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Why the lack of demand for apartments?

  • 23-04-2014 12:09am
    #1
    jescart
    Registered Users Posts: 140 ✭✭


    I read the recent "bubble" in Dublin property market is partly due to shortage of family homes and the people who bought apartments during the boom years are now in their 30's and want to settle down and have children etc. I am looking to buy a property in Dublin shortly and see some great deals on apartments. Something turning me off the idea is the management fees though, I mean I am viewing 1 bedroom apartments (Some as cheap as €100,000) but the management fees are €1,500/year. Crazy stuff, and those fees could potentially increase -correct? I doubt they would ever reduce them.

    Sorry if this is a bit of a rambling post, so I'll cut to the chase - do you believe apartments are currently overvalued/undervalued/correct price given factors such as management fees and demand for 3/4 bed semi-d houses.


Comments

  • #2
    athtrasna
    Closed Accounts Posts: 13,420 ✭✭✭✭athtrasna


    The way to deal with management fees is to be elected as a director of the management company at your AGM and be involved in the tendering/budget process that ultimately sets the fees.

    Our fees went down and down but have recently increased marginally (€20 a year) but for that we get block insurance, landscaping, refuse, common area maintenance and other stuff. I consider our fees to be good value, particularly when compared to others.

    The key thing when buying an apartment is to research the management company accounts to see the financial position of the development. Bear in mind that most one bedroom apartments are in blocks with lifts and their maintenance is a hefty part of your management fees.


  • #3
    marathonic
    Registered Users Posts: 1,660 ✭✭✭marathonic


    If you assume an interest rate of 4%, then €37,500 in borrowings would cost €1,500 per year in interest.

    With this in mind, if I saw a terraced 2-bed house and an apartment, both of which I'd be equally as happy to live in, and the apartment was €40,000+ cheaper than the house, I wouldn't let the management fees turn me off.

    Also, remember that the management fees include various services that you would be paying for separately anyway if you lived in a house.


  • #4
    doolox
    Closed Accounts Posts: 2,350 ✭✭✭doolox


    Now that we are in a very slow moving or uncertain housing market, where the chance of getting a larger mortgage later on or the chance of upgrading to a house later on if family size dictates, most people are better off getting a house to start with as their first purchase.

    Many people are now stuck in apartments unfit for families because they cannot sell them or cannot get a mortgage to move to a house.


  • #5
    Dandelion6
    Registered Users Posts: 1,405 ✭✭✭Dandelion6


    jescart wrote: »
    Something turning me off the idea is the management fees though, I mean I am viewing 1 bedroom apartments (Some as cheap as €100,000) but the management fees are €1,500/year. Crazy stuff, and those fees could potentially increase -correct? I doubt they would ever reduce them.

    Mine have come down by about 25% since I bought the place seven years ago. If you get a decent management company they will look for ways to reduce them.


  • #6
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,463 Mod ✭✭✭✭johnnyskeleton


    There is no lack of demand for decent , well located 2/3 bed apartments in dublin city centre. Most of these that go for sale attract dozens of people per viewing and many end up in bidding wars.

    An early 1990s grubby one bed, or somewhere in an undesirable location, will not fare as well though


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  • #7
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭seamus


    johnnyskeleton wrote: »
    There is no lack of demand for decent , well located 2/3 bed apartments in dublin city centre. Most of these that go for sale attract dozens of people per viewing and many end up in bidding wars.
    This.
    Even decent apartments outside of the city are doing OK provided that they're not in the middle of nowhere and have a decent amount of room for two people.
    A close relative works for an EA and she recently closed on a two bed in Sandyford that went for €100k over asking after two couples for some bizarre reason got into a bidding war over it.

    Apartments in Dublin at the moment are increasing fastest out of all property types and regions. This is most likely because they dropped in price so much during the crash and rents have been increasing so quickly that you're seeing an increase in the number of investors and foreign nationals trying to make and save money respectively.

    Management fees are a pain in the ass, but it has to be remembered that the management company aren't some external entity who impose charges and rules on you. The management company is basically your resident's association. You can choose to get involved, make noise and direct the development of the estate in a way that you would like.
    Or you can choose to just pay the fees and let the small group of 7-10 residents make all of the decisions on your behalf. Most people go for the latter and then spend half their life bitching about management fees, but if you get involved then you'll see where the fees are going and probably feel better about it.
    There is a balancing act to consider too. If you have a house, then you have to pay to maintain your gardens, walls, windows, etc, everything on the outside of your home. You also have to buy buildings insurance. Management fees take care of all that in an apartment. Which may suit some people.


  • #8
    Ray Palmer
    Registered Users Posts: 8,346 ✭✭✭Ray Palmer


    Management fees going down is not necessarily a good thing. It can indicate they are not paying enough into the sinking fund for the major jobs that come along such as roof replacement.

    The other thing you must also remember is labour costs have dropped so it is cheaper to get things done. when labour costs go back up so will the fees.

    Many apartments are poorly built with some theoretical construction life times as new methods have been used. That can mean some failure on these due to the life span of the materials but more importantly potential problems as the workmen were not familiar with the correct use of these materials.

    I would be very careful about buying an apartment without knowing more about construction and the developers involved. To certain extent it applies to new houses too but somewhat easier to rectify. If you have a taller building failing costs and disruption can be much more problematic.


  • #9
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    Main reason for me is future proofing and quality of apartments. I want to have a home for family down the line. Also the quality of apartments is fairly poor in a lot of case. Too many shoe box apartments which I have no interest in living in.


  • #10
    jescart
    Registered Users Posts: 140 ✭✭jescart


    Thanks for the replies. I think the demand for apartments will actually fall, given that it's only the first year of property tax and water charges are not in full effect yet. I'm not going to buy an apartment then spend the next 10 years complaining about the managements fees, hence why I'm researching now. I don't buy the argument about insurance and refuse charges. My parents house insurance is around €200/year and bins around €150/year. The grass is done by themselves but to put a price on it -maybe €15 once every 2 months, less than €100/year. That is still less than €500 total. One apartment I viewed had €1,800/year fees. There has to be someone at the top making a serious amount of cash off those fees.
    It seems like the type of charge that would push people over the edge, everyone will eventually have TV license, electricity, heating, property tax, water charges, a lot of people have mortgages, interest rates are very low and can only go one way - when you throw another €1,000-€2,000 on top of that.. I dunno, thanks all the same - some interesting points have been made.


  • #11
    jd
    Registered Users Posts: 5,680 ✭✭✭jd


    Ok Just had a quick look at the invoice and budget for the year where I live

    So out about 1.5k service charge:

    Insurance (Buildings, lifts and directors): 120
    Electricity: 170
    Lift Maintenance: 110
    Cleaning: 160
    Gardens and Grounds : 90
    Repairs and Maintenance (mech/elec): 70
    Plumbing/Tanks: 30
    Building repairs: 70
    Refuse: 140
    Emergency line: 30

    etc etc (sink fund,management fees,audit and book keeping,vermin,sundries,security cameras )
    It all adds up..


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  • #12
    yankinlk
    Registered Users Posts: 2,730 ✭✭✭yankinlk


    jescart wrote: »
    The grass is done by themselves but to put a price on it -maybe €15 once every 2 months, less than €100/year.

    sold! are they free to start next week on my grass pleease?


  • #13
    Dandelion6
    Registered Users Posts: 1,405 ✭✭✭Dandelion6


    johnnyskeleton wrote: »
    There is no lack of demand for decent , well located 2/3 bed apartments in dublin city centre. Most of these that go for sale attract dozens of people per viewing and many end up in bidding wars.

    But the final selling prices may still be fairly low, at least they are where I live - in a well-located apartment block with very decent 2-3 bed apartments. I bought under affordable housing and judging by the Property Price Register if I were to sell today I would still not recoup what I paid for it.


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