Will prices take a tumble now?

JoeyJJ

There are a lot of properties out there on the market for over a year in my search areas which have not shifted downward at all. Will recent revelations cause a tumble of prices, or will the deluded sellers keep their asking prices at their current levels.

There are vendors who are moving on prices and these do seem to be the ones who are been removed from daft/myhome now if they are been sold or removed is another thing.


Downward factors
IMF
Property Tax
Higher income taxes.
Apparent Lack of FTB's.
Banks stricter Lending practices


There are factors which restrict people from lowering their prices however, which seem to be bank policy regarding negative equity to be transformed to personal dept.

I will continue to monitor prices with interest.

gurramok

The only thing that is trying to stop prices falling off a cliff is NAMA(new builds) and the mortgage moratorium/interest holidays(2nd hand market).

I don't think those 2 factors can hold back the tide though as the stricter lending policy and emigration/unemployment and possible rate rises(JCTricheT) militate against any stabilisation of prices. Also NAMA will eventually have those firesales.

The banks are stricter indeed but there are people still getting mortgages. A colleague of mine just obtained one as a FTB with good employment record, no debts and lowish mortgage(160k).

dory

Where's that great post someone wrote about the reasons why house prices would fall further?

I certainly hope they do. They're still not at a level I would consider buying at. Still seeing 4 bed semi's in bad areas of Cork for 320k. Once that halves I'll start talking.

robd

YES

The end.

Done to death. No need for further debate or justification.

Theboinkmaster

dory wrote: »

Where's that great post someone wrote about the reasons why house prices would fall further?

I certainly hope they do. They're still not at a level I would consider buying at. Still seeing 4 bed semi's in bad areas of Cork for 320k. Once that halves I'll start talking.

Someone posted this list before, is it the one you had in mind?

A) Income taxes will rise substantially for everybody
Significant Property taxes will be introduced for owners
C) Significant Indirect tax increases- VAT/Excise
D) Interest relief for investors will be further reduced from current 75%
E) Rent Allowance will be decreased by some material percentage
F) Personal Insolvencies will increase when the law is changed in their favour
G) Continued downward wage pressures-or no pay increases at least till 2013
H) As competition in Banking is reduced then mortgage margins will rise
I) Emigration will continue by current and future potential homeowners
J) NAMA releasing finished properties onto the market mopping up demand
K) ECB raising interest rates to normal levels, ie by 1.5%-2.5%
L) Property owners/investors in tight financial straits will be forced to sell
M) People realise that property in Ireland is still expensive vs other countries
N) More builders are put into receivership and properties are sold at large discounts to current prices as has happened recently where €120k properties had queues wanting to buy them (North west region I think)
O) Rising fuel prices decrease disposable income and discourage commuting
P) The Croke Park aggreement falls apart and public sector pay falls
Q) Unemployment rises and
R) The 12.5% Corporate tax rate rises and ECB/IMF step in when the government falls after the 3 byelections and Bonds become too expensive for Ireland to issue.
T) Deflation or very low inflation causes debt to have to be repaid in full rather than inflated away at lenders expense.
U) Stiffer regulation forces banks to provide mortgages with more caution
V) Interbank lending to Irish Banks does not return to precrisis levels and the Banks have to price margins very conservatively-A given
W) Building costs decline further as NERA is disbanded and new build houses can be profitably sold for less.
X) Development land has plummeted so land costs can lead to further downward pressure on prices of future developments.
Y) Commercial rents continue to decline and contagion negative pressures apply to residential rents leading to lower property asking prices
Z) Contrarily the current booming birth rate will provide demand in 25 years time-for subsidised housing at the least

seligehgit

Excellent posts guys,not expecting you guys to be able to see into a crystal ball,only expect that off economists with no vested interests ak Morgan Kelly,Brian Lucey,John Fitzgerald!:DBut any feel for how much further they will fall percentage wise?Especially interested in your thoughts re the Dublin market.Thinking of dipping my feet into the shark infested waters that is the property market at some stage.

dory

Love that post!!

seligehgit, I have no idea. But look at other countries. There is no reason why Irish prices should be SO much higher. It's not like we have great weather!

Snakeblood

seligehgit wrote: »

Excellent posts guys,not expecting you guys to be able to see into a crystal ball,only expect that off economists with no vested interests ak Morgan Kelly,Brian Lucey,John Fitzgerald!:DBut any feel for how much further they will fall percentage wise?Especially interested in your thoughts re the Dublin market.Thinking of dipping my feet into the shark infested waters that is the property market at some stage.

Our prices apparently rose 520% since 1996. Go back to then, figure what they were with lets say 4% inflation year on year. They might get back around there possibly.

Wild conjecture though. Who knows?

Eglinton

Snakeblood wrote: »

Our prices apparently rose 520% since 1996. Go back to then, figure what they were with lets say 4% inflation year on year. They might get back around there possibly.

Wild conjecture though. Who knows?

€75,000 was the average in 1996. At an inflation rate of 4% per annum that amounts to €130,000 in 2010 all things being equal.

Long way to drop yet.

(Peak in 2006 was about €330k. Now about €230k although that's hard to ascertain)

(130,000 by the way is surprise surprise, about 4 times average industrial wage in 2010 - where it should be)

wyndham

Theboinkmaster wrote: »

R) The 12.5% Corporate tax rate rises and ECB/IMF step in when the government falls after the 3 byelections and Bonds become too expensive for Ireland to issue.

Didn't even need the by elections.

OMD

Eglinton wrote: »

€75,000 was the average in 1996. At an inflation rate of 4% per annum that amounts to €130,000 in 2010 all things being equal.

Long way to drop yet.

(Peak in 2006 was about €330k. Now about €230k although that's hard to ascertain)

(130,000 by the way is surprise surprise, about 4 times average industrial wage in 2010 - where it should be)

Your figures are not quite correct.
Average price at start of 1996 was €75,000. At 4% a year over 15 years that amounts to €135,000.

Current average price is €199,000 (3rd quarter 2010. Probably a little lower now in 4th quarter).

Why you believe house prices should increase at the rate of 4% a year is beyond me however.

the_syco

Snakeblood wrote: »

Our prices apparently rose 520% since 1996. Go back to then, figure what they were with lets say 4% inflation year on year. They might get back around there possibly.

Wild conjecture though. Who knows?

I wonder how much house prices rose since 1996. Now, people will say that they're not there to pay for peoples mortgages, but you kind of are in some places. Rent will always be set at how much you want to pay. You want to pay less, move, and rents may drop to get tenants in, who knows?

Eglinton

OMD wrote: »

Your figures are not quite correct.
Average price at start of 1996 was €75,000. At 4% a year over 15 years that amounts to €135,000.

Current average price is €199,000 (3rd quarter 2010. Probably a little lower now in 4th quarter).

Why you believe house prices should increase at the rate of 4% a year is beyond me however.

It was only an example to make a point; the precise figures are irrelevent - I've used 4% because it's approximates to the inflation experienced in the eurozone area in that period of time. It's a reasonable assumption that house prices should not exceed the cost of living generally. Irish house prices rose at a far greater rate than the cost of living, hence the trouble we're now in.