Best/Worst Case Scenarios in Terms of House Prices... Your Predictions?

blobert

Hello,

I've been doing quite a bit of reading of people's opinions on house prices both here, on propertypin and askaboutmoney in relation to how they see house prices going in the immediate and longer term. I think everyone is in agreement thay are going to fall further but how much and for how long is what I am interested in finding out.

Propertypin's members certainly seems to be the most doom and gloom when it comes to such predictions, boards somewhat in the middle, while askaboutmoney has banned negative discussions I believe. I'm also aware that the users of forums such as this may have a vested interest in seeing property prices fall (as the majority do not own properties) or rise (those that own homes).

As things stand prices have fallen about 20-30% from their peak thus far as far as I am aware. I'm interested in what people believe will happen next. Will prices continue to fall? To what % of their highest price? 50%? 70%? How long will they keep falling for?

Secondly I'm interested to see if people think that if after falling, prices are likely to level out and increase again over time? Or are we unlikely to ever see the prices of late 2006/07 again (or not for a very long time). If the way banking is done fundamentally changes and credit is not available at the same levels as before then I suppose this becomes more likely.

As I say, I'd be very interested to here what people think is going to happen in the short (next 1-3 years), medium (3-10 years) and long term (10 years +).

Let me know your thoughts/opinions.

Thanks

The_Conductor

I predict Japanese style stagflation for the US and the EU in the short to medium term. Japans bubble was based on commercial property- the US and 5 EU countries was based on residential, but most other factors are pretty constant.

I also predict a return to a declining population within 5 years.

Property has fallen by between 22 and 30% since the peak (acknowledged to be August '06) with the higher falls in the Dublin region. I predict that going forwards the higher falls will be in the "dormer" towns servicing Dublin- everything in the Wexford, Portlaoise, Athlone, Mullingar, Navan, Drogheda arc.

Given that we are now predicting a net contraction in the Irish economy in both 2009 and 2010 (and even the more optimistic economists still aren't willing to call beyond this timeframe)- its a safe bet that prices are going to follow the economy........

If we were 15% overvalued compared to our international peers in 2000 (according to the IMF), its very possible that any growth since then may be pared back, possibly less 10% to allow for inflation. That leaves us at a net decrease of just over 60% on Aug'06 prices- which could possibly mean that the house price falls are roughly half way there.

Then again- I don't have a crystal ball- and if I did, given the current state of the economy- I'd probably hock it on ebay

punchestown

But Liz O'Kane was just on RTE a few minutes ago and she said we have reached the bottom of the market and there is great value to be had!

Money Shot

punchestown wrote: »

But Liz O'Kane was just on RTE a few minutes ago and she said we have reached the bottom of the market and there is great value to be had!

Well then, you go for it - have yourelf a bargain. With a name like punchestown, you must like a gamble.:D


P.S who's Liz o'Kane - an auctioneer or estate agent by any chance

Ryaller

Money Shot wrote: »

P.S who's Liz o'Kane - an auctioneer or estate agent by any chance

She's the "funny" one in the family.

gurramok

This topic has been discussed loadsa times in the forum.

OP - You'll be surprised that the majority of members of the Pin either own or have owned property hence their experienced advice contrary to your assumption.

I'd agree with smccarrick, it depends on the economy, easy credit and sentiment as well as demand and supply. A population decline or stagnation will happen(that immigrant factor and our own emigration due to economy).

A 50% drop from 2006 peak will happen as there is nothing to stop it happening.

bugler

There are no best or worst scenarios, only reality. The reality is there is nothing on the horizon to suggest a rebound of any sort anytime soon. There are no "fundamentals" underpinning Irish house prices.

I think AAM has moderated it's approach to discussion of house price falls (I'm open to correction on this), as reality overpowered their pathetic attempt to mask what was happening.

gazzer

I was lucky enough to sell my house in Dublin a few months back but I have no intention of buying again at the moment. I am now living/renting a house in Cavan where a 4 bed detached house can be got for 700 a month. I am still putting the same amount of money into my account as I was when I had a mortgage (1500 a month) so at the moment I am saving approx 800 a month that will go towards a deposit for a house(along with the money I got from the house sale) when I think the time is right to buy.

I honestly cant see me buying a house for at least 18 months. Even then it will be only after reading extensively on propertypin, boards, politics.ie and from getting all the necessary information as to wheter it is the right time to buy.

jaycen

I'm not an economist or anything like but when the average house price is 13 times the average wage there is a problem that needs to be addressed, that's happening at the moment, I'd guess that about 6-7 times the average wage would be about right for the average house (if that makes any sense) so average wage being 30K(ish) then the average house should be about 210k(ish).

The market would probably drop below that for a time before it truly recovered I'd guess, at the moment the average price is somewhere around 260k so I'd guess it will bottom out around mid next year and then start recovering.

ZYX

jaycen wrote: »

I'm not an economist or anything like but when the average house price is 13 times the average wage there is a problem that needs to be addressed, that's happening at the moment, I'd guess that about 6-7 times the average wage would be about right for the average house (if that makes any sense) so average wage being 30K(ish) then the average house should be about 210k(ish).
.

Based on yesterdays budget the average wage is nearer €40,000. (The levy will raise 1.2 billion, 2.1 million in employment) so that means you think average price should be 280,000 which is slightly below where we are now!

The_Conductor

jaycen wrote: »

I'd guess it will bottom out around mid next year and then start recovering.

Would you revise this in light of the concensus that the economy itself is forecast to contract for the next 27-30 months (by the Department of Finance)?

kinetic

I saw a fool on the ****e tabloid news that is TV3 news last week saying that the house market was " in danger of over correcting itself".

She was from Sherry Fitzgerald and a so called expert in the housing market.I dont know how they didnt fall about laughing at this article!

Senna

kinetic wrote: »

the house market was " in danger of over correcting itself".

In every boom bust cycle, the market has always over corrected itself. The problem is, no one knows what prices SHOULD be at, so the prices will drop below this point and then level off.

Just as a side point, in the NW were i'm currently watching the market the only houses that are selling in the 200k to 300k price range are ones that have minimum drops of 30-40%. I'd say the market here is down 35%-40% on 2006 prices and i'd say 60% is were it will settle.

gurramok

ZYX wrote: »

Based on yesterdays budget the average wage is nearer €40,000. (The levy will raise 1.2 billion, 2.1 million in employment) so that means you think average price should be 280,000 which is slightly below where we are now!

False. This topic about average wages has been done to death in previous threads, try using the search function.

Average wage or the better measure of median wage we do not know about.

Go to the budget website, it's crystal clear the vast majority of the workforce earn under €36k pa.

Last year, 65.3% of the entire workforce earned under €35k http://www.budget.gov.ie/2007/downloads/TechnicalAnalysis.pdf with another 11.5% earning over it but getting enough tax credits to be not liable at the higher tax rate.

Collumbo

i thought Tom Parlon's comments recently were hilarious... I can't quote it exactly, but it was along the lines of "new house prices cannot fall further than the price of what it cost the builders to build them"... (again... wording might be wrong but the gist of it is accurate).

Yeah. Right. And when the banks are breathing down the builders' necks for the 50m they owe or whatever, is a builder going to refuse money because it's "below the cost of what it cost me to build it"?

This can, and will happen. Think of it as goods about to go-off... they'll sell them just to bring in cash

IanCurtis

This is easy.

5 times average income (€36,000) = €180,000 should buy you a decent 3 bed home in the likes of Swords, Blanchardstown, Tallaght.

This is where the prices will go.

Supply and demand.

Anyone who tells you otherwise is talking out their arse.

blobert

Thanks very much for the replies guys, I appreciate them.

I see the predictions for price drops are quite high at about 60% of peak prices.

Question: With the exception of the often discussed Japanese bust (which was about 70% over a long period of time I believe) has there been any other price drops on this level in recent history?

Also several of you have mentioned that you think house prices will fall to a place where 5/6 times your wage will be able to buy a home as has traditionally been the case.

What I wonder is whether the fact that the majority of couples buying houses both work effectively doubles this? This is a fundamental change over the last 20 years, do you think it makes the traditional model of house = 5/6 times a single wage less likely achievable?

If a single person on the average industrial wage could comfortably afford a 3 bed house in Blanchardstown (as suggested above), does this not mean that a couple both working for the average industrial wage could afford a 3 bedroom house in Ranelagh (assuming this is worth about twice the house in Blanch)? This seems an unlikely scenario surely?

As someone who would like to buy in the next few years I would love to see the 60% price drops that you guys are predicting happen. But is this really likely?

Thanks again for the replies, please keep them coming.

mikemac

My predications, big drops 08,09 and from 2010-2015 a period of steady prices but dropping due to inflation.
A lot of stubborness even now, can't sell for what it's worth which seems to mean what the neighbour got in 2006.

If you're not already there stroll across to http://www.thepropertypin.com/
I'm not a member and have never posted but it's a great read and loads to take in

gurramok

blobert wrote: »

Question: With the exception of the often discussed Japanese bust (which was about 70% over a long period of time I believe) has there been any other price drops on this level in recent history?

Yes. Look at other countries. Finland, for example.

blobert wrote: »

What I wonder is whether the fact that the majority of couples buying houses both work effectively doubles this? This is a fundamental change over the last 20 years, do you think it makes the traditional model of house = 5/6 times a single wage less likely achievable?

Not exactly. Both portions of a couple never work all the time as most couples have kids.
A good rule is using 4.5 for a couple(banks are using this now) and don't forget savings!

blobert wrote: »

If a single person on the average industrial wage could comfortably afford a 3 bed house in Blanchardstown (as suggested above), does this not mean that a couple both working for the average industrial wage could afford a 3 bedroom house in Ranelagh (assuming this is worth about twice the house in Blanch)? This seems an unlikely scenario surely?

Ranelagh as far as i know is double the prices of a gaff in Blanch with alot of pricy Georgian type dwellings which are targetted towards the rental market.

Places like Ranelagh would be for the top earning professionals to buy just like a Killiney, not for the average joe and jane to afford and has not been even in recessionary times before.
So they would not be able to afford it if prices did come down.

blobert wrote: »

As someone who would like to buy in the next few years I would love to see the 60% price drops that you guys are predicting happen. But is this really likely?

Yes in some urban areas, as long as the factors outlined in the thread still happen.
It just takes time as a typical bubble takes 4-5yrs to burst, we are in year 2.

ravendude

Interesting, the outlook is for interest rates to be slashed.

http://www.independent.ie/national-news/series-of-interest-rate-cuts-now-on-the-cards-1501397.html

Interest rates are one of the biggest variables in determining house prices. This change in outlook has been quite recent, and could change things considerably. This could have a significant effect on slowing the decline prices to the 60% decrease that has been quoted here.
However, other factors could easily offset a reduction in rates, eg. widespread unemployment

Whispered

Ah lads, come on say something nice. I'm so depressed. With interest rates put up by the banks, our mortgage is a third higher than it was when we bought, and with us paying the 2007 prices, we are in so much negative equity and seems to be no way out (besides fleeing to australia )

ravendude

helena.ryan wrote: »

Ah lads, come on say something nice. I'm so depressed. With interest rates put up by the banks, our mortgage is a third higher than it was when we bought, and with us paying the 2007 prices, we are in so much negative equity and seems to be no way out (besides fleeing to australia )

Have a look at http://www.independent.ie/national-n...s-1501397.html , might cheer you up

The_Conductor

helena.ryan wrote: »

seems to be no way out (besides fleeing to australia )

Mmmmm- Australia.......

mountainyman

I believe that house prices will fall for 3 years and begin to rise in nominal terms thereafter.

This is because I believe that the long period of low inflation that we have 'enjoyed' is over. The reason is simple.
If the central bank is to inject liquidity that money must be spent.
Inflation ensures that $1 in 2 years is worth less than $1 now. I know that this is held to be true anyway but if you look at Japan's long 'recession' people don't think that way and when times are uncertain enough neither do banks.

Inflation will rise from the dead and Trichet will be doctor Frankenstein.
In 10 years my 200,000 apartment in the mountains will still be worth 200K but everything else will have doubled in price.

The_Conductor

Mountainyman- first of all, a lot of the liquidity that is being injected is simply replacing liquidity that has evaporated, or being used to bolster banks gearing- a bank does not have that same amount on deposit as it lends out- typically it has between 8 and 14% (depending on where its domiciled). With incredible losses from subprime (I would class all the loans to Irish developers as "subprime" too), most of this additional money is going precisely nowhere.

Secondly- Trichet in the ECB, George in the Bank of England and the bankers in most of the worlds central banks (with the notable exception of the Fed) are specifically tasked with combatting inflation- they do not target any other economic indicator. That is why EU rates rose so much more higher than US rates, and why they are unlikely to fall to the same extent. If anything- with a tightening of the availability of credit- its entirely possible that we may have more pressure towards negative inflation rates in the medium term, than high inflation.

Further- when you say you believe house prices will fall for 3 years- do you mean another 3 years? If so- you are broadly in concurrence with most financial commentators. Rises in real terms are not expected though- possibly things might change and they may rise with inflation in 8-10 years time, when the problems in the system iron themselves out?

ravendude

mountainyman wrote: »

the long period of low inflation that we have 'enjoyed' is over.

Which long period was of low inflation that? Inflation has been running at very high rates in this country for years, c 5% and is probably the main reason this country's competitiveness has been eroded. hence the term "rip off republic".

Inflation across the euro zone hasn't been lower for some time now, and we are finally beginning to see a reduction in irish inflation.

mountainyman

There is a degree of wishful thinking in my belief.

I know that the ECB has to focus on infation above all else. As you know this was to assure that the German voter (as opposed the BRD) would accept the end of the D Mark.


We have the Euro now and the ECB will do as it is told. I do not believe that the Americans can be expected to 'save the world's financial system' by passing reserve currency status to the Euro. As a gesture of solidarity with President Obama the rich world will collectively allow high single digit inflation for a decade.

Inflation will allow the 'real economy' 's output to catch up with the 'imaginary economy'. In a more regulated global economic system inflation will force banks to lend.

If there is no Eurozone inflation then Ireland is facing a long period of falling nominal and real wages. But we are not alone in benefitting from inflation.

joe_chicken

mountainyman wrote: »

This is because I believe that the long period of low inflation that we have 'enjoyed' is over.

High inflation is what got us into this mess in the first place.

Look at the Fed's base interest rate over the last 7 years.

Fears of a recession after 9/11 led George W to tell people to buy their way out and spend, spend, spend.

With low interest rates (~1%) people duly obliged and money flowed out the wazoo (2001-2004)

Confident that the economy was strong, they then proceed to try and control inflation by highering interest rates to around 6% in a relatively small period of time (2004-2006).

This led some people who could barely afford their loans when they were at 1% to default. (2006-2007)

The fed panic and start lowering interest rates drastically in a small period of time. People lose faith in the banking system. The banking system tightens lending in fear of more defaulting. People lose more faith in the banks. Vicious circle that we find ourselves in now (2007-2008)

Bottom line. Everything is the US governments fault.

The_Conductor

joe_chicken wrote: »

High inflation is what got us into this mess in the first place.

Cheap easy credit, and a perception that we were all at a never ending all-you-can-eat financial buffet, is what created the mess, period.

mountainyman

Lack of regulation and 'the Offer' created the credit crunch.
What is 'the Offer'. It is the fact that workers in finance have 2 choices.

1 Take alot risk for alot of return or serious losses
2 don't take risks

in scenario 1 either you get a million dollar bonus or you get fired
in scenario 2 you get fired

Ireland's problems are caused by our property bubble not the CC.

Money Shot

mountainyman wrote: »

Lack of regulation and 'the Offer' created the credit crunch.
What is 'the Offer'. It is the fact that workers in finance have 2 choices.

1 Take alot risk for alot of return or serious losses
2 don't take risks

in scenario 1 either you get a million dollar bonus or you get fired
in scenario 2 you get fired

Ireland's problems are caused by our property bubble not the CC.

Huhh !!:eek: Sorry mate, you are going to have to elaborate on this. Are you saying that what happens in the credit markets and property markets are unconnected. Speculation was rife in all markets. Leverage was used to speculate in the hope of easy money in all markets. Lack of regulation in our banking sector was partly to blame for creating a property bubble. Are we talking chicken and egg here ??

johnnyskeleton

blobert wrote: »

Propertypin's members certainly seems to be the most doom and gloom when it comes to such predictions, boards somewhat in the middle, while askaboutmoney has banned negative discussions I believe. I'm also aware that the users of forums such as this may have a vested interest in seeing property prices fall (as the majority do not own properties) or rise (those that own homes).

Everyone has a vested interest in seeing property prices fall to be honest, because if they don't accomodation costs will remain prohibitively expensive and increase wage demands leading to Ireland being uncompetitive, ultimately leading to a loss of jobs and that that stage people can't afford houses anyway.

It's interesting that people welcome news of drops in food, fuel, clothes, flights, healthcare etc, but are horrified at the drops in accomodation costs. This is primarily because they believed property would increase in price indefinately, but such was unsustainable.

Also, speculation in the property market is more dangerous than speculation in other markets, because while the dot com mess was reasonably easy to tidy up, the property market is much messier.

So while I freely admit that it suits me for property prices to fall as I have not purchased an over-valued property, it is not just my personal interest (vested interest) in seeing drops, but I also recognise that it is important for the economy.

blobert wrote: »

As things stand prices have fallen about 20-30% from their peak thus far as far as I am aware. I'm interested in what people believe will happen next. Will prices continue to fall? To what % of their highest price? 50%? 70%? How long will they keep falling for?

It really is impossible to say what sort of drops there will be, because selling prices are not published. I would also caution you against looking at drops because they can be misleading. If I was trying to sell a 2 bed apartment for €1m last year and drop the price to €500k, even though there has been a 50% drop it's still grossly overvalued as the asking price last year was beyond all levels of sanity. As other posters have pointed out, you should calculate the correct property price in relation to market conditions. Generally, 3-5 times someone's gross income, or a mortgage repayment that is approx 30% of net income, is considered affordable. For this money, a person should be able to afford a property that suits their lifestyle (e.g. small house in the outer suburbs for a young family, large redbrick house for consultant neurosurgeon etc). Another way of looking at the price of a house is in relation to the rental market. Generally, if the purchase price of a property is between 12 and 20 times the annual rent the house is correctly valued. Anything more than 20x will not generate sufficient profit for a rational landlord, anything less than 12x will encourage people to become landlords.

To put these tests in perspective, the average home is about 10x the average wage, and between 30x and 40x the annual rent. As things stand, these point to price drops of approx 50%. With incomes and rents dropping, price drops could be more than 50%. Traditionally in Ireland house prices were buoyed up by the scarcity of available property. Now, there is massive over supply. Whether property prices will ever reach these lows or not is a different story, but certainly in theory (i.e. in a rational economy) prices would drop by at least half.

One other factor to be considered is that property is not selling in any substantial volume at the moment because people are holding out for higher prices. What they don't realise is that while they might value their house at €400k or whatever, if it won't sell the economy values that house at €0.

blobert wrote: »

Secondly I'm interested to see if people think that if after falling, prices are likely to level out and increase again over time? Or are we unlikely to ever see the prices of late 2006/07 again (or not for a very long time). If the way banking is done fundamentally changes and credit is not available at the same levels as before then I suppose this becomes more likely.

As I say, I'd be very interested to here what people think is going to happen in the short (next 1-3 years), medium (3-10 years) and long term (10 years +).

I don't expect many houses will sell until next summer, when a few bad decisions and forced sales will start to emerge. From end 2009-2011 I expect prices to keep dropping and sales to slowly pick up. From 2011 onwards is hard to predict; it all depends on how people react to the new prices. I would like to see prices dropping to a rational level and then keeping broadly in line with inflation, but this is unlikely in reality. More likely is that they will slowly stagnate until the next boom comes along and we have an even bigger headache.

This is all assuming that the world (of banking) doesn't end in the meantime.

bakerbhoy

One other factor to be considered is that property is not selling in any substantial volume at the moment because people are holding out for higher prices. What they don't realise is that while they might value their house at €400k or whatever, if it won't sell the economy values that house at €0.

I believe that its rather a case of no one buying ;
Waiting for the bottom :cool:
cannot secure funding :mad:
Scared/confused

The rest of your post i would agree with

The_Conductor

Was talking to a few estate agents in the past couple of days (post budget). They are reporting an upswing in viewings- but very few sales, particularly in the second hand market. In the new market First Time Buyers are active again- but primarily at price points below 200k. Agents are getting fed up with over priced second hand property on their books that isn't shifting and trying to get sellers to reduce prices, to try to get viewings underway again, but sellers are proving reluctant to do so.

On a related note- looks like rents are going to plummet- it appears that nationwide the supply of rental property is increasing 10% month-on-month, as sellers who are unable to achieve their desired asking prices, are simply putting their properties on the rental market instead.

S.

SimpleSam06

johnnyskeleton wrote: »

Generally, 3-5 times someone's gross income, or a mortgage repayment that is approx 30% of net income, is considered affordable. For this money, a person should be able to afford a property that suits their lifestyle (e.g. small house in the outer suburbs for a young family, large redbrick house for consultant neurosurgeon etc).

Just a quick addendum to your excellent post johnnyskeleton, to be honest I don't really think that percentage of wages paid will have much to do with it. As some have pointed out over the last few months, even the very high prices being charged in 2006 were affordable. They were really terrible value, but they were affordable to a lot of people, as is evidenced by the fact that they sold.

From that perspective, what matters is how much the banks will let you leverage your income. If the banks stop allowing people to get these huge loans (which they have), house prices will drop more in line with supply and demand (multiples of rental rates).

Theboinkmaster

johnnyskeleton wrote: »

Everyone has a vested interest in seeing property prices fall to be honest, because if they don't accomodation costs will remain prohibitively expensive and increase wage demands leading to Ireland being uncompetitive, ultimately leading to a loss of jobs and that that stage people can't afford houses anyway.

It's interesting that people welcome news of drops in food, fuel, clothes, flights, healthcare etc, but are horrified at the drops in accomodation costs. This is primarily because they believed property would increase in price indefinately, but such was unsustainable.

Also, speculation in the property market is more dangerous than speculation in other markets, because while the dot com mess was reasonably easy to tidy up, the property market is much messier.

So while I freely admit that it suits me for property prices to fall as I have not purchased an over-valued property, it is not just my personal interest (vested interest) in seeing drops, but I also recognise that it is important for the economy.



It really is impossible to say what sort of drops there will be, because selling prices are not published. I would also caution you against looking at drops because they can be misleading. If I was trying to sell a 2 bed apartment for €1m last year and drop the price to €500k, even though there has been a 50% drop it's still grossly overvalued as the asking price last year was beyond all levels of sanity. As other posters have pointed out, you should calculate the correct property price in relation to market conditions. Generally, 3-5 times someone's gross income, or a mortgage repayment that is approx 30% of net income, is considered affordable. For this money, a person should be able to afford a property that suits their lifestyle (e.g. small house in the outer suburbs for a young family, large redbrick house for consultant neurosurgeon etc). Another way of looking at the price of a house is in relation to the rental market. Generally, if the purchase price of a property is between 12 and 20 times the annual rent the house is correctly valued. Anything more than 20x will not generate sufficient profit for a rational landlord, anything less than 12x will encourage people to become landlords.

To put these tests in perspective, the average home is about 10x the average wage, and between 30x and 40x the annual rent. As things stand, these point to price drops of approx 50%. With incomes and rents dropping, price drops could be more than 50%. Traditionally in Ireland house prices were buoyed up by the scarcity of available property. Now, there is massive over supply. Whether property prices will ever reach these lows or not is a different story, but certainly in theory (i.e. in a rational economy) prices would drop by at least half.

One other factor to be considered is that property is not selling in any substantial volume at the moment because people are holding out for higher prices. What they don't realise is that while they might value their house at €400k or whatever, if it won't sell the economy values that house at €0.



I don't expect many houses will sell until next summer, when a few bad decisions and forced sales will start to emerge. From end 2009-2011 I expect prices to keep dropping and sales to slowly pick up. From 2011 onwards is hard to predict; it all depends on how people react to the new prices. I would like to see prices dropping to a rational level and then keeping broadly in line with inflation, but this is unlikely in reality. More likely is that they will slowly stagnate until the next boom comes along and we have an even bigger headache.

This is all assuming that the world (of banking) doesn't end in the meantime.

Agree with everything you said johnnyskeleton - excellent post

johnnyskeleton

SimpleSam06 wrote: »

Just a quick addendum to your excellent post johnnyskeleton, to be honest I don't really think that percentage of wages paid will have much to do with it. As some have pointed out over the last few months, even the very high prices being charged in 2006 were affordable. They were really terrible value, but they were affordable to a lot of people, as is evidenced by the fact that they sold.

From that perspective, what matters is how much the banks will let you leverage your income. If the banks stop allowing people to get these huge loans (which they have), house prices will drop more in line with supply and demand (multiples of rental rates).

That's a fair point but (as a footnote to your addendum) what I think is important is the sea change in people's attitudes. It is no longer a case of how much will the bank give me (i.e. mortgage lending based on other people's standards) but how much I want the bank to give me (i.e. people looking at their own standards). Hopefully, people will start to live by the following criteria (or similar):

1) I will not get a mortgage for more than 20/25 years
2) I will only buy a property that I am happy to live in the medium-long term
3) I will not borrow more than 5x my income
4) I will not spend more than 30% of my income on mortgage repayments
5) I will make provision for interest rate increases, temporary loss of employment and any other scenario that might threaten my ability to repay.

If everyone lives by such standards, we will start to see realism in the market. However, I accept that if we have another boom in 10 years time, these standards will once again fall by the wayside.

punchestown

johnnyskeleton wrote: »

That's a fair point but (as a footnote to your addendum) what I think is important is the sea change in people's attitudes. It is no longer a case of how much will the bank give me (i.e. mortgage lending based on other people's standards) but how much I want the bank to give me (i.e. people looking at their own standards). Hopefully, people will start to live by the following criteria (or similar):

1) I will not get a mortgage for more than 20/25 years
2) I will only buy a property that I am happy to live in the medium-long term
3) I will not borrow more than 5x my income
4) I will not spend more than 30% of my income on mortgage repayments
5) I will make provision for interest rate increases, temporary loss of employment and any other scenario that might threaten my ability to repay.

If everyone lives by such standards, we will start to see realism in the market. However, I accept that if we have another boom in 10 years time, these standards will once again fall by the wayside.

Jesus Johnny, you do talk an awful lot of sense. Any chance you could take up a position as advisor to the government?

johnnyskeleton

punchestown wrote: »

Jesus Johnny, you do talk an awful lot of bollox. Any chance you could take up a position as advisor to the government?

Fixed it for you. I'd much rather be a nogoodnick (more opportunity for divilment).

dennistuam

i see on gumtree a lovely looking bungalow reduced by nearly 50 % in ten months in co roscommon,i know its back of beyonds but for 130k it is great value

Hobky

How are you measuring value there Dennistuam?

Dirk Gently

dennistuam wrote: »

i see on gumtree a lovely looking bungalow reduced by nearly 50 % in ten months in co roscommon,i know its back of beyonds but for 130k it is great value

yours?

I was checking out bungalows in the past few weeks. was expecting to see massive drops since I last checked over a year ago but to be honest most of them are in a bad state of repair and miles from anywhere considered close to somewhere. Bit of a drive just to find even a national road on the way to somewhere.

There are houses at the moment in Dublin not that far off in price to a lot of the bungalows I'd consider to be liveable, at least in leinster. Some nice properties in the west / south west / north west alright but I was expecting much bigger falls tbh. When I start seeing nice bungalows with a decent garden / sheds for around 100k in the counties surrounding Dublin then I'll be interested. Give me a bungalow outside of the city rather than a town house or apartment any day.

SimpleSam06

johnnyskeleton wrote: »

but how much I want the bank to give me (i.e. people looking at their own standards)

I doubt it. Even the train wreck thats ploughing its way down the economic motorway towards us at the moment isn't likely to make a dent on the mindset. If people are offered a loan of a million, thats what they'll take. They will probably even be nostalgic for the "good old days", the boom years of the early 21st century, as they pay off the last of their grandparents loans in the early 22nd century.

IanCurtis

SimpleSam06 wrote: »

I doubt it. Even the train wreck thats ploughing its way down the economic motorway towards us at the moment isn't likely to make a dent on the mindset. If people are offered a loan of a million, thats what they'll take. They will probably even be nostalgic for the "good old days", the boom years of the early 21st century, as they pay off the last of their grandparents loans in the early 22nd century.

So true.

The same clowns who'd argue with MBNA to lower their credit limit on their credit cards took the maximum loans offered by their mortgage providers, ignoring their ability to make the loan repayments.

I've little or no sympathy for them. They look at their mortgages as badges of honour.

Guy I work with still talks about his "two properties" rather than his two enormous 30 year loans.

The_Conductor

dennistuam wrote: »

i see on gumtree a lovely looking bungalow reduced by nearly 50 % in ten months in co roscommon,i know its back of beyonds but for 130k it is great value

Not if they jack up the tax on second homes........
You're hardly going to live there in order to commute elsewhere- unless you're a local with a specific need to be housed in the area, its totally immaterial.

Freddie59

gazzer wrote: »

I was lucky enough to sell my house in Dublin a few months back but I have no intention of buying again at the moment. I am now living/renting a house in Cavan where a 4 bed detached house can be got for 700 a month. I am still putting the same amount of money into my account as I was when I had a mortgage (1500 a month) so at the moment I am saving approx 800 a month that will go towards a deposit for a house(along with the money I got from the house sale) when I think the time is right to buy.

I honestly cant see me buying a house for at least 18 months. Even then it will be only after reading extensively on propertypin, boards, politics.ie and from getting all the necessary information as to wheter it is the right time to buy.

That's an interesting one. We've just sold our home (well not quite - signing in next day or two) and we're looking around. Good prices to be had. One auctioneer said that some first-time buyers were underbidding by as much as 40 to 50%. Now some are being told to eff off. But others aren't. I heard of an apartment which was on for €200k recently. Were offered €125k and accepted.

I think I'll follow your lead and rent for a while my friend.:)

JuliusCaesar

Freddie59 wrote: »

I heard of an apartment which was on for €00k recently. Were offered €25k and accepted.

I think that qualifies as OVER bidding!

Freddie59

JuliusCaesar wrote: »

I think that qualifies as OVER bidding!

Indeed! Rectified now.:o:D

jaycen

smccarrick wrote: »

Would you revise this in light of the concensus that the economy itself is forecast to contract for the next 27-30 months (by the Department of Finance)?

ZYX wrote: »

Based on yesterdays budget the average wage is nearer €40,000. (The levy will raise 1.2 billion, 2.1 million in employment) so that means you think average price should be 280,000 which is slightly below where we are now!

Sorry for the late reply guys, was away from the boards

I'd really hope it wouldn't continue to fall for that long, a depression (not recession( would be the end result for the Irish economy, I don't think (hope) we are in that much trouble.

40k maybe an average wage to someone but not to me or any average joe (I'd gladly take it though), wage inflation must stop fast or we'll all be suffering, just my op.

punchestown

jaycen wrote: »

wage inflation must stop fast or we'll all be suffering, just my op.

Looking at -100% judging be the increasing numbers signing on.:eek:

Fozzie Bear

The house beside my girlfriends home place has been for sale for the last 8 months. It's one of 4 houses in their own private, quiet, leafy cul de sac. The house is a 15 minute walk from Eyre Square in Galway city and 4 people have looked at it in those 8 months.

The auctioneer (from one of Galway cities main auctioneering firms) was telling Joe (who owns the house) that her firm has not sold ONE SINGLE house since the end of June and they have hundreds of houses on their books.

Sign of the times lads and lassies. I plan on buying a house in the next year/18 months and the prices should have dropped even further by then. I've been waiting for the worm to turn for years. While all my friends went out and bought I waited thank God and unfortunately most of my mates are already in negative equity.