Four reasons for a property slump, can anyone think of reasons otherwise?

Zaph0d

11,000 new apartments are expected to be built in the docklands by 2012
source: http://www.dublindocklands.ie/cold_fusion/dublin_docklands/dublin_docklands.cfm

whizzbang

lomb wrote:

so what u are saying is u are going to take a gamble, and can i ask what if u are worng? have u factored that into ur figures?

I'f I'm wrong I rent or move away, I'd rather that than be in Negative Equity.

J

whizzbang

There definitly seem to be an oversupply of apartment on the horizon! Go up the 3 Rock and look over Dublin at all the building cranes and apartment blocks under construction. It will take alot of immigrents and people without kids to fill them!

J

homeOwner

Zaph0d wrote:

11,000 new apartments are expected to be built in the docklands by 2012
source: http://www.dublindocklands.ie/cold_fusion/dublin_docklands/dublin_docklands.cfm

J@ysus its worse than I thought. Am I the only person worried about that? I assume due to their price they are not going to be bought (or have not already been bought) by first time buyers. So the majority are going to be rented out.

MorningStar

homeOwner wrote:

J@ysus its worse than I thought. Am I the only person worried about that? I assume due to their price they are not going to be bought (or have not already been bought) by first time buyers. So the majority are going to be rented out.

No but for different reasons I would guess. THe baddly built appartments around the city will cause a storng dislike for appartements overall. Even well built appartments will suffer. The increased density is needed and as I have said fuel and commuter costs will make people want to move closer to places of work.
City living is as viable as anyother kind of life and we will have to become accustomed to it or more importantly the next generation will. Right now most appartment livers are tansient but that will change. People are staying single, not having kids and breaking up, a lot less traditional familes. OUr culture is changing without any imigrants.

soma

MorningStar wrote:

The increased density is needed and as I have said fuel and commuter costs will make people want to move closer to places of work.

Yeah as morningstar has touched on a few times - the rising costs of fuel are to be factored in when buying in the commuter belt, altho something that isnt mentioned much in the media (when discussing the current oil price hike) is that 'peak oil' really isnt that many years away http://www.peakoil.net/ altho yes there have been some incorrect forecasts.

We keep building millions of machines that can only run on a substance that is finite and depleting yet we refuse to (as the site says!) "Deal With Reality or Reality Will Deal With You" - altho this could also be a good motto to use for those on boards who say buy property now

lomb

whizzbang wrote:

I'f I'm wrong I rent or move away, I'd rather that than be in Negative Equity.

J

then im sorry to say this u will be renting or moving away.
' GOOD ' property will never fall SIGNIFICANTLY even if it does fall it will only fall relative to inflation. ur gamble isnt based on anything other than what u think and what u think isnt based on any facts.

my advise is buy a freehold somewhere even south drogheda if u believe it is rentable after a little reasearch for 200 grand and try and rent it out then continue to rent in the city and at least that way u have hedged urself.

also on the balance of probability working till 70 as u say may not even be possible due to the fact that rarely does anyone want to hire a 70 year old in addition to the fact ur health may not be what it is today at that age. what im saying is u cant bank on it like u are banking on it.

either u are a great gambler or u are someone who hasnt done their homework either way i wish u good luck

whizzbang

lomb wrote:

then im sorry to say this u will be renting or moving away.
' GOOD ' property will never fall SIGNIFICANTLY even if it does fall it will only fall relative to inflation. ur gamble isnt based on anything other than what u think and what u think isnt based on any facts.

my advise is buy a freehold somewhere even south drogheda if u believe it is rentable after a little reasearch for 200 grand and try and rent it out then continue to rent in the city and at least that way u have hedged urself.

also on the balance of probability working till 70 as u say may not even be possible due to the fact that rarely does anyone want to hire a 70 year old in addition to the fact ur health may not be what it is today at that age. what im saying is u cant bank on it like u are banking on it.

either u are a great gambler or u are someone who hasnt done their homework either way i wish u good luck

Thanks

J

lomb

homeOwner wrote:

IMO property prices will not go into decline but increases will come inline with inflation pretty soon. I think the market is off the boil already in some areas.

Anecdotal eveidence: there is an second hand apartment in dundrum that has been on sale for over 8 months and I would have thought it was highly sellable (maybe because there is a glut of apartments being built there now demand is less than supply, surely this will also bring rent down in the area).... a work collegue has been looking at a house in dublin that seems to be underpriced for a quick sale and is the only person who has put an offer on it at asking price(maybe because it is summer). I know two people who are in the process of selling their investment apartments to buy something overseas and there has been very little interest in them and no offers yet. It just seems that there is not the same frenzied buying there was a few years ago.

I am really worried about what is going to happen when Spencer dock is finished, someone told me there is going to be 5000 apartments in the complex. Surely that alone will provide all the rental needs in the city centre for a while or at the very least reduce rent in the area. I also heard planning permission has been given for a huge development of apartments beside leopardstown business park including a 17 storey tower block. Can the city really cope with that many new properties over the next 3 years? It scares me that they are building so many apartments in dublin. I'm no economist but it simply has to affect rental prices. My point being that it will not become feasible for the average person with a bit of spare cash to buy investment properties as rent will not cover mortgage thus slowing everything down.

apartments being leasehold arent the best investment out there. their value is strongly linked to rentability as only young people today or immigrents live in them. perhaps in the future well serviced semis may be grossly unaffordable for families and they will live in flats, that will be a sad day and i think that day has nearly come.

whizzbang

2 Quick questions!

Is there anyone here who owns a house who thinks prices are going to go down?
Is there anyone here who doesn't own a house who thinks prices are going to continue to go up?

soma

whizzbang wrote:

2 Quick questions!

Is there anyone here who owns a house who thinks prices are going to go down?
Is there anyone here who doesn't own a house who thinks prices are going to continue to go up?

Good questions/points. I guess our perspective is always heavily influenced by the context we find ourselves in.

whizzbang

soma wrote:

Good questions/points. I guess our perspective is always heavily influenced by the context we find ourselves in.

exactly

lomb

whizzbang wrote:

2 Quick questions!

Is there anyone here who owns a house who thinks prices are going to go down?
Is there anyone here who doesn't own a house who thinks prices are going to continue to go up?

houses arent apartments, use common sense in 15 years say can u imagine the demand for a semi d thats say within 10 miles of dublin. remember the young in apartments today will want these within 10 years and within 15 the price could climb to whatever who knows. whatever the market can bear to the absolute maximum.

whizzbang

lomb wrote:

houses arent apartments, use common sense in 15 years say can u imagine the demand for a semi d thats say within 10 miles of dublin. remember the young in apartments today will want these within 10 years and within 15 the price could climb to whatever who knows. whatever the market can bear to the absolute maximum.

ok then

Who ownes property and thinks prices will go down
Who doesn't own property and think prices will go up

(earlier in this thread we talked about demographics and the aging of apartmetn buyers, have a read if you are interested! I agree that houses will be a lot safer investments than apartments)

Zaph0d

whizzbang wrote:

2 Quick questions!
Is there anyone here who owns a house who thinks prices are going to go down?

I suspect that property will go down but I'm not sure enough to sell up. My current property is a hedge against movements in residential property prices in Dublin. I wouldn't invest in property.

In London you can short proerty using spread bets. Some people were using these bets as a hedge against falls in their expensive houses. Is anyone offering this facility in Ireland?

whizzbang

Zaph0d wrote:

I suspect that property will go down but I'm not sure enough to sell up. My current property is a hedge against movements in residential property prices in Dublin. I wouldn't invest in property.

In London you can short proerty using spread bets. Some people were using these bets as a hedge against falls in their expensive houses. Is anyone offering this facility in Ireland?

good point, I'd say it also depends when you bought your property. if you got it for €50,000 years ago you won't be so worried but if you got it for €500,000 last year then you might be a bit nervous!

J

Bluehair

whizzbang wrote:

ok then

Who ownes property and thinks prices will go down

Me.

Bought 1999. Just signed contracts on sale of my house this week. House gone up in value 300%.

Frankly I'm breathing a sigh of relief. I'm renting now and will happily do so for the next couple of years until I decide whether or not to buy again or move abroad.

I'm utterly convinced that at the *very* least I'm not missing out on any worthwhile future growth and reasonably convinced that there's trouble ahead for Irish property owners, especially amateur investors who only own 1 or two 'speculation' properties and are screwed at the slightest downturn in the market.

whizzbang

Bluehair wrote:

Me.

Bought 1999. Just signed contracts on sale of my house this week. House gone up in value 300%.

Frankly I'm breathing a sigh of relief. I'm renting now and will happily do so for the next couple of years until I decide whether or not to buy again or move abroad.

I'm utterly convinced that at the *very* least I'm not missing out on any worthwhile future growth and reasonably convinced that there's trouble ahead for Irish property owners, especially amateur investors who only own 1 or two 'speculation' properties and are screwed at the slightest downturn in the market.

nice move! I'd like to think I'd be doing the same in the same situation but it must take some guts!

MorningStar

Bluehair wrote:

Bought 1999. Just signed contracts on sale of my house this week. House gone up in value 300%.

Frankly I'm breathing a sigh of relief. I'm renting now and will happily do so for the next couple of years until I decide whether or not to buy again or move abroad.

What ever can be said about joining the market now is fine and understandable and could go one way or the other in the short term. Bluehair has stated this "sell up" view a few times and his actions. I must be bluntly honest that I think this is maddness. I can't believe any financial advisor would recommend it. It might work out but it is a huge risk. I would have a heart attack taking on that risk and waiting out the market.

homeOwner

Bluehair wrote:

Bought 1999. Just signed contracts on sale of my house this week. House gone up in value 300%.

I assume you now have alot of cash sitting in the bank as your mortgage must have been quite low. What are you going to do with it? I ask because obviously you wont get anything in a savings account, maybe 3% from rabo, but do you think whatever you do with it will be better than loosing money on rent over the next coule of years till you decide what you are doing?

Culchie

Bluehair wrote:

Me.

Bought 1999. Just signed contracts on sale of my house this week. House gone up in value 300%.

Frankly I'm breathing a sigh of relief. I'm renting now and will happily do so for the next couple of years until I decide whether or not to buy again or move abroad.

I'm utterly convinced that at the *very* least I'm not missing out on any worthwhile future growth and reasonably convinced that there's trouble ahead for Irish property owners, especially amateur investors who only own 1 or two 'speculation' properties and are screwed at the slightest downturn in the market.

I have an investment property, released some of the equity and re-invested in Croatia.

I would not do the same with my 'home' though.

whizzbang

MorningStar wrote:

What ever can be said about joining the market now is fine and understandable and could go one way or the other in the short term. Bluehair has stated this "sell up" view a few times and his actions. I must be bluntly honest that I think this is maddness. I can't believe any financial advisor would recommend it. It might work out but it is a huge risk. I would have a heart attack taking on that risk and waiting out the market.

Its the classic investment situation, don't let greed be your driver! If you get a good return sell up and move on to the next investment, don't be driven by emotions! Its a littel different in this case as it is his home but any investor selling now would be quite wise I feel.

Culchie

whizzbang wrote:

Its the classic investment situation, don't let greed be your driver! If you get a good return sell up and move on to the next investment, don't be driven by emotions! Its a littel different in this case as it is his home but any investor selling now would be quite wise I feel.

Investment property.... yes....by all means, make a profit ....... re-invest elsewhere or in a different asset class.


Home.... are you mad ? You have to live somewhere.


You have to seperate the two.

Bluehair

MorningStar wrote:

It might work out but it is a huge risk. I would have a heart attack taking on that risk and waiting out the market.

Who's waiting out the market? Where's the risk precisely?

I should probably elaborate a little so my own situation is more clear.

Been living in that house since purchase (my PPR). Whatever happens will definately not be living in that location in about two years so would have to sell at that point anyway.

Am currently renting in a location where it suits me. Renting out my own home would have turned it into an investment property with the consequent CGT implications that entails when I would have sold in two years anyway. Can show you the maths but there would have to be a significant capital appreciation over that time frame for me just to come out with roughly what I'm taking tax-free now anyway.

I'm not convinced at all the market will continue to grow at anything close to what it has been and am not willing to gamble my gain thus far on the slim possibility I could increase my return in two years time.

It's really very simple, I'm taking my profit now. If I do decide to re-enter the market in two years it won't be in Dublin anyway and possibily even abroad.

I'm quite content to take the 'risk' that I'll pay slightly more for a home then than now and certainly a lot happier about it than taking the (much more likely imho) risk of losing money in a downturn.

Bluehair

homeOwner wrote:

I assume you now have alot of cash sitting in the bank as your mortgage must have been quite low. What are you going to do with it? I ask because obviously you wont get anything in a savings account, maybe 3% from rabo, but do you think whatever you do with it will be better than loosing money on rent over the next coule of years till you decide what you are doing?

I never cease to be amazed at the logic 'rent money is dead money'. You're paying for a service so who's loosing money?

I'm renting a house in a nice location extremely close to where I want to be, save money on petrol and have no concerns about life/home insurance, maintenence etc. etc.

Naturally I don't want to leave the entire sum I made from the sale in a savings account but I'm somewhat risk adverse (as you may have guessed ) so am currently exploring a fairly diverse portfolio to invest in.

It won't include property of any kind, Irish or foreign.

MorningStar

Bluehair wrote:

Who's waiting out the market? Where's the risk precisely?

.

Personal sistuation can suit many things. You are right about the CG tax as you say. You are now out of the market with your profit. If the market goes up your money won't so if you had kept owning the house you would never have "lost" the profit. It may be a standard investement method but it is your home so the same rules don't apply. Your profit is eaten into if your new rent is over your last mortgage the difference should be deducted from your 300% profit. Property is a long term investement and quick profits are possible but risky I don't know how to say it in a way that is crystal clear if you don't know already.

As I said your particular situation may suit what you are doing but it doesn't mean it is not a risk or that you are right. The risks are real and no fiancical advisor would say it is not a risk. The risk is dependent on you joining back into the irish property market.

There is huge potential for price increases

MorningStar

Bluehair wrote:

Who's waiting out the market? Where's the risk precisely?

.

Personal sistuation can suit many things. You are right about the CG tax as you say. You are now out of the market with your profit. If the market goes up your money won't so if you had kept owning the house you would never have "lost" the profit. It may be a standard investement method but it is your home so the same rules don't apply. Your profit is eaten into if your new rent is over your last mortgage the difference should be deducted from your 300% profit. Property is a long term investement and quick profits are possible but risky I don't know how to say it in a way that is crystal clear if you don't know already.

As I said your particular situation may suit what you are doing but it doesn't mean it is not a risk or that you are right. The risks are real and no fiancical advisor would say it is not a risk. The risk is dependent on you joining back into the irish property market.

There is huge potential for price increases one way are the other so that adds to the risk

GreeBo

I am off the opinion that rent is "dead money"
the argument that "so is mortgage interest" can be used for anything that you pay interest on, car, holiday loan whatever.
The difference between the rent dead money and the mortage dead money is that after 25 years you have a house, after 25 years of a renting you have diddly squat.
Also the amount of dead money reduces each year of your mortgage (unless you are very unlucky and get screwed on rates, but that will just delay the start of the reductions). Im pretty sure that rents will never reduce to zero as mortgage repayments do.

For those who forsee a drop in prices, here are my thoughts.
For sure there are properties that are overvalued and have been pushed up because of the general price increase, but counter to that this fact.
If you want to live in Rathmines for example, there are a finite number of homes that you can choose from, if there is a demand for living in Rathmines (as there is) then you will have to pay more than the next person is willing to pay to secure the house you want.
I would argue that there is more competition for a Rathmines 3bed then there is for a 3 bed in Trim for example. I think it is these houses that will be hit by any falling prices.
If Rathmines prices itself out of the market, then the prices in Trim will increase because of competition, Rathmines will drop and competition increases there again.
Any drops in the Rathmines will be temporary.
Bottom line is, if you live in a house in a desirable area I think you are pretty safe. If you buy somewhere "just to get a house" then I think you may well be screwed.

Just my opinion, and you can substitute Clontarf for Rathmines and Drogheda for Trim, they are just examples.

Bluehair

GreeBo wrote:

Bottom line is, if you live in a house in a desirable area I think you are pretty safe. If you buy somewhere "just to get a house" then I think you may well be screwed.

A reasonable assumption I believe. But how many people do you know who are buying 'starter homes' just to 'get on the ladder'. I know many who are doing so with no interest at all in the community or area they are buying in and little knowledge about the locality other than proximity to a motorway.

They are completely relient on strong capital growth in order to trade up in a few years to something more akin to what they'd like to live in. Talk about risk!

whizzbang

Bluehair wrote:

A reasonable assumption I believe. But how many people do you know who are buying 'starter homes' just to 'get on the ladder'. I know many who are doing so with no interest at all in the community or area they are buying in and little knowledge about the locality other than proximity to a motorway.

They are completely relient on strong capital growth in order to trade up in a few years to something more akin to what they'd like to live in. Talk about risk!

I think the people most at risk are those buying starter homes in Dodgeyville/Ballygobackwards to "get on the ladder". If you have a nice 3 bedroom house in Blackrock you are ok, if you are trying to buy a 2 bedroom place in Ballygobackwards to commute to Dublin, you are in trouble.

Unfortunatly I could only afford to buy in either Dodgeyville or Ballygobackwards. Which I don't fancy much.

J