OfflerCrocGod

grindle wrote: »

The only stabilising mechanism is an increased knowledge of economics, value, and a lack of greed (either on the part of developers, speculators, or the understandably numbers-obsessed nature of a politician).
So no, no true stabilising mechanism, just a blind (impossibly unlikely) hope that all these factors won't play out the same way again...
We sure do love pyramid schemes in this country though.
Luckily for the hardcore gamblers, the house took most of their money this time, so the next should either be much less pronounced, or just as bad, but very far away.

Actually the mechanism is increased supply, the problem with Ireland (or one of the problems) was the restrictive planning regime which allowed the initial growth in demand to be catered to by increase in prices instead of an increase in supply. If supply had grown fast enough that initial spurt of prices would have not happened. That would have meant the speculators and hedgers would have not had a reason to start piling into the housing market. They will only pile in if there is substantial house prices positive momentum. Enough supply would have restricted that. Leverage limits are good but even better is a planning system that allows supply to quickly respond to demand. Housing bubbles tend to only occur in countries with restrictive planning policies.

The economic and social impacts of restrictive
land use regulation were also examined by Demographia International Housing Affordability Survey co-author
Wendell Cox in research (The Housing Crash and Smart Growth) published by the National Center for
Policy Analysis. Much of the housing value increase in the bubble occurred in markets with more restrictive
land use regulation. Much more importantly, however, 94 percent of the major metropolitan area house value
losses in the United States occurred in these markets. It was, of course these losses, concentrated in areas
with more restrictive land use regulation that precipitated the Great Financial Crisis. The research noted that
if housing value losses in all markets had been at the rate of major metropolitan areas with less restrictive
regulation, the intensity of the losses would have been cut by three-quarters. This would have made the Great
Financial Crisis less intense and might have permitted it to be avoided altogether

Allow me to flood the market with housing and I will pop any bubble before it forms.

Monty Burnz

OfflerCrocGod wrote: »

Japan. Ireland is no Japan we would have to seriously set out to kill our housing market to achieve what Japan did.



Ireland is not even close to being a Japan. We can produce population growth that most other developed countries would give their right arm for while undergoing one of the deepest, most severe recessions of any economy in the last few decades.

Don't look in the rear view mirror for an indication of the future of our housing market look at the future.
The future is full of more Irish people...and also far fewer new homes then we may expect.

This is simply not sustainable.



You overshoot on the way up and you overshoot on the way down...

Yup. And the overshoot has yet to even begin.

Monty Burnz

ToddyDoody wrote: »

I'm sure there's lots of interesting posts in this thread. Today i stopped in front of an estate agents and was genuinely suprised at how cheap some of the properties in galway were (considering how ridiculously expensive they used to be)

This is your mistake, right here. The bubble price is meaningless - a lie, a fiction. This should take no part in how you value a property.

If I offered you a Mars bar for a thousand euro, it's clearly a rip-off. But if I cut the price to just 400 euro, it's not suddenly a bargain, is it?

Dismiss the bubble price from your mind: just consider how much time and effort each thousand euro takes you to earn and save in an environment of rising costs and taxes. Work up to the price, not down from the bubble make-believe prices that ruined us.

bnt

Monty Burnz wrote: »

Yup. And the overshoot has yet to even begin.

If you want to see an overshoot, try Florida for an idea of just how bad it can get. A 14-year-old schoolgirl has been in the news recently after she bought her own house for $12,000 (€9,000).

https://www.youtube.com/watch?v=GTTczC27fko

The excellent NPR Podcast Planet Money had more details. She raised half the money through selling off the contents of foreclosed houses, some (not all) of which were bought by her mother, and other things people throw away. She's not legally allowed to own a house at her age, so her mother is the owner of record and loaned her half the money. But it's her house, and she's already making money from tenants - and there's no mortgage to service.

RiseToTheTop

My uncle paid £2000 for his house back in 1976. 3 bedroom house which would have been over €250,000 during the boom.

I want prices to be back down to that level. (in line with inflation.)

donegal_road

RiseToTheTop wrote: »

My uncle paid £2000 for his house back in 1976. 3 bedroom house which would have been over €250,000 during the boom.

I want prices to be back down to that level. (in line with inflation.)

the other thing is that most people didn't do 1 very simple calculation when they were signing up for a mortgage during the great delusion..

€250k borrowed @ 5% for 25 years = €438,442 total repayment

How is that good value? who ever said renting was dead money? :pac:

OfflerCrocGod

Pretty much what I said. The way things are going we will have a serious surprise in a few years time. Babies, they'll be our salvation.

Robdude

Prices are still way to high for me to consider paying them.

I feel bad for those of you with big mortgages, but not bad enough to take them off your hands

Dubit10

Still crazy asking prices around tbh. I noticed a three bed semi in stillorgan asking price 330,000.:D The delusion out there never fails to amuse me.

gurramok

OfflerCrocGod wrote: »

Pretty much what I said. The way things are going we will have a serious surprise in a few years time. Babies, they'll be our salvation.

Will they have jobs in 25-30years time and have a willingness to buy instead of rent or emigrate?
We'll all be old people by then so that salvation is fairytale stuff.

gurramok

gurramok wrote: »

Will they have jobs in 25-30years time and have a willingness to buy instead of rent or emigrate?
We'll all be old people by then so that salvation is fairytale stuff.

If the changing trend of employment over the past 25 years or so is anything to go by, the only jobs left in Ireland will be in retail and agriculture, everything else will be in the far east!

Add diminishing fuel supplies to the mix and buyers will be few and far betweem.

grindle

gurramok wrote: »

Who wants to live in Balbriggan? Note want, not have to.

Can you provide one in the burbs of Dublin that is not a rough area? There are a handful but curious what you would post

I found a nice house in a middle-of-the-road part of Dublin.

Here's a crap house in an apparently nice area.

It's not like I was insinuating anybody should move anywhere.
I think anyone buying a house now needs a psychiatric evaluation, and that anybody who buys a house as a cashing-out investment should be drowned politely told that they're not helping anybody's situation, including their own.
Thought that ten years ago, think it now.
Best thing about this recession is the amount of absolute d!ckheads who've lost everything.
De-fukcing-lighted.

If you don't need to live in it, don't buy it.
If nobody else is likely to rent it off you at whatever exorbitant rate you want to charge, don't buy, or charge less.

Doc Ruby

grindle wrote: »

If you don't need to live in it, don't buy it.

What about all those people who want to rent or aren't in a position to buy? The much reviled (and often deservedly so) Irish landlord does have a legitimate role to play.

OfflerCrocGod

Dubit10 wrote: »

Still crazy asking prices around tbh. I noticed a three bed semi in stillorgan asking price 330,000.:D The delusion out there never fails to amuse me.

Asking prices are delusional but those aren't what indexes are based on, the CSO index is based on actual sales. I can bet you no one is getting asking prices now a days, if you want something you go in with an offer 30% below asking if it's delusional and see what response you get. If it's reasonable then 10-15% below. Those are the prices that go into the CSO index. NAMA and AIB are saying we've hit 60% drop or so and 330,000 for a three bed in stillorgan isn't a 60% drop. That person is meaningless, delusional and not selling.

OfflerCrocGod

gurramok wrote: »

Will they have jobs in 25-30years time and have a willingness to buy instead of rent or emigrate?
We'll all be old people by then so that salvation is fairytale stuff.

That's true it will be a rerun of the 1980's when everyone left the country and twenty years afterwards the country was deserted.

Utterly empty.

Apart from all the people who give us our highest population for 150 years.

Apart from them, empty.

*tumbleweed*

OfflerCrocGod

Doc Ruby wrote: »

What about all those people who want to rent or aren't in a position to buy? The much reviled (and often deservedly so) Irish landlord does have a legitimate role to play.

They've left the country, did you not get the memo?

Monty Burnz

OfflerCrocGod wrote: »

That's true it will be a rerun of the 1980's when everyone left the country and twenty years afterwards the country was deserted.

Utterly empty.

Apart from all the people who give us our highest population for 150 years.

Apart from them, empty.

*tumbleweed*

Yes, we had the demographic argument during the bubble too. Remember all those immigrants who were going to drive prices ever upwards? How did that work out again?

OfflerCrocGod

Monty Burnz wrote: »

Yes, we had the demographic argument during the bubble too. Remember all those immigrants who were going to drive prices ever upwards? How did that work out again?

I'm not saying that prices will be driven ever upwards, I'm saying that writing off house prices due to depopulation is plain silly. It's just not happening.

Prices in Ireland are now more affordable then almost all other English speaking countries except for the US. Given that US house prices will bottom this year and have been falling slower then Irish ones I think Ireland will this year become the most affordable English speaking country in the world. This is a boon to the country and I think will result in a slowdown/bottom within a year (Spring 2013?).

In London €550 will rent a *room* in a shared house and houses are easily €300,000+, at this stage you could almost buy two houses in a place like Dublin 15 for the price of one in London and get a better quality of life, don't even talk about crazy Oz or Canada (not all of it but some parts are very expensive.). Something like this is the lap of luxury compared to places I've stayed in. For almost the same money!
Things aren't as awful as you all may think.

Monty Burnz

OfflerCrocGod wrote: »

I'm not saying that prices will be driven ever upwards, I'm saying that writing off house prices due to depopulation is plain silly. It's just not happening.

Oh yeah, I agree with that. There are dozens of other perfectly good reasons to write off house prices.

OfflerCrocGod

Monty Burnz wrote: »

Oh yeah, I agree with that. There are dozens of other perfectly good reasons to write off house prices.

As everyone knows trends continue forever. Can't wait until you get paid to buy a house.

Monty Burnz

OfflerCrocGod wrote: »

As everyone knows trends continue forever.

No, they don't. But they trend years past the point where they should inflect - if you didn't notice that during the bubble, you'll never understand it now.

grindle

Doc Ruby wrote: »

What about all those people who want to rent or aren't in a position to buy? The much reviled (and often deservedly so) Irish landlord does have a legitimate role to play.

Ah yeah, thought the second half of my statement might have clarified any unidentified thoughts re: renting. I've no problem with landlords making a wage, but the scalping that was going on was unbelievable. Landlords raising the rent in line with what the mortgage would be to buy at the height when they bought it for three times less a decade ago was ridiculous.
When you look at it singularly as one person saying "well, this is happening, so I'll take advantage" you'd think "Okay, rent from someone else, it keeps the balance.", but when every single one does it, a market of choice doesn't exist anymore and it's an unspoken, crowd-sourced cabal, no better than serfdom for the middle-classes or under.
(Before anyone jumps in to say "You can't compare us to SERFS!!!", it's relative to how we live, not how THEY lived. Even the poorest council-dwelling-dwellers in Ireland can phone someone on the other side of Earth nowadays, if they save up €5. Even at our worst, in this climate, we are extremely spoilt by the futurism we live in. Like the case of the London rioter who felt owed PS3 games, but he had a PS3. That is an incredible [in the undiluted, most literal meaning] sense of entitlement).

Pottler

Annual Rent times ten. That is the golden rule of property. If it passes that test and you can afford it, buy it and rent it out. If it doesn't, pass. Regardless of short term trends, if you apply the ten times rent rule you will seldom go wrong buying property. Where it gets scowed is when people shell out €450,000 for a semi that rents for €900 a month..that's just... anyway considering the average house rents for between €650-€1250 a month, that gives you a price of €78000 - €150,000 for your average 3 bed semi. Thats the real price. The rest is hype. Don't believe the hype.:)

gurramok

OfflerCrocGod wrote: »

I'm not saying that prices will be driven ever upwards, I'm saying that writing off house prices due to depopulation is plain silly. It's just not happening.

Prices in Ireland are now more affordable then almost all other English speaking countries except for the US. Given that US house prices will bottom this year and have been falling slower then Irish ones I think Ireland will this year become the most affordable English speaking country in the world. This is a boon to the country and I think will result in a slowdown/bottom within a year (Spring 2013?

Croc, there is a flaw in your argument when comparing to the UK and US.

The UK did not build thousands of homes in the middle of nowhere with no demand, we did.

There are really 3 markets in Ireland, the Dublin market, the urban centres market(small cities\towns) and a market for middle of nowhere estates. The latter which is numerous is distorting the national house price figure of where people want to live.

Plus on immigration. Its not in this census but in 2006, it said that the vast majority of immigrants rent rather than buy, the only abnormality was British immigrants who are split down the middle on renting vs buying here. A plus side, it helps the rental market a bit but the downside to that market is the cut in Rent Supplement.

bnt

Pottler wrote: »

Annual Rent times ten. That is the golden rule of property.

That's one rule - and it assumes a lot, such as the availability of funds or a mortgage. It also assumes that you're buying to let, instead of to live in. Not everyone can be a landlord, or wants to be. Or should be - or else, who's left to do the renting?

Do people really not "get" how the "buy-to-let" boom was the main trigger for the property bubble? It wasn't the people who were buying to live in - the numbers of such people simply did not increase quickly enough to explain what happened. It was the idea that property was an "investment", a vehicle for making money off of other people.

Am I the only one bothered by the ethics of that? Driving up prices, driving up rents, and all at the expense of people like you - the only difference being that you got in there first with the money? I even heard people say "yeah, the renters will pay the mortgage, and I'll still have the house in the end"! And this is supposed to be a "Christian" country? What would "Jesus" say about that? :pac:

OfflerCrocGod

gurramok wrote: »

Croc, there is a flaw in your argument when comparing to the UK and US.

The UK did not build thousands of homes in the middle of nowhere with no demand, we did.

There are really 3 markets in Ireland, the Dublin market, the urban centres market(small cities\towns) and a market for middle of nowhere estates. The latter which is numerous is distorting the national house price figure of where people want to live.

Plus on immigration. Its not in this census but in 2006, it said that the vast majority of immigrants rent rather than buy, the only abnormality was British immigrants who are split down the middle on renting vs buying here. A plus side, it helps the rental market a bit but the downside to that market is the cut in Rent Supplement.

Yes sorry I wasn't clear those dates are my base case for Dublin, I've already mentioned that the rest of the country seems a year or more behind so that would mean a bottoming for it sometime in 2014 but frankly that's total guesswork and also utterly meaningless.

Dublin is by light years the only market that means anything in Ireland. It will lead in and out.

While I think rent supplement being cut is excellent news I don't think it will end up pushing house prices down another ~30% as some people are expecting. That would add up to almost 75% drop from peak which is probably unheard of for a countries primary city. Put that into context you would be buying a house with ~2.2 years of gross household income, that would be phenomenal.

I repeat; it's important for people to ignore asking prices as those are not the prices transactions are closing at.

As for renting instead of buying, that's the same in the UK or the US for immigrants. Someone must own the house they rent though.

I've already mentioned how little the houses that were built in stupid locations matter. They will never sell, no one will ever live in them. They mean nothing and will not be transacted on, they may end up being bulldozed over. As I said cheap houses in Detroit affect house prices in Dublin as much as cheap houses in Sligo.

Anyway we will see, Dublin is our primary city, it has a still growing population and has seen almost no house building for 2 years and this will be the third year. Yet we will see a further 30% price drop on top of the almost 60% drop. Right.

Rabidlamb

Robdude wrote: »

Prices are still way to high for me to consider paying them.

I feel bad for those of you with big mortgages, but not bad enough to take them off your hands

I bought in 2005 but it's not been as painful as some would have you believe.
Because I've a small tracker my mortgage has rarely been above 2%, couple that with increasing TRS & the burden has reduced further.
This year was the 7th on my term which should finished by the time my kids start college.
Economic cycles would suggest an inflation surge once the recovery takes hold & that aids the affordability through increased earnings.
If someone bought my house tomorrow they would pay half what I paid but would be looking at a much higher interest rate.
It would be interesting to compare the total amounts paid at the end of both terms.

Monty Burnz

OfflerCrocGod wrote: »

That would add up to almost 75% drop from peak which is probably unheard of for a countries primary city.

How far did Tokyo fall - where they didn't even need any IMF bailout?

So not unprecedented at all.

OfflerCrocGod

Monty Burnz wrote: »

How far did Tokyo fall - where they didn't even need any IMF bailout?

So not unprecedented at all.

The Japanese have been in deflation for two decades which is why they are a special case, it would be impossible for Ireland to be in deflation for so long as without our own currency we would simply default.

According to the guys who were warning about a giant housing bubble in Ireland prices have no reached fair value and are slightly overshooting. I think the US has bottomed/will bottom this year and if we follow them we need a further 15% drop before our bottom. At the speed prices are falling we could do that in one year.

Again I would urge to ignore Japan as it is an utterly crazy situation which will probably need to be resolved through a sudden large collapse in value of the Yen. Japan is not normal and Ireland is not even remotely like it.

Frankly it seems like Ireland and the US are ahead of the pack and are heading toward much healthier/sane housing markets. Now if we could only fix planning regulation so to prevent this from happening again.

Japan had a capital surplus and was a sovereign issuer of it's currency so it never had the slightest need for the IMF, we on the other hand were using Germany's currency so we needed to be bailed out once the ECB decided to put us to our knees.

It's possible that Spain may get the same treatment later this year if it's banks become too dependent on the ECB...

Robdude

Rabidlamb wrote: »

I bought in 2005 but it's not been as painful as some would have you believe.
Because I've a small tracker my mortgage has rarely been above 2%, couple that with increasing TRS & the burden has reduced further.
This year was the 7th on my term which should finished by the time my kids start college.
Economic cycles would suggest an inflation surge once the recovery takes hold & that aids the affordability through increased earnings.
If someone bought my house tomorrow they would pay half what I paid but would be looking at a much higher interest rate.
It would be interesting to compare the total amounts paid at the end of both terms.

I think there is a lot to what you are saying; a lower interest rate + higher loan can be the same or better than a higher interest rate + a smaller loan.

People like yourself who are intending to buy one house and stay there until it's paid off are probably in good shape. Who cares what the place is worth on paper if you aren't interested in selling?

For someone like me, looking at the current prices and current interest rates; with my own expectations for what I think a house is worth - I still can't fathom buying a place in Dublin for the foreseeable future.

I'll be honest and say that I haven't looked anywhere outside of Dublin, so maybe that is slanting my view.

davet82

subway wrote: »

theres a dead cat bounce coming along in the middle of this year.
we will exit 2012 higher than we started... within 6 months of starting 2013, it will be on the way back down.

cats told me in a dream

Them cats have been eerily right so far...

have they revisited you lately?