House prices have much further to fall: Morgan Kelly

punchestown

Article in today's Irish Times

http://www.irishtimes.com/newspaper/opinion/2008/0815/1218747921594.html

Kelly is ging to be really popular in banking, government and building circles in the morning with that article!

DonJose

Do you think the sellers will listen to his advice,

"For sellers, the important question is to ask: do you really want to sell? This means, are you willing to accept a good deal less than the guy down the street got two years ago? If you are not, save yourself a lot of grief and stay out of the market. If you are, then find an estate agent who understands the importance of selling quickly.

It is vital not to delay for months, and above all not to rent out, in the hope of a better offer. With prices falling about 1 per cent a month, every week you postpone selling a €400,000 house will cost you €1,000."

With a recession underway and job losses growing daily most buyers don't have an option unless the banks ease their lending criteria, "banks are now returning to their old policies of 80 per cent mortgages of a maximum of three to four times income, and house prices will fall accordingly".

MonkeyWrench

Saw Morgan Kelly on the news a couple of years back predicting exactly the position we are in now. I don't think people have yet grasped the impact that negative equity will have on their financial state as well as their mental state...there will be a hugh chunk of my generation (25-35) in great financial difficulty for years to come if they entered the market in the last couple of years.

jetski

reading between the lines, is morgan try to get ireland to fall into "The second group".

SkepticOne

I think the second group is more likely regardless of what anyone wants. We don't have control over interest rates unlike Japan or Switzerland.

jetski

one thing that i do worry about outside of all the economic influences is the stubbron irish attiude.... :P

i can imagine all the greedy feckers, an how hard it would be for them to drop a penny off their asking... alot of people wont have the option to hold out but the ones that do....

IronMan

It is clarity of thought that is needed. Being stubborn will not pay a mortgage on your investment home because you won't drop the rent. And there is places that no matter how low you drop the rent, you still will not get tenants, the midland ghost towns for example. Homes there are practically worthless.
Villages with more houses than people. Villages with one shop, and 3 almost empty estates of badly designed, badly built houses. A future planning, economic and social disaster. All built on the back of greed, cheap credit, and a large dose of stupidity.

On another note, Morgan Kelly has always been one of the only voices of reason in this country in the past few years when it comes to matters of finance. He noted the end of the celtic tiger when it really happened in 2001/2002, when we stopped producing and exporting enough goods and services, and instead created a huge big property bubble to keep the new Ireland roadshow motoring for a while longer. We needed a short sharp shock at that stage, but our elected representatives sold out a generation of young people just so they could get elected again.

Oh and he doesn't have a big mop of red hair like McWilliams. And he doesn't use phrases like Drummie Mummy and the breakfast roll man.

A great article.

Ootermus

To be honest, despite the fact that he's called a lot of parts of the property downturn correctly (though i think there was a large slice of luck involved - some of the things that have happened in the banking sector were quite simply unimaginable 18 months ago), i dislike the way he's so permanently smug about the chances of people's main assets halving in value and some of the nation's banks going under. At least McWilliams sounds a bit more sombre when he suggests these things, and moreover, generally tries to suggest ways we can fix the problems at hand.

I laughed out loud when i read the part about us having "mediteranean level productivity" here - i can only assume he's including our massively overpaid and government-funded Third Level Education sector in this analysis. Is there any other country in the world where they pay their university professors as well as here and get so little real economic value back from them???

gurramok

Ootermus wrote: »

To be honest, despite the fact that he's called a lot of parts of the property downturn correctly (though i think there was a large slice of luck involved - some of the things that have happened in the banking sector were quite simply unimaginable 18 months ago), i dislike the way he's so permanently smug about the chances of people's main assets halving in value and some of the nation's banks going under. At least McWilliams sounds a bit more sombre when he suggests these things, and moreover, generally tries to suggest ways we can fix the problems at hand.

He calls it as it is(like the banking sector hole and the housing crash) and doesn't hide any info from the public like the vested interests in this country do.

Ootermus

Ok, but what you have to remember that in a situation like this (property collapse and potential bank failure), EVERYONE is a vested interest on one side of the coin or the other, ie renters would like property prices to fall as this should bring down rents and also maybe allow them to actually buy a home at a price they can finanlly afford. Academics are also a vested interest in that when the economy is booming people tend not to take too much notice of them, but when the economy is tanking everyone wants to listen to anyone who might be able to explain why. When builders and bankers are running the economy, university professors tend to go down the list in terms of importance, and now they get the chance to say "i told you so". All from the comfort of a state backed job for life, which, btw, generally means that they're among the group of people who aren't struggling to get a mortgage right now.

People living in the real world are badly effected by all of this, so it wouldn't be hurt for him to maybe show some concern at the current events, rather than frothing at the mouth in excitement like he currently is.

who_ru

IronMan wrote: »

but our elected representatives sold out a generation of young people just so they could get elected again.

Absolutely true, politicians in general, but particularly at local level have been a dreadfully negative influence on irish society.

bangersandmash

Ootermus wrote: »

Academics are also a vested interest in that when the economy is booming people tend not to take too much notice of them, but when the economy is tanking everyone wants to listen to anyone who might be able to explain why. When builders and bankers are running the economy, university professors tend to go down the list in terms of importance, and now they get the chance to say "i told you so".

Absolute nonsense. Where do you get this stuff? Let me spell it out for you. When the economy is booming, there is considerably more funding available for both research and teaching. During a recession, there is considerably less money for both, as third-level and R&D are naturally seen as a more popular target for cut-backs than more contentious areas such as health and primary/secondary education. So if anything, academics take a back seat when the economy is tanking.

Are you honestly suggesting that Kelly is frothing at the mouth for this or this? And how do you know he won't be personally affected by the property crash like people in the "real world"? Is it not possible that he too lives in one of those assets that is about to half in value?

Ootermus wrote: »

People living in the real world are badly effected by all of this, so it wouldn't be hurt for him to maybe show some concern at the current events, rather than frothing at the mouth in excitement like he currently is.

He is simply making predictions for the market. He may appear detached, but that is his job. In fact, it's the "massively overpaid and government-funded Third Level Education sector" that allows him to make such unpopular statements without fear of recrimination, unlike the bankers and builders you mention, whose predictions are based on towing the company line.

If many so-called experts had been as brutal and honest as Prof. Kelly was in the past, then many of the people you and I are concerned about would not be in the position that they now find themselves. Or do you think ignoring reality and hoping for the best is really the best course of action?

Honestly, if you want to read emotive "won't someone think of the children" type opinion pieces about the state of the property market, stick to reading the SIndo.

dazberry

Ootermus wrote: »

People living in the real world are badly effected by all of this, so it wouldn't be hurt for him to maybe show some concern at the current events, rather than frothing at the mouth in excitement like he currently is.

Kelly was on the Right Hook on Newstalk this evening - and didn't come across as frothing at the mouth. He also used an analogy of telling everyone a ship will sink and no one listens and then the ship sinks and a couple of hundred people die - and there not being any comfort in being right because of the outcome.

In comparison to everyone else that seems to have a soundbite in our media I'd say Kelly would appear to have the least vested interest. Not to say the an academic view of things is necessarily/likely going to be on the money, but I've worked in a bank - so lets just say I wouldn't be taking too much notice of their inhouse economists.

D.

Ootermus

Listen, i'm not getting into a pissing match over this, far more interesting things to do on a Friday night. However, perhaps i should reclarify my original point, that he seems overly smug when dishing out the doom and gloom, and that perhaps he's starting to like the limelight his comments are creating for himself. These are comments that, in reality, are easy to make when they have little direct downside effect on his own employment situation (does anyone seriously expect job cuts or any meaningful funding cuts at third level education?), and are comments which previously Kelly has himself admitted were not based on systematic research and were actually just him "spouting off", though that detail got less airplay than the original story.

http://www.independent.ie/business/irish/banking-collapse-economist-was-just-spouting-off-1318359.html

In the same way that many many people made a buck or seven off the housing boom, its quite possible that some people are seeking to make a few bob off the housing downturn.

SkepticOne

On the subject of smugness, he was on Newstalk talking to George Hook this afternoon. Hook asked him whether he was happy that his predictions are being vindicated. He said he wasn't happy at all. It was predicting the sinking of a passenger ship, not being believed, then being forced to watch it sink.

I think he was a bit pleased though.

ZYX

Economists in general love to be heard. If you want 3 opinions on the economy just ask 2 economists.

Firetrap

Well, that's what they're paid to do. I'm sure there are people who would rather listen to the likes of Dan McLoughlin (BOI) and Austin Hughes (IIB) telling them that everything's great and to dash out and buy a house.

jackal

Ootermus wrote: »

Listen, i'm not getting into a pissing match over this, far more interesting things to do on a Friday night. However, perhaps i should reclarify my original point, that he seems overly smug when dishing out the doom and gloom, and that perhaps he's starting to like the limelight his comments are creating for himself. These are comments that, in reality, are easy to make when they have little direct downside effect on his own employment situation (does anyone seriously expect job cuts or any meaningful funding cuts at third level education?), and are comments which previously Kelly has himself admitted were not based on systematic research and were actually just him "spouting off", though that detail got less airplay than the original story.

http://www.independent.ie/business/irish/banking-collapse-economist-was-just-spouting-off-1318359.html

In the same way that many many people made a buck or seven off the housing boom, its quite possible that some people are seeking to make a few bob off the housing downturn.

Classic attack the messenger not the message stuff. Whether he is smug or not the message he is conveying is the important part. Feck off with your "spreading doom and gloom" line. I'm so sick of hearing that. All we have heard in Ireland for years is property cheerleaders, bank employed "economists" who got it spectacularly wrong and blustered away telling young people to get on board the property gravy train. The media have been so lazy and complicit, going to say Austin Hughes every 3 months for his latest 100% wrong interest rate prediction (Interest rises are done and dusted!), going to estate agents and asking them how the market is doing (Never a better time to buy!), giving Tom Parlon airtime whenever he likes (Quick, supply is drying up... Buy NOW NOW NOW!) and now... the "bail out" talk is slowly gathering steam and being reported as something positive?

Good on Kelly for calling it as he saw it. The Future Shock "Property Crash" program got exactly the same reaction ("Ireland is different") when in fact the only thing wrong with the program was everything it has predicted has happened faster than it said!

faceman

I think it's fair to say no one can tell how long the slump will last no matter how comparisons are done with other countries

jackal

faceman wrote: »

I think it's fair to say no one can tell how long the slump will last no matter how comparisons are done with other countries

Have you a better suggestion?

Ootermus

I didn't say anything about him "spreading the doom and gloom". What i did say was that some of his comments were what he has himself described as him just "spouting off". In the same way as yelling "fire" in a crowded theatre for no good reason isn't a particularly good idea, questioning the viability of Irish banks in the current markets, unless you have hard data to back it up, is also somewhat dubious in its merits.

mrgaa1

from the way I see it this is the best time to buy. Prices will not get much lower because any developer who has borrowed money to buy and build has to repay back any loan and interest on that. Any house below 200k that is newly built will not drop anymore - in fact i'd say that most new houses can not drop anymore. Banks are starting to look for bigger deposits so that the LTV is less for them.
The irish economy is actually doing ok - we're hearing a lot of doom and gloom out there but take away the construction side and other industries are doing ok given the current unsettled international markets.
Construction of Housing has more or less stopped - and when houses start to move again there will be a shortage. People have to get it into their heads that houses at €400,000 will not drop to €200,000 - this will not happen. The primary schools and secondary schools are full - more teachers are needed - and this points to a higher population. Where are these people going to live when they move out of education? Some will emmigrate but by and large Ireland has a good population growth that needs serviced.
More industry is needed - but as 2.9 people occupy every house on average as opposed to 2.4 as the average across Europe there is a need for housing. Affordable housing for sure - look at DAFT.IE and see the affordable houses there.
So to summarise anyone looking to get on the property ladder is going to have to be realistic, buy now, save some monies and move up the ladder as per normal.

jackal

Ootermus wrote: »

... that he seems overly smug when dishing out the doom and gloom, and...

Thats exactly what you said its there a few posts up.

jackal

Ootermus wrote: »

I didn't say anything about him "spreading the doom and gloom". What i did say was that some of his comments were what he has himself described as him just "spouting off". In the same way as yelling "fire" in a crowded theatre for no good reason isn't a particularly good idea, questioning the viability of Irish banks in the current markets, unless you have hard data to back it up, is also somewhat dubious in its merits.

I remember that. I was very suspicious about his semi-retraction after the original article. Almost like someone powerful had told him to STFU he is causing problems and could cause.. oh i dont know something like a run on a bank?

Then again I wear a tin foil hat when I go near an estate agents!

mrgaa1

from the way I see it this is the best time to buy. Prices will not get much lower because any developer who has borrowed money to buy and build has to repay back any loan and interest on that. Any house below 200k that is newly built will not drop anymore - in fact i'd say that most new houses can not drop anymore. Banks are starting to look for bigger deposits so that the LTV is less for them.
The irish economy is actually doing ok - we're hearing a lot of doom and gloom out there but take away the construction side and other industries are doing ok given the current unsettled international markets.
Construction of Housing has more or less stopped - and when houses start to move again there will be a shortage. People have to get it into their heads that houses at €400,000 will not drop to €200,000 - this will not happen. The primary schools and secondary schools are full - more teachers are needed - and this points to a higher population. Where are these people going to live when they move out of education? Some will emmigrate but by and large Ireland has a good population growth that needs serviced.
More industry is needed - but as 2.9 people occupy every house on average as opposed to 2.4 as the average across Europe there is a need for housing. Affordable housing for sure - look at DAFT.IE and see the affordable houses there.
So to summarise anyone looking to get on the property ladder is going to have to be realistic, buy now, save some monies and move up the ladder as per normal.

jackal

mrgaa1 wrote: »

from the way I see it this is the best time to buy. Prices will not get much lower because any developer who has borrowed money to buy and build has to repay back any loan and interest on that. Any house below 200k that is newly built will not drop anymore - in fact i'd say that most new houses can not drop anymore. Banks are starting to look for bigger deposits so that the LTV is less for them.
The irish economy is actually doing ok - we're hearing a lot of doom and gloom out there but take away the construction side and other industries are doing ok given the current unsettled international markets.
Construction of Housing has more or less stopped - and when houses start to move again there will be a shortage. People have to get it into their heads that houses at €400,000 will not drop to €200,000 - this will not happen. The primary schools and secondary schools are full - more teachers are needed - and this points to a higher population. Where are these people going to live when they move out of education? Some will emmigrate but by and large Ireland has a good population growth that needs serviced.
More industry is needed - but as 2.9 people occupy every house on average as opposed to 2.4 as the average across Europe there is a need for housing. Affordable housing for sure - look at DAFT.IE and see the affordable houses there.
So to summarise anyone looking to get on the property ladder is going to have to be realistic, buy now, save some monies and move up the ladder as per normal.

You are entitled to your opinion, but it all sounds like its based on hope and also the naive belief that because all you have seen houses do is go up ridiculously fast that a 400k house cant drop to 200k.

from the way I see it this is the best time to buy. Prices will not get much lower because any developer who has borrowed money to buy and build has to repay back any loan and interest on that.

Things don't sell for the price the seller needs to sell at, they sell at the price a buyer is willing to buy at. The seller has the choice of not selling at that price, but as you pointed out, interest is due on the loan, prices are going down, so the developer has the choice of selling now for a loss, or holding off, paying a ****load of interest and going bust eventually when nobody buys his product because its way overpriced.

Construction of Housing has more or less stopped - and when houses start to move again there will be a shortage. People have to get it into their heads that houses at €400,000 will not drop to €200,000 - this will not happen.

Thats a complete myth, there is years of supply on the market, and its growing. The only thing there is a shortage of in the market is greater fools. Why wont a 400k house drop to 200k? Apart from saying "it just won't"?

Internationally, houses are 4-5 times average wage. Our house prices were double that in 2006. Ireland *is not* different. Immigration has tanked! Do you seriously think there is a constuction worker sitting in poland at the moment thinking "mmm i have to get myself over to ireland and get my fingers in the recession pie"?

So to summarize, buy now and you are throwing money away. Owe 400k on a house worth 200k, remember in Ireland Debt = Wealth!

Ootermus

jackal wrote: »

Thats exactly what you said its there a few posts up.

Apologies, didn't realise i had said that! Must be getting old and the memory is lapsing. I don't have an issue with people putting out bad news so long as they can back it up and/or don't seem to be getting a kick out of it (the second part there is just a personal preference, all i've said is that i have a dislike for Morgan Kelly, not that i think he should be muted). I also stand by the point that lashing out headline-friendly nightmare scenarios should come with consequences, but that Professor Kelly's tax-payer-funded job means he actually has very few of these.

mrgaa1

in response:

House prices are closer now to being realistic than ever before - if house prices drop 50% from 400,000 to 200,000 there will be a lot of people on the streets and the airports will be full of young people moving out of the country.
The only price reductions will be at the top end of the scale - houses at the lower end e.g. under €200k will not drop 15/20%. We are starting to see a levelling out on bank finances -they are making money - don't be conned by media hyped up stories of doom and gloom.
Our country is strong and we will see house sales improving. House prices will stagnate for a period of time - sought after areas will go up - but apartments etc... are a no go area. People want houses - front door, back door and a green patch. If people do not buy now they will not get the bargains out there - the banks will take them - they are then an asset so they can sit on them and wait.
Banks are open for mortgages and are glad to take the business - get out there and improve your portfolio - renting has strong returns.
the DOOM and GLOOM merchants want to talk DOOM and GLOOM.

jackal

mrgaa1 wrote: »

in response:

House prices are closer now to being realistic than ever before - if house prices drop 50% from 400,000 to 200,000 there will be a lot of people on the streets and the airports will be full of young people moving out of the country.
The only price reductions will be at the top end of the scale - houses at the lower end e.g. under €200k will not drop 15/20%. We are starting to see a levelling out on bank finances -they are making money - don't be conned by media hyped up stories of doom and gloom.
Our country is strong and we will see house sales improving. House prices will stagnate for a period of time - sought after areas will go up - but apartments etc... are a no go area. People want houses - front door, back door and a green patch. If people do not buy now they will not get the bargains out there - the banks will take them - they are then an asset so they can sit on them and wait.
Banks are open for mortgages and are glad to take the business - get out there and improve your portfolio - renting has strong returns.
the DOOM and GLOOM merchants want to talk DOOM and GLOOM.

If house prices fall 50% I might buy one! You are either a troll or... No you must be a troll. Good luck with your portfolio!

Amazotheamazing

mrgaa1 wrote: »

in response:

House prices are closer now to being realistic than ever before - if house prices drop 50% from 400,000 to 200,000 there will be a lot of people on the streets and the airports will be full of young people moving out of the country.
The only price reductions will be at the top end of the scale - houses at the lower end e.g. under €200k will not drop 15/20%. We are starting to see a levelling out on bank finances -they are making money - don't be conned by media hyped up stories of doom and gloom.
Our country is strong and we will see house sales improving. House prices will stagnate for a period of time - sought after areas will go up - but apartments etc... are a no go area. People want houses - front door, back door and a green patch. If people do not buy now they will not get the bargains out there - the banks will take them - they are then an asset so they can sit on them and wait.
Banks are open for mortgages and are glad to take the business - get out there and improve your portfolio - renting has strong returns.
the DOOM and GLOOM merchants want to talk DOOM and GLOOM.

People want houses in good areas, sink estates in Meath and Longford are going to remain worthless, whereas houses near the city centre in any of the cities will hold some value, but will probably still decrease a considerable %.

martian1980

mrgaa1 wrote: »

in response:

House prices are closer now to being realistic than ever before - if house prices drop 50% from 400,000 to 200,000 there will be a lot of people on the streets and the airports will be full of young people moving out of the country.
The only price reductions will be at the top end of the scale - houses at the lower end e.g. under €200k will not drop 15/20%. We are starting to see a levelling out on bank finances -they are making money - don't be conned by media hyped up stories of doom and gloom.
Our country is strong and we will see house sales improving. House prices will stagnate for a period of time - sought after areas will go up - but apartments etc... are a no go area. People want houses - front door, back door and a green patch. If people do not buy now they will not get the bargains out there - the banks will take them - they are then an asset so they can sit on them and wait.
Banks are open for mortgages and are glad to take the business - get out there and improve your portfolio - renting has strong returns.
the DOOM and GLOOM merchants want to talk DOOM and GLOOM.

tell me more about these strong rental returns

Joseph Kuhr

There are a lot of properties out there that aren't good homes. They're badly designed, they're small, they're badly finished and they're out in the middle of nowhere. Not only are they a bad buy but they don't even have any rental potential.

I think the problem with economists is they can only see figures. They do not take bad homes into account and they start their analysis on the basis that every single home has the god given right to sell at the going rate, regardless of whether its a dud or not.

My view and my experience is that good homes will sell for a good price (good price for the buyer as its a buyers market of course but that does not mean a bad price for the seller).

The real issue here is not that the market has crashed, but that there are a lot of people who bought dud homes over the years. There's a subtle difference here. Let me put it this way: there are certain homes (mainly apartments but not all apartments) out there that a sensible person would not touch with a barge pole even during the height of the madness. If you have one of these homes your problem is not that there is/isn't a property crash, your problem now is that people have wised up and you're going to have trouble shifting your home no matter what, whether it be a buyers market or a sellers market.

jackal

martian1980 wrote: »

tell me more about these strong rental returns

Also tell us about how the banks simply *love* snapping up property. I hear its really popular in America. But for some reason, I am a bit confused here... they don't seem to sit on these "assets" as you suggest, but they sell them for whatever they can get in an auction on the city hall steps. You should give those guys a ring and see if you cant expand your portfolio. Now I realise that America is not as Strong an economy as Ireland, but the house prices are getting more and more realistic every day, and if we are not careful, people might just be able to buy them themselves instead of renting them off people with "portfolios" (whats in your portfolio anyway, is it an A3 sized folder with pictures of 2 bed townhouses in a field in longford?)

Joseph Kuhr

martian1980 wrote: »

tell me more about these strong rental returns

A good home will get good rental returns. But it all depends what you expect. A lot of people think that tenants should be paying their mortgage for them, i.e the mortgage is €1000p.m so therefore the rent should be €1000p.m. This is not how it works and its not the definition of strong rental returns.

jackal

Joseph Kuhr wrote: »

There are a lot of properties out there that aren't good homes. They're badly designed, they're small, they're badly finished and they're out in the middle of nowhere. Not only are they a bad buy but they don't even have any rental potential.

I think the problem with economists is they can only see figures. They do not take bad homes into account and they start their analysis on the basis that every single home has the god given right to sell at the going rate, regardless of whether its a dud or not.

My view and my experience is that good homes will sell for a good price (good price for the buyer as its a buyers market of course but that does not mean a bad price for the seller).

The real issue here is not that the market has crashed, but that there are a lot of people who bought dud homes over the years. There's a subtle difference here. Let me put it this way: there are certain homes (mainly apartments but not all apartments) out there that a sensible person would not touch with a barge pole even during the height of the madness. If you have one of these homes your problem is not that there is/isn't a property crash, your problem now is that people have wised up and you're going to have trouble shifting your home no matter what, whether it be a buyers market or a sellers market.

What you are saying about dud property is true, but you think that 800k or more is a good price for a completely average 3 bed semi in south dublin? Yes there are good properties out there, but my god, the money people are asking (and were getting up to recently) is pure bull****. A 3 bed semi is a roof over your head and a nice family home. Unless the walls are made from diamonds it should not cost the guts of a million! People have lost the run of themselves, seriously. There is no way for this mess to be sorted without some pain along the way. The warnings were plentiful, but the market was allowed to continue to boom in an unsustainable way, and we will see a bust and sure as the sun sets in the west after rising in the east.

faceman

jackal wrote: »

Have you a better suggestion?

yes, i have plenty. But you will have to buy my cash in book to find out more! If everyone else is doing it, so am i!

Calina

Current rental yield in Ireland is approximately 3% if you are lucky. It's below what you will get in a deposit account in a bank. In many cases, rental income doesn't even exceed interest rate outgoings. At the very least, rental income should exceed interest rate outgoings.

The rental market in Ireland, in other words, is a mess. You can talk all you like about good houses; they exist but they are not commanding strong rents. Not only that, supply is on the upward trend.

Joseph Kuhr

Calina wrote: »

Current rental yield in Ireland is approximately 3% if you are lucky. It's below what you will get in a deposit account in a bank. In many cases, rental income doesn't even exceed interest rate outgoings. At the very least, rental income should exceed interest rate outgoings.

The rental market in Ireland, in other words, is a mess. You can talk all you like about good houses; they exist but they are not commanding strong rents. Not only that, supply is on the upward trend.

True. But you're not looking at the bigger picture. Put your money in a deposit account for 25/30 years and compare it to your rental yield over 25/30 years of a good home.

People are selling good homes out of fear of being stuck. There's desperation coupled with a bit of ignorance that even in a buyers market they should be looking to get a good bit more than what people are offering (not more than the asking price but more than what people are offering).

jackal

Joseph Kuhr wrote: »

True. But you're not looking at the bigger picture. Put your money in a deposit account for 25/30 years and compare it to your rental yield over 25/30 years of a good home.

People are selling good homes out of fear of being stuck. There's desperation coupled with a bit of ignorance that even in a buyers market they should be looking to get a good bit more than what people are offering (not more than the asking price but more than what people are offering).

Look, most rental yields in Ireland are bollocks. People were making money on capital appreciation. With that rug pulled, the rental market will consist mostly of landlords effectively subsidising people to rent their house. But hey, as Journey say... Don't stop Believin'!

Joseph Kuhr

Calina wrote: »

supply is on the upward trend.

And this backs up my point that a good home will get a strong rental yield. When every tom dick and harry has their holiday home on the market, yes of course supply increases. But for those that are smart with their money a home with good rental potential, that ticks most of the boxes is only going to look more attractive than the inferior apartments down the road. Stick the word "Luxury" in the broshure

Joseph Kuhr

jackal wrote: »

Look, most rental yields in Ireland are bollocks. People were making money on capital appreciation. With that rug pulled, the rental market will consist mostly of landlords effectively subsidising people to rent their house. But hey, as Journey say... Don't stop Believin'!

The rug is not pulled on capital appreciation....its down and battered yes. And it takes those with a bit of balls and cop on to sort the mess out. So why don't you go follow the next bubble and buy a load of corn crops or whatever the latest craze is. Leave the property investment to those who know what they're doing.

SkepticOne

Joseph Kuhr wrote: »

I think the problem with economists is they can only see figures. They do not take bad homes into account and they start their analysis on the basis that every single home has the god given right to sell at the going rate, regardless of whether its a dud or not.

But by definition the going rate is the rate at which it sells.

Duckjob

Joseph Kuhr wrote: »

People are selling good homes out of fear of being stuck. There's desperation coupled with a bit of ignorance that even in a buyers market they should be looking to get a good bit more than what people are offering (not more than the asking price but more than what people are offering).

What is it about property in Ireland that makes people think house prices can defy free market economics?

Sellers can 'look' for more all they want, but any market what they can get will be dictated by what buyers are willing to pay. In a falling market, the sellers that grasp this concept the quickest will lose the least money.

Joseph Kuhr

SkepticOne wrote: »

But by definition the going rate is the rate at which it sells.

Not when you're looking at figures on a screen it doesn't. The going rate is based on statistics and probability.

Calina

Joseph Kuhr wrote: »

The rug is not pulled on capital appreciation....its down and battered yes. And it takes those with a bit of balls and cop on to sort the mess out. So why don't you go follow the next bubble and buy a load of corn crops or whatever the latest craze is. Leave the property investment to those who know what they're doing.

Those who know what they are doing are staying out of the market because there is no capital appreciation on offer right now and will not be until prices reach their trough.

Joseph Kuhr

Duckjob wrote: »

What is it about property in Ireland that makes people think house prices can defy free market economics?

Sellers can 'look' for more all they want, but any market what they can get will be dictated by what buyers are willing to pay. In a falling market, the sellers that grasp this concept the quickest will lose the least money.

Yes exactly. Maybe I'm not getting my point across too well here. I'm talking about getting a good price for a good property. Do you think its stupid to buy a property that is going to lose value in the short term? I don't not if its A) a good home that either fits your families needs or b) has good rental potential if thats what you're after. Prices will go back up, when is irrelavent if you're in it for the long term.

With prices still in decline you need to make an eduated judgment on whether now is a good time to buy or can you get the same property for less in a few months or even next year. that educated judgement can be based on a whole rake of things depending on your situation and on your assesment of the vendors situation.

I guess what I'm saying is the games not over....its just got a whole lot interesting

jackal

Joseph Kuhr wrote: »

The rug is not pulled on capital appreciation....its down and battered yes. And it takes those with a bit of balls and cop on to sort the mess out. So why don't you go follow the next bubble and buy a load of corn crops or whatever the latest craze is. Leave the property investment to those who know what they're doing.

Is that you Brendan O Connor?

And whats this about corn? Are ryanair flying there soon?

So there we have it - when you actually get into the sums with most landlords this is what it always comes back to. Rental yields are bollocks and they were riding the capital appreciation gravy-train. They also tend to make condescending remarks about leaving it to the big boys and waffle on about risk-taking, balls and canny/savvy decisions.

Oafley Jones

mrgaa1 wrote: »

from the way I see it this is the best time to buy. Prices will not get much lower because any developer who has borrowed money to buy and build has to repay back any loan and interest on that. Any house below 200k that is newly built will not drop anymore - in fact i'd say that most new houses can not drop anymore. Banks are starting to look for bigger deposits so that the LTV is less for them..

This guy has to be a shill.

We'll see how low prices will get when the banks start repossessing the mothballed estates from developers and start selling the houses themselves.

Oafley Jones

jackal wrote: »

Is that you Brendan O Connor?

BO'C is the name that came into my head as well.

jackal

Joseph Kuhr wrote: »

What can I say. There's no other way to say it without being condescending. The fact is the market has been flooded by every gob sh!te in the country and now they're all bailing and offloading their "investments" for next to nothing.

You truly are a captain of industry and I salute your mad entrepreneurial skillz.

Look maybe you are making fistfuls of cash off your rental properties excluding capital appreciation, and if you are then fair play, you did your homework. If not then you are pretty much describing yourself above. A "good" rental property that does not make money from the yield is as bad as anything else.

Ryaller

Oafley Jones wrote: »

This guy has to be a shill.

Naah, he's just one of those "Smart Ballsy Guys"...