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.