Will house prices drop anymore?

miss luce

just wondering what you all think? would love if they were going to drop more, as we're trying to save for mortgage. or will things start to stabalise at end of this year, and prices start to gradually increase again?

dolliemix

Looks like they're going to drop. The banks are not lending so there's not many people out there who can afford to buy what's on offer any way. I saw a house on Daft in Cavan going for 100,000 the other day. Who'd have thought three years ago?

Mr. Presentable

Who knows? Probably, but it'll be how much depending on where you're looking.

Senna

There is nothing on the horizon to stop prices falling further, interest rate rises (banks this year, ECB next year) will pretty much guarantee a downward trend for the next two years, maybe more.

gurramok

Everywhere including my locality will keep falling in price OP, don't worry.

Tech3

Decreases could get more severe when interest rates will rise. Currently there is no signs of it slowing down.

miss luce

so, itll be still be a buyers market in year or two???? thats good news for us, but not if youre tring to seel i guess. my mom had to take her house off market. crazy offers, but thats just how it is i guess. id be really happy if house prices dropped further.

The_Conductor

miss luce wrote: »

so, itll be still be a buyers market in year or two???? thats good news for us, but not if youre tring to seel i guess. my mom had to take her house off market. crazy offers, but thats just how it is i guess. id be really happy if house prices dropped further.

Prices look like they may still fall significantly- but it doesn't mean that it'll be a buyers market by any means. Normalisation of interest rates is an ECB overnight rate of 4.5%- when you factor in a bank margin of 1.5%- this infers a rate of 6%- which is double what many people are paying at present.

Just because prices may be significantly lower in 3-4 years time, does not mean that its a buyers market- or that the property may be 'more affordable' by any means......

Headline prices are only one indication of affordability- and a rather poor indication at that.

Mr. Presentable

It'll be an investor's market in a few years. I am a home owner with mortgage, and some savings. Already my savings can buy me a small house in Cavan or Leitrim. In a few years I'll be in a position to buy a couple - with cash.

Sure I have neg equity, but as I have no plan to sell my home, this is just a meaningless phrase.

The_Conductor

nipplenuts wrote: »

It'll be an investor's market in a few years. I am a home owner with mortgage, and some savings. Already my savings can buy me a small house in Cavan or Leitrim. In a few years I'll be in a position to buy a couple - with cash.

Sure I have neg equity, but as I have no plan to sell my home, this is just a meaningless phrase.

Just why you'd want to buy a few houses in Cavan or Leitrim- regardless of whether you can pay for them in cash or not- is beyond me. There are more vacant than occuppied properties up there- and the rental market is pretty non-existant (and getting worse!). If (and when) interest rates start to rise- you'd do far better to use your cash to clear any debt, than to make speculative property purchases.........

Mr. Presentable

I wouldn't, and that's kind of part of the illusion. There's a lot of houses that are now available for three times salary, that are not viable and will likely never be, that are deflating the market by their presence.

The_Conductor

nipplenuts wrote: »

I wouldn't, and that's kind of part of the illusion. There's a lot of houses that are now available for three times salary, that are not viable and will likely never be, that are deflating the market by their presence.

Not really- the historical international norm- is for housing units to be 3.2 times average salaries- so the presence of these properties is more a reflection of what has to happen (on average) everywhere- than anything else.

Obviously an apartment in Carrick-on-Shannon would sell for a lower income multiple than one in Dublin- or somewhere that has an inherent demand....... The 3.2 times average salary would be a good national average to strive towards- and it infers that some property is still more than 50% overvalued.......

AARRRRGH

nipplenuts wrote: »

It'll be an investor's market in a few years. I am a home owner with mortgage, and some savings. Already my savings can buy me a small house in Cavan or Leitrim. In a few years I'll be in a position to buy a couple - with cash.

Sure I have neg equity, but as I have no plan to sell my home, this is just a meaningless phrase.

I think you might be right there, but not in Cavan . I know a few people who are just waiting to buy with cash. Purely for investment. They are waiting for prices to turn upwards.

With the terrible rates on savings at the moment and the need to diversify so everything isnt depending on the stock markets, they see rental income as diversification.

I think they are mad, but i bet there are a lot of people like that waiting on the sidelines.

AARRRRGH

smccarrick wrote: »

Not really- the historical international norm- is for housing units to be 3.2 times average salaries-

Id like to read about this. Where can I find it?

the ostrich

we are sitting on a very large amount of mortgage defaulters, who will be repossessd as soon as the grace period is over later this year, non payers will be taken to court, and their properties will be sold at knock down prices., therefore my advice would be wait, and dont rush in to buying now.

The_Conductor

Just where are they going to get these tenants?
I know of housing and apartment developments in fairly sought after parts of Dublin that are over 30% vacant at the moment- and taking 6-7 months to let (and even then at much lowered rents).

Demand is not there- its falling constantly, and we have massive problems with average tenancies now down to 6-7 months (where previously it was ~3 years).

People who think they are going to make a killing as landlords- are in my opinion, delusional at best......

The_Conductor

AARRRRGH wrote: »

Id like to read about this. Where can I find it?

Recent article in the Economist magazine (the issue had a special study on international housing bubbles). Do a search on their website, you'll find it. It dealt with the housing bubble in Ireland, Spain, Portugal and the US. I think the 3.2 times average they quoted was from an OECD study done on behalf of the French government last year (its provenance would be cited in the article though).

AARRRRGH

Where I live most of the other places are rented. They are obviously getting tenants from somewhere.

Do you have some links top the 3.2 times average salary. Id really like to read them. Just curious as to whether its combined household salary or single salary, given that there has been a change in the last 10 years to more dual income homes.

The_Conductor

the ostrich wrote: »

we are sitting on a very large amount of mortgage defaulters, who will be repossessd as soon as the grace period is over later this year, non payers will be taken to court, and their properties will be sold at knock down prices., therefore my advice would be wait, and dont rush in to buying now.

Defaulters now account for 2.1% of all current mortgage holders. Vacant residental property on the other hand is almost 18% of our entire housing stock. If/when NAMA start to try to shift some of their crabby apartments in the middle of nowhere- it'll have a far bigger effect than mortgage defaulters ever will......

The_Conductor

AARRRRGH wrote: »

Where I live most of the other places are rented. They are obviously getting tenants from somewhere.

Do you have some links top the 3.2 times average salary. Id really like to read them. Just curious as to whether its combined household salary or single salary, given that there has been a change in the last 10 years to more dual income homes.

Its an international average- what became the norm in Ireland where there were almost universal dual income households- is not normal. I'd also hazard that with unemployment now @ 13.4%- that the manner in which dual incomes was normal here- will not be repeated again. Emmigration by many of the unemployed (typically young males who may have been employed in the construction industry and may find it difficult to find employment in other industries)- may reshape our population demographics somewhat, time will tell.....

testicle

AARRRRGH wrote: »

Where I live most of the other places are rented. They are obviously getting tenants from somewhere.

There are entire estates in the country (including at least one where I live) which not a house is neither sold nor let. The estate in question is complete, with gates across the entrance.

There are other brand new houses where the asking prices 2 years ago was about 800k, it's now 300k...

AARRRRGH

testicle wrote: »

There are entire estates in the country (including at least one where I live) which not a house is neither sold nor let. The estate in question is complete, with gates across the entrance.

There are other brand new houses where the asking prices 2 years ago was about 800k, it's now 300k...

But the vast majority of rented accommodations seem to find tenants dont they.
Probably not in Lietrim or Carlow though
Im actually from Carlow. There is nothing there to go back for tbh. So i wouldnt be surprised if they are empty. Those empties should not even be counted in the housing stock, because they will never be worth much in the future even if property does rebound.

Im sure anyone thinking of investing will confine their activities to the major cities.
The only way to stop investors in is to tax them up to the neck. Then they will sit it out forever.
So remove all of the interest relief and load up the stamp duty for investors.

smccarrick

smccarrick wrote: »

If/when NAMA start to try to shift some of their crabby apartments in the middle of nowhere- it'll have a far bigger effect than mortgage defaulters ever will......

Just how low can they go? There are some estates that are so remote that I doubt that anyone except a local farmer would be interested in buying them. But the domino effect will drop prices elsewhere.

The historical international norm- is for housing units to be 3.2 times average salaries- ..

I always find that figure to be a bit of a finger in the air job. It would make more sense to calculate as a percentage of monthly take home pay, as in the mortgage repayments should never be more than, say 30% of the household budget.

The figures should also be based on an above average interest rate as well to avoid people being squeezed when rates rise.

The_Conductor

Deleted User wrote: »

Just how low can they go? There are some estates that are so remote that I doubt that anyone except a local farmer would be interested in buying them. But the domino effect will drop prices elsewhere.

I don't accept that there is any limit on how low prices could potentially go. Just for fun I've been looking at some properties in Portugal and Spain- property that was once worth over 1million is very often now at less than 100,000.

People have to accept that until there is an equilibrium between supply and demand that prices will continue to fall until an equilibrium level is reached.

Its estimated that we have between 65,000 (Construction Industry Federation) and 170,000 (Maynooth RIMA (Spatial Analysis in the Geography Dept)) vacant properties out there- aside from holiday homes etc. We are also in a net migration situation again. There is not a market for these properties. Agricultural land is in freefall- down 80% on peak prices (there is an article on it in this weeks Farmer's Journal)- yet residential property has not taken this nose dive just yet.

The only thing propping up property prices at present- is low interest rates. As soon as they start to rise- the writing will really be on the wall.

The_Conductor

Deleted User wrote: »

I always find that figure to be a bit of a finger in the air job. It would make more sense to calculate as a percentage of monthly take home pay, as in the mortgage repayments should never be more than, say 30% of the household budget.

The figures should also be based on an above average interest rate as well to avoid people being squeezed when rates rise.

Its only a finger in the air job- if you accept that historical data has no bearing on future trends. Also- it relates to income on a per-country basis, so 20k in Portugal would equate to an average 68k property while 100k in Germany would equate to a 320k property.

At present lending institutions are trying to price interest rate hikes into the equation when lending funds- hence the demand that at least EUR1500 for a single person and EUR2500 for a couple net remains *after* mortgage payments.

In an Irish context- an extra fly in the ointment is that we have never historically had interest rates akin to our current rates- and there are a whole generation out there who believe rates below 2% are their god given right. Normalisation of rates is probably in the 6% region (4.5 ECB+1.5Local). Its actually costing the banks 5.8% (BOI) and 6.1% (AIB) to raise private funds at the moment (most recent bond rates). They are not in the busines of shovelling money out the door for less than it costs them to borrow it......

This is going to cause far more consternation than anyone is reporting at the moment.

dan_d

Also have to take into account that people's wages have dropped, therefore they can't afford the same mortgages, particularly with banks not throwing 100% mortgages at us anymore. Smaller percentages of people's wages are being spent on mortgages, which pulls the prices down further.
I'd hold on a bit longer if I were you, OP, assuming you're in a position to.

jackal

AARRRRGH wrote: »

I think you might be right there, but not in Cavan . I know a few people who are just waiting to buy with cash. Purely for investment. They are waiting for prices to turn upwards.

With the terrible rates on savings at the moment and the need to diversify so everything isnt depending on the stock markets, they see rental income as diversification.

I think they are mad, but i bet there are a lot of people like that waiting on the sidelines.

Ok the savings rates are bad, but do you really want to hand over a wodge of stamp duty to the government, pay solicitors, have surveys done etc and sit there watching your asset depreciating? Not to mention the fact that when/if you need your money you have to hope the market has risen and you can find a seller, rather than simply just going to the ATM/bank and getting it out.

AARRRGH

Whoa... my evil twin AARRRRGH is using boards.ie now...

Joey the lips

AARRRGH wrote: »

Whoa... my evil twin AARRRRGH is using boards.ie now...

Yes copped that yesterday... You must have cult(Thats cult I said) status.


As for house prices. I reckon the govt cutting the rent allowence subsidy in december will drive down the price of rent which will ultimatly drive down the price to buy.

All just my opinion though

ArraMusha

The prices have a long way to go especially in Galway and Cork as they have not yet hit the drops of Dublin (which is still falling)

It comes down to the logic fact above from smccarrick...worth a second read!

People have to accept that until there is an equilibrium between supply and demand that prices will continue to fall until an equilibrium level is reached.


The only thing propping up property prices at present- is low interest rates. As soon as they start to rise- the writing will really be on the wall.

bladebrew

a lot of estate agents are reporting a surge in house sales over the first few months of the year,as mentioned in mark keenans article in the sunday times home section,
is this only related to the low interest rates available at present??

he does mention it may be the start of a double or treble dip in the market so he isnt jumping for joy like the estate agents, but myhome.ie reported a 300% increase in second hand properties sold in dublin!!

has every civil servant in the country gone running to the banks

One thing to note is that the 300% increase is in sale agreed not sold, that means that the properties could return to the market in a few weeks.

The_Conductor

Deleted User wrote: »

One thing to note is that the 300% increase is in sale agreed not sold, that means that the properties could return to the market in a few weeks.

Especially if the eager buyers find they can't get mortgage approval.........

ArraMusha

ArraMusha wrote: »

The prices have a long way to go especially in Galway and Cork as they have not yet hit the drops of Dublin (which is still falling)

It comes down to the logic fact above from smccarrick...worth a second read!

People have to accept that until there is an equilibrium between supply and demand that prices will continue to fall until an equilibrium level is reached.


The only thing propping up property prices at present- is low interest rates. As soon as they start to rise- the writing will really be on the wall.

On the supply side, construction is falling and therefore in a couple of years "new" houses will be quite scarse, there will be of course tonnes of nearly new scattered about in the wrong places.



I'm not even going to mention the shortage of credit that would hold up prices as the availability of that will be as scarse as the jobs near these completed houses.

dolliemix

AARRRGH wrote: »

Whoa... my evil twin AARRRRGH is using boards.ie now...

Lol Yeah! I was getting confused. I knew I'd seen the name before but he only had 40 odd posts....

The_Conductor

Deleted User wrote: »

On the supply side, construction is falling and therefore in a couple of years "new" houses will be quite scarse, there will be of course tonnes of nearly new scattered about in the wrong places.

New houses are already scarce- construction over the past decade has been predominantly poorly constructed apartment blocks, alongside copious amounts of office space and out of town developments. Some counties have more retail space entering NAMA than they have residential space......

Living in apartments is largely a cultural thing that the Irish have never gotten used to. Short of knocking multiple units together across the board- to make reasonable sized living spaces- and a desireable accommodation unit, they are not going to be able to clear them.

What people are hankering for is a semi-d in a builtup area with its own garden- or rural one-off properties with privacy and space. Neither of these are going to be delivered on in future- regardless of what people express as their preferences. We're already being fined by Europe over pollution from septic tanks from one-off units etc.

At present rates- we have in the region of 7-8 years worth of property standing vacant- or 5 years, if you knocked apartments into reasonable sized living spaces. This is however assuming a continuation in organic rate of growth- which is a very dodgy assumption- the ESRI now reckon that far from their original predictions of further significant population growth- with a resumption of large scale net outward migration- we may return to lower levels akin to those of the early 90's.

Your graph conveys a compelling message- however the information out there, and alongside what might happen in the future, does not support the theory that our future housing needs are not adequately catered for. It would be a depressing situation- were we to plateau as is now being suggested, time will tell.......

dtipp

Saw a few houses lately, one in particular was a large 4Bed Detached house in a decent location.
Guide price was 375,000, which seemed reasonable enough (when compared with what houses in the area were making 3 years ago).
Estate agent said owner had told him he'd take 350,000.
Then a few minutes later said he'd take 340,000.

Felt like offering him 2 loafs of bread and see if he'd negotiate from there.

Anyone selling their house at the moment knows that whatever they get for it right now will be far better than what they'd get in 6 or 12 months time.

McTigs

Deleted User wrote: »

One thing to note is that the 300% increase is in sale agreed not sold, that means that the properties could return to the market in a few weeks.

and another thing to note is that 300% of **** all is still **** all.

and any EA reports can be taken with a 5kg catering box of salt

unklerosco

Deleted User wrote: »

One thing to note is that the 300% increase is in sale agreed not sold, that means that the properties could return to the market in a few weeks.

True, house across from me has just gone sale agreed for the 3rd time...

Treehouse72

Deleted User wrote: »

I always find that figure to be a bit of a finger in the air job. It would make more sense to calculate as a percentage of monthly take home pay, as in the mortgage repayments should never be more than, say 30% of the household budget..

My take on this is that an income multiple is simply another (shorthand) way of expressing repayment amounts. For example:

> €50k salary = €3,000pm net
> 4 x €50k salary = €200,000 mortgage
> Repayments on that will be around 1/3 of income.

I think they are just different ways of saying the same thing.

shoegirl

smccarrick wrote: »

Just where are they going to get these tenants?
I know of housing and apartment developments in fairly sought after parts of Dublin that are over 30% vacant at the moment- and taking 6-7 months to let (and even then at much lowered rents).

Demand is not there- its falling constantly, and we have massive problems with average tenancies now down to 6-7 months (where previously it was ~3 years).

People who think they are going to make a killing as landlords- are in my opinion, delusional at best......

While I do agree with this, right now I am finding it impossible to find somewhere affodable and not substandard to rent in Cork city. While a lot of places that were 750 a month 3 years ago when I last moved in 2007 have now dropped to the 600-650 a month mark, there is little movement downwards.

Now with the maximum rent subsidy for a single person at 108 per week which equates to 468 a month I cannot see welfare tenants as plugging that gap that artificially maintains high rents. As I have stated elsewhere somebody on a 29-32k per year single income isn't going to pull 750 a month out of a hat as their take home net is going to be somewhere between 2000 and 2200 a month. Hence the trend towards sharing in this demographic - which jades very quickly as its difficult to live in such arrangements in ordinary semi-Ds or apartments and these folks did find themselves pushed towards renting alone or buying.

The question I have is that if a landlord or seller can afford to withhold a property from the sale or rental market for 6-7 months without significant rent reductions (and I see plenty of these) they must have sufficient liquidity to continue to keep these vacant, but advertised at higher sale or rent prices, in the vain hope that eventually somebody will bite.

Even the people losing their jobs need somewhere to live by the way. Same goes for people who are now unable to afford mortgages (if they can sell) or going through repossessions. Guessing that they will need SWA subsidy, it does seem to me more and more likely that the baseline for SWA will generate an artificial baseline rent - which I think it has been doing anyway for most of the last decade.

The trouble is, a lot of people are paying out of their own pockets and don't have a lot to spare, or feel greater need to save in case of job loss so this should be constraining rents a lot more.
What I don't see a lot of is rents falling even to - never mind beneath - SWA thresholds. For example, in Midleton, which is where I am looking since rents aremore affordable than in the city and there is a lot of purpose built, reasonable quality rather than shabby Victorian plasterboard masterpieces, there are 10 places with 1 bed at the moment - ranging in price from 450 to 600, but probably really only 2 of these are within the SWA threshold for a single person. However all of them could be affordable to a welfare-dependent couple needing SWA - but there is about 5 times the amount of property with 2 beds available in the same area on Daft ranging from 450 to 900 - about 18 fall inside the threshold, again many of these are on the market for months with little or small price drops. The landlords MUST be able to sustain the impact of vacancy levels, or else they wouldn't exist.

That said, rent subsidies ARE artificially propping up prices, as well as contributing to pressures to buy (due to higher than market rents and poor standards - a quick glance on here shows a lot of people renting very substandard properties). I live in what would in the 1950s have been regarded as a slophouse or a tenement, minus the 70 children or so Bill Cullen would have had in his home. The LL seems to have no problem finding tenants, even in a depressed market with a huge amount of local competition.

shoegirl

I think smc's article is this one?

http://www.economist.com/business-finance/displaystory.cfm?story_id=15179388

Fighting Irish

yes they will, no doubt

AARRRRGH

AARRRGH wrote: »

Whoa... my evil twin AARRRRGH is using boards.ie now...

I was trying to log in as you too
Until i noticed i was actually using the wrong username.
And there was me thinking it was unique after stealing it from a thread title.

AARRRRGH

jackal wrote: »

Ok the savings rates are bad, but do you really want to hand over a wodge of stamp duty to the government, pay solicitors, have surveys done etc and sit there watching your asset depreciating? Not to mention the fact that when/if you need your money you have to hope the market has risen and you can find a seller, rather than simply just going to the ATM/bank and getting it out.

People with that kind of cash arent worried about the stamp duty rates we have now.
Solicitors and surveyors arent that expensive either. You would get both for l€1000 these days probably.
They will be waiting for prices to go into an up trend im sure, so watching a depreciating asset is no what they will be expecting to be doing.

The only way to stop that kind of person is to increase stamp duty and taxes so high that it makes it impossible for them to make a profit in the long term.

BobbyD10

Treehouse72 wrote: »

My take on this is that an income multiple is simply another (shorthand) way of expressing repayment amounts. For example:

> €50k salary = €3,000pm net
> 4 x €50k salary = €200,000 mortgage
> Repayments on that will be around 1/3 of income.

I think they are just different ways of saying the same thing.

Yeah was in PTSB there the other day and they said that generally they want your mortgage repayments to be 35% of your net wages.

leahcim

We are looking to buy a house in the Dublin West/North Kildare area in the next couple of months.

Ideally we would like a 4 bed house detached with a BER of C1 or C2. This usually means either a house built in the last 7 or 8 years or an older house that has had alot of insulation work done.

Nearly every house in our price range 450K incl stamp duty is geting a BER in the Ds or Es mostly houses built in the 70's and 80's.

I suspect people with newer properties are stuck in a negative equity trap where they may want to sell but cannot as they would have to borrow money or put their savings towards paying off the difference between the sale price and what they owe the bank.

leahcim

leahcim wrote: »

I suspect people with newer properties are stuck in a negative equity trap where they may want to sell but cannot as they would have to borrow money or put their savings towards paying off the difference between the sale price and what they owe the bank.

That is the principle sticking point for many, until negative equity can be "made portable" i.e. it can be carried over to a new mortgage by some moving to buy another property, then these owners will be stuck for the term of their current mortgage or until the repayments have wiped out the negative portion of it anyway >20 years for many in the current economic climate (barring a bout of high inflation).

ei.sdraob

some people in this thread expecting 25% rise in 10 years

tsk tsk tsk

anyone from this forum wants to go over and share some wisdom

AARRRRGH

Nobody, but nobody can tell if house prices will be up by 25% in 10 years. Anyone who thinks they know is an idiot.

At the same time anyone who thinks they can tell that prices wont be up by that much in 10 years is also an idiot. Its just impossible to know what the landscape will be like in 10 years.