I got charged 6.10 the other night... 6 blumming 10.
Oh right. About as reliable as his research on the price of a pint then
From The Irish Times today:
Warning that house prices may fall by 80%
Whatever about the prediction on house prices I did enjoy the following quote:
I would like Mr Kelly to go and price building a new house to current regulations. A standard 3 bed house at lets say 1200 square feet. I think he'll find that his 80% reduction is so laughable its not even funny anymore. Materials are still rising in price - labour costs have gone down a bit but all in all no matter where in the country you are it will costs more or less the same to build.
These predictions are rubbish. he's saying that if a house was worth 1 million its going to be worth 200k and if a house was worth 500k its only going to be 100k and that a 200k house is going to be worth 40k????
Catch a grip. We all know that houses were over priced - thats called supply and demand. now prices are correcting as supply and demand has changed. When the supply becomes less we will see a correction. I can't see many houses being built this year - one-offs will happen but there will not be the large scale 100's of houses in sites being started. There are a lot of people looking to buy and they are doing what all good shoppers do - look around, bargain and wait until its the right time for them
He's not going to build a house
In rough translation of what he is saying, it is possible for a 80% drop in some cases due to money supply problems(credit), unemployment(bad economy), demographics and the old supply and demand problem.
Below cost comes to mind on an overshoot downwards, whether it will go down that far remains to be seen.
I think in terms of new houses in popular areas you are certainly correct. There is a minimum cost for materials and labour so the lowest they would sell for is maybe a slight loss to the builder.
But for old houses you have to remember that they were built for a fraction of the cost. Take a 4 bed in South Dublin on sale last year for 1 million. This house could be 50 years old so whatever it cost to build then was tiny and now irrelevent to the current sale price. A house like this could easily drop 50% or more if the market dictated.
I doubt most houses could drop 80% but then again, you never know. It is possible for somewhere like Leitrim where there is a MASSIVE oversupply of crappy houses that may never sell. I would think that you could buy for way under 100K there is you pushed you luck with the hard-up developers and agents. These houses would have been adverstised at around 200K last year but I think it is possible to go down to 40k-50K. Remember there are houses in the UK for sale for a lot less in rural or deprived areas.
I'd tend to agree, there are locations this could happen, but across the board it won't.
I thought it was interesting that he mentioned there could be a net demolition of properties. Imagine developers knocking down perfectly good houses to reduce supply and increase demand
Agree with what you are saying - however they may have been built for a fraction but not necessarily bought at that price certainly in the past 2-7 years.
Indeed, but I don't think the buyers will care what the current owner paid. If they have to sell it for less, that's their own problem. If they don't want to sell it for less, they'll have to reconsider their options and perhaps not sell until the market goes on the 'up' again. It sucks for them but that's business. Any investment (if you think of a house as an investment!!) can go up or down.
I wouldn't dismiss an 80% fall in real terms out of hand. Stats like unemployment are back at 1998 levels and likely to go to 95 levels or earlier, national debt is accelerating at an alarming rate, ISEQ is down 65% (property related stock by even more), taxes bound to rise etc. Why should house prices be immune to such dramatic falls? Seems to me that the only thing propping up prices is denial.
The peak to trough period could be 5-10 years which at 3% inflation per year could add 15-30% to the nominal fall. A 50% nominal fall is by no means implausible (maybe even likely) so an 80% fall in real terms is possible.
all these property price arguements seem to be divided between the people with huge mortgages saying there's no way the bottom will fall out of the housing market and really wanting to believe this is the case and people with no mortgages saying it's definitely going to happen. I don't have a house so I hope it all collapses so I can rent/buy somewhere decent when I go back to Eire.
It's the ones who bought several houses in recent years as as an investment for their pension who will suffer the most.
There seem to be some smart people on here so here's one for you.
They keep going on about how much prices will fall, but can anyone at all tell how much prices are likely to fall in a certain area?
More to the point, a nicer area in Nth County Dublin. I'm looking at the possibility of bidding on a 3 bed, older council, terraced house, that would need to be gutted, and I mean gutted. It's a shell at the moment and the asking price is just laughable.
I'm not expecting an exact amount but how much have houses come down in the area since last July(2008) until now, and how much more to go?
Would you be buying to sell as an investment or live in it?
If it's an investment, you will really have to buy for rock bottom. I would suggest circa 150K and then put another 50K into it to modernise it. I don't think you'll be able to sell that sort of a house for a huge amount more than 220 -250K in a year or two. I'd say this is the bottom end of the scale though. If the market bottoms out soon enough you might get a bit more. But the way things are going I'm not so sure.
If you're buying it to live in, you could spend a bit more initially as you'll be able to spend money on the improvements over a longer period.
Be cheeky and offer a really low price though. You never know what will be accepted these days.