Queston about Property Investing - Is it that time again ???

pocketdooz

According to the Central Statistics Office (www.cso.ie) :

The average second-hand house price in Dublin in Quarter 3 of 2006 was €549,330

The average second-hand house price in Dublin in Quarter 1 of 2008 was €430,410 (taking quarter 4, 07 figure and discounting by 7%, the average figure quoted as being 2008's drop so far)

If the inflation rate is 4% then this is a 'real' reduction in house prices of just under 28% in the past two years. :eek: (€594,155 to €430,409). This is roughly what Jim Power of Friends First quoted too.

My questions are :

(1) Do we think prices are set to fall by much more . . . and Why ?

(2) Allowing for the fact that sellers are willing to drop prices now by 10/15% in order to sell . . .

Is this a good time to buy if you find a home, in an area you consider a good investment (Ringsend, Grand Canal Dock, East Wall etc.) ?

(3) Assuming ECB rates will rise by another 1/2 or 3/4 point by mid-2009 would it be reasonable to get a mortgage now and lock in a fixed rate ?

I'm looking to see what the general market consensus is out there.

Thanks for your time . . . please be as brutally honest as you can.

Oafley Jones

pocketdooz wrote: »

According to the Central Statistics Office (www.cso.ie) :

The average second-hand house price in Dublin in Quarter 3 of 2006 was €549,330

The average second-hand house price in Dublin in Quarter 1 of 2008 was €430,410 (taking quarter 4, 07 figure and discounting by 7%, the average figure quoted as being 2008's drop so far)

If the inflation rate is 4% then this is a 'real' reduction in house prices of just under 28% in the past two years. :eek: (€594,155 to €430,409). This is roughly what Jim Power of Friends First quoted too.

My questions are :

(1) Do we think prices are set to fall by much more . . . and Why ?

(2) Allowing for the fact that sellers are willing to drop prices now by 10/15% in order to sell . . .

Is this a good time to buy if you find a home, in an area you consider a good investment (Ringsend, Grand Canal Dock, East Wall etc.) ?

(3) Assuming ECB rates will rise by another 1/2 or 3/4 point by mid-2009 would it be reasonable to get a mortgage now and lock in a fixed rate ?

I'm looking to see what the general market consensus is out there.

Thanks for your time . . . please be as brutally honest as you can.

Personally, I think we've a long way to go yet. I started my Masters Thesis on Sustainable housing in 2006 and back then there was a common view expressed to me from academics and planners that property was over-valued by at least 30% - this is in Cork by the way.

The views held by many on thepropertypin.com are even more bearish -Galway overvalued by 70pc etc- and I'm inclined to agree with them. As someone who works in the markets you should be well aware that a 30pc drop in price does not nessarily equate to a bargain. The one constant of all property booms throughout the world has been that the pace of price increases is matched by the fall.

We're playing a game of chicken on a national scale. Developers are moth-balling houses, banks are rolling over their loans, and people are waiting for a 'spark'.
This coupled with the banks lack of liquidity makes for a very interesting scenario. For me, my money on the banks to cave first and the reposession of a major developer assets will be the catalyst that sets things in motion.


As it stands, we have a massive overhang of housing - most built to an appalling standard with no amenities or services, an economy thats going into the toilet, banks that won't/are incapable of lending and our Eastern europeans rentors heading away. The mood of the nation seems to have changed in the last few weeks as well, we've moved from denial and head straight into fear and to be honest it's about time.


I'm struck by one thing you said;

pocketdooz wrote: »

Is this a good time to buy if you find a home, in an area you consider a good investment.

For me that sums up why we're in the position we find ourselves. A nation that speculates on their homes is one that is destined for major trouble, we need to break away from this mentality.

This is all extremely general from me, I'd have to be home to get facts and specific examples (once again you should start by checking the pin).

edit. No chance of a fixed rate mortgage.

pocketdooz

Oafley Jones wrote: »

Personally, I think we've a long way to go yet. I started my Masters Thesis on Sustainable housing in 2006 and back then there was a common view expressed to me from academics and planners that property was over-valued by at least 30% - this is in Cork by the way.

The views held by many on thepropertypin.com are even more bearish -Galway overvalued by 70pc etc- and I'm inclined to agree with them. As someone who works in the markets you should be well aware that a 30pc drop in price does not nessarily equate to a bargain. The one constant of all property booms throughout the world has been that the pace of price increases is matched by the fall.

We're playing a game of chicken on a national scale. Developers are moth-balling houses, banks are rolling over their loans, and people are waiting for a 'spark'.
This coupled with the banks lack of liquidity makes for a very interesting scenario. For me, my money on the banks to cave first and the reposession of a major developer assets will be the catalyst that sets things in motion.


As it stands, we have a massive overhang of housing - most built to an appalling standard with no amenities or services, an economy thats going into the toilet, banks that won't/are incapable of lending and our Eastern europeans rentors heading away. The mood of the nation seems to have changed in the last few weeks as well, we've moved from denial and head straight into fear and to be honest it's about time.


I'm struck by one thing you said;


For me that sums up why we're in the position we find ourselves. A nation that speculates on their homes is one that is destined for major trouble, we need to break away from this mentality.

This is all extremely general from me, I'd have to be home to get facts and specific examples (once again you should start by checking the pin).

edit. No chance of a fixed rate mortgage.

Great Answer

Well thought out and well written.

Thanks - some very good points. If only all posters on here were of this quality.

Oafley Jones

pocketdooz wrote: »

Great Answer

Well thought out and well written.

Thanks - some very good points. If only all posters on here were of this quality.

Thanks, but too kind. Will try and come up with something that's a bit more concrete, factual and organised in next day or two.

What's truely scary was the predatory nature of lending within this country. 100pc mortgages, 110pc mortgages! where people were sold on the prospect of capital appreciation, low rates and a market that never diminshes.

I've heard at least two people claiming that they will 'hand back the keys' if they were to slide too far into negative equity. Figures suggest that 40k already are in this position. Obviously they're being influenced by cases in America and the UK. What they don't seem to realise is that banks have recourse to the balance in this country. Expect things to get very nasty in the years ahead.

pocketdooz

Oafley Jones wrote: »

Thanks, but too kind. Will try and come up with something that's a bit more concrete, factual and organised in next day or two.

What's truely scary was the predatory nature of lending within this country. 100pc mortgages, 110pc mortgages! where people were sold on the prospect of capital appreciation, low rates and a market that never diminshes.

I've heard at least two people claiming that they will 'hand back the keys' if they were to slide too far into negative equity. Figures suggest that 40k already are in this position. Obviously they're being influenced by cases in America and the UK. What they don't seem to realise is that banks have recourse to the balance in this country. Expect things to get very nasty in the years ahead.

Thank You

I do, but I'm a contrarian at heart and like to look at both sides of the coin.

Where there is risk, confusion and panic - there is always profit.

stepbar

pocketdooz wrote: »

According to the Central Statistics Office (www.cso.ie) :

The average second-hand house price in Dublin in Quarter 3 of 2006 was €549,330

The average second-hand house price in Dublin in Quarter 1 of 2008 was €430,410 (taking quarter 4, 07 figure and discounting by 7%, the average figure quoted as being 2008's drop so far)

If the inflation rate is 4% then this is a 'real' reduction in house prices of just under 28% in the past two years. :eek: (€594,155 to €430,409). This is roughly what Jim Power of Friends First quoted too.

My questions are :

(1) Do we think prices are set to fall by much more . . . and Why ?

Depends where you're talking about. As a FTB I would like to see them fall further (obviously). In Dublin I think you'll see prices fall in areas such as Lucan / Clondalkin / Blanch etc (i.e where people in the past have been forced to buy because they couldn't afford to purchase elsewhere). If I was purchasing 2-3 years ago that's where I'd be looking. But now I can look a little further in with confidence. You might find that prices closer to the city may stabilise (within reason) in the coming months as demand for property increases closer to the city.

(2) Allowing for the fact that sellers are willing to drop prices now by 10/15% in order to sell . . .

Is this a good time to buy if you find a home, in an area you consider a good investment (Ringsend, Grand Canal Dock, East Wall etc.) ?

At the moment I would be looking to areas such as Inchicore, Drimnagh, Sandyford (basically pretty much anywhere with the luas). I think anyone waiting for the metro to come round is taking a bit of a gamble. Buying now at the right price "should" mean that come 2010 (when experts predict a bounce back) you should have at least held value. But obviously it's all speculation.


(3) Assuming ECB rates will rise by another 1/2 or 3/4 point by mid-2009 would it be reasonable to get a mortgage now and lock in a fixed rate ?

I'm looking to see what the general market consensus is out there.

For me personally I will be working off the fixed rates (for mortgage repayments) and going for a variable mortgage. The difference will be going into a savings account. I'll take a chance that ECB rates won't rise too much.

Thanks for your time . . . please be as brutally honest as you can.

.

2 stroke

pocketdooz wrote: »

Where there is risk, confusion and panic - there is always profit.

Well said.

Oafley Jones

Expert outlines prediction of bounce back for Irish economy by 2010.

shnaek

pocketdooz wrote: »

Where there is risk, confusion and panic - there is always profit.

There is always loss as well.

pocketdooz

Oafley Jones wrote: »

Expert outlines prediction of bounce back for Irish economy by 2010.

If he says it - it must be right !

pocketdooz

shnaek wrote: »

There is always loss as well.

Very true. Point is that often the most money is made when people buy when everyone else if panicing and selling. Or when you sell when everyone else and the mainstream media is jumping on the bandwagon and buying.

pocketdooz

Thanks to Oafley and Stepbar for your answers. I understand where you're all coming from.

The main reason I started this thread is that I am currently in the process of buying a house but am having second thoughts. I have agreed the sale and put down a fully refundable €10,000 deposit. Here is the situation - what do people think ? I am half-thinking of backing out and would like some neutral opinions. Thanks

It is a 3 bedroom end-of-terrace house in Ringsend/Grand Canal Dock, right next to the Gasworks, Google building and many other companies (including my own, which is 7 minute walk, door-to-door). The asking price was €400,000 but I got the lady down to €350,000. I then agreed to purchase. ( An identical, mid-terrace house 8 doors away sold for €560,000 in May 2006 :eek: )

I am putting down 10% and have 90% mortgage secured with IIB. So my mortgage is €315,000 and the monthly re-payments are c. €1700. (No stamp duty as I'm a First Time buyer)

I can rent out the other two bedrooms, fully furnished for €150 per week and thus my cost will be €500 per month, taking into account mortgage interest relief so my net will be less than €100 per week. This will save me €80 per week (nearly €4000 per year) on the rent I am currently paying to someone else close by.

So, my yield is 4.5% (from the other 2 rooms) , I get to save €4000 per year on what I am currently paying in rent, it is an up-and-coming area, close to work.

Am I giving myself enough of a cushion from further falls?
Is there no value to having your own place?
Will city centre (the city is moving east toward the Point) housing hold it's value better than elsewhere?

etc.etc.

Thanks for your feedback. Be as brutal as you want.

bosra

I would sum the situation up as follows:
House prices are more likely than not to fall in the coming months. I believe we haven't seen the bottom of this cycle yet. The bottom of this kind of cycle comes when there is capitulation. That is when distressed sellers are forced out of their homes and when bad debts are accounted for by the banks. In the U.S they are only getting to this point now. Banks are doing what they call 'forclosure' tours. They are taking would be investors around and auctioning off repossessed properties at rock bottom prices. The Irish banks, on the other hand, are in denial about their levels of bad debts. I would be very suprised if the Irish case didn't replicate the US scenario. It's all about tight cashflow right now. A developer who has bought a few apartments and finds now he can't cover the mortgages will soon find the bank looking for the cash to cover. He is then forced out of the market just like equity investors are being forced out of their positions in order to raise cash. So that's the biggest negative for me..Property prices are trending lower..Even the commercial property segments haven't hit the market yet..That's going to be the problem for 2009.
Getting away from the negative...the price you quoted..sounds like a good one to me..350 for a three bed? how big is the house? does it have a good garden? It is in a great area..walking distance to work and all that..It is a good price relative to what asking prices for that area are at the moment. So the main positive is you sound like ur getting it at a good discount which act as a buffer to any more falls in the mkt.
Lastly, I think ur view on the rents you are going to get are a little bit optimistic..If the house is small, you will be doing really well to get 150 for each room..The market in rental in all areas of Dublin has hit a brick wall. My own background is .. I am an equity trader..I own some property .. My thoughts are mainly formed by my own personal experience and by some advice from friends that work in the property field.

pocketdooz

bosra wrote: »

I would sum the situation up as follows:
House prices are more likely than not to fall in the coming months. I believe we haven't seen the bottom of this cycle yet. The bottom of this kind of cycle comes when there is capitulation. That is when distressed sellers are forced out of their homes and when bad debts are accounted for by the banks. In the U.S they are only getting to this point now. Banks are doing what they call 'forclosure' tours. They are taking would be investors around and auctioning off repossessed properties at rock bottom prices. The Irish banks, on the other hand, are in denial about their levels of bad debts. I would be very suprised if the Irish case didn't replicate the US scenario. It's all about tight cashflow right now. A developer who has bought a few apartments and finds now he can't cover the mortgages will soon find the bank looking for the cash to cover. He is then forced out of the market just like equity investors are being forced out of their positions in order to raise cash. So that's the biggest negative for me..Property prices are trending lower..Even the commercial property segments haven't hit the market yet..That's going to be the problem for 2009.
Getting away from the negative...the price you quoted..sounds like a good one to me..350 for a three bed? how big is the house? does it have a good garden? It is in a great area..walking distance to work and all that..It is a good price relative to what asking prices for that area are at the moment. So the main positive is you sound like ur getting it at a good discount which act as a buffer to any more falls in the mkt.
Lastly, I think ur view on the rents you are going to get are a little bit optimistic..If the house is small, you will be doing really well to get 150 for each room..The market in rental in all areas of Dublin has hit a brick wall. My own background is .. I am an equity trader..I own some property .. My thoughts are mainly formed by my own personal experience and by some advice from friends that work in the property field.

Very good points. I think you're right about most of it to be honest but I think ^^^^ (bold) is unlawful in Ireland. I lived in NYC for the last 4 years and saw these foreclosures for myself. Ireland is to a socialistic a state for that to occur to the same extent. (in NY they have a website of those who are falling late on payments and MAY be entering foreclosure so sharks can call to them and offer to 'save' their homes !!)

Rents - I'm not sure how opptimistic. I'd be surprised if I didn't get somewhere in that region of 125-150 I think. Does it not follow that as the real estate market flattens or falls (eg Sydney, Aus c. 2003-2005) and credit gets tighter for FTBs that less people in their 20's and 30's buy houses, therefore they must rent, thereby pushing prices up (simple S&D curve ?)
Thanks Bosra

stepbar

I was talking to a mechanic recently after getting the car serviced. He told me of a developer who got into a bit of trouble with the bank (down the country). The bank was owed nearly a mil. The bank sold the houses for 60k a piece to another developer and recouped it's money. That's only one developer. You'd wonder how many more similer case there are???

BTW I'd be jumping at that house if it was in good condition, recession or no recession. I would never see a property as a monetary investment but as an investment that secures your future.

bosra

I suppose it all depends on the size and condition of the house for rent..You find on daft, everyone insists on a 1 year lease..but there are alot of people out there looking for short term rental ( 6 months or less)..so i guess if ur willing to be flexible, you will get ur 150 by accommodating different demands..afterall the area is one of the most sought after..nearness to town and all that..

Blackjack

Folks, I'm not entirely sure that comparing the US market with the Irish Market is entirely accurate.

There are a number of reasons:

Mortgages - you hand in the keys in the US and you walk away. It does not operate in the same manner here, as previously mentioned in this thread, the bank has recourse to seek any difference over and above not covered by the property in the event of foreclosure.

The Market - Irish banks don't have the same exposure to sub prime. I do know a couple in the US who did get a sub prime loan for a house, were paying 10% interest on their house. They recently handed in the keys, as the house was worth less than the mortgage. Can't do that here. Further, and remarkably this may be where the Banks here may have saved themselves by being less competitive, there are much fewer mortgage products available here. For example, you don't have (or at least I've not) see Interest-only mortgages, endowment mortgages or the like here, nor do you see the mental "Pick-A-Payment mortgages" that Wachovia in the US was offering.

Predatory lending - not as prevalent here. It exists, but its no where near as bad as the US.

It's important to note that about 70% of US Homes are mortgaged. I'd be interested to find out what the percentage is here, but I would expect this to perhaps be lower.

In short, I think the quality of the Mortgage book for the banks here is better than what you'd have in the US - currently. I don't see any of the Irish Banks going to the wall, and to be honest, I think the Government here would step in to prevent this happening.

The bad times are by no means over, and we're really only guessing as to where we are in the cycle here. Once the full effect of interest rate rises and some job losses, as well as the sell off of investment properties that are no longer being rented out plays its course, I think we can expect to have a better picture of where we are.
Having read 2 different Research Analysts notes (both dated 15th of July), there is likely to be more to come in the way of write downs in the US as they try to get the correct asset Valuations, and an expectation by one analyst of a probable 25-30% decrease in House prices (above what has already been seen). Interestingly, it does not seem to mention when they expect to see the low point of the trough here.

I suppose to answer Pocketdooz, as long as you can afford to pay the Mortgage each month without having to depend on the rent, you should be fine. Having the ability to rent is no bad thing, leaves you with a bit of extra dosh.
I'd be very wary of there being a dependancy on rental income, personally, as I think that's a bit of a gamble, particularly if you are on a variable rate mortgage and you have a few quarter point rises in the interest rates.

As some poster already mentioned, your home should not really be treated as an Investment opportunity, rather as a home, so if the value falls below the amount you owe, it's not really the end of the world, unless you have to sell.

Best of luck with whatever you decide to do.

stepbar

Let's put it this way.

If you can afford to meet monthly repayments on your own (without relying on rental income) you should be fine.

Rental income should be threated as a bonus especially if you're a first time buyer.

pocketdooz

stepbar wrote: »

Let's put it this way.

If you can afford to meet monthly repayments on your own (without relying on rental income) you should be fine.

Rental income should be threated as a bonus especially if you're a first time buyer.

No I can't - so maybe I should relax for a while. Although in that area it is as good a chance of renting at least one room as anywhere I think (google/ifsc etc.)

pocketdooz

Blackjack wrote: »

Folks, I'm not entirely sure that comparing the US market with the Irish Market is entirely accurate.

There are a number of reasons:

Mortgages - you hand in the keys in the US and you walk away. It does not operate in the same manner here, as previously mentioned in this thread, the bank has recourse to seek any difference over and above not covered by the property in the event of foreclosure.

The Market - Irish banks don't have the same exposure to sub prime. I do know a couple in the US who did get a sub prime loan for a house, were paying 10% interest on their house. They recently handed in the keys, as the house was worth less than the mortgage. Can't do that here. Further, and remarkably this may be where the Banks here may have saved themselves by being less competitive, there are much fewer mortgage products available here. For example, you don't have (or at least I've not) see Interest-only mortgages, endowment mortgages or the like here, nor do you see the mental "Pick-A-Payment mortgages" that Wachovia in the US was offering.

Predatory lending - not as prevalent here. It exists, but its no where near as bad as the US.

It's important to note that about 70% of US Homes are mortgaged. I'd be interested to find out what the percentage is here, but I would expect this to perhaps be lower.

In short, I think the quality of the Mortgage book for the banks here is better than what you'd have in the US - currently. I don't see any of the Irish Banks going to the wall, and to be honest, I think the Government here would step in to prevent this happening.

The bad times are by no means over, and we're really only guessing as to where we are in the cycle here. Once the full effect of interest rate rises and some job losses, as well as the sell off of investment properties that are no longer being rented out plays its course, I think we can expect to have a better picture of where we are.
Having read 2 different Research Analysts notes (both dated 15th of July), there is likely to be more to come in the way of write downs in the US as they try to get the correct asset Valuations, and an expectation by one analyst of a probable 25-30% decrease in House prices (above what has already been seen). Interestingly, it does not seem to mention when they expect to see the low point of the trough here.

I suppose to answer Pocketdooz, as long as you can afford to pay the Mortgage each month without having to depend on the rent, you should be fine. Having the ability to rent is no bad thing, leaves you with a bit of extra dosh.
I'd be very wary of there being a dependancy on rental income, personally, as I think that's a bit of a gamble, particularly if you are on a variable rate mortgage and you have a few quarter point rises in the interest rates.

As some poster already mentioned, your home should not really be treated as an Investment opportunity, rather as a home, so if the value falls below the amount you owe, it's not really the end of the world, unless you have to sell.

Best of luck with whatever you decide to do.

Nice post thanks. It's good to get clear answers from unrelated parties here on boards. .

stepbar

pocketdooz wrote: »

No I can't - so maybe I should relax for a while. Although in that area it is as good a chance of renting at least one room as anywhere I think (google/ifsc etc.)

Don't get me wrong. I'm not sure how IIB threated your mortgage app but if it had if been the likes of AIB / BOI they would have discounted it straight away. I know because I'm in the process of applying for same myself with AIB. Now I'm in the lucky sence that I will be able to get a 100% mortgage (because my bro is a civil engineer) and won't have to rely on rental income. So for me i'm threating it as a bonus TBH. Any prospective FTB's "should" be doing the same TBH.

pocketdooz

stepbar wrote: »

Don't get me wrong. I'm not sure how IIB threated your mortgage app but if it had if been the likes of AIB / BOI they would have discounted it straight away. I know because I'm in the process of applying for same myself with AIB. Now I'm in the lucky sence that I will be able to get a 100% mortgage (because my bro is a civil engineer) and won't have to rely on rental income. So for me i'm threating it as a bonus TBH. Any prospective FTB's "should" be doing the same TBH.

Just to clarify - you must be buying with your brother ?

With regard to IIB, my wage will cover the mortgage but what I meant when I said I couldn't afford it was that after paying out c.1700 (c.1500 after mortgage relief) I would be left with very little, so i meant my lifestyle coudn't afford it, not I couldn't literally afford it . . . .

bosra

Blackjack

With all due respect, your post contains a number of inaccuracies..In the US, you don't just hand in the keys and walk away. They have a very developed credit scoring system. Miss even a telephone bill and it impairs your chance of getting a loan or a rental property. As they say in the trade here, if you owe the bank 1000, it's your problem..you owe them 500000, it's their problem...basicallly, when u havent got the cash, what can the bank do in any country for that matter..
The idea of Ireland not having sub prime is misleading. We have plenty of it out there. Subprime aside, we have the same problems as the rest of the planet. Cheap credit fuelled a house price boom/ bust. Now the process of deleveraging must be worked through. The people that are over extended will fail. The price adjustments must be all worked through unfortunately. We did have the alot of predatory lending here. We had estate agents telling buyers that the market was great. You still have them telling you this. The problem is they work on commission so they aren't gonna tell you the truth. This is the biggest failure of capitalism. These people were not well regulated enough. I have seen a note from one agent advising their brokers to tell people that you wont get a better deal a few months down the road. That is complete rubbish. We have had just as bad policies here as the US...100% motgages..or 110% if u wanted to get the place kitted out..There has and still are interest only facilities.. I think one thing we all agree on is the market has further adjustments to go..

stepbar

pocketdooz wrote: »

Just to clarify - you must be buying with your brother ?

Spot on.

With regard to IIB, my wage will cover the mortgage but what I meant when I said I couldn't afford it was that after paying out c.1700 (c.1500 after mortgage relief) I would be left with very little, so i meant my lifestyle coudn't afford it, not I couldn't literally afford it . . . .

Not to sound funny but that would suggest poor lending TBH. Now unless you have family connections who could support you when things are rough then it would seem that poor lending practices amoungst our banks are still alive and well.

pocketdooz

stepbar wrote: »

Not to sound funny but that would suggest poor lending TBH. Now unless you have family connections who could support you when things are rough then it would seem that poor lending practices amoungst our banks are still alive and well.

No, just a good broker . . .

lol - looks like they're still at so !

stepbar

pocketdooz wrote: »

No, just a good broker . . .

lol - looks like they're still at so !

Enough said so

Kama

Agree with Bosra on the subprime exposure, and the tendency to collusion between banks/agents/etc. Ireland is that bit too small and intimate a country for these things not to happen without a level of regulatory oversight that, quite frankly, none of the players wanted.

Whats for sure is if its your home, approaching it as bottom-feeding for a recovery in price would be a pretty risky move, as further deleveraging of housing seems more than probable.

Blackjack

bosra wrote: »

Blackjack

With all due respect, your post contains a number of inaccuracies..In the US, you don't just hand in the keys and walk away. They have a very developed credit scoring system. Miss even a telephone bill and it impairs your chance of getting a loan or a rental property. As they say in the trade here, if you owe the bank 1000, it's your problem..you owe them 500000, it's their problem...basicallly, when u havent got the cash, what can the bank do in any country for that matter..
The idea of Ireland not having sub prime is misleading. We have plenty of it out there. Subprime aside, we have the same problems as the rest of the planet. Cheap credit fuelled a house price boom/ bust. Now the process of deleveraging must be worked through. The people that are over extended will fail. The price adjustments must be all worked through unfortunately. We did have the alot of predatory lending here. We had estate agents telling buyers that the market was great. You still have them telling you this. The problem is they work on commission so they aren't gonna tell you the truth. This is the biggest failure of capitalism. These people were not well regulated enough. I have seen a note from one agent advising their brokers to tell people that you wont get a better deal a few months down the road. That is complete rubbish. We have had just as bad policies here as the US...100% motgages..or 110% if u wanted to get the place kitted out..There has and still are interest only facilities.. I think one thing we all agree on is the market has further adjustments to go..

Appreciate that there is a credit scoring system, but the system of non-recourse mortgages does exist in a number of states.
As regards sub-prime and predatory lending, I did not state that it does not exist here, only that it's not as prevalent here as it is in the US.

There's no doubting that there are a number of factors and I agree entirely that Estate agents have a lot to answer for here. They are as you say not regulated enough, but if people are willing to believe what these guys have to say then they have a level of responsibility themselves. I've seen a mate of mine had an initial offer of a house he was buying bumped up 10% due to "counterbids" from another supposed buyer. There is absolutely no way of knowing whether these were genuine or just the estate agent adding the bumps themselves.

Caveat Emptor and all that.

In my own personal experience, there is a system in scotland of offers over and "blind bidding". Basically how it works is that the seller lists the property at either an "offers over" or a fixed price. Fixed price is basically the price they will accept (or perhaps a little less if you're lucky). Offers over is where the buyer submits an amount they are willing to pay for the property. The seller then selects what they believe to be the best offer (not necessarily the highest amount) and if your bid is that successful offer, then the deal is pretty much binding, subject to conclusion of the missives.
You can make your bid "subject to survey" where the surveyor will then survey the property, and confirm the value of the property for mortgages, and identify certain aspects of the property, such as whether there is the existance of subsidance, built on an mine or an old Indian burial ground or the like. If the survey satisfies your valuation for mortgages or structural soundness, then you can confirm the bid.

You can also carry out the survey before the closing date as well, which will do the same survey, but this then allows you to make your bid as survey confirmed, which gives the seller a level of comfort that your survey is not going to throw anything up that could prevent the deal from going through.

You can also include certain items in your bid, such as items of furniture, white goods etc - generally whats included in the sale can be listed in the prospectus but you can also make offers for items if you like. If you take a particular fancy to a coffee table you can go for it.

While this system does favour the buyer in most areas, it does prevent gazumping. Also once the deal is agreed, the seller can pass on any costs of any bridging loans they may have to pay in the event that you don't pay up on time (i.e closing date). Similarly, AFAIR, the seller may have to pay you the same compensation should they not be moved from the property by the closing date.

A lot to be said for this system, but the downside if you are a buyer is that you can be easily disappointed when looking for a property, but at least you only offer what you can afford to borrow, so it keeps you a little more focused on paying what you can affored as opposed to buying a house because its the one you absolutely must have.

maninasia

There is a massive amount of oversupply in the housing market, check Daft, the rental properties are going up at a phenomenol rate. The other idea you have about FTBs is a bit erroneous. Most of these people are already renting. There will be some coming through but nothing to match the oversupply and the immigrants leaving and net emigration. These factors point both to sales prices coming down and rents coming down in unison.

Plus everybody here has as usual overlooked the critical role of the economy and job market in all your assertions, ultimately it's more dependent on employment and income than credit conditions in the next 10 years, don't you think? Getting a mortgage at this time and seeing it as an investment, I don't know about that. It would be nice to have your own place but what's the harm for waiting another couple of years.

It seems a good location to rent out rooms for young single workers, but have you checked to see how many rooms are available for these workers, do they like to rent single rooms or will they just get a small apartment instead when rents come down?

SerialComplaint

pocketdooz wrote: »

I can rent out the other two bedrooms, fully furnished for 150 per week

As your rental income will exceed the threshold for the rent a room scheme, you will need to factor in your tax liability. Do you plan to share your house for ever?
As

pocketdooz

SerialComplaint wrote: »

As your rental income will exceed the threshold for the rent a room scheme, you will need to factor in your tax liability. Do you plan to share your house for ever?
As

I know - it's a wreck the head. I thought it was only the amount above the €10 k you paid tax on but apparantly it's the whole lot.

Does anyone know any (legal) way around this ?

Anyone any suggestions for how this could work ?

Thanks

Blackjack

pocketdooz wrote: »

I know - it's a wreck the head. I thought it was only the amount above the €10 k you paid tax on but apparantly it's the whole lot.

Does anyone know any (legal) way around this ?

Anyone any suggestions for how this could work ?

Thanks

Only way I could think of is keep the total you collect below 10K. Its' not a bad deal in fairness, its 833 if you charge by the month, or just under 200 a week. You could charge them 200 a week and let them off the amount for Christmas and New year to keep it at that amount.

It's an extra 100 a month for you to pay based on your projections, but if you get the right tenants in (and you will be able to pick and have plenty of applicants at that price) it will give you a bit of peace of mind about leaving the house for a weekend. That in itself is worth the money in my book.
If you had friends that were looking for a room this may suit them also.

pocketdooz

Blackjack wrote: »

Only way I could think of is keep the total you collect below 10K. Its' not a bad deal in fairness, its 833 if you charge by the month, or just under 200 a week. You could charge them 200 a week and let them off the amount for Christmas and New year to keep it at that amount.

It's an extra 100 a month for you to pay based on your projections, but if you get the right tenants in (and you will be able to pick and have plenty of applicants at that price) it will give you a bit of peace of mind about leaving the house for a weekend. That in itself is worth the money in my book.
If you had friends that were looking for a room this may suit them also.

Thanks for the idea - surely 100 a week for a room in town would be too much of a bargain ????

I was kind of thinking about renting to country people that might just want to rent from Monday til Friday thus giving me the weekends in the house free OR renting to students (masters or PHD or somthing, not students proper) so the place'd be all mine in the summer ???

Blackjack

pocketdooz wrote: »

Thanks for the idea - surely 100 a week for a room in town would be too much of a bargain ????

I was kind of thinking about renting to country people that might just want to rent from Monday til Friday thus giving me the weekends in the house free OR renting to students (masters or PHD or somthing, not students proper) so the place'd be all mine in the summer ???

Not really. Depends on the size of the room and the house. Factor in their share of the bills and someones probably paying somewhere in the region of 450-500 a month.
That said, get in the right tenant that pays on time, does not wreck the place and respects your privacy as well as you respecting theirs, and it will be worth it.

rugbyman

hey, you two Pocketdooz and Stepbar are all palsy walsy now. glad the civil war over on the bank of ireland thread is over:

oops, i should be reading,not writing

BarrierReef

Pocketdooz buy the house, you seem to like it and it is close to work etc... Of course do your numbers carefully to ensure you can afford it, In 10 years will it be worth more than it is now ?? Probably would be my guess.

Buying a house to live in isn't all about making the best financial decision. I bought one house last year at the absolute peak in Ranelagh, Is it worth more or less than I bought it for ?? I don't really care, I am about to spend alot of cash extending it to move into for at least 5 years, I love the house and area and can just about afford to live there, so I am going to.

I also have a couple of other houses around the city which the ass has fallen out off and I would like to sell on but can't, but there is still strong demand for rental in properties which can house families, I rented one two weeks ago in 1 day and could have rented it 5 times over.

One last thing, I think that there is alot of people just like you wondering when is the right time to get back onto the ladder, just remember don't all jump at once.

maninasia

Why isn't it about making the best financial decision. If you don't have the money for 3 houses and it's going to cost you 20/30/40 years mortgage it should be the best financial decision you ever made!
Pocketdoor, you are doing some wishful thinking. Almost all masters/PhD students continue working through the summers just like regular workers.
If you want hassle and trouble for at least 10 years by all means for a risky investment by all means go ahead...

pocketdooz

There was a report by Goodbody today in the Irish Times that house prices could drop by 30% from their peak and have dropped already by 12%

but . . .

According to the Central Statistics Office (www.cso.ie) :

The average second-hand house price in Dublin in Quarter 3 of 2006 was €549,330

The average second-hand house price in Dublin in Quarter 2 of 2008 was €430,410 (taking quarter 4, 07 figure and discounting by 7%, the average figure quoted as being 2008's drop so far)

If the inflation rate is 4% then this is a 'real' reduction in house prices of just under 28% in the past two years. (€594,155 to €430,409).

. . . .


These figures would only be up until June too so I'd say we've seen a further drop over the summer.

So, are Goodbody getting their figures from somewhere else ?

Where do they get the figure "already declined 12% from peak levels".







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