She says buy, I say wait - who's right?

ntlbell

Freddie59 wrote: »

PS I'D HATE TO HAVE BOUGHT A HOUSE AT THE PEAK THOUGH.

Get that salt out of your hands :pac:

jetski

Freddie59 wrote: »

Precisely. And Jetski - did I say I posted the predictions HERE?;):p:D

Now isnt the convenient.

jetski

gurramok wrote: »

I've seen some asking 200k that were 400k in 2006.

Its not unrealistic to expect it to hit 120k as we have a few more budgets to come along plus the rest of bubble has not burst yet as well as the bank problems not cleared up yet.

Ill buy you a present if you can show me a realistic house being sold for 120k that was for sale at 400,000 during the peak.

mikewest

jetski wrote: »

Ill buy you a present if you can show me a realistic house being sold for 120k that was for sale at 400,000 during the peak.

Who says we are at the bottom yet? Long way down before the economy of the country improves and maybe you can tell me which direction house prices will be going until then.

DJDC

In reference to the OP, this excellent post by "Edo" from politics.ie may of some interest to you:

Having said that - women were complete suckers for the whole property rollercoaster - the amount of property and consumerist porn that was produced to push the biological buttons in women in this country over the last 10 years was serious - houses,fashion,WEDDINGS etc etc - the whole thing was you could have it all - get your public service job (between 2000-2007 66%-70% of all PS jobs were taken by women), buy your mini/volkswagen convertable, throw on the auld Destiny's Child CD,, and spend your weekends off dragging the fella off to housing developments or Wedding fairs , or if single , buy that 1/2 bed duplex that cost 6-9 times your income - cos you'll be independent and those nice people at the property store said you were lucky to get in now , cos in 2 years or so you wouldn't be able to afford it and the prices would be thru the roof.

In short, be careful.

jetski

mikewest wrote: »

Who says we are at the bottom yet?

Good question let me know when you find out.

Gurgle

gurramok wrote: »

I've seen some asking 200k that were 400k in 2006.

You've seen some asking 200k that were asking 400k or were sold at 400k in 2006?

The difference is important.

bobbysands81

rediguana wrote: »

Hello,

My wife and I are in our late twenties and, ordinarily, we would be actively house hunting about now. We're sick of renting (no garden, ugly Dunnes furniture, having to hide our cat).

Anyway, she is desperate to buy. Obviously, houses are cheaper than they were. And apparently if you ask for tens of thousands of euro of you will get it (though I did read that, unsurprisingly, estate agents are just factoring in the "discount" to the price, so it isn't as much of a bargain as you might think).

I'm aghast at the prospect of signing up to a thirty or forty-year mortgage when the market still seems to be tanking, and the bad news continues every day. I'm strongly opposed to buying until I am reading regularly, and from independent sources, that the market is near the bottom.

I feel there is little risk in waiting six or twelve or eighteen months. In the meantime, we can (try to) organise our finance and get everything in place so that we're ready to pounce when things have reached their nadir.

Buy low, isn't that the idea?

Obviously, nobody can be certain about when is the best time to buy. But surely now isn't it?

Let's be honest mate - she's right, women are ALWAYS right!

Mugatu

gurramok wrote: »

I've seen some asking 200k that were 400k in 2006.

Its not unrealistic to expect it to hit 120k as we have a few more budgets to come along plus the rest of bubble has not burst yet as well as the bank problems not cleared up yet.

I'm being very honest that I don't have a clue where house prices are going. Probably some more downward pressure on them but I have no idea by how much.

My big problem with this is at the peak a houe for 400k would be generally in an area like Knocklyon (for example), 3 bed semi-d. At 120K with an 8% deposit a person on their own claiming the dole could easily cover the monthly repayments (1 year teaser rate@ 360€ approx). Can someone explain to me how they see this as ever possible?

bangersandmash

Gurgle wrote: »

You've seen some asking 200k that were asking 400k or were sold at 400k in 2006?

The difference is important.

As we know the absence of any kind of public price database makes the latter difficult to ascertain beyond personal anecdotes from those who bought/sold at the time.

I do think it's a fair assumption to make that the vast majority of properties sold in early to mid 2006 were sold for at least the asking price and probably more. These are still useful comparisons unless we're talking about unique properties.

PullOutMethod

> "My big problem with this is at the peak a houe for 400k would be generally in an area like Knocklyon (for example), 3 bed semi-d. At 120K with an 8% deposit a person on their own claiming the dole could easily cover the monthly repayments (1 year teaser rate@ 360€ approx). Can someone explain to me how they see this as ever possible?"

Let me explain...the dole is about to be severely cut.
According to economists (e.g. Moore McDowell) 90% of the increase in government revenue since 2000 was spent on 2 areas:
(1) Public spending increases
(2) Social welfare increases

Now that that revenue has been savaged both of these areas are about to be severely curtailed.
The government is awaiting 2 reports (due later this year) to rubber stamp this:
The commission on Taxation and An Bord Snip.

Mugatu

PullOutMethod wrote: »

> "My big problem with this is at the peak a houe for 400k would be generally in an area like Knocklyon (for example), 3 bed semi-d. At 120K with an 8% deposit a person on their own claiming the dole could easily cover the monthly repayments (1 year teaser rate@ 360€ approx). Can someone explain to me how they see this as ever possible?"

Let me explain...the dole is about to be severely cut.
According to economists (e.g. Moore McDowell) 90% of the increase in government revenue since 2000 was spent on 2 areas:
(1) Public spending increases
(2) Social welfare increases

Now that that revenue has been savaged both of these areas are about to be severely curtailed.
The government is awaiting 2 reports (due later this year) to rubber stamp this:
The commission on Taxation and An Bord Snip.

You must be a politician as you managed to avoid answering the real question I asked.;) But I take your point.

So let me change my example. How about somone on minimum wage being easily able to afford this. Please don't try to tell me everyones wages will be cut down to below minimum wage over the next few years.

PullOutMethod

Hi Mugatu,
The minimum wage will be lowered.
It must happen to regain competitiveness (it will lower childcare costs and a host of other living expenses).
I predict it will come out as a recommendation from one of the two reports.
Nothing weird in anything I am saying, Ireland is inevitably returning to European norms.

P

bangersandmash

Mugatu wrote: »

My big problem with this is at the peak a houe for 400k would be generally in an area like Knocklyon (for example), 3 bed semi-d. At 120K with an 8% deposit a person on their own claiming the dole could easily cover the monthly repayments (1 year teaser rate@ 360€ approx). Can someone explain to me how they see this as ever possible?

Whatever about the figure of €120k, it's probably not a good idea to base mortgage affordability on 1 year teaser rates when ECB rates are at a record low. At 5% over 25 years we would be talking €630 per month - without considering maintenance and the possibility of property taxes to come.

gurramok

Gurgle wrote: »

You've seen some asking 200k that were asking 400k or were sold at 400k in 2006?

The difference is important.

Yes it is. In early 2006, sale prices were going for more than the asking price in the last frenzy of the buying back then.

jetski wrote: »

Ill buy you a present if you can show me a realistic house being sold for 120k that was for sale at 400,000 during the peak.

We're not there yet. Will you still buy me a present when it does?

Mugatu wrote: »

I'm being very honest that I don't have a clue where house prices are going. Probably some more downward pressure on them but I have no idea by how much.

My big problem with this is at the peak a houe for 400k would be generally in an area like Knocklyon (for example), 3 bed semi-d. At 120K with an 8% deposit a person on their own claiming the dole could easily cover the monthly repayments (1 year teaser rate@ 360€ approx). Can someone explain to me how they see this as ever possible?

Knocklyon were asking 500-600k back then. Bangersandmash answered your question correctly.

Mugatu

gurramok wrote: »

Yes it is. In early 2006, sale prices were going for more than the asking price in the last frenzy of the buying back then.



We're not there yet. Will you still buy me a present when it does?



Knocklyon were asking 500-600k back then. Bangersandmash answered your question correctly.

10 year fixed is €530 a month.

So lets say minumum wage goes to 6€ an hour. 6€*8hrs*5days*52weeks = a take home of €1000 a week (approx). So once again at a push someone on minimum wage could clear the payments.

Sorry lads I never see this happening. People in that bracket should be looking to pickup a one bed apartment somewhere outside the city. Not a 3 bed semi is a very nice part of Dublin.

PullOutMethod

Minimum wage earners have started paying levies and furthermore will be brought into the tax net in the next budget.
You're pointing out inconsistencies in the system, these will exist until equilibrium is restored.

jetski

gurramok wrote: »

We're not there yet. Will you still buy me a present when it does?

Absolutly, wrapped and a red ribbon for good measure.

As a previous poster said, ill buy 4 of them myself

Mugatu

PullOutMethod wrote: »

Minimum wage earners have started paying levies and furthermore will be brought into the tax net in the next budget.
You're pointing out inconsistencies in the system, these will exist until equilibrium is restored.

Ok, but you are only pointing out yet unknown possible tax increases, minimum wage cuts and dole cuts to avoid answering the original question. Do you see a point in time when very low earners can afford houses that have only been affordable to people on far above the average wage?

My problem with this argument is it seems that people took Morgan Kelly saying the gains made in the boom would be lost by 70% in the bust, as meaning all houses will drop by 70%.

gurramok

Mugatu wrote: »

10 year fixed is €530 a month.

So lets say minumum wage goes to 6€ an hour. 6€*8hrs*5days*52weeks = a take home of €1000 a week (approx). So once again at a push someone on minimum wage could clear the payments.

Sorry lads I never see this happening. People in that bracket should be looking to pickup a one bed apartment somewhere outside the city. Not a 3 bed semi is a very nice part of Dublin.

6 x 8 x 5 x 52 = €12480/12= 1040 per month...not week.

Min wage jobs are not really guaranteed and i don't think banks would touch them for mortgages.

However, nearly 40% of the workforce on around that wage never paid tax before the last budget so if there is chronic oversupply still in a couple of years, the demand issue with affordability of course will come into play for that bracket.

That 70%+ is an overshoot as bubbles tend to force down the prices to the extreme before recovering to a stable level so it really depends how long that overshoot occurs.(Finland comes to mind)

Mugatu

gurramok wrote: »

6 x 8 x 5 x 52 = €12480/12= 1040 per month...not week.

Typo, sorry my bad.


But we are talking about 70+% of the gains in the bubble and not the entire house price, right?

To be honest I'm not sure why I'm not on your side. I mean if the market dropped 70% across the board that means I can finally buy that mansion I always wanted on my modest wage.

I'd give them 250-300k for this. www.daft.ie/1425683

gurramok

It was the famous Morgan Kelly who stated that 70% of the gains are lost when a bubble bursts. Not to be confused with a 70% drop in price

So find out what that mansion fetched(prob 1.5m) in 2006 and what it would of fetched 7 years previously, yeh impossible to find but we do know prices doubled between 2003 and 2006 so i reckon it was 750k in 2003 if not slightly less.

We're going back to at least 2001 if not 1999 on prices depending on downwards overshoot so i reckon it will end up in the 300k-500k bracket depending how worse it gets.
So start saving

Mugatu

gurramok wrote: »

It was the famous Morgan Kelly who stated that 70% of the gains are lost when a bubble bursts. Not to be confused with a 70% drop in price

So find out what that mansion fetched(prob 1.5m) in 2006 and what it would of fetched 7 years previously, yeh impossible to find but we do know prices doubled between 2003 and 2006 so i reckon it was 750k in 2003 if not slightly less.

We're going back to at least 2001 if not 1999 on prices depending on downwards overshoot so i reckon it will end up in the 300k-500k bracket depending how worse it gets.
So start saving

I have a change jar in the kitchen already.

I personally think you are very optomistic about how low house prices will go. But I guess only time will tell.

Freddie59

jetski wrote: »

Now isnt the convenient.

Ah, Jetski. Still on that famous Egyption River, DeNial.:D

Right - example. We are currently renting a house which, when we rented in Ocober, was on at €265k. We offered €200k in November, on the basis that, by June 2009, these houses would be ranging at maximum €220k.

By that time someone would probably offer €190k and the seller would sell for €200k. Reasonable assumption.

But even at that I was over-optimistic about the price MYSELF.;)

The houses in the area are now ranging at €215k since March. THREE MONTHS ahead of June.

By June they will probably fall below an asking price of €200k.

Similar stories happening all around us here in Waterford. A house went on sale in a nearby estate recently that was ranging €240k - €260k. It went on the market two weeks ago for €170k. And has gone sale agreed. Isn't there a message in there somewhere?:rolleyes:

As I said to you before Jetski, this is economics, supply/demand, etc at work. Much as you apparently would like to see property prices rise again (which got us all into this mess in the first place) it ain't gonna happen son. For a very long time.

Freddie59

jetski wrote: »

Good question let me know when you find out.

Funny. I thought you were the expert in that Department Jetski.:D

jetski

Freddie59 wrote: »

Funny. I thought you were the expert in that Department Jetski.:D

no why did you thank that? and whats wrong with property increasing in value?

gurramok

jetski wrote: »

whats wrong with property increasing in value?

If this happens, who does it benefit?

bangersandmash

I don't particularly agree with the Knocklyon €120k figure. But Gurramok has pointed out a very flawed assumption here. Which bank will be giving a 92% mortgage to someone on the dole or in an unstable minimum wage job? A return to easy credit isn't on the cards for the foreseeable future.

Firetrap

As well as that, there are plenty of people who don't have a clue what wage they will be earning this time next year. I'd love to know what percentage of the workforce has had a pay cut. I'm earning less as are quite a few of my family and friends. Throw in on top of that the income levies and pension levies the government have brought in over the past 6 months. Who knows what nasty surprises they will have in store for us in the next budget?

Freddie59

jetski wrote: »

no why did you thank that? and whats wrong with property increasing in value?

I refer you to the past ten years.:rolleyes: Look it up if you're unsure.;)

Along with a small matter of €90 BILLION.

bobbiw

rediguana wrote: »

Hello,

My wife and I are in our late twenties and, ordinarily, we would be actively house hunting about now. We're sick of renting (no garden, ugly Dunnes furniture, having to hide our cat).

Anyway, she is desperate to buy. Obviously, houses are cheaper than they were. And apparently if you ask for tens of thousands of euro of you will get it (though I did read that, unsurprisingly, estate agents are just factoring in the "discount" to the price, so it isn't as much of a bargain as you might think).

I'm aghast at the prospect of signing up to a thirty or forty-year mortgage when the market still seems to be tanking, and the bad news continues every day. I'm strongly opposed to buying until I am reading regularly, and from independent sources, that the market is near the bottom.

I feel there is little risk in waiting six or twelve or eighteen months. In the meantime, we can (try to) organise our finance and get everything in place so that we're ready to pounce when things have reached their nadir.

Buy low, isn't that the idea?

Obviously, nobody can be certain about when is the best time to buy. But surely now isn't it?

I like the guy who said you would be stuck with 30k negative equity, more like 150k.

Wait it out.

The_Conductor

rediguana wrote: »

My friend is an actuary in London and he was saying that a "fair" value for a house is 16-17 times the annual rent that a property generates, and that by that reckoning there is still some way to go.

If you base fair market values on actuarial normalised ROIs- where a gross return of ~7% is the longterm norm- the fair market price for a property is around 13-14 times the annual rent it is capable of generating- and rents are falling significantly in an Irish context. A lower ROI (and consequently higher market value) might be acceptable in an area where rental yield has a higher degree of security associated with it (i.e. vacant periods are not to be expected).

The_Conductor

bangersandmash wrote: »

I don't particularly agree with the Knocklyon €120k figure. But Gurramok has pointed out a very flawed assumption here. Which bank will be giving a 92% mortgage to someone on the dole or in an unstable minimum wage job? A return to easy credit isn't on the cards for the foreseeable future.

92% is to the best of my knowledge safely gone by the wayside. Gardai and civil servants are now at the 80% level- admittedly they have taken a sizeable cut in net salaries this year, with their levies- but there are commensurate cuts in the private sector- so its a simple assumption that people's lower salaries, command lower borrowing capacity.