Glut of repossessed houses could depress prices ‘by up to 25%’

handlemaster

gaius c wrote: »

What repo sales are going to look like

Wouldn't be the best of areas so probably not the best example
If say it will go for note than that anyhow.

lima

The Spider wrote: »

And again I reiterate the point, there's lots of value in Dublin, it's just in places like Blanchardstown and Lucan, time for people to accept that not everyone can live in SCD.

Not everyone wants to live in 'SCD' SoCoDu' or whatever the culchies call it!

gaius c

handlemaster wrote: »

Wouldn't be the best of areas so probably not the best example
If say it will go for note than that anyhow.

What does the area matter? It is selling for an asking price significantly below "par" for other houses in the area. More of these and we might actually find a true floor in the market and then move on with life.

Villa05

Investec, the South African-owned bank, has put its plans to offer up to €300m in new Irish mortgages on hold, as it reviews changes in the market place which is increasingly dominated by State-owned zombie banks.

This is seen as a massive blow for consumers with mortgage lending at a 40-year low. The IBF/PwC mortgage report showed that just 15,881 mortgages were issued last year – the lowest amount for any year since 1973.

It is understood that Investec, headed by Michael Cullen, views the Irish mortgage market as increasingly uncertain because of recent changes to the repossession and insolvency regimes. These changes make it harder for banks to repossess properties if they are Personal Dwelling House (PDH) loans.

Sources told the Sunday Independent that while Investec remains interested in entering the mortgage market, it has growing reservations about being able to get its money back if loans go bad because of new repossession and insolvency regulations. The rising cost of litigation has now to be factored in to mortgage pricing.

As posted in the madness thread, Looks like the scam has been spotted
http://www.independent.ie/business/irish/investec-puts-300m-plan-for-new-mortgage-lending-on-hold-29818741.html

handlemaster

gaius c wrote: »

What does the area matter? It is selling for an asking price significantly below "par" for other houses in the area. More of these and we might actually find a true floor in the market and then move on with life.

What are the selling prices of the same house type locally

lima

Villa05 wrote: »

As posted in the madness thread, Looks like the scam has been spotted
http://www.independent.ie/business/irish/investec-puts-300m-plan-for-new-mortgage-lending-on-hold-29818741.html

Hopefully this will have an impact on repossessions so that the market will become normal and people who were not part of the boom can purchase a house at the price they should be without govt-sponsored vested interest manipulation

Zamboni

To: enda.kenny@oireachtas.ie
From: next.generation@ireland.ie

Subject: Sort it out

Hi Enda,

We cannot get a mortgage because banks in Ireland have no money and foreign banks won't enter the market because repossessions are not happening and you are too busy keeping the last generation in houses they cannot pay for.

Sort it out.

Thanks,

Next Generation

http://www.independent.ie/business/irish/investec-puts-300m-plan-for-new-mortgage-lending-on-hold-29818741.html

Shane732

Perhaps people could give me their opinions on a couple of things -

I'm a first time buyer ideally looking to buy in the D4/6 area. I'm also willing to look at D14/16.

Is there any stats available on the repossessed properties that are due to come on to the market in the coming months?

Will any of the repossessed properties be in D4/6?

The_Conductor

Shane732 wrote: »

Perhaps people could give me their opinions on a couple of things -

I'm a first time buyer ideally looking to buy in the D4/6 area. I'm also willing to look at D14/16.

Best of good luck Shane- I wish you luck with your purchase. It might be helpful to other people if you start a thread here yourself to document your journey- and you can knock ideas off folk as you're going along.

Shane732 wrote: »

Is there any stats available on the repossessed properties that are due to come on to the market in the coming months?

Will any of the repossessed properties be in D4/6?

No- is the short and simple- there are no such stats available.
Almost half property sales in the D4/D6 area are executor sales- not repossessed property at all- and much of the other half, are units in development's, such as Bernard McNamara's homage to glass- just over from St. Vincents- that have started up again, as NAMA see it as an opportunity to cash-in some chips.

I'm personally aware of people taking offices and converting them back into residential dwellings in the area (once they've received the appropriate planning permissions etc)

Please let us know how it goes- it will be a learning lesson for us all.

The_Conductor

gaius c

handlemaster wrote: »

What are the selling prices of the same house type locally

It has been €80-90k-ish but this one is priced below that and is likely to be sold below asking…whatever they can get really.

handlemaster

gaius c wrote: »

It has been €80-90k-ish but this one is priced below that and is likely to be sold below asking…whatever they can get really.

The real test is how much are u willing to offer

gaius c

handlemaster wrote: »

The real test is how much are u willing to offer

Not me. Somebody else.

mr_seer

This is a very worrying development... particularly the line "We need property prices to be restored....". So official government policy is to inflate residential property prices. Here we go again.

http://www.independent.ie/business/irish/michael-noonan-not-concerned-about-hike-in-dublin-property-prices-29822367.html

handlemaster

mr_seer wrote: »

This is a very worrying development... particularly the line "We need property prices to be restored....". So official government policy is to inflate residential property prices. Here we go again.

http://www.independent.ie/business/irish/michael-noonan-not-concerned-about-hike-in-dublin-property-prices-29822367.html

He didn't say that. Restored to a level where the cost of construction is at least the price of the resale of a secondhand property. I really think some people will be negative no matter what is said by the government or state bodies. And just let it be noted I am not pro everything the government does but a little perspective is required now and again.

mr_seer

He's missing the point entirely. Firstly properties in SCD are selling for prices way in excess of construction costs. Most properties on the market for c. EUR 500k have a build cost of <EUR 150k. The issue is the cost of the site, local authority charges per unit etc. Why are our houses so much dearer than most European countries? Labour costs are similar, materials are the same.

Noonan stated that the increase in 2013 is "quite small" relative to the "massive drop". The drop took prices to quite realistic levels relative to income and net rental yield. The last monthly rate of house prince inflation in Dublin was 3.9% - that equates to c. 60% annualised compound inflation. This is caused by a chronic lack of supply (only dead granny houses for sale). This type of situation has never been seen before in the first world. Ireland is once again an economic experiment. The complete moratorium on repossessions to date means that we have yet to see the bottom of the market. Any increase in supply relative to the current zero will cause another fall in prices. The extent of the fall will depend on how long it takes for the supply to come on stream. The longer it takes, the worse it will be.

jd1983

handlemaster wrote: »

He didn't say that. Restored to a level where the cost of construction is at least the price of the resale of a secondhand property. I really think some people will be negative no matter what is said by the government or state bodies. And just let it be noted I am not pro everything the government does but a little perspective is required now and again.

Surely the prices in Dublin are well above the cost of construction. Otherwise the prices in some rural areas would be well below the price of construction, even in the boom. The only extra cost in construction that i can imagine is the cost of land and perhaps slightly increased labor costs.

12% Annual increases are not normal and it appears to me that Noonan's looking for excuses to talk up the property market.

gaius c

handlemaster wrote: »

He didn't say that. Restored to a level where the cost of construction is at least the price of the resale of a secondhand property. I really think some people will be negative no matter what is said by the government or state bodies. And just let it be noted I am not pro everything the government does but a little perspective is required now and again.

Why does the price need to be based on the cost?
Maybe it's the cost that is too high?

The Spider

gaius c wrote: »

Why does the price need to be based on the cost?
Maybe it's the cost that is too high?

Because that's an insane way to run any business, the price of anything is based on the cost of production, materials, labour etc.

However I do agree that the free market should be allowed to dictate the price, if the cost of producing goods is higher than what can be achieved on the market then you need to reduce the cost of production.

The problem with that in relation to houses or apartments, is that you end up with another priory hall, as the cost of building is more than the price that can be achieved, you buy cheaper substandard materials, you don't employ as many people to build the house, you hire cowboys rather than experts.

All of these will reduce the cost, but you end up with a substandard product.

Balmed Out

The Spider wrote: »

the price of anything is based on the cost of production, materials, labour etc.

Do you want to buy my second hand car?

Value = what someones prepared to pay nothing to do with the cost price.

Celtic tiger era housing was also built by people on wages far higher then what is normal elsewhere.

The Spider

Balmed Out wrote: »

Do you want to buy my second hand car?

Value = what someones prepared to pay nothing to do with the cost price.

Celtic tiger era housing was also built by people on wages far higher then what is normal elsewhere.

No problem with existing stock obviously, it's built the price halved regardless of what it cost to build. People can buy that cheap regardless.

I think the point is if you want to build more stock currently the prices achievable don't match the build costs, so how can you build more stock? The land costs are what they are, and owners are entitled to sell it for whatever price they want, whether they get it is another story, but then they don't have to sell it.

Bricks cost what they cost, so does cement, so do windows, so does copper pipe etc. Labour costs again, experts will cost more than cowboys, if you want professional tradesmen building houses, then you have to pay them or they won't work for you.

Wages will be set by market demand, but if it doesn't offer a healthy wage people either won't do it or will work in the black economy, and guys who are looking at building will do something else, however a shortage of available tradesmen will drive up wages.

You can always hire cowboys, and having personal experience here, you certainly do get what you pay for.

And on top of the above, as a business you want to make a profit unless your a charity.

gaius c

The Spider wrote: »

Because that's an insane way to run any business, the price of anything is based on the cost of production, materials, labour etc.

However I do agree that the free market should be allowed to dictate the price, if the cost of producing goods is higher than what can be achieved on the market then you need to reduce the cost of production.

The problem with that in relation to houses or apartments, is that you end up with another priory hall, as the cost of building is more than the price that can be achieved, you buy cheaper substandard materials, you don't employ as many people to build the house, you hire cowboys rather than experts.

All of these will reduce the cost, but you end up with a substandard product.

Incredible isn't it? I've no idea how any country in the world has managed to build anything seeing as it's so difficult to make money doing so and that the rest of the world is stuck with Priory Hall-standard construction because they refuse to pay Irish bubble-era prices for their houses.

The Spider

gaius c wrote: »

Incredible isn't it? I've no idea how any country in the world has managed to build anything seeing as it's so difficult to make money doing so and that the rest of the world is stuck with Priory Hall-standard construction because they refuse to pay Irish bubble-era prices for their houses.

The costs are the costs, price of land is going to be high because there's so little of it. I know that down the country building a decent size house not massive, but not tiny either is going to cost a relative around 130000, and that's with mostly free labour and a free site.

The costs for materials are huge, put it this way I put up two pillars and a wall and it cost 10 grand, most of that was spent on materials, if I had got granite caps the price would have gone up again, not to hard to see how building a house is going to cost, one way or the other.

jmayo

mr_seer wrote: »

This is a very worrying development... particularly the line "We need property prices to be restored....". So official government policy is to inflate residential property prices. Here we go again.

http://www.independent.ie/business/irish/michael-noonan-not-concerned-about-hike-in-dublin-property-prices-29822367.html

I would have said it was unoffical policy because lets face it if property prices went up then less people are in negative equity, more people can sell their houses and repay banks, banks can repossess and sell on with lower losses.
It would solve some problems.
But we can't inflate hosue prices to get us out of the mess that inflated hosue prices got us into in the first place.
Oh and our entire banking system is shot to sh** so inflating house prices is a non runner.

The Spider wrote: »

Because that's an insane way to run any business, the price of anything is based on the cost of production, materials, labour etc.

Ehh ever heard of supply and demand ?

The Spider wrote: »

However I do agree that the free market should be allowed to dictate the price, if the cost of producing goods is higher than what can be achieved on the market then you need to reduce the cost of production.

The problem with that in relation to houses or apartments, is that you end up with another priory hall, as the cost of building is more than the price that can be achieved, you buy cheaper substandard materials, you don't employ as many people to build the house, you hire cowboys rather than experts.

All of these will reduce the cost, but you end up with a substandard product.

Are you serious about that as an explanation as to why we ended up with kips like Priory Hall ?
Ever think it was people just were very greedy and knew they would find an easy buyer for any type of sh**e ?

The Spider

jmayo wrote: »

Are you serious about that as an explanation as to why we ended up with kips like Priory Hall ?
Ever think it was people just were very greedy and knew they would find an easy buyer for any type of sh**e ?

You should try reading more than one post, Priory Hall was used as an example of the type of place you end up with when you cut corners, as in if you try to reduce your costs so that you can make a profit.

The point being discussed is that are building costs too high? as was pointed out in the article that houses couldn't be sold for less than the build cost. I point out that this refers to houses yet to be built.

Houses that have already been built and lost more than 50% of their sale price, tough that's supply and demand the market dictates the price.

However if the market deems that a house will sell for say 200'000, but it costs 250'000 to build, who in their right mind is going to start building these houses at such a loss?

To build a basic house and that's not including land costs is easily going to be north of 120'000, now after doing a search for sites in Dublin, I don't see too many that are coming in for less than 110'000, and any that are, are in the likes of Balbriggan.

http://www.daft.ie/searchsale.daft?s%5Bcc_id%5D=ct1&s%5Broute_id%5D=&s%5Ba_id_transport%5D=0&s%5Baddress%5D=&s%5Btxt%5D=&s%5Bmnb%5D=&s%5Bmxb%5D=&s%5Bmnbt%5D=&s%5Bmxbt%5D=&s%5Bmnp%5D=&s%5Bmxp%5D=&s%5Bpt_id%5D=5&s%5Bhouse_type%5D=&s%5Bsqmn%5D=&s%5Bsqmx%5D=&s%5Bmna%5D=&s%5Bmxa%5D=&s%5Bnpt_id%5D=&s%5Bdays_old%5D=&s%5Bnew%5D=&s%5Bagreed%5D=&more=&tab=&search=1&s%5Bsearch_type%5D=sale&s%5Btransport%5D=&s%5Badvanced%5D=&s%5Bprice_per_room%5D=

Raffeal

Spider,

Agree that no developer is going to be a house at a loss, makes no sense at all. But that leads to the question why are land prices so high? I saw your posts about SCD and it's true, there isn't room for everyone there, at least not in houses with gardens. You're point about land being limited is way off, Ireland is a sparsely populated country. There's loads of land, it's just hoarded, or other wise not available for development.

Land that is available if places like SCD is very expensive and they type of development needed to justify the price isn't allowed by planning authorities and if it is will be objected to by interested other parties. I remember a story from the boom years about developer wanting to build a tall building with large units, he got planning permission for a smaller building with the same amount of units. The same developer was then criticised for building shoe boxes.

We can't have it every way, if we want property prices to reflect true demand we have to stop trying to inflate or deflate it, allow people to build at a profit and prevent land hoarding and monopolies.

We don't want the problem but don't want the solution either.

The Spider

Raffeal wrote: »

Spider,

Agree that no developer is going to be a house at a loss, makes no sense at all. But that leads to the question why are land prices so high? I saw your posts about SCD and it's true, there isn't room for everyone there, at least not in houses with gardens. You're point about land being limited is way off, Ireland is a sparsely populated country. There's loads of land, it's just hoarded, or other wise not available for development.

Land that is available if places like SCD is very expensive and they type of development needed to justify the price isn't allowed by planning authorities and if it is will be objected to by interested other parties. I remember a story from the boom years about developer wanting to build a tall building with large units, he got planning permission for a smaller building with the same amount of units. The same developer was then criticised for building shoe boxes.

We can't have it every way, if we want property prices to reflect true demand we have to stop trying to inflate or deflate it, allow people to build at a profit and prevent land hoarding and monopolies.

We don't want the problem but don't want the solution either.

Absolutely, Ireland is sparsely populated and there's lots of land available, unfortunately it's not in areas like SCD or (insert other extremely desirable area to live here.) If people decided that they would have to accept a commute or move to west Dublin, areas like Inchicore or some areas in North Dublin, there wouldn't be a problem.

The fact is the vast majority (I didn't say everyone before they chime in.) on this thread anyway all want to live in SCD, to the point where they're considering ways to remove people already living there, SCD is the most desirable residential area on the whole island, regardless of what you think of it.

You'll never get permission to build anything that has potential to devalue other property in this area, just as you wouldn't in other desirable areas in other cities around the world.

Land prices aren't that high outside Dublin (again supply and demand) you'll get a site pretty cheaply, but again that means a lifestyle change that may be too far for some people.

Calina

I'm tired of this assumption that everyone wants to live in SCD. I don't. In fact, I am not sure I even want to live in Dublin.

SCD is not indicative of the entire market in Ireland and it's misleading to discuss it as if it is. It's not even indicative of the market in Dublin itself.

Ireland has planning legislation which reduces the amount of buildable ground. Not only that, the bulk of new jobs are going into the Dublin area which might be fine if transport into that area from the outer rings were reasonably comprehensive and reliable. Unfortunately, our infrastructure, particularly as far as public transport is concerned, is done on the basis of kicking and screaming for dragging into the modern era. No one wants to pay for it, much.

We haven't built suitable high density accommodation - the apartment blocks are in walled developments rather than developing decent community structures about them.

We need to reassess spatial strategy in this city as this directly impacts on where people live or don't live.

Raffeal

Spider / Calina,

I mostly agree with both of you.

@ spider you're wrong about other places restricting development that will potentially damage the values of other properties. The imagined impact of a development on the market values of other properties should have no part of the planning process. That so many living here believe it should shows how effective the vested interests are in protecting their views etc.

The belief that developments should only proceed if no influence person objects is a major reason why public transport is a mess and most have difficult commutes. It's also a reason why people want to live near where they work which brings us to SCD. The prevalence of industrial estates for non industrial businesses is evidence of a badly broken planning system. High density for the suburbs, low density for the city centre, makes no sense at all.

Calina, the type of development plays a role but is not entirely central to the sense of community, I lived in NYC and London and the apartment blocks aren't too dissimilar to here but there was a sense of community where I lived in NYC, people said hello in the morning, there were block BBQ's, charity event etc, didn't happen in London and doesn't happen that often here. How many of your friends and family know their neighbours? Pretty much all of my parents friends are their neighbours with a few exceptions. I don't know what's stopping the younger generations getting involved, long commutes etc? who knows, but it's not solely down to the type of development, some of Dublin's strongest communities had and have little or no community structures.

gaius c

The Spider wrote: »

You should try reading more than one post, Priory Hall was used as an example of the type of place you end up with when you cut corners, as in if you try to reduce your costs so that you can make a profit.

Eh no. Priory Hall was a case of corners being cut to increase profit, not to make it in the first place. You have your red herrings all mixed up.

The point being discussed is that are building costs too high? as was pointed out in the article that houses couldn't be sold for less than the build cost. I point out that this refers to houses yet to be built.

Houses that have already been built and lost more than 50% of their sale price, tough that's supply and demand the market dictates the price.

However if the market deems that a house will sell for say 200'000, but it costs 250'000 to build, who in their right mind is going to start building these houses at such a loss?

To build a basic house and that's not including land costs is easily going to be north of 120'000, now after doing a search for sites in Dublin, I don't see too many that are coming in for less than 110'000, and any that are, are in the likes of Balbriggan.

You might not be able to do much about the cost of bricks but you can do something about the margin being charged on them and the labour rates of the fellas using them, especially those labour rates.

I work in engineering and we do a lot of work with a well-known beverage company. Let's call them Depsi. We bid for a job and were called in to do a presentation and we had a lovely presentation prepared for what a lovely job we were going to do for them but what they wanted to talk about was our price. They had a general breakdown of our price and looked for a more specific one and then they asked our rates. When we told them, we were kicked out of the meeting room with "you'd want to look at those rates again if you want to do business with us" ringing in our ears.

We lost the job as did all the other Irish bidders so we had to go back to the drawing board and make a decision on our rates. This was 2010.
We either reduced our rates or we were all going to be on the dole at a rate of €188 a week.
True story and my point is that builders rates are set by unions and like most unions, they are more concerned with protecting the pay of the people who still have work than genuinely improving employment numbers.

If our builders really really want to work, then they are going to have to figure out why they are so expensive compared to our trading partners and cut their costs to suit. If building costs are too high for the current market then the smart builders need to figure out how to fix their costs so the market can bear them.

The Spider

gaius c wrote: »

Eh no. Priory Hall was a case of corners being cut to increase profit, not to make it in the first place. You have your red herrings all mixed up.



You might not be able to do much about the cost of bricks but you can do something about the margin being charged on them and the labour rates of the fellas using them, especially those labour rates.

I work in engineering and we do a lot of work with a well-known beverage company. Let's call them Depsi. We bid for a job and were called in to do a presentation and we had a lovely presentation prepared for what a lovely job we were going to do for them but what they wanted to talk about was our price. They had a general breakdown of our price and looked for a more
specific one and then they asked our rates. When we told them, we were
kicked out of the meeting room with "you'd want to look at those rates again if you want to do business with us" ringing in our ears.

We lost the job as did all the other Irish bidders so we had to go back to the drawing board and make a decision on our rates. This was 2010.
We either reduced our rates or we were all going to be on the dole at a rate of €188 a week.
True story and my point is that builders rates are set by unions and like most unions, they are more concerned with protecting the pay of the people who still have work than genuinely improving employment numbers.

If our builders really really want to work, then they are going to have to figure
out why they are so expensive compared to our trading partners and cut their costs to suit. If building costs are too high for the current market then the
smart builders need to figure out how to fix their costs so the market can bear
them.

I agree with a lot of the above in relation to what a job will pay etc, but in my experience it's the materials that are the major cost, believe me I've gone through a bit of it and I've seen the breakdown of labour versus materials, and the labour really is the minor cost.