Will house prices drop anymore?

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.

AARRRRGH

AARRRRGH wrote: »

Its just impossible to know what the landscape will be like in 10 years.

True, best anyone can do is look at the current trend and continue the trend into the future, factoring in what effects economic "tinkering" could have.

Currently the trend is southbound with "tinkering" forcing the line to go further south, despite the best efforts of VI's to reverse these trends.

The_Conductor

I saw in the Business Post at the weekend- that Irish Life and Permanent, have taken a unilateral decision to devalue their residential property portfolios by 55%...... there is plenty of blood in the water yet........

AARRRGH

AARRRRGH wrote: »

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.

I disagree.

It is possible to make an educated guess - based on the state of the economy - about house prices.

Joey the lips

AARRRRGH wrote: »

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.

AARRRGH wrote: »

I disagree.

It is possible to make an educated guess - based on the state of the economy - about house prices.

Right folks.... User names that are wrecking my head...

paddym355

International study shows Irish housing affordability up but only affordable markets are in US and Canada
http://www.finfacts.ie/irishfinancenews/article_1018886.shtml

House Prices:Long Term Averages
http://www.finfacts.ie/irishfinancenews/article_1019181.shtml

Managing an Unstable Housing Market
http://www.ucd.ie/news/2010/03MAR10/050210_housing.html

ixoy

Maybe I missed something in the report on affordability, but where does it talk about the length of mortgages? How does Ireland, with up to 40 years being offered, compare? This extra time pushed prices up further, spreading debt over longer periods. Do people think this is something that will be addressed alongside swithcing away from a double-income model?

Fighting Irish

AARRRRGH wrote: »

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.

I can say for defo, houses will not rise by 25% in 10 years

ei.sdraob

AARRRRGH wrote: »

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.

except thats exactly what Brian L. is doing, betting billions on a future rise, with our money

spockety

ixoy wrote: »

Maybe I missed something in the report on affordability, but where does it talk about the length of mortgages? How does Ireland, with up to 40 years being offered, compare? This extra time pushed prices up further, spreading debt over longer periods. Do people think this is something that will be addressed alongside swithcing away from a double-income model?

I don't think you've seen anything yet. I would wager on the introduction of even longer mortgage terms, multi-generational mortgages, etc.

When things get desperate, the desperate will do desperate things.

spockety

spockety wrote: »

I don't think you've seen anything yet. I would wager on the introduction of even longer mortgage terms, multi-generational mortgages, etc.

When things get desperate, the desperate will do desperate things.

It was this type of shenanagans that got us into this mess in the first place!

It's like bungee jumping over rocks, eventually when you allow yourself to get too fat, the rope won't stop stretching before you land!

The next interest rate rise will add a few metres to the rope!