Where should the prices be

tootsy70

Just like the title says. where should the real property prices be here in ireland. I keep reading were back to 2001 or even 1996-97 prices but where should they be set at when we have a fully functional property market.

handlemaster

four times the average salary give or take

tootsy70

handlemaster wrote: »

four times the average salary give or take

4 times the average salary of who thou.

L1011

tootsy70 wrote: »

4 times the average salary of who thou.

Of the target audience for the house. Which means the average industrial for the bulk of properties.

The_Conductor

The average property used to be a 3 bed semi with a reasonable garden. Now, more often than not, its an apartment. Are we suggesting 4 times average salary for an average apartment?

tootsy70

MYOB wrote: »

Of the target audience for the house. Which means the average industrial for the bulk of properties.

What is the average industrial wage

Carnegie

It should be 4 times net salary max. Average net salary is about 28,000, so your average 3 bed with a garden should be 112,000. Of course both direct and indirect taxes are going up for the foreseeable future, so basing it on 4 times net salary is probably too high of a valuation.

L1011

smccarrick wrote: »

The average property used to be a 3 bed semi with a reasonable garden. Now, more often than not, its an apartment. Are we suggesting 4 times average salary for an average apartment?

I'd say the average desired "normal" property is still a 3 bed semi with a garden.

tootsy70 wrote: »

What is the average industrial wage

41k. Although actually it seems the better figure these days is the average all-sectors, which is 35k.

Bigcheeze

tootsy70 wrote: »

What is the average industrial wage

EUR 43k. Average house price in Ireland is EUR 157k.

4 x 43k = EUR 172k.

Therefore, houses undervalued by 10%, according to the poster above.

Bigcheeze

Carnegie wrote: »

It should be 4 times net salary max.

Source?

Forest Demon

Borrowing guide estimates
Income less than €50,000 = 3.75 times gross salary
Income between €50,000 and €100,000 = 4 times gross salary
Income between €100,000 and €200,000= 4.5 times gross salary

Basic lending criteria
1. You should have savings of approximately 12% of the purchase price.

2. You should be in secure permanent employment or if self employed, be well established, with at least two complete years trading.

3. Your income should be greater than €35,000 if you are applying by yourself or €60,000 if it is a joint application.

4. You should have a good credit history and be able to clearly demonstrate, through previous savings/rental payments, that you can comfortably afford the intended repayments on your new mortgage.

Source:

http://www.mortgages.ie/go/first_time_buyers/how_much_can_i_borrow

I know that BOI and AIB have criteria as above. I think KBC are the only other bank lending and you need 20% deposit with them.

jay0109

Bigcheeze wrote: »

EUR 43k. Average house price in Ireland is EUR 157k.

4 x 43k = EUR 172k.

Therefore, houses undervalued by 10%, according to the poster above.

43k!!!

http://businessetc.thejournal.ie/average-industrial-wage-in-ireland-576846-Aug2012/

more like 36k

Forest Demon

Bigcheeze wrote: »

EUR 43k. Average house price in Ireland is EUR 157k.

4 x 43k = EUR 172k.

Therefore, houses undervalued by 10%, according to the poster above.

Houses are not undervalued. If anything they have a bit to go in some areas based on the salaries available to the people who live in that area or county. In more desirable areas in Dublin they are far above the average selling price.

Its 3.75 times a salary below 50k. Also you need a deposit of at least 10%. So for for 157k it is a deposit of €15,700. Borrowings available would be 161k on top of that based on a salary of 43k

To be honest the average selling price is all over the place at the moment as the lower end of the market is nearly worthless and the medium to upper end is still overpriced IMHO. Every area in Dublin needs its own average based on the demographic of the people looking to buy in that area.

Average industrial wage if you have savings will buy you a house in a fairly average area depending on savings.

StillWaters

Forest Demon wrote: »

Houses are not undervalued.

The OECD would beg to differ.

Bigcheeze

jay0109 wrote: »

43k!!!

http://businessetc.thejournal.ie/average-industrial-wage-in-ireland-576846-Aug2012/

more like 36k

The question was about average industrial wage. You linked to an article that says average industrial wage is 41k. I was quoting a more recent article that says its 43k.

hfallada

The average industrial wage thing by four is ridculous. There is some houses in the west of Ireland that are €50,000 and over priced. Yet there are ones in dublin that are €650,000 in ok areas and are a bargain.

If its cheaper to buy than rent which most places are at the moment, then I would buy. I can't see there being anymore huge corrects in the market. Prices are rising in some parts of Dublin city and houses are selling within 2/3 months.

handlemaster

hfallada wrote: »

The average industrial wage thing by four is ridculous. There is some houses in the west of Ireland that are €50,000 and over priced. Yet there are ones in dublin that are €650,000 in ok areas and are a bargain.

If its cheaper to buy than buy which most places are at the moment I would buy. I can't see there being anymore huge corrects in the market. Prices are rising in some parts of Dublin city and houses are selling within 2/3 months.

I think thats called averaging

Forest Demon

hfallada wrote: »

The average industrial wage thing by four is ridculous. There is some houses in the west of Ireland that are €50,000 and over priced. Yet there are ones in dublin that are €650,000 in ok areas and are a bargain.

Thats spot on. Whats four times unemployment? Thats the value in a lot of areas in the country at the moment.

coolemon

It might be useful to look at the graph below. Get your MS Paint out and extend the yearly segments to 2013+, and continue the rate of increase of the blue line from 1977 to about 1994.

tootsy70

coolemon wrote: »

It might be useful to look at the graph below. Get your MS Paint out and extend the yearly segments to 2013+, and continue the rate of increase of the blue line from 1977 to about 1994.

Is there a graph with 2005 -2013 ?

coolemon

tootsy70 wrote: »

Is there a graph with 2005 -2013 ?

No not that I have seen.

PhilMcGee

coolemon wrote: »

It might be useful to look at the graph below. Get your MS Paint out and extend the yearly segments to 2013+, and continue the rate of increase of the blue line from 1977 to about 1994.

And dont forget to adjust for wage inflation too, and the increase in double income families since 1994. Theres more than just one variable in house prices over time.

jay0109

PhilMcGee wrote: »

And dont forget to adjust for wage inflation too, and the increase in double income families since 1994. Theres more than just one variable in house prices over time.

and the increase in child care costs for those double income families as well, don't forget that bit!!!!;)

StillWaters

PhilMcGee wrote: »

And dont forget to adjust for wage inflation too, and the increase in double income families since 1994. Theres more than just one variable in house prices over time.

And immigration, and the increase in housing need due to people staying single longer and legalisation of divorce and increased urbanisation.

Senna

tootsy70 wrote: »

Is there a graph with 2005 -2013 ?

Wouldn't be hard to make it yourself, all the information is available.

beeno67

coolemon wrote: »

It might be useful to look at the graph below. Get your MS Paint out and extend the yearly segments to 2013+, and continue the rate of increase of the blue line from 1977 to about 1994.

The problem with graphs like this is that people assume the blue line and the red line should both increase at the same rate. They shouldn't though as house prices are a multiple of wages so the gap between the two should be constantly widening. Using this graph house prices are back at expected levels of 4-4.5 times average industrial wage. Possibly slightly undervalued

PhilMcGee

jay0109 wrote: »

and the increase in child care costs for those double income families as well, don't forget that bit!!!!;)

My point is that there are many variables so the "extend the graph to get the correct prices" means nothing at all. It is as meaningless to the value of property today as the term "average wage".
Anyone who pretends to know the true value of property or the future true value of property is just showing how ill informed they are themselves.
If they are that good they should be retired and living it up in the Bahamas by now to be fair.

Tigerandahalf

House prices are still irrelevant to many future buyers. Unemployment is still a huge issue. If the economy continues to drag the young people who have emigrated are more likely to settle and buy abroad. There are many factors also putting pressure on wages such as high taxes, increased pension contributions and the likelihood that a health insurance charge will be brought in.
There is no guarantee either that interest rates are going to stay low. If they rose 2 or 3%. a lot of recent buyers would come under pressure.

Tigerandahalf

Also childcare costs are likely to increase further if that sector has to increase its standards.

coolemon

PhilMcGee wrote: »

If they are that good they should be retired and living it up in the Bahamas by now to be fair.

Perhaps if a lot of those who bought and gambled and thought house prices were going to go up forever had looked at that graph, then yes, they could have been living it up.

The point of the graph is that the variables are smoothened over time. There are fluctuations in population, supply, family formation, employment. But this can be expected in a market system. The point is that there is a market equilibrium, and that that equilibrium would correspond to a smoothened trend over time.

The_Conductor

Tigerandahalf wrote: »

Also childcare costs are likely to increase further if that sector has to increase its standards.

We're already at the 3rd highest childcare costs in the EU :eek:
I don't understand how working people are supposed to be able to afford childcare. Its rapidly reaching the point where the only people who will be able to have children, are those who are out of work and available to look after their own children. Its a silver lining for those who are unemployed- but a millstone, for those in work. For an increasingly large number of people it simply doesn't make economic sense to work.

Tigerandahalf

Well maybe we are paying the price for pushing women into the workplace. If prices continue to increase one partner will simply have to stay at home. Given how few work opportunities and promotions are out there now it may make sense. However v few fellas would like to take that option.

PhilMcGee

coolemon wrote: »

Perhaps if a lot of those who bought and gambled and thought house prices were going to go up forever had looked at that graph, then yes, they could have been living it up.

The point of the graph is that the variables are smoothened over time. There are fluctuations in population, supply, family formation, employment. But this can be expected in a market system. The point is that there is a market equilibrium, and that that equilibrium would correspond to a smoothened trend over time.

I wasnt taking issue with whats on the graph.
What I dont agree with is this very unscientific statement. Might be OK for the Junior cert though, but thats about it. You wont be living in the Bahamas on that methodology

coolemon wrote: »

It might be useful to look at the graph below. Get your MS Paint out and extend the yearly segments to 2013+, and continue the rate of increase of the blue line from 1977 to about 1994.

StillWaters

Tigerandahalf wrote: »

Well maybe we are paying the price for pushing women into the workplace.

Off topic, but noone pushed women into the workforce. Women willingly availed of increased employment opportunities in the 90s and 00s. Believe it or not, many women prefer to work than stay at home, build careers and have independence.

jay0109

StillWaters wrote: »

Off topic, but noone pushed women into the workforce. Women willingly availed of increased employment opportunities in the 90s and 00s. Believe it or not, many women prefer to work than stay at home, build careers and have independence.

emmm, Charlie McCreevy certainly give them a nudge out the door to work by introducing individualisation into the tax system.

S McCarrick- I agree. Only those out of work will be able to have kids soon. What does that say about the system we have!
We currently have 2 under the age of 3. The next one will be mid next year all going well. Missus will get her 9 months maternity pay out of her company and will probably then pack in the job...as #3 pushes her over the edge of it costing more in childcare then she takes home

StillWaters

jay0109 wrote: »

emmm, Charlie McCreevy certainly give them a nudge out the door to work by introducing individualisation into the tax system.

S McCarrick- I agree. Only those out of work will be able to have kids soon. What does that say about the system we have!
We currently have 2 under the age of 3. The next one will be mid next year all going well. Missus will get her 9 months maternity pay out of her company and will probably then pack in the job...as #3 pushes her over the edge of it costing more in childcare then she takes home

Well yes, he did. There was a labour shortage, we had young women who had availed of free 3rd level, and we had been given lots of money from Europe to invest in Childcare, so it all coincided. However women were not pushed, I find that insulting to women.

I dont see childcare getting more expensive as a result of the creche scandals, in fact I see increased Government investment.

Btw, did you look into getting a childminder to come into your home? Much cheaper than creche for 3.

Tigerandahalf

If childcare requires more gov investment that will mean higher taxes.
This will all feed into less money in people's pockets to purchase a home.
Ideally it would be nice to save enough money to avoid taking out a mortgage. For someone building their own home it would be a possibility as you could build it over a couple of years. For the majority it is not an option. Unless unemployment drops significantly it is hard to see how house prices will increase except for small pockets around the country like desirable areas in the main cities.

jay0109

StillWaters wrote: »

Well yes, he did. There was a labour shortage, we had young women who had availed of free 3rd level, and we had been given lots of money from Europe to invest in Childcare, so it all coincided. However women were not pushed, I find that insulting to women.

I dont see childcare getting more expensive as a result of the creche scandals, in fact I see increased Government investment.

Btw, did you look into getting a childminder to come into your home? Much cheaper than creche for 3.

Increased Govt investment in this climate!!! Can't see that happening. Increased fees as a result of more Govt bureaucracy but which will lead to no discernible changes- that I can certainly see.

Nope, not interested in a childminder. I've seen too many disinterested minders on my travels to want to go that route. I don't think it's good for really young kids...works better with older kids. My opinion of course.
It might cost more for the OH to quit work and mind them herself, but in the long run we feel it'll be in the best interests of the kids.

StillWaters

jay0109 wrote: »

Nope, not interested in a childminder. I've seen too many disinterested minders on my travels to want to go that route. I don't think it's good for really young kids...works better with older kids. My opinion of course.

I can't point you to lots and lots of research that shows the opposite, very young children do best when cared in a mixed age cohort in a home setting. But of course each family knows what is best for their own children, so i wouldn't impose my views. It's all about choice.

PhilMcGee

So we have gone from somehow not only being experts at predicting what property prices "should" be now, to what they "will" be in the future, to how much people earn, to the income per household, to knowing what people outgoings are, to how many kids someone is going to have, to how much they are going to spend on their own individual childcare.

I can see how we are going to be accurate in our analysis of the correct price to put on a house alright.

jay0109

My tuppence on current house prices in the area I'm most familiar with...SCD.

Way overpriced. When you see 4 bed semi's on the outer reaches of Rathfarnham (not a huge size either) looking for 0.5m (14 to 15 times the average wage in this country) and some in need of a fair bit of upgrading......well then you know we still have a major problem with the way prices are.
And don't tell me Dublin/Ireland is 'different'....we've heard that before and see where we ended up

Eric Cartman

south dublin is its own kind of madness though , no matter what stats you bring up , south dublin doesn't conform , those with more money than sense choose to pay far over the odds for the coveted addresses.

jay0109

Eric Cartman wrote: »

south dublin is its own kind of madness though , no matter what stats you bring up , south dublin doesn't conform , those with more money than sense choose to pay far over the odds for the coveted addresses.

I would'nt call Rathfarnham a coveted address. Most of it is ordinary middle class dullness.
But I'm not a native of Dublin so perhaps I don't 'appreciate' the mystic of it all:P

koheim

The_Conductor wrote: »

We're already at the 3rd highest childcare costs in the EU :eek:

What countries in EU, or the world, have a higher childcare than Ireland?? I doubt very much that any other countries pay more than we do in Ireland, but stand to be corrected...

Zamboni

Haha it's great reading about what people think the average wage is.
And without a shadow of a doubt the best source is the CSO, however...
The companies that provide that type of information to the CSO are predominately state bodies and well organised private professional organisations.
You know, the ones that pay higher wages...
Having had direct experience in the completion of these forms for a variety of organisations, I can assure you that the raw data is questionable at best. They are seen as a hassle and bare basics are put in, for example, omitting temp work information.
There is no or little auditing of the information supplied by organisations and the CSO are effectively taking whatever raw data they can get their hands and working with that.
I have no doubt in my mind that the average is skewed and my best guess is that the average industrial gross is more like mid-30's than the quoted €42-43k.
Take CSO stats with a pinch of salt. I know the people that work there do...

kaymin

beeno67 wrote: »

The problem with graphs like this is that people assume the blue line and the red line should both increase at the same rate. They shouldn't though as house prices are a multiple of wages so the gap between the two should be constantly widening.

That's wrong - if the multiple house prices is of wages is constant the gap between the two lines will be constant.

L1011

kaymin wrote: »

That's wrong - if the multiple house prices is of wages is constant the gap between the two lines will be constant.

No, it won't. Extremely simple maths

If average wages are 10,000 and house prices are 4x, they're 40,000. Gap is 30,000

Average wages go to 60,000. House prices now 240,000. Gap is 180,000 - 6x the size.

kaymin

MYOB wrote: »

No, it won't. Extremely simple maths

If average wages are 10,000 and house prices are 4x, they're 40,000. Gap is 30,000

Average wages go to 60,000. House prices now 240,000. Gap is 180,000 - 6x the size.

Obviously not simple enough. The relative gap remains the same and that's what is important i.e. the two lines will always be parallel to eachother. In other words, the gap, when you re-base everything into todays money value will be constant. The chart demonstrated that this gap didn't remain constant during the years 1994 - 2005 and by extending the graph for the period upto 1994 will give you an idea where prices should be today based on historical averages.

L1011

kaymin wrote: »

Obviously not simple enough. The relative gap remains the same and that's what is important i.e. the two lines will always be parallel to eachother. In other words, the gap, when you re-base everything into todays money value will be constant. The chart demonstrated that this gap didn't remain constant during the years 1994 - 2005 and by extending the graph for the period upto 1994 will give you an idea where prices should be today based on historical averages.

No, the lines will not be parallel.

kaymin

MYOB wrote: »

No, the lines will not be parallel.

True, not in absolute values but when rebased into todays money, yes - beeno67 stated 'both [shouldn't] increase at the same rate' but they do - 6x in the example you gave. The point is, such a chart can give an view of how today's prices compare to historical averages.

beeno67

kaymin wrote: »

True, not in absolute values but when rebased into todays money, yes - beeno67 stated 'both [shouldn't] increase at the same rate' but they do - 6x in the example you gave. The point is, such a chart can give an view of how today's prices compare to historical averages.

You need to go away and think about it Kayim. The lines should never be parallel. Also the figures are not "rebased into today's money", that would give a totally different graph.

I agree such charts give a view of today's prices compared to historical averages as long as you remember the lines will never be parallel and the house price line will always be moving away from the wages line when the market has a constant ratio of wages to prices (as was neatly explained by MYOB).