Buy now or wait for sanity to return to the market?

witchgirl26

psheaser wrote: »

Prices in areas such as Clondalkin and Tallaght have actually been decreasing for months on end.

Albeit some parts are not very desirable but there is some lovely estates there and bargains can be had.

Another factor that hasn't been mentioned is the review of our corporate tax bracket that is due for review in November, any raise to that and you may kiss the multi nationals goodbye along with thousands of " professional " jobs.

I haven't seen those price decreases. In fact most areas I know in Clondalkin & Tallaght the prices are up on average 20k since last year in similar estates.

Honestly I don't think we will see masses of multi-nationals pull out unless we really hammer them with a tax rate....and I mean really hammer. Maybe some of the newer established ones but ones that have been here for a number of years already have significant investment in terms of buildings etc will be less likely to pull out as the cost-benefit would not be there.

I also don't understand why you have professional in inverted commas.

Nika Bolokov

Eugene Norman wrote: »

Nobody's concerned about profit but buying a reasonable house at a reasonable price. In the 80's prices stagnated. It wasn't an issue. There was no panic.

Irelands housing market is a mess. Massive downturns and upturns.

Prices stagnated because unemployment was sky high as were interest rates. Buying a house in a clapped out economic mess was a risk in itself. There was mass emigration pretty sure that counts as 'panic'

Some posters might have an idea of a 'reasonable' price but I think that might be conditioned by what they could have got the place for in 2011 therefore today's prices are 'unreasonable'

Villa05

Nika Bolokov wrote:

Some posters might have an idea of a 'reasonable' price but I think that might be conditioned by what they could have got the place for in 2011 therefore today's prices are 'unreasonable'

Prices rose by 300+% from 96 to 2006, they corrected by 50% from 07 to 11. I think there are more people comparing with the 06 price than the 2011 price.

Property is overpriced and in a bubble, more evidence of that today with Debenhams going into examinership citing rents as a major issue

psheaser

Galway and Cork prices have been stagnating somewhat, possible rises coming but nothing compared to Dublin.

newacc2015

Villa05 wrote: »

Prices rose by 300+% from 96 to 2006, they corrected by 50% from 07 to 11. I think there are more people comparing with the 06 price than the 2011 price.

Property is overpriced and in a bubble, more evidence of that today with Debenhams going into examinership citing rents as a major issue

Those figures are extremely misleading. If you adjust them for inflation or earnings. You will be the price of property is not very much out of place compared to 1996 or even 1976. What you have suggested is like taking an Apple stock from 1996 and saying it is overpriced as it has risen 300% since 1996. But you have ignored adjusted for dividend growth and inflation, the stock is still value

http://www.thepropertypin.com/viewtopic.php?f=4&p=686835

How is property in a bubble? Compare Dublin to other medium sized wealthy European cities and you will see that our property is comparable in price. A bubble implies the price is irrational. If it costs €210k to build a basic house, how can you say that is overpriced and in a bubble? An property analyst will tell you prices dropped too low in 2011.


What exactly has commerical property to do with residential property? Very little in fact. Commerical property tends to be owned by large pension funds and insurance companies. Where as residential property tends to be own by single investors. There is very little similarities in commerical and residential property markets.

1st dalkey dalkey

For me the bottom line is that we are not building enough housing.
The government may bring in measures to address that basic problem, but they will take time to impact the actually selling prices. Probably in the order of 3 to 5 years.
And then if they do start to drive down the prices, homeowners will kick up at what they will perceive as the loss of value, so expect these measures to have a time limit.
I suppose it therefore comes down to your time horizon. Things may get marginally better but I don't expect to see another collapse. At least not one like the last one. The world economy is very shaky, but if it goes there is nothing either you or the government can do about it.

KomradeBishop

newacc2015 wrote: »

Those figures are extremely misleading. If you adjust them for inflation or earnings. You will be the price of property is not very much out of place compared to 1996 or even 1976. What you have suggested is like taking an Apple stock from 1996 and saying it is overpriced as it has risen 300% since 1996. But you have ignored adjusted for dividend growth and inflation, the stock is still value

http://www.thepropertypin.com/viewtopic.php?f=4&p=686835

The price of property is way out of place, compared to that far in the past - you measure this as a proportion of earnings, using the 'House Price to Wage ratio' - I gathered stats on this a while back:


The more house prices get out of line with wages, the less affordable they get.

Wanderer78

KomradeBishop wrote:

The more house prices get out of line with wages, the less affordable they get.

I'd have agreed with you here. House prices are completely over inflated and have been for a very long time. We are deluding ourselves by believing the value of our assets. It's causing a lot of serious problems for us thinking so

Wanderer78

1st dalkey dalkey wrote:

The world economy is very shaky, but if it goes there is nothing either you or the government can do about it.

I do agree that the world economy is very shaky, but sitting back and doing nothing is not an option here. We must do whatever we can to protect ourselves from external economic shocks. We're a very open economy, very vulnerable

draiochtanois

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Michael D Not Higgins

That's a good point but doesn't take into account the people who bought in the 90s and paid off over the 00s and today are benefitting from the lower income multiple AND the lower interest today. We might see high interest rates again so basing the affordability off today's interest rate ignores the total cost over the life of the mortgage.

KomradeBishop

draiochtanois wrote: »

This post has been deleted.

Here are the interest rates adjusted for inflation - inflation was often high, when the interest rate was:


It doesn't cover the whole period - but Ireland had massive inflation in periods in the past, which greatly affect the real interest rate.

This inflation, also effectively reduced the real principle of the mortgages from that time - so focusing only on the interest is very misleading.

Since mortgages are a decades-long investment, and since the high interest was over a comparatively short period of time, then (after back of the envelope estimates, that I did when I last posted this) the drop in compound interest costs does not make up for the increased cost of houses today - things have not balanced out, they are still way out of balance.

That's not even considering inflation - which, again, will have reduced the principal significantly.

draiochtanois

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draiochtanois

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KomradeBishop

The first graph started in 1990, because that's as far back as usable wage stats went in the table I used - including wage stats prior to that, required figuring out how to make statistical adjustments to them, so that they would be comparable to the post-1990 data.

Here is proof of that - these are the wage stats used (select the date - it goes back to 1990, earliest):
https://stats.oecd.org/Index.aspx?DataSetCode=AV_AN_WAGE

The graph on inflation-adjusted interest rate ends at 2004, because that's the limit of the data on the site......
http://www.tradingeconomics.com/ireland/real-interest-rate-percent-wb-data.html

If it's showing 0% interest in 2004 - and we presume that it carries on close to that thereafter - then that doesn't help my argument in any way...

When you scoff at hard stats, instead of putting a bit of effort into either creating an argument or collecting stats of your own to counter what was said - it doesn't make your own position any more believable.

seamus

KomradeBishop wrote: »

The price of property is way out of place, compared to that far in the past - you measure this as a proportion of earnings, using the 'House Price to Wage ratio' - I gathered stats on this a while back

You're making an assumption though that the ratio in 1990 was "good" or "correct" and then using that presumption to conclude that the ratio in 2016 is "incorrect".

You also need to be more exact in citing the calculations. Showing a graph where "up = bad" is easy, but what's the context?

You're comparing house prices against wage. What kind of wage, whose wage, etc.

The appropriate metric is house prices versus household income. Is that what you've done? Or have you compared it against the average industrial wage?

"I collected some statistics and put them into a graph" is very nice, thanks for your work. But what statistics did you collect? A graph is somewhere meaningless without that information.

KomradeBishop

seamus wrote: »

You're making an assumption though that the ratio in 1990 was "good" or "correct" and then using that presumption to conclude that the ratio in 2016 is "incorrect".

You also need to be more exact in citing the calculations. Showing a graph where "up = bad" is easy, but what's the context?

You're comparing house prices against wage. What kind of wage, whose wage, etc.

The appropriate metric is house prices versus household income. Is that what you've done? Or have you compared it against the average industrial wage?

"I collected some statistics and put them into a graph" is very nice, thanks for your work. But what statistics did you collect? A graph is somewhere meaningless without that information.

Well, here are the stats going back further:


The gigantic bump in house prices, co-incides with the gigantic bump in the ratio. If you want to claim it was similarly high in the past, it'd be hard to convince others of.

If you want to try and discredit that, go gather your own stats, and generate your own graph.

draiochtanois

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KomradeBishop

If you claim I manipulated the graph - which is inherent in your claim that I came to a conclusion first, and then created a graph around it - then prove that, as you're claiming I am directly lying and falsifying stats here.

athtrasna

Play nicely please folks!

Monife

Wages have DEFINITELY not kept pace with house prices. I'll use my mother as an example.

Bought a house in 1994 for £50,000
Sold it in 2004 for €325,000

Wages in 1994 were approximately £30,000
Wages in 2004 were approximately €40,000 (and are now €36,000)

No way have the majority of wages kept pace with house prices!

Ush1

Monife wrote: »

Wages have DEFINITELY not kept pace with house prices. I'll use my mother as an example.

Bought a house in 1994 for £50,000
Sold it in 2004 for €325,000

Wages in 1994 were approximately £30,000
Wages in 2004 were approximately €40,000 (and are now €36,000)

No way have the majority of wages kept pace with house prices!

What was the interest rate in 1994?

draiochtanois

This post has been deleted.

seamus

Monife wrote: »

Wages have DEFINITELY not kept pace with house prices. I'll use my mother as an example.

Bought a house in 1994 for £50,000
Sold it in 2004 for €325,000

Wages in 1994 were approximately £30,000
Wages in 2004 were approximately €40,000 (and are now €36,000)

No way have the majority of wages kept pace with house prices!

I'm pretty sure you've got that quite wrong. No way in hell the average wage in 1994 was nearly €40k.

According to the CSO the average industrial wage in 1998 (in euros) was just shy of €20k. So 1994 would have been below that again.

Relevant discussion here which has attempted to extrapolate the pre-1990 figures that KomradeBishop doesn't have;
http://www.irisheconomy.ie/index.php/2009/05/01/negative-equity-in-ireland/#comment-6563

This guy's figures could be used to suggest that a ratio hovering around 5-7 is the "norm" and anything outside of this is an abberation.

I say "could be used" because it in reality the raw ratio is useless as an indicator. It ignores massively relevant pieces of data such as the average interest rate at the time and the average amount of income per household. For example, a ratio of 12:1 could be just fine if your average household has 3 full-time earners.

Monife

seamus wrote: »

I'm pretty sure you've got that quite wrong. No way in hell the average wage in 1994 was nearly €40k.

According to the CSO the average industrial wage in 1998 (in euros) was just shy of €20k. So 1994 would have been below that again.

Relevant discussion here which has attempted to extrapolate the pre-1990 figures that KomradeBishop doesn't have;
http://www.irisheconomy.ie/index.php/2009/05/01/negative-equity-in-ireland/#comment-6563

This guy's figures could be used to suggest that a ratio hovering around 5-7 is the "norm" and anything outside of this is an abberation.

I say "could be used" because it in reality the raw ratio is useless as an indicator. It ignores massively relevant pieces of data such as the average interest rate at the time and the average amount of income per household. For example, a ratio of 12:1 could be just fine if your average household has 3 full-time earners.

I never said it was the average wage. It is what my mother was earning as an accounting technician.

draiochtanois

This post has been deleted.

seamus

Monife wrote: »

I never said it was the average wage. It is what my mother was earning as an accounting technician.

Ah here, with all due respect that's meaningless.

I bought my current house for less than my first house, but I'm earning twice as much now as I was then. Does that mean houses have become more than twice as affordable in the interim? Or that wages have increased to meet property prices?

No, a single data point does not provide any meaningful information about trends.

KomradeBishop

seamus wrote: »

I'm pretty sure you've got that quite wrong. No way in hell the average wage in 1994 was nearly €40k.

According to the CSO the average industrial wage in 1998 (in euros) was just shy of €20k. So 1994 would have been below that again.

Relevant discussion here which has attempted to extrapolate the pre-1990 figures that KomradeBishop doesn't have;
http://www.irisheconomy.ie/index.php/2009/05/01/negative-equity-in-ireland/#comment-6563

This guy's figures could be used to suggest that a ratio hovering around 5-7 is the "norm" and anything outside of this is an abberation.

I say "could be used" because it in reality the raw ratio is useless as an indicator. It ignores massively relevant pieces of data such as the average interest rate at the time and the average amount of income per household. For example, a ratio of 12:1 could be just fine if your average household has 3 full-time earners.

Figuring in that data to the graph (in green), and while the wage stats don't track well with existing data (maybe they're indexed against a different year or something), the ratio calculation against house prices still shows it goes far out of whack as soon as the house prices increase - well beyond any comparable past figures - and, estimating from the two ratio figures in the graph, we're still well above where we should be:


The house price data, was calculated from this table - averaging both the new and second hand house prices - so while it's still a bit crude, I went to a lot of effort to keep it accurate:
http://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?Maintable=HSQ06&Planguage=0

sKeith

in the 80s, a bag of chips would set you back 10p. By the late 80s that had increased to about 70p. Then in the 90s it jump to 1.50 and by late 90s it was 1.80. Then in the 00's it had risen to over 2 euros a portion. Even thought the recession brought the price down a tiny bit, I still think 3 quid is too much for a bag of chips, but if I was hungry I'd still pick up a portion.

Sheep in a field

seamus wrote: »

Ah here, with all due respect that's meaningless.

I bought my current house for less than my first house, but I'm earning twice as much now as I was then. Does that mean houses have become more than twice as affordable in the interim? Or that wages have increased to meet property prices?

No, a single data point does not provide any meaningful information about trends.

Far from meaningless, even using your example of the average wage in 1998 being 20000 euros, the ratio of average house prices to average wages has definitely and unequivocally risen sharply. You can't argue with that.