Dublin house price rise to instantly rise national prices.

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?

Ray Palmer

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.

It doesn't matter if your accountant is insured or not, your tax liability remains yours. I can assure you if there is a difference of €100 between your mortgage and your rent you are losing money. You have to pay tax on your rental income not the difference between it and your mortgage. A rule of thumb is you pay 40% tax on your rental income.
So
1200+(1300*.4)=1720=your costs (not including insurance, maintenance etc...)
1300=income
Net loss=1300-1720=-420

I kid you not and am not trying to scare you. I would investigate this yourself and question your accountant. I have been given incorrect information by an accountant before and the taxman doesn't care. You just arrange payment over a period of time and that is the only thing that could be done. I didn't even get a refund for accounting service and he also had insurance.

There really isn't anyway around this unless you are spending more money on fixing up the property you are renting. I guess if you or your partner isn't working you could use your tax free allowance. Considering you are talking about a second mortgage that is unlikely. Go check it out on old threads here

Ray Palmer

gaius c wrote: »

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?

You do get inflation and wage inflation are different things? Money is simply worth less now

kennyb3

BuyAHouse wrote: »

Therefore we make €100 per month on the apartment, before we pay any income tax on the rent received on the apartment.

I'll put this in bold for the posters who can't read, buyahouse clearly stated that was before tax.

Buy a house you do supplement the mortgage by paying expenses and your tax bill.

Ray Palmer

kennyb3 wrote: »

I'll put this in bold for the posters who can't read, buyahouse clearly stated that was before tax.

Buy a house you do supplement the mortgage by paying expenses and your tax bill.

If you actually read what he said he is only paying tax on the €100. So when he said before tax he is suggesting he is only paying tax on €100. He believes he is not paying to top up the mortgage payments. That isn't possible given what he has said. Using that expression incorrectly doesn't magic away that he working out his figures incorrectly. He should be topping up his mortgage and believes he doesn't have to which is incorrect.

He has it wrong in his mind at the very least. He is incorrectly working out a gross profit to pay tax on. So it doesn't matter if he says €100 profit before tax, that is wrong.

jay0109

Latest ESRI report gets headline attention from the IT
http://www.irishtimes.com/business/economy/esri-says-house-prices-27-below-real-value-1.1889640

ESRI says house prices 27% below real value
Overcorrection in wake of property crash still to work itself out, research finds

But the headline has grabbed the juiciest part of course. The rest of the report goes like this

Using four separate models for the period from 1981 to the end of 2013, it found actual prices were currently between 12 and 27 per cent below their fundamental values.
The analysis only covers the period up to the end of last year and does not take into account the further price increases this year. It also makes the point that prices in Dublin, which has seen the biggest recent increases, are not as undervalued as those in other parts of the State.
The ESRI’s analysis showed that, at the peak of the housing boom in 2006, prices were overvalued by between 25 and 35 per cent. In late 2005, the OECD warned that the property market was dangerously overheating, with prices overvalued by at least 20 per cent. At the time, the warning was roundly criticised as inaccurate and went unheeded.
The ESRI predicts real Irish house prices will grow by a further 8 per cent this year and by 9 per cent in 2015, before moderating to growth rates of 4.9 per cent and 3.9 per cent in 2016 and 2017.

I dunno- I've see price rises of 35-50% in the areas of SCD I'm looking at in the past 2.5 years...I cannot for the life of me see how they are still undervalued

TheDriver

Beats the boom when,prices could rise by 10k over a weekend.....ah the good ol days

riclad

IT may be true in dublin,
i don,t think its true in small towns , in rural area,s .50 miles from dublin.

Where people paid 250k for semi d, in 2007.
That,s now worth 140k.
IN dublin we don,t have enough house,s ,
in many towns there were too many built,
hence ghosts estates.
WE have maybe 3,or 4 different house markets in ireland ,
rural area,s , citys,houses vs apartments,
dublin etc ,
Saying prices will rise by 27 per cent doesn,t mean much.
I don,t see any ghost estates in dublin.

Basing a survey on prices in 2006 ,does,nt make sense as
banks were doing crazy things ,
engaged in crazy ,reckless lending ,
which was unsustainable.

Hopefully this won,t happen again,
the ecb will keep an eye on irish banks lending practice in regard to mortgages.

eg if you want to borrow 100k, you,ll need to earning at least 20k.
IN many rural area,s young people go to dublin,or emigrate to get
a job.
I think it .ll be years before we see a house price increase in most
rural area,s .
The rural population is decreasing .

TheDriver

More like people paid 300k for a semi in 2007 that's now worth 120k.

riclad

YES, if you bought a house in cavan,
for 300k,in 2006 if its worth 120k now,
in 10 years time, it,ll probably be worth 120k.
IT wont go up by 27 per cent .
IT,ll probably go down in value ,if you take inflation into account.
I wonder is social welfare still helping people on low incomes, pay for a 300k, mortgage,
on houses that are worth 120k now.
IN most rural area,s houses prices went down by 50- 60 per cent.
I understand welfare, don,t pay the whole mortgage.

circadian

TheDriver wrote: »

Beats the boom when,prices could rise by 10k over a weekend.....ah the good ol days

Sadly this trend is making a comeback in Dublin, I've seen houses jump 25k in some areas in the North City after being on the market a few days.