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

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  • Closed Accounts Posts: 58 ✭✭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


  • Closed Accounts Posts: 13,992 ✭✭✭✭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 ;)


  • Closed Accounts Posts: 58 ✭✭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. :D

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


  • Closed Accounts Posts: 6,679 ✭✭✭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.


  • Closed Accounts Posts: 6,679 ✭✭✭Freddie59


    jetski wrote: »
    Good question let me know when you find out.

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


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  • Registered Users Posts: 820 ✭✭✭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?


  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    jetski wrote: »
    whats wrong with property increasing in value?

    If this happens, who does it benefit?


  • Closed Accounts Posts: 686 ✭✭✭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.


  • Closed Accounts Posts: 4,442 ✭✭✭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?


  • Closed Accounts Posts: 6,679 ✭✭✭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.


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  • Closed Accounts Posts: 211 ✭✭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.


  • Moderators, Society & Culture Moderators Posts: 32,283 Mod ✭✭✭✭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).


  • Moderators, Society & Culture Moderators Posts: 32,283 Mod ✭✭✭✭The_Conductor


    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.


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