Property prices are on the way back up!

Catweasel

daltonmd wrote: »

Sorry, but the conclusion is when the CSO states:

House price increase.

It's methodolgy excludes 30% cash transactions. We don't know how much these properties sold for and that is the issue.

Leaving out cash transactions and concluding from the part information included that house prices have risen, when in actual fact that cannot be verified is wrong.

I think we need to distinguish between the conclusions you drew from the report and what the CSO actually said.

The CSO is pretty clear that about the dangers of interpretations and the scope of its report

“Residential property prices grew by 0.2% in the month of May. This compares with a decline of 1.1% recorded in April and a decline of 1.2% recorded in May of last year.”

“care should still be taken when interpreting monthly figures which may indicate short-term volatility rather than underlying change in longer term price trends.”

“Not all residential property transactions are funded by a mortgage (i.e. they are cash based) and these transactions are excluded from the scope of the index.”

http://www.cso.ie/en/media/csoie/releasespublications/documents/prices/2012/rppi_may2012.pdf


The CSO does not mention the impact that including or excluding the cash transactions would have (other than they cover in excess of 75% of stamp duty returns) but I have seen no evidence to suggest that including them would significantly impact on the overall index (other than, obviously, increasing sample size)

Snakeblood

Catweasel wrote: »

The CSO does not mention the impact that including or excluding the cash transactions would have (other than they cover in excess of 75% of stamp duty returns) but I have seen no evidence to suggest that including them would significantly impact on the overall index (other than, obviously, increasing sample size)

The issue I'd have is that generally speaking, Cash buyers are seen as being able to command lower prices for things, not just houses. There's less faffing around with banks, which is a big incentive to process a sale through cash, considering how banks are seen at the moment (not lending, changing terms of mortgage, reassessments constantly).

I haven't seen evidence that it would tip the price index down, but I can think of several reasons why it would push the price index down, and not one why a cash sale would command an increased price from someone selling a house.

daltonmd

Catweasel wrote: »

I think we need to distinguish between the conclusions you drew from the report and what the CSO actually said.

The CSO is pretty clear that about the dangers of interpretations and the scope of its report

“Residential property prices grew by 0.2% in the month of May. This compares with a decline of 1.1% recorded in April and a decline of 1.2% recorded in May of last year.”

“care should still be taken when interpreting monthly figures which may indicate short-term volatility rather than underlying change in longer term price trends.”

“Not all residential property transactions are funded by a mortgage (i.e. they are cash based) and these transactions are excluded from the scope of the index.”

http://www.cso.ie/en/media/csoie/releasespublications/documents/prices/2012/rppi_may2012.pdf


The CSO does not mention the impact that including or excluding the cash transactions would have (other than they cover in excess of 75% of stamp duty returns) but I have seen no evidence to suggest that including them would significantly impact on the overall index (other than, obviously, increasing sample size)

From the link you provided:

"Residential property prices grew by 0.2% in the month of May"

"In Dublin residential property prices rose by 0.2% in May"

"Dublin house prices increased by 0.5% in the month"
"The price of residential properties in the Rest of Ireland (i.e. excluding Dublin) rose by 0.1%"

It's not MY conclusion - it is theirs.

Let's say that 300 properties sold in Dublin in May and 200 required mortgages - the other 100 didn't. Now to conclude as they have done, that this means that "ALL" property prices have risen is wrong.

This really tells us the level of lending the banks are engaging in - not the actual sales prices and as you and I both know the media and VI's will spin this as the signs of "recovery".

Look at it another way: If the report was only based on cash transactions and that concluded that prices fell - then you wold hear the VI's screaming " But you haven't taken non cash sales into account".

Until we have the register all if this is pretty meaningless and only serves to lull more people into buying property.

gurramok

OMD wrote: »

You quoted the report. At least read the bloody thing before you comment. FFS

What is wrong with my post? It quotes the figures from the report. Enlighten us.

robd

This is a really dumb thread.

If you don't agree that the property market has turned and want to throw money at it you're part of the herd.

Lots of anecdotal (i.e. statistically irrelevant) evidence of Dads of Friends buying a place.

Best advice I can give it, wait till the Year on Year figures show an increase. Monthly figures are irrelevant in a small market with low liquidity. It's not about trying to buy at the lowest price before things go back up. If you don't understand why (I already posted why) then do as you wish, it's your money and your life after all.

Also, if you have the cash and aren't too worried about the short term (5 year) losses and you're just sick of renting etc. then buying now, if you can get the place you want at a fair price, probably isn't going to make much difference to you. Psychologically, people in this country seem to feel more secure owning (even when it's the bank who really owns). Rent is dead money isn't true at all, but people genuinely subscribe to this theory. The feeling of security is an important thing in life, again even when that's not necessarily the case. Above all keep your mortgage below 80% of value. The lower the ratio the better.

robd

robd wrote: »

This is a really dumb thread.

If you don't agree that the property market has turned and want to throw money at it you're part of the herd.

Lots of anecdotal (i.e. statistically irrelevant) evidence of Dads of Friends buying a place.

Best advice I can give it, wait till the Year on Year figures show an increase. Monthly figures are irrelevant in a small market with low liquidity. It's not about trying to buy at the lowest price before things go back up. If you don't understand why (I already posted why) then do as you wish, it's your money and your life after all.

Also, if you have the cash and aren't too worried about the short term (5 year) losses and you're just sick of renting etc. then buying now, if you can get the place you want at a fair price, probably isn't going to make much difference to you. Psychologically, people in this country seem to feel more secure owning (even when it's the bank who really owns). Rent is dead money isn't true at all, but people genuinely subscribe to this theory. The feeling of security is an important thing in life, again even when that's not necessarily the case. Above all keep your mortgage below 80% of value. The lower the ratio the better.

Good post.

Catweasel

daltonmd wrote: »

From the link you provided:

"Residential property prices grew by 0.2% in the month of May"

"In Dublin residential property prices rose by 0.2% in May"

"Dublin house prices increased by 0.5% in the month"
"The price of residential properties in the Rest of Ireland (i.e. excluding Dublin) rose by 0.1%"

It's not MY conclusion - it is theirs.

CSO address this - “care should still be taken when interpreting monthly figures which may indicate short-term volatility rather than underlying change in longer term price trends.”

daltonmd wrote: »

Let's say that 300 properties sold in Dublin in May and 200 required mortgages - the other 100 didn't. Now to conclude as they have done, that this means that "ALL" property prices have risen is wrong.

CSO does not anywhere claim that "ALL" prices have risen. In fact, it states the exact opposite. “Not all residential property transactions are funded by a mortgage (i.e. they are cash based) and these transactions are excluded from the scope of the index.”

You are inferring they are referring to ALL prices, even though explicitly say otherwise. It is your conclusion that “ALL” prices have risen, not the CSO.

Catweasel

Snakeblood wrote: »

The issue I'd have is that generally speaking, Cash buyers are seen as being able to command lower prices for things, not just houses. There's less faffing around with banks, which is a big incentive to process a sale through cash, considering how banks are seen at the moment (not lending, changing terms of mortgage, reassessments constantly).

I haven't seen evidence that it would tip the price index down, but I can think of several reasons why it would push the price index down, and not one why a cash sale would command an increased price from someone selling a house.

I can tell you from experience that most people are interested in achieving the highest price from property and only a minority are tempted by the lower price but more certain cash bid.

Let’s consider 5 scenarios and the probable outcome:
1. Seller needs cash quick and has low debt on the property – lower Cash bid may win out over mortgage approved buyer.
2. Seller is in negative equity or needs to clear a large debt – will take highest bid regardless of cash or mortgage approved bidder.
3. Seller is in no rush to sell and has low debt – will probably take the highest offer regardless of cash or mortgage approved bidder.
4. Seller has competing cash and mortgage bids – will probably try to play bidders off against each other – pushes prices up, person who wants house more or has more resources will stay in the game longer. If all else equal will go with cash.
5. Bank won’t fund a property – cash buyer will win out

So lots of scenarios and sometimes cash is king, sometimes the highest price wins.
There is a myth that cash buyers push down prices but there is no evidence to support that. Most times the highest bid will win outregardless of source of finance.

1Tony1

Hope it keeps going up!

strandroad

Snakeblood wrote: »

The issue I'd have is that generally speaking, Cash buyers are seen as being able to command lower prices for things, not just houses. There's less faffing around with banks, which is a big incentive to process a sale through cash, considering how banks are seen at the moment (not lending, changing terms of mortgage, reassessments constantly).

I haven't seen evidence that it would tip the price index down, but I can think of several reasons why it would push the price index down, and not one why a cash sale would command an increased price from someone selling a house.

Not for this one particular house, no. I agree that a cash buyer is more likely to get a lower price as they can close quickly.

But looking at the bigger picture they can change it quaite a lot. The supply in some places is fairly limited. If there is an influx of cash buyers (such as thousands of PS retirees) they buy what they want perhaps even cheaper and drive the prices down, but this is not counted in this report. Their activity leaves an even smaller pool of houses for those who need mortgages, so in some cases they start competing and some houses start selling closer to asking or above. This gets counted in the report - as an increase.

If both types of activities were counted, most likely there would be no increase and instead a further decrease, due in part to the negotiating power of cash.

Snakeblood

Catweasel wrote: »

I can tell you from experience that most people are interested in achieving the highest price from property and only a minority are tempted by the lower price but more certain cash bid.

Let’s consider 5 scenarios and the probable outcome:
1. Seller needs cash quick and has low debt on the property – lower Cash bid may win out over mortgage approved buyer.
2. Seller is in negative equity or needs to clear a large debt – will take highest bid regardless of cash or mortgage approved bidder.
3. Seller is in no rush to sell and has low debt – will probably take the highest offer regardless of cash or mortgage approved bidder.
4. Seller has competing cash and mortgage bids – will probably try to play bidders off against each other – pushes prices up, person who wants house more or has more resources will stay in the game longer. If all else equal will go with cash.
5. Bank won’t fund a property – cash buyer will win out

So lots of scenarios and sometimes cash is king, sometimes the highest price wins.
There is a myth that cash buyers push down prices but there is no evidence to support that. Most times the highest bid will win outregardless of source of finance.

I think you're arguing something I'm not arguing. I'm saying that all other things being equal, the likelihood is, because of the relative advantages of cash vs. credit, cash purchases will tend to be cheaper than credit for the same stock, and won't be more in the current climate. Certainly not all cases, maybe not most, but then, I didn't say that.

From your examples:
1: Cash wins
2: Doesn't matter- Cash probably wins all else being equal as it's faster
3: Doesn't matter- Cash probably wins all else being equal as it's faster
4: Doesn't matter- Cash probably wins all else being equal as it's faster
5: Cash wins.

There's no situation where cash isn't preferable to a mortgage, and it's a stupid cash buyer who doesn't know that they hold the cards vs. mortgages and can bid accordingly. The balance of probabilities favours the more advantageous payment method getting cheaper properties.

goodie2shoes

robd wrote: »

This is a really dumb thread.

If you don't agree that the property market has turned and want to throw money at it you're part of the herd.

Lots of anecdotal (i.e. statistically irrelevant) evidence of Dads of Friends buying a place.

Best advice I can give it, wait till the Year on Year figures show an increase. Monthly figures are irrelevant in a small market with low liquidity. It's not about trying to buy at the lowest price before things go back up. If you don't understand why (I already posted why) then do as you wish, it's your money and your life after all.

Also, if you have the cash and aren't too worried about the short term (5 year) losses and you're just sick of renting etc. then buying now, if you can get the place you want at a fair price, probably isn't going to make much difference to you. Psychologically, people in this country seem to feel more secure owning (even when it's the bank who really owns). Rent is dead money isn't true at all, but people genuinely subscribe to this theory. The feeling of security is an important thing in life, again even when that's not necessarily the case. Above all keep your mortgage below 80% of value. The lower the ratio the better.

"RENT IS DEAD MONEY isn't true at all". LOL spoken like a true landlord.
a work colleague of mine has been renting for the past 10 years at an average rent of €800 pm. He has paid over €96,000 in rent! What has he got to show for it? Nothing. His landlord can kick him out whenever he likes and there's nothing he can do about it. So much for your "feeling of security" eh?

on one hand you advise people not to invest their cash in property, but in the next sentence you advise them to keep their mortgage below 80% LTV???? Duh!

your posts are so riddled with contradictions it's hard to take them seriously.:o

jmayo

goodie2shoes wrote: »

the problem with the herd (and its' mentality) is it lurches first one way and then the other. (like sheep do).

Sheep are in a flock not a herd

goodie2shoes wrote: »

remember those folk telling you property could only go up?
well they're at it again, except this time they're telling you it can only go down!

don't believe them unless you want to be part of that herd. AGAIN!:D

So far you have failed to give any concrete economic reasons in this thread why you think now is a good time to buy and why houses are such good value, bar comparing us to the UK in the late 80s and how one should never follow the herd. :rolleyes:

And claiming that we will come out of our bubble burst like the Uk in the 80s has no relevance because we are no UK and the economic circumstances are totally different.
I can give you loads of economic reasons why house prices will probably come down and none of them involve following a herd or comparing us to some country at some other time.

And if we were to compare us to other countries' bubble bursts it could mostly point towards more price decreases and stagnation.
See Japan for instance.

Zamboni

goodie2shoes wrote: »

a work colleague of mine has been renting for the past 10 years at an average rent of €800 pm. He has paid over €96,000 in rent! What has he got to show for it? Nothing. His landlord can kick him out whenever he likes and there's nothing he can do about it. So much for your "feeling of security" eh?

If your colleague had bought in 2002 he would potentially:

Be looking at a similar value or less for his property now. No capital gain/possible loss.
Have paid ten years of mortgage repayments.
Have paid ten years of interest.
Have paid ten years of maintenance, repairs, servicing.
Have paid ten years of various insurance and assurance policies in relation to the mortgage.

It is entirely possible this could have cost a hell of a lot more than €96k.
Obviously it is impossible to retrospectively come up with exact hypothetical figures but the point is, don't dismiss Robd's "rent is not dead money" out of hand.

daltonmd

Catweasel wrote: »

CSO address this - “care should still be taken when interpreting monthly figures which may indicate short-term volatility rather than underlying change in longer term price trends.”



CSO does not anywhere claim that "ALL" prices have risen. In fact, it states the exact opposite. “Not all residential property transactions are funded by a mortgage (i.e. they are cash based) and these transactions are excluded from the scope of the index.”

You are inferring they are referring to ALL prices, even though explicitly say otherwise. It is your conclusion that “ALL” prices have risen, not the CSO.

The report clearly concludes a rise in house prices in Dublin and nationally - it states this while acknowledging it has omitted a very large chunk of transactions, meaning that it cannot conclude this as absolute fact. If you cannot see the point I am trying to make then that's your prerogative.

robd

goodie2shoes wrote: »

"RENT IS DEAD MONEY isn't true at all". LOL spoken like a true landlord.
a work colleague of mine has been renting for the past 10 years at an average rent of €800 pm. He has paid over €96,000 in rent! What has he got to show for it? Nothing. His landlord can kick him out whenever he likes and there's nothing he can do about it. So much for your "feeling of security" eh?

on one hand you advise people not to invest their cash in property, but in the next sentence you advise them to keep their mortgage below 80% LTV???? Duh!

your posts are so riddled with contradictions it's hard to take them seriously.:o

goodie2shoes.

Your posts are just getting annoying at this stage. You seem to just believe and pick up what you want from mine and other peoples posts. I never advised people not to invest their cash in property. I clearly stated if you are buying property make sure to have < 80% LTV. Given the number of people that took 100% mortgages in the last decade and that 92% mortgages are still available this isn't universally thought of.

Again you bring in anecdotal evidence of some distant person. A work colleague not exactly being a close friend of family member. Anecdotal evidence is complete rubbish to any study of anything. A basic higher education in most fields teaches this, yet you keep going back to it.

In giving your spectacular €96,000 figure, you are completely ignoring the interest element of having a mortgage which itself is dead money too. A €250k mortgage would cost you €1200 per month over 30 years at 4% interest, thus you'd be paying an average of €9,000 per annum in interest over the first 10 years. That's €90,000 over the 10 years. You'd have knocked about €55k off your mortgage but that would probably just cover the negative equity over that period. You could have saved €400 per month in a bank (the difference between rent and mortgage, €1200-800) and had €48,000 cash in the bank. Thus you'd be in a better position. Thus you're completely wrong in your hear say analysis/anecdotal evidence. Q.E.D.

Also, the gist of my post re "Rent is Dead Money", is that people are comfortably believing this and they are perfectly entitled to believe this if they wish. You're clearly one of this herd.

Unfortunately, it's becoming clearer and clearer that you really have no idea what you're taking about.

Snakeblood

daltonmd wrote: »

The report clearly concludes a rise in house prices in Dublin and nationally - it states this while acknowledging it has omitted a very large chunk of transactions, meaning that it cannot conclude this as absolute fact. If you cannot see the point I am trying to make then that's your prerogative.

I think the report makes clear that it can only speak about mortgages within its terms of reference. It's not pulling a fast one.

daltonmd

Snakeblood wrote: »

I think the report makes clear that it can only speak about mortgages within its terms of reference. It's not pulling a fast one.

Maybe not snakeblood, but google the amount of reports this generated stating a recovery in the market.

A lot of people won't bother with the details of the report and may be influenced to buy a property, thinking we are in recovery.

I'm not saying this is the case or it's not the case - but I do think that the cash transactions could be the difference between a view of "increases" and "falls" given that the margin is so small.

I think it's pointless at this stage and am looking forward to when the register comes out.

Catweasel

Snakeblood wrote: »

I think you're arguing something I'm not arguing. I'm saying that all other things being equal, the likelihood is, because of the relative advantages of cash vs. credit, cash purchases will tend to be cheaper than credit for the same stock.

Apologies, I agree with that...I'm arguing that there should not be a significant difference between a cash purchase and a credit purchase price. All other things being equal a cash bid is preferable for a vendor but it would be a rare vendor who turns down a higher credit bid in favour of a significantly lower cash one.

Catweasel

daltonmd wrote: »

Maybe not snakeblood, but google the amount of reports this generated stating a recovery in the market.

A lot of people won't bother with the details of the report and may be influenced to buy a property, thinking we are in recovery.

I'm not saying this is the case or it's not the case - but I do think that the cash transactions could be the difference between a view of "increases" and "falls" given that the margin is so small.

I think it's pointless at this stage and am looking forward to when the register comes out.

We're not that far apart on what we are saying. You are right that people read the headline but that is not stated in the report. It would also be helpful if there was a margin of error stated in the report (I estimate it might be + - 3% for the monthly figures)

Where we might differ is that I don't think the cash sales per se will produce a significant change in the index, other than helping the main flaw/contributer to volitility currently which is the small sample size.

Theboinkmaster

robd wrote: »

goodie2shoes.

Your posts are just getting annoying at this stage. You seem to just believe and pick up what you want from mine and other peoples posts. I never advised people not to invest their cash in property. I clearly stated if you are buying property make sure to have < 80% LTV. Given the number of people that took 100% mortgages in the last decade and that 92% mortgages are still available this isn't universally thought of.

Again you bring in anecdotal evidence of some distant person. A work colleague not exactly being a close friend of family member. Anecdotal evidence is complete rubbish to any study of anything. A basic higher education in most fields teaches this, yet you keep going back to it.

In giving your spectacular €96,000 figure, you are completely ignoring the interest element of having a mortgage which itself is dead money too. A €250k mortgage would cost you €1200 per month over 30 years at 4% interest, thus you'd be paying an average of €9,000 per annum in interest over the first 10 years. That's €90,000 over the 10 years. You'd have knocked about €55k off your mortgage but that would probably just cover the negative equity over that period. You could have saved €400 per month in a bank (the difference between rent and mortgage, €1200-800) and had €48,000 cash in the bank. Thus you'd be in a better position. Thus you're completely wrong in your hear say analysis/anecdotal evidence. Q.E.D.

Also, the gist of my post re "Rent is Dead Money", is that people are comfortably believing this and they are perfectly entitled to believe this if they wish. You're clearly one of this herd.

Unfortunately, it's becoming clearer and clearer that you really have no idea what you're taking about.

+1 nicely said

daltonmd

Catweasel wrote: »

Apologies, I agree with that...I'm arguing that there should not be a significant difference between a cash purchase and a credit purchase price. All other things being equal a cash bid is preferable for a vendor but it would be a rare vendor who turns down a higher credit bid in favour of a significantly lower cash one.

That's another good point. There has to be a significant lag (months) in the mortgage drawdowns.

Snakeblood

Catweasel wrote: »

Apologies, I agree with that...I'm arguing that there should not be a significant difference between a cash purchase and a credit purchase price. All other things being equal a cash bid is preferable for a vendor but it would be a rare vendor who turns down a higher credit bid in favour of a significantly lower cash one.

Oh, definitely. But if we're talking about a .2% increase in house prices via mortgage alone being taken as some sort of basement or turnaround, then I think that increase could comfortably be offset by the estimated 33% of the market being cash sales pulling house sale prices in the other direction. Not that it necessarily is, but it's at least a possibility, and to my mind, a strong one.

goodie2shoes

robd wrote: »

goodie2shoes.

Your posts are just getting annoying at this stage. You seem to just believe and pick up what you want from mine and other peoples posts. I never advised people not to invest their cash in property. I clearly stated if you are buying property make sure to have < 80% LTV. Given the number of people that took 100% mortgages in the last decade and that 92% mortgages are still available this isn't universally thought of.

Again you bring in anecdotal evidence of some distant person. A work colleague not exactly being a close friend of family member. Anecdotal evidence is complete rubbish to any study of anything. A basic higher education in most fields teaches this, yet you keep going back to it.

In giving your spectacular €96,000 figure, you are completely ignoring the interest element of having a mortgage which itself is dead money too. A €250k mortgage would cost you €1200 per month over 30 years at 4% interest, thus you'd be paying an average of €9,000 per annum in interest over the first 10 years. That's €90,000 over the 10 years. You'd have knocked about €55k off your mortgage but that would probably just cover the negative equity over that period. You could have saved €400 per month in a bank (the difference between rent and mortgage, €1200-800) and had €48,000 cash in the bank. Thus you'd be in a better position. Thus you're completely wrong in your hear say analysis/anecdotal evidence. Q.E.D.

Also, the gist of my post re "Rent is Dead Money", is that people are comfortably believing this and they are perfectly entitled to believe this if they wish. You're clearly one of this herd.

Unfortunately, it's becoming clearer and clearer that you really have no idea what you're taking about.

the figure of €96k is not spectacular. far from it. ask anybody who has rented. do the math!
why on earth would anybody take out a mortgage of €250k, when you can purchase a 2 bed apartment for less than €150K. 2 beds which are currently renting for €850 pm.
do some research. you clearly are out of touch.

and you again erroneously assuming the mortgage should run for 30 years?
as anyone with an once of common sense knows, it's best to keep the term as low as possible and repay chunks off it as & when you can. (i've never had a mortgage go beyond 12 years).

a few posts back you were advising folk to keep they're mortgage to below 80% LTV. now your advocating a 30 year term. again you are contradicting yourself.

for somebody who holds themselves up to be some kind of property guru, you seem to know very little about the subject.:o

daltonmd

goodie2shoes wrote: »

"RENT IS DEAD MONEY isn't true at all". LOL spoken like a true landlord.
a work colleague of mine has been renting for the past 10 years at an average rent of €800 pm. He has paid over €96,000 in rent! What has he got to show for it? Nothing. His landlord can kick him out whenever he likes and there's nothing he can do about it. So much for your "feeling of security" eh?

What has he got to show for it? No negative equity - that's what.

I have paid close to 90k myself, I live in the house that I was contemplating buying. It was 375k.

Mortgage would have cost me about 1300pm. I have never paid 1300 rent in my life.

Exact same house now, brand new, fully finished and furnished sold on this estate last week for 160k.

So my rent now is 800pm and I have "wasted" (lol) almost 90k.
My alternate life would look like this:

Over 1300pm mortgage payments 7 years into mortgage my o/s balance would be:

315k, so 60k paid off mortgage (@3%).

Negative Equity to the tune of 155k.

90k wasted? For nothing? I don't think so. I can rent for another 10 years and like your friend I'll still come out quids in.

I can buy now, for a fraction of the price.

Best 90k I ever spent.

murphaph

daltonmd wrote: »

Best 90k I ever spent.

...and you got the not insignificant benefit of having a comfortable home, while staying footloose for the whole time period too! The "rent is dead money" thing is silly-you pay the rent in exchange for somewhere to live, same as you pay the asking price when you buy (and then pay the bank interest for lending you the money). It's the same thing...it can just cost different amounts (and it can be cheaper or dearer either way, depending on a lot of factors).

I own property but myself and the GF will be renting our next home as it suits us to do so.

OMD

gurramok wrote: »

What is wrong with my post? It quotes the figures from the report. Enlighten us.

It quotes some of the figures from the report. When looking at how house prices may be rising it quotes the wrong figures.
Your initial comment was that the IBF Figures showed that any rise must be from cash sales.
Why didn't you make any mention of these figures?

Average mortgage FTB
Q4 2011= €159,220
Q1 2012= €163,470
I.e. rising

Average Mortgage Mover Purchaser
Q4 2011= €205,971
Q1 2012= €208,439
I.e. rising

Average Mortgage Buy to Let
Q4 2011 = €168,252
Q1 2012 = €197,262
I.e. rising


And, on top of all the the article the thread is about possible price rises in May but these figures you quoted refer to drawdowns in Jan, Feb & March.

OMD

daltonmd wrote: »

What has he got to show for it? No negative equity - that's what.

I have paid close to 90k myself, I live in the house that I was contemplating buying. It was 375k.

Mortgage would have cost me about 1300pm. I have never paid 1300 rent in my life.

Exact same house now, brand new, fully finished and furnished sold on this estate last week for 160k.

So my rent now is 800pm and I have "wasted" (lol) almost 90k.
My alternate life would look like this:

Over 1300pm mortgage payments 7 years into mortgage my o/s balance would be:

315k, so 60k paid off mortgage (@3%).

Negative Equity to the tune of 155k.

90k wasted? For nothing? I don't think so. I can rent for another 10 years and like your friend I'll still come out quids in.

I can buy now, for a fraction of the price.

Best 90k I ever spent.

In fairness you are being very selective with your figures. You pick the 7 year period with the biggest price fall in this country's history

1. You pick an interest rate well above the average most have paid over the last 7 years. Majority who took out mortgages in the last 10 years are on trackers and the average tracker is around 1% above ECB
2. You use your rent now to estimate your costs over the last 7 years but ignore the fact that rents have plummeted over the last 7 years so your average rent would have been much higher.
3. You have assumed a much higher price fall for your property than national figures show for the period 2005 - 2012
4. You can buy now at a fraction of the price is true. If you were to buy now you would pay about 40 % less than someone who bought 7 years ago on average, but you can expect to pay a much higher interest rate than someone on a tracker.

Now I am not saying you should have bought in 2005. Clearly with hindsight it would have been a very stupid decision. But, the benefits to you are not nearly as high as you believe.

Look at things a different way. I bought a house in 1996 for £65,000. I paid no stamp duty unlike you will have to when you eventually buy I got my first time buyers grant of £3,000 and then got interest relief on my mortgage for the entire time I owned the house. Again 2 more things you will not get. In 2006 I sold the house for €400,000. This allowed me to go part time in my job and spend much more time with my kids.

daltonmd

OMD wrote: »

In fairness you are being very selective with your figures. You pick the 7 year period with the biggest price fall in this country's history

In fairness I didn't. I chose the period that I started renting.

1. You pick an interest rate well above the average most have paid over the last 7 years. Majority who took out mortgages in the last 10 years are on trackers and the average tracker is around 1% above ECB

In December 2005 the ECB rate was 2.25% (+1% =3.25) Dec 2006 it was 3.5%,(4.5%) June 07, 4.00% (5.00%) , July 08 4.25% (5.25%). It started reducing in November 2008. It first hit 1% in May 2009 where it went up a couple of times before settling at 1% in December 2011.


I used 3% as an average which I think looks pretty fair. And this still doesn't change (much) the amount paid off the mortgage in those years.

1. You use your rent now to estimate your costs over the last 7 years but ignore the fact that rents have plummeted over the last 7 years so your average rent would have been much higher.

No I didn't. When I first started renting at the start of 2005 I paid 1150pm for 2years (27,600) 1100 for 2 years (26,400), 950 for one year (11400) and for the past 1.5 years it's been 800pm (14,400). So it's closer to 80k not 90k. I have absolutely accounted for higher rent.

1. You have assumed a much higher price fall for your property than national figures show for the period 2005 - 2012.

I haven't assumed anything. There were a few unfinished houses on this estate that have been officially put back on the market in recent weeks, the "official asking price" is 189k. A neighbour told me today that her pal bought an identical house nto the one I am living in, finished and furnished for 160k.

1. You can buy now at a fraction of the price is true. If you were to buy now you would pay about 40 % less than someone who bought 7 years ago on average, but you can expect to pay a much higher interest rate than someone on a tracker.

Your assumption of 40% below is way out. I could buy a home now, in my desired location for closer to 60% lower than the boom price as I have explained above.




Now I am not saying you should have bought in 2005. Clearly with hindsight it would have been a very stupid decision. But, the benefits to you are not nearly as high as you believe.


Oh they absolutely are. Let me pose this scenario to you, and it's a very valid one that many people don't look at.

Let's go down the road a minute. The recession is over, we are out of the mire, wages are increasing and house prices are going up at a nice steady rate a year. It's 20 years or so down the line, many people will be coming out of their mortgages. How much will the 375k house, now worth 160k be worth? In 1990 house average house price was 80k, now (after major reductions) it's 160k so double?

Now if you think that double is a fair increase, (you may believe more/less but I think you'll get the point) then any idea of the interest paid on a 300k plus mortgage? Even at 5% average over the term the interest costs about 260k (I have deducted 20k for the mortgage interest relief).

So, 375k house + 260k interest, total cost of house = 635k.(at the very least).

If I buy at 160k, taking out a 120k mortgage for 25 years at 10% will cost me 207k = total cost of house 367k ( at the very least)

Edit to add here - If the interest rate goes higher than 10% for a buyer now, then the tracker also increases - so the margin between buying in 2005 and now is basically the same.


Now, we still have to live somewhere so it makes sense for me to buy *at some point* over renting. The best thing for me at the moment is to buy as cheaply as possible and stress for the highest rate imaginable.

OMD wrote: »

Look at things a different way. I bought a house in 1996 for £65,000. I paid no stamp duty unlike you will have to when you eventually buy I got my first time buyers grant of £3,000 and then got interest relief on my mortgage for the entire time I owned the house. Again 2 more things you will not get. In 2006 I sold the house for €400,000. This allowed me to go part time in my job and spend much more time with my kids.

I also bought in 1998, I paid 70k and had to move for work in 2005. When I moved counties I had an accident that changed my needs and I decided not to go ahead and purchase, as even with a substantial deposit I wasn't sure if I could repay the mortgage in the event my injury deteriorated - it did and I am very blessed that I chose to rent.

I am not getting a dig at those who bought, I am getting to those who really view people who have rented for the last few years as having NOTHING to show for it - that is wrong.

gurramok

OMD wrote: »

It quotes some of the figures from the report. When looking at how house prices may be rising it quotes the wrong figures.
Your initial comment was that the IBF Figures showed that any rise must be from cash sales.
Why didn't you make any mention of these figures?

Average mortgage FTB
Q4 2011= €159,220
Q1 2012= €163,470
I.e. rising

Average Mortgage Mover Purchaser
Q4 2011= €205,971
Q1 2012= €208,439
I.e. rising

Average Mortgage Buy to Let
Q4 2011 = €168,252
Q1 2012 = €197,262
I.e. rising


And, on top of all the the article the thread is about possible price rises in May but these figures you quoted refer to drawdowns in Jan, Feb & March.

You're selectively quoting what I had said. Below is what I said, note the question mark.

Mortgage lending continues its downward slide in Q1 2102, the raise(if its true) must be from cash sales? Total drawdowns still decreasing. And definitely from a tiny number of transactions which are down 90%+ from 2007.

And you conveniently ignore this part which is important. March is part of Q1, we don't have Q2 figures yet, we can only judge on the latest figures available.

Only RIL went up in value from Q4 2011 to Q1 2012, the others including FTB and Mover Purchasers went down. RIL is a tiny part of the market at the moment, only 25m worth of those mortgages were taken out in Q1 2012.

And the volumes are down in each segment, less people taking out all types of mortgages. What does that say? It says that fewer people are taking out slightly larger mortgages, agree?

daltonmd

Catweasel wrote: »

We're not that far apart on what we are saying. You are right that people read the headline but that is not stated in the report. It would also be helpful if there was a margin of error stated in the report (I estimate it might be + - 3% for the monthly figures)

Where we might differ is that I don't think the cash sales per se will produce a significant change in the index, other than helping the main flaw/contributer to volitility currently which is the small sample size.

I think that given the very small rise that it would impact it. But even had they said: "Using a two third sample of sales it shows an increase" and as you said give a margin of error, then that would be something.

But as I said, people cherry pick points to suit their argument and I think it's misleading.

Catweasel

daltonmd wrote: »

I think that given the very small rise that it would impact it. But even had they said: "Using a two third sample of sales it shows an increase" and as you said give a margin of error, then that would be something.

But as I said, people cherry pick points to suit their argument and I think it's misleading.

To clarify, I believe that the small sample size is the problem; leading to short term anomalies possibly beyond the margin of error (I know they do some adjustments to allow for this which is why they may not be able to publish a statistical margin of error). It is also possible that they are correct because of a short term surge in demand, but that is not necessarily predictive of the future.

I do not believe that there is a statistical association between cash sales and lower prices. Leaving them out of the index (perhaps 33% of the market) is unlikely in itself to change the index significantly because the 33% left out will probably be paying the same price as the 67% in the index. But including them would increase the sample size which reduces our margin of error.

Vested interested will always spin reports their own way. I am not arguing that property prices are increasing or have stabilised by the way. On the contrary, I am arguing that the CSO report should be read for what it is. It's not meaningless, its meaning simply has to be understood.

daltonmd

Catweasel wrote: »

To clarify, I believe that the small sample size is the problem; leading to short term anomalies possibly beyond the margin of error (I know they do some adjustments to allow for this which is why they may not be able to publish a statistical margin of error). It is also possible that they are correct because of a short term surge in demand, but that is not necessarily predictive of the future.

I do not believe that there is a statistical association between cash sales and lower prices. Leaving them out of the index (perhaps 33% of the market) is unlikely in itself to change the index significantly because the 33% left out will probably be paying the same price as the 67% in the index. But including them would increase the sample size which reduces our margin of error.

Vested interested will always spin reports their own way. I am not arguing that property prices are increasing or have stabilised by the way. On the contrary, I am arguing that the CSO report should be read for what it is. It's not meaningless, its meaning simply has to be understood.

Thanks for that clarification CW. Food for thought, I would not have focussed so much on the sample size - it's a great point.

McTigs

The Irish Times are facilitating more of this rubbish today. Here's a gem of an opinion piece from the director of Property "Industry" Ireland.

http://www.irishtimes.com/newspaper/opinion/2012/0628/1224318886589.html

goodie2shoes

McTigs wrote: »

The Irish Times are facilitating more of this rubbish today. Here's a gem of an opinion piece from the director of Property "Industry" Ireland.

http://www.irishtimes.com/newspaper/opinion/2012/0628/1224318886589.html

My goodness!
What utter tripe!

Continue renting folks. It's money well spent. The best 100k you'll ever spend.

seamus

McTigs wrote: »

The Irish Times are facilitating more of this rubbish today. Here's a gem of an opinion piece from the director of Property "Industry" Ireland.

http://www.irishtimes.com/newspaper/opinion/2012/0628/1224318886589.html

What in there exactly do you disagree with?

Do you disagree that we need to put processes in place to prevent another property bubble at some point in the future?

Do you disagree that we're seeing medium-term issues with housing stocks in urban areas?

Do you not agree that in order to properly plan out requirements we need to do an in-depth exercise to ascertain what our vacancy rates are like in all areas, as well as gather sophisticated data about sales (or lack thereof)?

What I'm seeing at the moment is the exact inverse of the attitude we had during the bubble.

"Buy now before prices go up, your house will be worth twice that next year" has been replaced with, "Don't buy now, prices will keep dropping, they'll be giving them away next year"

Viewpoints which both contain a modicum of correctness for their time (house prices did go up, remember), but which completely fail to ignore the long-term possibilities.

We do need a body with responsibility for long-term planning in this area.

Monty Burnz

goodie2shoes wrote: »

3 months in a row!
are you mad?

This is what is known in statistics as a 'blip'.

daltonmd

goodie2shoes wrote: »

My goodness!
What utter tripe!

Continue renting folks. It's money well spent. The best 100k you'll ever spend.

Oh, some of us already are - glad to see you coming round to our point of view though, took you awhile, but welcome on board

McTigs

Seamus,

What i disagree with is the notion of "recovery" in property prices. I believe prices are recovering, that is recovering back to what they ought to be before they were inflated to the detriment of all but a few major profiters.

I disagree that high proerty prices are a good thing.

I disagree with the government, NAMA and other vested interests interfering with the market andf their atempts to artificially prop up prices.

and i totally disagree with the likes of Property Industry Ireland pontificating in a national newspaper about "sustainability", "quality", "policy frameworks", "roadmaps", "critical infrastructure" and "genuine social and economic needs" when they clearly didn't give a flying shíte about any of that 7 short years ago

Monty Burnz

Roxee wrote: »

Well I have a cousin who's a solicitor and said they've seen a steady rise in conveyancing business in the last 6 months. They're now doing probably 8 times as much as they were at the height of recession.

This figure seems a tad suspicious seeing as the number of mortgages being given out are at an all-time low...I'm not surprised though that people who rely on property transactions to make a living are encouraging people to buy property.

Monty Burnz

goodie2shoes wrote: »

My goodness!
What utter tripe!

Continue renting folks. It's money well spent. The best 100k you'll ever spend.

Yes, I'm sure renters feel very foolish when they look at their neighbours who owe hundreds of thousands more than their property is worth and are stuck somewhere they can't move out of even if they need to...

Snakeblood

seamus wrote: »

What I'm seeing at the moment is the exact inverse of the attitude we had during the bubble.

The attitude during the bubble was based on nothing. There was no good reason for prices to go up forever. There are good reasons for the next ten years to be flatlining at best property prices, and even if you don't agree that they are good reasons, there's a huge amount of uncertainty surrounding the euro, and our place in europe that make taking out a massive debt extremely dubious. It's not the exact inverse.

daltonmd

seamus wrote: »

What I'm seeing at the moment is the exact inverse of the attitude we had during the bubble.

In fairness this is happening all over and not just in relation to property. People are holding off making purchases, not major ones, because if they see that it reduced this week, then instead of saying "I'll buy it now" they say "hmmm, it could be cheaper next week".

So the attitude is more to do with fear of the future, consumer sentiment, confidence etc.

seamus

McTigs wrote: »

What i disagree with is the notion of "recovery" in property prices. I believe prices are recovering, that is recovering back to what they ought to be before they were inflated to the detriment of all but a few major profiters.

I disagree that high proerty prices are a good thing.

I disagree with the government, NAMA and other vested interests interfering with the market andf their atempts to artificially prop up prices.

That's fine, but the article says absolutely nothing like that.

and i totally disagree with the likes of Property Industry Ireland pontificating in a national newspaper about "sustainability", "quality", "policy frameworks", "roadmaps", "critical infrastructure" and "genuine social and economic needs" when they clearly didn't give a flying shíte about any of that 7 short years ago

I'm going to guess that's because PII didn't exist 7 years ago. They didn't even exist this time last year.

This seems to be the mistake a lot of people are making. Rather than actually read the article, it would appear that you've see a few choice words in it and then interpreted it as some "buy now" cheerleader for another bubble and then making wild statements about greedy builders, bankers and politicians.

People sticking their fingers in their ears and going, "Lalalalala, nothing's happening, ignore the figures, it'll keep going the way I say it will". Sound familiar?

PII, for what it's worth, appears to be a group set up by IBEC. So not by some builders' union, or banking group or NAMA.

Snakeblood

seamus wrote: »

PII, for what it's worth, appears to be a group set up by IBEC. So not by some builders' union, or banking group or NAMA.

Membership will be open to representatives from all sectors of the property industry including the following: architects, chartered surveyors, consulting engineers, contractors, developers, institutional investors, planning consultants,financial advisers, property lawyers and quantity surveyors. Other categories which may have a role to play in the industry will also be considered.

The primary objectives of the recruitment of members are to ensure that:
PII is representative of all those with a direct interest as participants in the Irish property industry
The composition of the membership contributes to the strength of PII and its objectives
Reasonable care is taken to ensure no one accepted for membership will reflect poorly on PII or inhibit its ability to achieve its objectives
Potential members can make a meaningful contribution of resources and expertise to PII
Where possible, there shall be a reasonable balance in the number of members from the target sectors

http://www.propertyindustryireland.ie/membership.html

People, in other words, who have a vested interest in property prices going up and construction activity increasing, because that's where they get their money.

The Property Industry have proven themselves to be filled with corrupt incompetent mendacious liars (as to be fair, have the political classes) when it comes to payoffs, rezoning, selling houses. Why should anyone believe a property industry representative group when they say what would be good for the country? They were telling us to keep buying in 2007, 2008, 2009, 2010, 2011, 2012, and I'm fairly certain they won't say 'Hold on a second, maybe lowering prices generally is a good idea' in 2013, because it's not in their interest to do so. Probably some PPI people are honest, but they're in an industry that still stinks.

McTigs

seamus wrote: »

That's fine, but the article says absolutely nothing like that.

Yes it does. The opening lines are "As property prices show glimmers of recovery, a national plan is needed for sustainable growth" . She then proceeds to reference the CSO report showing a blip in price falls. Did you read it yourself?

seamus wrote: »

I'm going to guess that's because PII didn't exist 7 years ago. They didn't even exist this time last year.

For property Industry Ireland you can take i meant the property "Industry" in general, no need to be pedantic, it does nothing for the credibility or your arguements

seamus wrote: »

This seems to be the mistake a lot of people are making. Rather than actually read the article, it would appear that you've see a few choice words in it and then interpreted it as some "buy now" cheerleader for another bubble and then making wild statements about greedy builders, bankers and politicians.

People sticking their fingers in their ears and going, "Lalalalala, nothing's happening, ignore the figures, it'll keep going the way I say it will". Sound familiar?

I read the article and made no wild statements.

I'm interested in this country recovering from the mess it's in, that won't happen by focusing on property, infact i believe it will do the opposite. It annoys me that it's given column space is all.

goodie2shoes

daltonmd wrote: »

Oh, some of us already are - glad to see you coming round to our point of view though, took you awhile, but welcome on board

as a landlord who has benefited greatly from my tenants' monthly contributions, i encourage folk to rent all the time.

every morning i turn over for my second sleep happy in the knowledge they are battling through commuter traffic to pay my rent.

my tenants are great and i love them all.
God Bless 'em!:D

Monty Burnz

goodie2shoes wrote: »

as a landlord who has benefited greatly from my tenants' monthly contributions, i encourage folk to rent all the time.

Looking at your posts on Boards.ie, that isn't exactly true - so I find this claim about your property empire a little hard to believe. To put it mildly.

seamus

Snakeblood wrote: »

People, in other words, who have a vested interest in property prices going up and construction activity increasing, because that's where they get their money.

Construction activity increasing, sure, but whether an increase in property prices is good for these people is debateable. Especially considering what happened the last time we tried that...

The Property Industry have proven themselves to be filled with corrupt incompetent mendacious liars (as to be fair, have the political classes) when it comes to payoffs, rezoning, selling houses. Why should anyone believe a property industry representative group when they say what would be good for the country?

The <insert word> Industry is full of incompetent liars, only out for what they can get themselves. That's a given.
You don't have to believe what they say hook, line and sinker. But at the same time just because they're looking out for themselves is no reason to ignore what they say if they're speaking even a little bit of sense. Writing off an entire article because it talks about building and mentions the word "recovery" is ridiculous.

Probably some PPI people are honest, but they're in an industry that still stinks.

Sounds like every other industry from healthcare to retail.

McTigs wrote: »

Yes it does. The opening lines are "As property prices show glimmers of recovery, a national plan is needed for sustainable growth" . She then proceeds to reference the CSO report showing a blip in price falls. Did you read it yourself?

So you disagree that 3 months in a row isn't a "glimmer of recovery"? I would have said the wording of the article was very cautious to avoid claiming an end to the property collapse.

For property Industry Ireland you can take i meant the property "Industry" in general, no need to be pedantic, it does nothing for the credibility or your arguements

Well not really. You meant PII and you assumed it was the CIF or some other body. If you meant "the property industry", you would have said that. It doesn't really do much to your argument to fluster and claim you meant something else rather than just admitting that you weren't aware the PII were a new industry body.

I'm interested in this country recovering from the mess it's in, that won't happen by focusing on property, infact i believe it will do the opposite. It annoys me that it's given column space is all.

Of course it won't happen by focussing on property, but house prices aside improving the state of our property industry will assist in the economy's recovery because the vast majority of those 14% unemployed came from the construction sector.
If nothing else, a return to normal (pre-boom) construction levels will provide employment for a group of people who've had particular difficulty locating any.

I find it odd that some people seem to think if we ignore the property issue, it will just go away. Any economy which is growing requires physical infrastructure to facilitate that growth. That's where the property industry comes in. It's part of the overall package, not some solitary industry.

jmayo

seamus wrote: »

What in there exactly do you disagree with?

Do you disagree that we need to put processes in place to prevent another property bubble at some point in the future?

You know the processes that will prevent further bubbles and could have prevented the last one ?
They are things like having sustainable lending, not fooking 100% mortgages to people with no savings history.
And proper annual property taxes will help put a big lid on excessive price hikes with nothing to back it up.

seamus wrote: »

"Buy now before prices go up, your house will be worth twice that next year" has been replaced with, "Don't buy now, prices will keep dropping, they'll be giving them away next year"

Viewpoints which both contain a modicum of correctness for their time (house prices did go up, remember), but which completely fail to ignore the long-term possibilities.

There was never a modicum of correctness in paying way to much for a property that left the buyers saddled with chronic debt if anything happened (as it is indeed did) and which had a price based on nothing more than sentiment with shag all underlying economics to back it up.

If you were interested in speculating and flipping then fair enough you could buy property much like one would day trade on shares.
But there was never anything wise or correct about buying a property for the long term whose price was grossly inflated just because someone (usually a vested interest) claimed prices would increase indefinitely.

seamus wrote: »

We do need a body with responsibility for long-term planning in this area.

The idea was floated years ago where possible development land was taken into public ownership to properly plan long term and to stop this land banking and huge jumps in development land.
AFAIK someone proposed that back in the 70s.
Oh and this type of thing works in other countries.
BTW are any of the property developers/construction industry insiders who probably are sitting (or hoping to thanks to NAMA) on such landbanks proposing this for the long term viability of our housing ?
I bet not.

McTigs wrote: »

Seamus,

What i disagree with is the notion of "recovery" in property prices. I believe prices are recovering, that is recovering back to what they ought to be before they were inflated to the detriment of all but a few major profiters.

Some eejits actually think that prices 2000/2002 to 2006/2007 is the norm that needs to be recovered to.
We have idiots in this country who actually believe the economy will only recover when house prices "recover".
Worse still these people are given speaking platforms.

McTigs wrote: »

and i totally disagree with the likes of Property Industry Ireland pontificating in a national newspaper about "sustainability", "quality", "policy frameworks", "roadmaps", "critical infrastructure" and "genuine social and economic needs" when they clearly didn't give a flying shíte about any of that 7 short years ago

I do find it funny when members of the construction industry talk about critical infrastructure when there idea for decades has been to build estates full of houses, without any consideration for the necessary surrounding infrastructure should as public amenities, schools, etc.
It is fooking galling to listen to that sh**e.

goodie2shoes wrote: »

My goodness!
What utter tripe!

Best description of your posts yet.

goodie2shoes wrote: »

Continue renting folks. It's money well spent. The best 100k you'll ever spend.

And once again I ask you to provide concrete indicators as to why people should now buy ?
Oh and quoting CIF, IAVI or the Indo doesn't wash.

Otherwise why not trundle back to the EA office.