Leading economist who predicted housing crash says now is time to buy

jetski

By Charlie Weston Personal Finance Editor

Wednesday November 03 2010
AN economist who was the only person in the property industry to label the housing market a bubble said yesterday that now is the right time for new buyers to enter the market.
Derek Brawn, whose book on the property market predicted the bursting of the bubble, said first-time buyers should buy now once they find a property at the right price.
The optimal time to buy a house was not at the bottom of the market but just before the market hit the bottom, Mr Brawn said.
A year before the bottom of the housing market is the ideal time to buy, he said.
Mr Brawn, who has launched a house price calculator at www.CompareBuy2Rent.ie, added: "House prices are only one factor that people should consider when choosing whether to buy a house now or wait for further reductions."
The other factors include benefits of paying off the capital amount on a mortgage, plus the fact that homeowners receive tax relief on mortgage interest.
"People need to consider both these benefits and factor in further house price drops, so they can buy now -- but at the right price," the former economist with an estate agency chain said.
Mr Brawn, whose book 'Ireland's House Party: What the Estate Agents Don't Want You to Know' made him the scourge of the property industry, said renters were missing out on mortgage tax relief.
Mr Brawn gave an example of a three-bed semi for sale in Kildare for €200,000.
A couple with a €20,000 deposit who are now renting a similar property for €850 a month should buy now if they can get the price down to €183,000.
This is based on a likely further decline in house prices of 15pc over the next five years, with a rise in European interest rates, calculations on CompareBuy2Rent suggest.
- Charlie Weston Personal Finance Editor
Irish Independent

http://www.independent.ie/business/irish/leading-economist-who-predicted-housing-crash-says-now-is-time-to-buy-2405035.html

derealbadger

i guess his winning streak is over

Daith

Damn it! The CIF have to got to him too!

gurramok

Whats your view Jetski Interestingly the economists who called the crash and did not work in property did not say to buy yet!

Snakeblood

jetski wrote: »

By Charlie Weston Personal Finance Editor

Wednesday November 03 2010
AN economist who was the only person in the property industry to label the housing market a bubble said yesterday that now is the right time for new buyers to enter the market.
Derek Brawn, whose book on the property market predicted the bursting of the bubble, said first-time buyers should buy now once they find a property at the right price.
The optimal time to buy a house was not at the bottom of the market but just before the market hit the bottom, Mr Brawn said.
A year before the bottom of the housing market is the ideal time to buy, he said.
Mr Brawn, who has launched a house price calculator at www.CompareBuy2Rent.ie, added: "House prices are only one factor that people should consider when choosing whether to buy a house now or wait for further reductions."
The other factors include benefits of paying off the capital amount on a mortgage, plus the fact that homeowners receive tax relief on mortgage interest.
"People need to consider both these benefits and factor in further house price drops, so they can buy now -- but at the right price," the former economist with an estate agency chain said.
Mr Brawn, whose book 'Ireland's House Party: What the Estate Agents Don't Want You to Know' made him the scourge of the property industry, said renters were missing out on mortgage tax relief.
Mr Brawn gave an example of a three-bed semi for sale in Kildare for €200,000.
A couple with a €20,000 deposit who are now renting a similar property for €850 a month should buy now if they can get the price down to €183,000.
This is based on a likely further decline in house prices of 15pc over the next five years, with a rise in European interest rates, calculations on CompareBuy2Rent suggest.
- Charlie Weston Personal Finance Editor
Irish Independent

http://www.independent.ie/business/irish/leading-economist-who-predicted-housing-crash-says-now-is-time-to-buy-2405035.html

I would be interested in whether he named it in 1998 when it was really getting going, or in 2007 when it was a hideously obvious nightmare.

johndaman66

jetski wrote: »

"House prices are only one factor that people should consider when choosing whether to buy a house now or wait for further reductions."
The other factors include benefits of paying off the capital amount on a mortgage, plus the fact that homeowners receive tax relief on mortgage interest.

Is it just me or is there a very obvious flaw in this argument, not everybody takes out a mortgage to buy a house, granted most do but not everybody and those who do will invaribly take out different sized mortgage as some have more savings than others. Also it is now apparent that this tax relief on mortgage interest Mr. Brawn talks about is going to be progressively done away with in forthcoming budgets. Fair enough if he made this call before this factor became apparent...but it does raise the other issue of Mr. Brawn making half baked assumptions about the future in these very uncertain times. Which leads me on to question his assumption of a 15pc fall over the next five years, whats this based on, is this another half baked assumption? Mr. Brawn doesn't appear to put forward any analysis that verifys this figure. Perhaps I need to look at this piece in the context of further writing from Mr. Brawn but based on what I see put in front I think it is a very dissapointing piece on so many levels from somebody who is seen as a leading economist.

jetski wrote: »

" the former economist with an estate agency chain said.

I think one must conceed that Mr. Brawn is hardly likely to provide an truly objective point of view in the first place

ntlbell

EA says it's time to buy. :eek::eek:

He's ahead of the curve this guy, I like the cut of his jib.

SoupyNorman

Hey Derek, heres a free equation:

Projected yearly rent * 13.

Offer that.

In terms of the cost of your calculator....a once off €4.99 maybe but €4.99 p/m?

sgd

Economist Ronan Lyons offers a free rent or buy calculator on his website.
No need to pay €4.99 a month.. http://www.ronanlyons.com/2010/04/20/your-very-own-rent-or-buy-calculator/

johndaman66

SoupyNorman wrote: »

a once off €4.99 maybe but €4.99 p/m?

Thats bloody ridiculous.

If you ask me even a one of €4.99 is ridiculous. They are freely and readily available out there

amacachi

AN economist who was the only person in the property industry to label the housing market a bubble.

LOL.

gurramok

Roll on Morgan Kelly I say. He is the only god we can depend on

ntlbell

Who's the buisness partner?

Comical Austin?

gurramok

Oh Comical Austin, he has disappeared alright. The only credence I give to Mr Brawn is that he destroyed a rival bubble estate agent on Pat Kenny's show once but he has become a populist in for the gain of money rather than showing his wisdom independently. I'd rather get my advice from Mr Kelly as Morgan Kelly has been dead on so far.

am i bovvered

SoupyNorman wrote: »

Projected yearly rent * 13.

every month on here I read a new equation.....
it started off at YRx20 (which IMO is too high)
and has gone all the way touching every figure down to your quote of YRx13 which is too low.... IMO

seamus

Snakeblood wrote: »

I would be interested in whether he named it in 1998 when it was really getting going, or in 2007 when it was a hideously obvious nightmare.

His book was published on 1st March 2009.

I'm not at all surprised that this beauty of journalistic laziness/incompetence is from the Indo.

gleep

Housing market picks up, Indo makes money advertising shoe/sh1tboxes, this is tripe.

This guy is an economist.

Reading his article, I don't much of what Derek is saying.

dalytrader

After the full impact of the IMF arriving to town in Feb 2011 and the realisation of our next phase of economic turmoil that being the Irish household mortage debts I reckon prices will fall another 60% off present notional values. I am looking foward to picking up a 4 bed in Malahide for about €120,000 in a years time. WooHOOOO

johndaman66

am i bovvered wrote: »

every month on here I read a new equation.....
it started off at YRx20 (which IMO is too high)
and has gone all the way touching every figure down to your quote of YRx13 which is too low.... IMO

I don't think thats the case am i bovvered. I'm a big reader of this forum also. Most often I see a rent multiplier of 13 to 15 being mentioned as a measure which I do believe is pretty much broadly in line with international norms for developed countries, taking booms and busts out of the equation. Stand to be corrected but can't say I ever saw reference to a formalua of YRx20 on the forum in the time I've being reading it.

johndaman66

dalytrader wrote: »

After the full impact of the IMF arriving to town in Feb 2011 and the realisation of our next phase of economic turmoil that being the Irish household mortage debts I reckon prices will fall another 60% off present notional values. I am looking foward to picking up a 4 bed in Malahide for about €120,000 in a years time. WooHOOOO

A fair wee bit on the optomistic side maybe dalytrader? At present the cheapest priced four bed house in Malahide I see on daft is €395,000 (there are many more a lot lot more expensive). A price tag of €120,000 would represent nearly a 70% asking price drop in the afore mentioned house.

IMF are coming to town in Feb 2011? You obviously know something I don't know at the moment?

An Ri rua

johndaman66 wrote: »

A fair wee bit on the optomistic side maybe dalytrader? At present the cheapest priced four bed house in Malahide I see on daft is €395,000 (there are many more a lot lot more expensive). A price tag of €120,000 would represent nearly a 70% asking price drop in the afore mentioned house.

IMF are coming to town in Feb 2011? You obviously know something I don't know at the moment?

Oh dear........Hate when that happens John.......

johndaman66

An Ri rua wrote: »

Oh dear........Hate when that happens John.......

Ah well, you win some, you loose some! Had a fair idea myself that the writing was on the wall and they were coming. Was curious as to Dalytraders reasoning as to why they were to be coming in a specific month next year though, truth be told.

An Ri rua

johndaman66 wrote: »

Ah well, you win some, you loose some! Had a fair idea myself that the writing was on the wall and they were coming. Was curious as to Dalytraders reasoning as to why they were to be coming in a specific month next year though, truth be told.

Valentine's !! Tough Love !!

jmayo

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Need I say anymore ? :rolleyes: