Why has rent not tumbled? 1000s apts empty / unemployment / can't sell / over supply

Calina

is_that_so wrote: »

My 2c worth.
It may be down to the fact that banks pushed interest only loans for rental properties, which means that those "investors" wouldn't necessarily be exposed as badly with interest rate increases.

Actually, interest only payments take a disproportionately high hit on rising interest rates. So I'm at a loss to understand what you think you're saying here.

is_that_so

Calina wrote: »

Actually, interest only payments take a disproportionately high hit on rising interest rates. So I'm at a loss to understand what you think you're saying here.

Agreed. My point is that the actual monthly payments are likely to be at a much lower level in cash terms.

Calina

is_that_so wrote: »

Agreed. My point is that the actual monthly payments are likely to be at a much lower level in cash terms.

Which is also not logical. The key reason that the payments would be much lower is if the principle was correspondingly low. You can't infer that from interest only - you require the LTV and purchase price to know that.

In any case, anyone who was interest only from about 3 years ago probably has seen their interest bill double. That probably does hurt.

is_that_so

Calina wrote: »

Which is also not logical. The key reason that the payments would be much lower is if the principle was correspondingly low. You can't infer that from interest only - you require the LTV and purchase price to know that.

In any case, anyone who was interest only from about 3 years ago probably has seen their interest bill double. That probably does hurt.

I'll take your word for it.

johnnyskeleton

A lot of people put their property for rent at a ridiculously high rent (lets say €1800 pm for a flat in an outer dublin suburb). When no one showed any interest they dropped the price to €1600, but only after 2 months. When only a few people showed any interest and turned it down or never called back they dropped further to €1400. When at this rent (which is a good deal lower than their monthly interest bill) there were still only a few people interested and they still turned it down or never called back, the landlord assumed that the rental market was dead and gave up dropping the price, waiting instead for the rent to go back up.

Meanwhile, landlords who realised instantly what the market would bear gobbled up tenants and/or did their best to retain the tenants they had, and coupled with the decrease in demand for rental properties due to less people around / less people working what we see is that the good properties / good landlords have tenants at a reasonable rent, while the turkeys sit on the market refusing to drop their rents.

The turkeys might only represent a small fraction of the market, but the thing is that the asking rents are highly visible (being advertised on daft etc) whereas the rents that people are actually paying are not as obvious.

Cantab.

If you want to have your choice of tenant, you need to be pitching 10-15% below market rates.

If you're at or above market rate, you can't pick and choose and could easily end up with a class-A drug user/waster who loses their job, gets pregnant and you can't kick them out.

Better to be able to choose between 4/5 prospective candidates and save yourself the hassle of dealing with wasters/promiscuous types liable to get preggers/skangers/mentally ill people.

johnnyskeleton

Here are two examples from irishpropertywatch.

http://www.irishpropertywatch.com/rentalsPriceDropReport.php?ReportDate=2008-07-03&Beds=any&Region=any

Millrace, Saggart, 5 bed, was €2600 now €1450 that’s a drop of €1150 or 44.23%

http://www.daft.ie/searchrental.daft?id=542544

No. 3 Camac View, Kilmainham, 2 bed, was €1450 now €800 (drop of €650 or 44.83%)(not surprisingly, this property has now rented).

beeno67

johnnyskeleton wrote: »

Here are two examples from irishpropertywatch.

http://www.irishpropertywatch.com/rentalsPriceDropReport.php?ReportDate=2008-07-03&Beds=any&Region=any

Millrace, Saggart, 5 bed, was €2600 now €1450 that’s a drop of €1150 or 44.23%

http://www.daft.ie/searchrental.daft?id=542544

No. 3 Camac View, Kilmainham, 2 bed, was €1450 now €800 (drop of €650 or 44.83%)(not surprisingly, this property has now rented).

In fairness according to your link the Saggart property was originally on at €1700 not €2600

Victor

Cantab. wrote: »

If you want to have your choice of tenant, you need to be pitching 10-15% below market rates.

If you're at or above market rate, you can't pick and choose and could easily end up with a class-A drug user/waster who loses their job, gets pregnant and you can't kick them out.

Better to be able to choose between 4/5 prospective candidates and save yourself the hassle of dealing with wasters/promiscuous types liable to get preggers/skangers/mentally ill people.

You realise how many good tenants you have just written off?

johnnyskeleton

beeno67 wrote: »

In fairness according to your link the Saggart property was originally on at €1700 not €2600

It was on for 1700-1750 for about 2 weeks, then was 2600 for 3 months, then dropped down again, but I take your point.

I was just picking out the largest drops from the IPW report.

Cantab.

Victor wrote: »

You realise how many good tenants you have just written off?

What do you mean?

astrofool

johnnyskeleton wrote: »

It was on for 1700-1750 for about 2 weeks, then was 2600 for 3 months, then dropped down again, but I take your point.

I was just picking out the largest drops from the IPW report.

Sounds like they meant to drop it to 1600 but mis typed

shoegirl

faceman wrote: »

I wouldnt use just one example to cite the market's position.

It seems to be me that rent prices are being dictated by local demand and local supply as opposed to national demand and supply. Some areas are holding steady, others are not.

Rent allowance max levels usually create a floor for rents, few landlords will drop beneath this level.

shoegirl

Cantab. wrote: »

If you want to have your choice of tenant, you need to be pitching 10-15% below market rates.

If you're at or above market rate, you can't pick and choose and could easily end up with a class-A drug user/waster who loses their job, gets pregnant and you can't kick them out.

Better to be able to choose between 4/5 prospective candidates and save yourself the hassle of dealing with wasters/promiscuous types liable to get preggers/skangers/mentally ill people.

Unlikely that you'll get this looking for over the market rate. Most of the crazies are already likely to be unemplyable so they will be unable to pay market rates never mind above, except maybe families.

But agreed you'll have more limited choice - thing is upping the rent may eliminate some of the more transient people who are less likely to be on higher incomes and thus have more to spend on rent. Contrary to popular opinion, most rent allowance recipients are not entitled to market rates (except for maybe 2 parent families with several kids) so they won't turn up to look at what they can't afford.

johnnyskeleton

astrofool wrote: »

Sounds like they meant to drop it to 1600 but mis typed

And then left it on the market for 3 months without correcting it?

beeno67

johnnyskeleton wrote: »

And then left it on the market for 3 months without correcting it?

Or of course the site could be full of mistakes and daft to take seriously

gurramok

beeno67 wrote: »

Or of course the site could be full of mistakes and daft to take seriously

You wish

Still in denial about rental reductions then?

astrofool

johnnyskeleton wrote: »

And then left it on the market for 3 months without correcting it?

You honestly believe that someone put a property to rent at 1700, then after not getting it rented, upped it by 900, and then dropped it a couple of months later by 1150?

Sounds like some are being as stupid about property on the way down as others were on the way up.

beeno67

astrofool wrote: »

You honestly believe that someone put a property to rent at 1700, then after not getting it rented, upped it by 900, and then dropped it a couple of months later by 1150?

Sounds like some are being as stupid about property on the way down as others were on the way up.

Astrofool is right. Then the site counts it at least 3 times on first page.

gurramok

One mistake on a listing don't mean the other few hundred are dodgy, there's a thing called margin of error and its extremely low with IPW!

AARRRGH

I'm lucky that I've been renting my Dublin city centre apartment for years so still have low rent (the landlord is a doctor who lives miles away somewhere and has no interest in the place), but I recently helped a friend find somewhere new to rent. I could not believe some of the prices being charged.

€1000 for a double room? WTF.

I don't know whether this is pure greed, or desperate homeowners needing someone to pay this much so they can meet their mortgage payment. If its the former, those people are scum.

I think we're only at the very beginning of the economies downfall (I know things have been falling for a while, but it's only recently the unwashed masses have become aware of this.) Give Ireland another 12 - 24 months and you'll see a very different picture.