Dublin house price rise to instantly rise national prices.

cursai

http://www.breakingnews.ie/business/economist-dublin-to-drive-up-national-house-price-rises-of-7-604436.html

A leading economist is forecasting an increase of up to 7% in national residential property prices this year.
David Duffy from the ESRI has said the value of houses and apartments in Dublin alone could rise by up to 10%.
It comes as a new report from the Irish Banking Federation said the property market is showing signs of a stabilisation.
The CSO's latest Residential Property Price Index, released this week, showed an increase of 2.3%.
David Duffy, who carried out an analysis of the IBF report, has said the price rises are being driven by the Dublin market.
Mr Duffy said: "I think there will be a rise in house prices, I think it will be an annual average rate of increase in the order of 5-7% nationallly.
"Dublin will be higher than that, I think it will probably be somewhere around 8-10% in Dublin."

Ohoh! The think the cats head has come off from bouncing it by now. Seemingly theres coming to be an 5 - 7% increase in house prices outside Dublin. Better get buying. AM more shocked this wasn't on the INDO's front page with a pull out supplement.

Stheno

cursai wrote: »

Seemingly theres coming to be an 8 - 10% increase in house prices outside Dublin. Better get buying. AM more shocked this wasn't on the INDO's front page with a pull out supplement.

Eh, not quite.

What they are actually saying is that overall there will be a 5-7% increase, but in Dublin that may be 8-10% and the overall increase is due to the volume of houses in Dublin that are rising as a disproportionate number of houses are in Dublin

cursai

Fixed that Stheno.
Where is the evidence for this? Or is it just another ploy to get the market moving especially since the repossessions haven't taken off as they should of.

Stheno

cursai wrote: »

Fixed that Stheno.
Where is the evidence for this? Or is it just another ploy to get the market moving especially since the repossessions haven't taken off as they should of.

There have been increasing reports of "family homes" being an area of the market where there is a shortage in desirable areas, so prices are rising, based on the property price register.

syklops

Property prices in Dublin may increase as demand increases. Despite listening to Joe Duffy there is still a lot of people in gainful employment in this country who need houses to live in.

Im not sure about property in the rest of the country. If there is no jobs in the area, there will be no demand and so prices won't go up. Round where my parents live, rural galway, there are houses for sale for 50k and 60k and have been on the market for some time.

cursai

syklops wrote: »

Property prices in Dublin may increase as demand increases. Despite listening to Joe Duffy there is still a lot of people in gainful employment in this country who need houses to live in.

Im not sure about property in the rest of the country. If there is no jobs in the area, there will be no demand and so prices won't go up. Round where my parents live, rural galway, there are houses for sale for 50k and 60k and have been on the market for some time.

Same here. For me anyway it takes a lot of credibility away from the news sources as this type of reporting is misleading at best. The fact that an ERSI economist is taking part in this leads me to think that these 'experts' don't know or don't care what they are talking about.
But a lot of people will be influenced by this type of news and this in turn will increase bidding on properties especially in Dublin and maybe even outside, nationally.

gaius c

Out of curiosity, what was the ERSI's track record on forecasts during the period 2006-2013?

gurramok

gaius c wrote: »

Out of curiosity, what was the ERSI's track record on forecasts during the period 2006-2013?

Terrible.

Take note of the attempted kick-off from the usual interests in prices.

Mortgage lending figures do not correspond with these rises. (see chart from previous thread http://www.boards.ie/vbulletin/showpost.php?p=86098824&postcount=954 )

The banks have recently(literally in the last few weeks) cut back on the credit available to purchasers. A single buyer for example can only now get 3.5 times the salary, it used to be 4 times at least.

These publicised rises in Dublin houses only(3 months) are being led by cash buyers and that is people with not just 2 years worth of savings but many years of either savings or just having big sums of cash in the bank. To afford to live in a 3bed semi in SCD, we're talking 6 figure sums at least.

gaius c

gurramok wrote: »

Terrible.

I know and was being rhetorical.

jd1983

Has anyone got any sources to literature regarding dead cat bounces during a property crash? Have they typically occurred during property crashes in other countries? I've been doing some googling on the topic but I can't find much. Initially I thought the uplift in Dublin prices was a dead cat bounce but I would've thought dead cat bounces should be short lived. The uplift in Dublin is going on for over a year now, so I'm starting to think there might be something in it. However I don't believe 8-10% rises are sustainable, that sounds like bubble increases.

Icepick

So my taxes are paying for failed bankers, failed landlords and failed civil service and as a bonus, prices are increasing because of collusion to artificially increase them.

gurramok

jd1983 wrote: »

Has anyone got any sources to literature regarding dead cat bounces during a property crash? Have they typically occurred during property crashes in other countries? I've been doing some googling on the topic but I can't find much. Initially I thought the uplift in Dublin prices was a dead cat bounce but I would've thought dead cat bounces should be short lived. The uplift in Dublin is going on for over a year now, so I'm starting to think there might be something in it. However I don't believe 8-10% rises are sustainable, that sounds like bubble increases.

Ok, we need to get away from the media's obsession with headlines and look deeper.

Here is the CSO chart, the 2nd column is the monthly change. These rises of Dublin houses(not apts) have been consistent for only 3 months in 2013, not 1 year. The media and the usual vested interests are using the yearly change to help sell papers.
http://www.cso.ie/en/media/csoie/releasespublications/documents/prices/2013/rppi_jul2013.pdf

Dub houses have been rising and falling every year, look at 2012 which had 5 months of positive rises with 7 down.

May, June and July are the only consistent rises so far in 2013 which has had 4 rises and 2 down with 1 static. The media are going estatic based on July's 3.6%. The CSO stats do not include cash buyers and they don't reveal the level of transactions.

gurramok

Here's more. http://www.irishtimes.com/business/sectors/financial-services/new-report-claims-housing-market-showing-stability-1.1502212

According to the IBF Housing Monitor for the second quarter of the year, the number of properties listed for sale rose, as did the number of transactions and the level of mortgage drawdowns.

Compared with the second quarter of 2012, there was a 3.3 per cent rise in the number of listed properties for sale to 9,901, while transactions were up by 8 per cent. Although mortgage approvals rose by 9.7 per cent, to 4,408, the level of drawdowns only increased slightly to 2,857, a rise of 20 compared to the previous year.

Dublin and Leinster were the key drivers for the positive trends, the IBF report said

Or the same article from Finfacts http://www.finfacts.ie/irishfinancenews/article_1026413.shtml

In total, 3,229 new mortgages to the value of €518m were issued during the second quarter of 2013. With the first quarter traditionally the weakest in any year, followed by recovery in the second quarter, the latest figures reflect a very modest 0.1% growth in Q2 2013 compared to the same quarter in 2012.

The average loan size now stands at just over €160,000, up marginally (0.2%) on Q1 2013 and down 1.4% year-on-year.

To sum up when comparing Q2 2013 with Q2 2012, there has been an extra 20 mortgage drawdowns in the entire country, its massive! :rolleyes:

OMD

gurramok wrote: »

Ok, we need to get away from the media's obsession with headlines and look deeper.

Here is the CSO chart, the 2nd column is the monthly change. These rises of Dublin houses(not apts) have been consistent for only 3 months in 2013, not 1 year. The media and the usual vested interests are using the yearly change to help sell papers.
http://www.cso.ie/en/media/csoie/releasespublications/documents/prices/2013/rppi_jul2013.pdf

Dub houses have been rising and falling every year, look at 2012 which had 5 months of positive rises with 7 down.

May, June and July are the only consistent rises so far in 2013 which has had 4 rises and 2 down with 1 static. The media are going estatic based on July's 3.6%. The CSO stats do not include cash buyers and they don't reveal the level [/URL]

You need to look year on year not month to month. Of course prices vary month to month. However every month in 2013 has shown an increase in price on the same month in 2012.

gurramok

OMD wrote: »

You need to look year on year not month to month. Of course prices vary month to month. However every month in 2013 has shown an increase in price on the same month in 2012.

I think if one is watching the market for the latest swings and wanting up to date info, looking back to August 2012 for an indicator of what's happening is a lot less preferable than looking at the last few months of the latest data release for example.

sparksfly

There are houses and apartments in certain areas that never should have been built and are practically worthless. Due to a lack of local population, infrastructure and employment, they will always be worthless.

OMD

gurramok wrote: »

I think if one is watching the market for the latest swings and wanting up to date info, looking back to August 2012 for an indicator of what's happening is a lot less preferable than looking at the last few months of the latest data release for example.

Looking at the market for the latest swings is of no value though. If you want the latest up to date figures then prices are rising 3.6% a month based on the figures you supplied.

We have about 1500-2000 house sales a month. That is far too little to make an analysis of the market. Year on year is really the smallest term you can use to look at the market to get any idea what is going on.

gurramok

OMD wrote: »

Looking at the market for the latest swings is of no value though. If you want the latest up to date figures then prices are rising 3.6% a month based on the figures you supplied.

We have about 1500-2000 house sales a month. That is far too little to make an analysis of the market. Year on year is really the smallest term you can use to look at the market to get any idea what is going on.

I'm very surprised you didn't say seasonal next. Just so happens the summer is traditionally the quietest period for sales and that includes July's 3.6%.

Will it take off in the traditional season of Sept to the end of Nov? We wait and see.

OMD

gurramok wrote: »

I'm very surprised you didn't say seasonal next. Just so happens the summer is traditionally the quietest period for sales and that includes July's 3.6%.

Will it take off in the traditional season of Sept to the end of Nov? We wait and see.

Exactly so like I said comparing month to month figures is a waste of time.

handlemaster

Prices have moved up in Dublin its easy to see. But from what I understand it takes 10 years for a market to recover to the pre crash prices and inbetween there are bounces in the market. It will be interesting at year end to see what has happened and if the government will interfere in the budget in the market.

tigershould

handlemaster wrote: »

... It will be interesting at year end to see what has happened and if the government will interfere in the budget in the market.

The government will surely do something to 'stimulate' the market further.

handlemaster

tigershould wrote: »

The government will surely do something to 'stimulate' the market further.

I think they will extend the captial gains tax exemption for a further year / six months

gaius c

tigershould wrote: »

The government will surely do something to 'stimulate' the market further.

They'll only turn it into a mini-bubble that will pop again. Best to leave it alone. I'm bearish but in the event that this is a bottom-up increase, it would sustain itself. Messing by the government would only inflate and pop it again.

Spanish Eyes

I think cash buyers are skewing the market.

Personally, I think another frenzy and bubble would be a total disaster. NOT AGAIN, now come on.

IMV, it's those in neg equity who need to move, or investors who want another bubble who are talking this up. And the vested interests of course.

nomoreindie

The following post which I have copied from thepropertypin.com pretty much sums what is happening in the market for me.




There is a discernible active campaign being run through the media to manufacture a new property price spike. The key tactic being employed is exactly the same one used at the start of the bubble back in the early 2000's; that is pushing the line that there is a shortage of properties and if you don't buy now you will miss the boat (the EA tactic of inventing non-existant bidders in auction or private treaty sales is just their standard day to day deception). In the early part of the last decade, there were supply side problems but these were quickly resolved as building rates ramped up to meet and then far outstrip demand. I accept that the leafier burbs of parts of the major urban centres have not had much building apart from corner sites and some smaller developments during the construction frenzy, but this has always been the way. These 'mature' areas didn't have many green/brown field sites available for new development and so the city grows and spreads out (again, thus it has always been). Many of today's desirable areas were outlying towns and villages in the 1960's and 70's ... some, thanks to planning regulations still are.

The reality of the situation is that the volume of property transactions is at an historically low level and the driver of the prices that are being held up as a "market recovery" are transactions centred around a small number of areas in the urban centres, especially those with good social infrastructure (schools, transport, recreation). These have always been the keys to "good areas" and a review of the demographics around these locations shows they are full to the brim with families that have children of school going age, thus are unlikely to move. As a result supply in these specific areas is limited, but no more so than any mature part of a city (by mature I mean areas built more than 30 years ago). That said, supply of properties increases as areas age due partly to downsizing but more by estate sales; just look at the demographics of Dun Laoghaire/Rathdown ... IIRC, back during the bubble David McWilliams identified the potential for a estate sale tsunami in this area.

On a macabre note, with cuts to health care and social welfare budgets while there is no structural reform of both services, the inevitable outcome will be reduced service levels, which will mean more people will die than would be the case if the systems were effective/efficient and well funded. Add in more families dropping private health care and the likely impact for the property market is an increase in the rate of potential estate sales, just how much is difficult to quantify.

Taking the wider view, there is a massive inventory overhang in both the Irish residential and commercial property markets. Property inventory is difficult to shift; it's static, incredibly costly to purchase and relies heavily on market sentiment. The State, through NAMA is actively working against free markets by restricting information and attempting to regulate supply, in this endeavour it is having some limited success.

However, the demand side is not a constant. As the demographics suggest, the age groups that drive the property market, the FTB cohort is reducing, most likely due to emigration. Whether they will return in the short term is debatable, but I suspect, given the short to medium term macroeconomic outlook for both the country and internationally, probably not. The headline figure of a growing population, which as been bandied about by some market bulls, is also a red herring for the reason already stated on this thread ... young children don't buy houses. The demographic bulge driving the population growth is over 20 years away from its first purchase, while significant numbers of those that could potentially buy now or in the next 5 years or so are either leaving the country, unemployed or working and seeing their disposable incomes reduced (according to the CSO, only 11% of the population in the first half of this year have managed to at minimum keep their savings at the same level or increase them, everyone else has had to dip into theirs if they had any). Lending levels are also at a low, reducing the amount those who can access credit are able to pay for a property.

There is supply available right across the country, across all cites, across all areas and property types. If buyers are flexible they will get far better value. If they return the bubble era mentality of believing the hype and making emotional purchases (panicking and/or "falling in love" with a particular building, street or area) then history shows that they will be ruthlessly exploited by those in the property industry waiting for the next naive buyer with more money (cash or credit) available to them than sense.

From a demographic perspective it's a buyers market and looks set to remain so for some time.

Caveat emptor.

Blue Horseshoe

gurramok

Todays Sindo has their own "investigation" quoting our beloved estate agents naming hotspots of demand.
http://www.independent.ie/irish-news/huge-dublin-property-surge-sparks-frenetic-bids-29525685.html

With a lovely map showing tiny areas of Dublin leading the charge.
http://cdn3.independent.ie/incoming/article29526038.ece/binary/bubble-847.jpg

And in another article its blaming falling house prices for the ability of criminals to move into "dormer areas" . Another evil in house prices falling :rolleyes:
http://www.independent.ie/irish-news/criminals-flee-inner-city-to-terrorise-quiet-suburbs-29525684.html

The Sindo brigade is getting desperate.

handlemaster

gurramok wrote: »

Todays Sindo has their own "investigation" quoting our beloved estate agents naming hotspots of demand.
http://www.independent.ie/irish-news/huge-dublin-property-surge-sparks-frenetic-bids-29525685.html

With a lovely map showing tiny areas of Dublin leading the charge.
http://cdn3.independent.ie/incoming/article29526038.ece/binary/bubble-847.jpg

And in another article its blaming falling house prices for the ability of criminals to move into "dormer areas" . Another evil in house prices falling :rolleyes:
http://www.independent.ie/irish-news/criminals-flee-inner-city-to-terrorise-quiet-suburbs-29525684.html

The Sindo brigade is getting desperate.

I just seen the map thats desperate journalism

nebuchad

Look at the bigger picture. The country is still in a deep recession along with the rest of the world. the British economy is on the verge of collapse. The foreign banks are running out of Ireland as the government is about to exit the bailout program. 1 in 5 mortgages in Ireland is in trouble. The banks are all reporting losses so they have no money to lend. Interest rates are going to rise, the have to if banks are to survive. The EA's are happy playing russian roulette with the property market, but that will back fire on them.

WAKE UP PEOPLE! Its easy to stop the increase in the property market.

STOP BUYING - STOP BIDDING - REDUCE THE ASKING PRICE BY AT LEASE 30% - 50% AND STICK TO IT.

no demand = no sale = deflation in prices to where they should be in a distressed economy.

THE MORE PEOPLE WHO DO THIS THE QUICKER THE PRICES WILL DROP - SPREAD THE WORD!

Grandpa Hassan

nomoreindie wrote: »

The following post which I have copied from thepropertypin.com pretty much sums what is happening in the market for me.

I agree with most of that. Other than the property overhang bit. It ignores the fact that a very large proportion (most?) of that 'overhang' is in areas where people don't want to live. Apartments that are worthless and will remain so for good. Would be better, in fact, if they were bulldozed. If you took those places out of the picture, then the supply / demand dynamic changes significantly

handlemaster

nebuchad wrote: »

Look at the bigger picture. The country is still in a deep recession along with the rest of the world. the British economy is on the verge of collapse. The foreign banks are running out of Ireland as the government is about to exit the bailout program. 1 in 5 mortgages in Ireland is in trouble. The banks are all reporting losses so they have no money to lend. Interest rates are going to rise, the have to if banks are to survive. The EA's are happy playing russian roulette with the property market, but that will back fire on them.

WAKE UP PEOPLE! Its easy to stop the increase in the property market.
STOP BUYING - STOP BIDDING - REDUCE THE ASKING PRICE BY AT LEASE 30% - 50% AND STICK TO IT.

no demand = no sale = deflation in prices to where they should be in a distressed economy.

THE MORE PEOPLE WHO DO THIS THE QUICKER THE PRICES WILL DROP - SPREAD THE WORD!

Good idea Robin ... well thought out... now all together now..

riclad

IF theres apartments for sale in dublin someone will buy them,

i think most apartments owned by nama are not being put up for sale.

They are waiting for prices to rise.
even in the country the hse is paying millions in rent allowance,

meanwhile nama owns 1000s of apartments ,

MAYBE some could be transfered to the local authoritys .
reduce rent allowance bill.

IT would be more accurate to say in middle class area,s of dublin, wheres theres no empty sites to build on, prices are going up.
Theres very few sites in clontarf left to build houses on ,for example.

Santa Cruz

nebuchad wrote: »

Look at the bigger picture. The country is still in a deep recession along with the rest of the world. the British economy is on the verge of collapse. The foreign banks are running out of Ireland as the government is about to exit the bailout program. 1 in 5 mortgages in Ireland is in trouble. The banks are all reporting losses so they have no money to lend. Interest rates are going to rise, the have to if banks are to survive. The EA's are happy playing russian roulette with the property market, but that will back fire on them.

WAKE UP PEOPLE! Its easy to stop the increase in the property market.

STOP BUYING - STOP BIDDING - REDUCE THE ASKING PRICE BY AT LEASE 30% - 50% AND STICK TO IT.

no demand = no sale = deflation in prices to where they should be in a distressed economy.

THE MORE PEOPLE WHO DO THIS THE QUICKER THE PRICES WILL DROP - SPREAD THE WORD!

And the less houses that will come on the market

riclad

IF prices went up by 20 per cent it would help some people in negative equity.
IF you want to live in drumcondra ,
you,ll have to bid a certain price,

or look elsewhere.

Theres no sites left to build on there,
at least for a house builder.

WE Have 2 property markets ,in ireland ,
dublin , cork, galway, and everywhere else.

handlemaster

riclad wrote: »

IF prices went up by 20 per cent it would help some people in negative equity.
IF you want to live in drumcondra ,
you,ll have to bid a certain price,

or look elsewhere.

Theres no sites left to build on there,
at least for a house builder.

WE Have 2 property markets ,in ireland ,
dublin , cork, galway, and everywhere else.

Dublin yes but Galway and cork also I Dont know

BuyAHouse

Hi All,

I want to do everything I can ensure that I don't end up in negative equity for the second time in my short life. Nor do I want to end up dubbed "stupid" or "reckless" by those who wre lucky enough to have avoided the impact of the property crash.

So, I'm researching, reflecting, considering and hoping for the best. In order to help with the first three of those criteria, I'd be very grateful to hear honest views and experiences from people.
Here is the our (familiar) scenario. 2 bed apartment in Dublin negative equity to the tune of about €170k. Both self-employed and first baby on the way. We would have put the baby off if we were a bit younger but, unfortunately for our little one, it is destined to be the (financially) poor cousin in the family. On the up-side, we are incredibly lucky to have a tracker rate - and it's only luck, we don't deserve it anymore than those on variable rates deserve to be targeted for rate increases. At the moment we are in a temporary arrangement in a house and are currently making about €100 profit per month (before tax) on the apartment.

But, like everyone else in our shoes who has sniff that it might be possible, we would like to buy a house soon. Not at any cost though - we could make our apartment work for a while if it was the right thing to do.

However, we have absolutely no idea what to do. Every time you turn on the radio, open a paper or turn on the TV you hear about rising prices in Dublin. Did I just wake up in 2007? And we are seeing evidence of prices rises everywhere. For example, a house that we just bid on in North (not South)Dublin is being marketed at €349k, when next door sold for €225k last year and the house down the road sold for €230k in May. That's a 60% increase in 1 year!! We bid the princely sum of €295k and were rejected. Part of me is actually relieved at the vendor's money-hunger:did we really want to pay €70k more than the guy next door?

So, my instinct tells me that this kind of rapid increase is property madness, not property stabilisation. My instinct also tells me that at some point in the near future, buyers will stop offering the newly-high prices. Partly because they don't have the money and partly because the ghosts of the past few years will begin to shout in their ears. Lastly, I get the feeling that the "who is buying Ireland" and "CSO figures" panic news stories will begin to fall away and will be no more than chip-wrapping. Not before some people have got burned again though. Fingers crossed that those who get burned this time are not those already in negative equity...

So that's my instinct. However, it's not as if my instinct has served me well in the past. I'd be very grateful to hear honest experiences / views on the above. If you have a vested interest, please don't participate in the discussion in a self-serving way. Apart from the fact that it's horrendous to try and profit from other people's difficulties, it's bad karma and what goes around comes around.Thanks and look forward to hearing from you!

handlemaster

Buyahouse... if you think these prices are going to pass then sit tight. Nothing wrong with renting anyhow. Dont forget the prices were lower in the last two three years because of Hugh uncertainty not just in Ireland but in Europe also. . Its your call ... when is a right time to buy... when you find out ..drop me a line ;-)

BuyAHouse

Ha ha - I will do handlemaster! It's unbelievably frustrating - I don't even want to "win" the property game, I just want a house at a reasonable price...

Ray Palmer

Seeing as people are saying there are so few sales are there any charts of the sales numbers for the last 15 years. Just want to see what sales were at the peak ,now and before.

Idbatterim

what area of dublin is your apartment in and are you achieving market rent for it? Do you have mortgage approval?

nebuchad

With €295k to spend there are still plenty of nice properties available. If you can broaden your search area I am sure you can find a good property North or South side. If your location is crucial and there is a low stock of property in that area you are going to be punished on price. It is very frustrating that in some areas the prices are jumping 50% to 60% or more in only a few short months. I feel its unlikely to change in the short term. I like many others have been watching the property market over the last year and you cannot deny that prices are still around 40% to 50% lower than the peak so it is still a good time to buy. It will be a gamble to wait and see if prices level out but with short supply and very few new developments coming on stream the current situation of price increases are unlikely to change.

BuyAHouse

Our apartment is south of the river, we are asking for €1300 a month and haven't had any problem getting it. We also have mortgage approval.

Nebuchad, your views represent one side of my brain and I absolutely see your point. However, the other side of my brain reminds me that it is very unlikely that prices will rise to boom levels in the short term, so even if it is a "good time to buy", there should be no rush. Of course, in many ways it would be no harm if the current "mini-bubble" caused a mini-bust, just so we could all re-group!

I'm also niggled because prices got so high in the boom because credit was so cheap and interest rates so low. The monthly repayments on our new mortgage of €315k (if we draw it down) will exceed the repayments on our enormous mortgage on the apartment. However, when interest rates rise (as they will) the "bargains" that everyone is getting at the moment may begin to feel less bargain-like and more boom-like.

It's funny, it feels so like the boom where estate agents don't feel they have to do anything to woo an interested buyer for their clients - they are confident enough that someone else will come along and cough up the asking price or over the asking price.

Lastly, I often wonder about the long-term impact of negative equity on those of us who are steeped in it. We tend to be in areas that, while ok, we would rather not live in with impressionable young children, where the schools are not what we would like them to be, where we won't have much space for toys, privacy for adults and the odd adult-barney, will have no gardens and lack proper open spaces etc. Our kids will be delightful of course (!) but unfortunately, the statistics aren't good regarding their outcomes.

spockety

40-50% off peak does not mean it's a "good time" to buy. It just means it's a "less bad" time to buy than the peak of the bubble.

BuyAHouse... to my mind.. if it looks like a new bubble, and smells like a new bubble, then it's a new bubble. Be grateful you're even asking yourself the questions... a lot of people aren't.

gaius c

BuyAHouse wrote: »

Our apartment is south of the river, we are asking for €1300 a month and haven't had any problem getting it. We also have mortgage approval.

Nebuchad, your views represent one side of my brain and I absolutely see your point. However, the other side of my brain reminds me that it is very unlikely that prices will rise to boom levels in the short term, so even if it is a "good time to buy", there should be no rush. Of course, in many ways it would be no harm if the current "mini-bubble" caused a mini-bust, just so we could all re-group!

I'm also niggled because prices got so high in the boom because credit was so cheap and interest rates so low. The monthly repayments on our new mortgage of €315k (if we draw it down) will exceed the repayments on our enormous mortgage on the apartment. However, when interest rates rise (as they will) the "bargains" that everyone is getting at the moment may begin to feel less bargain-like and more boom-like.

It's funny, it feels so like the boom where estate agents don't feel they have to do anything to woo an interested buyer for their clients - they are confident enough that someone else will come along and cough up the asking price or over the asking price.

Lastly, I often wonder about the long-term impact of negative equity on those of us who are steeped in it. We tend to be in areas that, while ok, we would rather not live in with impressionable young children, where the schools are not what we would like them to be, where we won't have much space for toys, privacy for adults and the odd adult-barney, will have no gardens and lack proper open spaces etc. Our kids will be delightful of course (!) but unfortunately, the statistics aren't good regarding their outcomes.

As far as I'm concerned that's the clincher. I think we all agree that property was too expensive during the bubble but if it's even more expensive now then surely it's too expensive now too.

Ray Palmer

gaius c wrote: »

As far as I'm concerned that's the clincher. I think we all agree that property was too expensive during the bubble but if it's even more expensive now then surely it's too expensive now too.

Except inflation has a factor to play too and they are talking about a larger property.

Anyway BuyAHouse no matter what anybody says it is a gamble and always was. They only thing you can do is limit/reduce your risk. What that means in property is you buy something that will have an increase amenity coming in the future or existing amenities likely to give stability to the property.

So the new Luas/Metro lines going to be put in mean the prices of property near to there will increase in the future and also recover quickly. Houses near hospitals or colleges have a steady stream of renters which again help in a difficult market.

I had friends buy property further out of Dublin because they weren't prepared to pay "Dublin prices" when they could buy a bigger house further out. To me it was madness to them a smart thing to do. Ten years later they have houses in negative equity and I don't yet bought for similar prices. Their commuting costs are massive having gone through at least 2 cars and petrol. That is ignoring they time costs their commutes cost them. Certain job opportunities were lost as the extra commuting would be too much. So heavy costs, extra commuting and restricted working locations were all factors that were ignored.

On a note of something you said. You said you get €100 before tax as profit. That sounds a little unlikely given what you said. It sounds like you have a mortgage of about €1200 and get rent of about €1300? If you think that is €100 before tax you have made a mistake.

BuyAHouse

Yes, Ray Palmer, it is always a gamble. However, some people have an uncanny knack of always making the right gamble. Unfortunately, I would bet that whatever course we take, it will be the wrong one! We took the precautions of "amenity value" into account in 2007 but this has obviously not produced a great result. We are extremely lucky that we can rent it of course and we are in a better position than many, for that reason.

Why do you take issue with the €100 profit I mentioned? Your calculation is correct - mortgage of apx €1,200 and rent of €1,300. Therefore we make €100 per month on the apartment, before we pay any income tax on the rent received on the apartment.

earlyevening

BuyAHouse wrote: »

Why do you take issue with the €100 profit I mentioned? Your calculation is correct - mortgage of apx €1,200 and rent of €1,300. Therefore we make €100 per month on the apartment, before we pay any income tax on the rent received on the apartment.

Uh oh. Don't think you've done your research here. Think there'll be a tax bill coming...

indiewindy

BuyAHouse wrote: »

Yes, Ray Palmer, it is always a gamble. However, some people have an uncanny knack of always making the right gamble. Unfortunately, I would bet that whatever course we take, it will be the wrong one! We took the precautions of "amenity value" into account in 2007 but this has obviously not produced a great result. We are extremely lucky that we can rent it of course and we are in a better position than many, for that reason.

Why do you take issue with the €100 profit I mentioned? Your calculation is correct - mortgage of apx €1,200 and rent of €1,300. Therefore we make €100 per month on the apartment, before we pay any income tax on the rent received on the apartment.

It isnt as simple as that, there are lots of threads on investment properties and investment portfolios you can check out. You would be well advised to read up on them to avoid a big bill

BuyAHouse

While I appreciate the reponse, the vagueness is just unhelpful. We pay income tax on our rent. Our accountant does the relevant calculation, is insured and therefore I'm absolutely not concerned in that regard. The reference to the 100 euro was to demonstrate that we don't have to supplement the mortgage.

earlyevening

All you have to do is 2 mins of searching, but seeing as you won't, here you go.

http://www.daft.ie/content/taxissues.daft

Your profit is not rent minus mortgage. It is rent minus 75% of the mortgage interest minus other allowable expenses as detailed in the link.

Thomas D

BuyAHouse wrote: »

While I appreciate the reponse, the vagueness is just unhelpful. We pay income tax on our rent. Our accountant does the relevant calculation, is insured and therefore I'm absolutely not concerned in that regard. The reference to the 100 euro was to demonstrate that we don't have to supplement the mortgage.

The property probably costs you about €400 a month when you factor in tax and costs.

gaius c

Ray Palmer wrote: »

Except inflation has a factor to play too and they are talking about a larger property.

What wage inflation has this country had since 2007?
And if we've had any, has it increased by more than taxes and increased costs?