Daft.ie website- snapshot from 2005

noodler

Apples and oranges etc and I am usually the first to criticise anecdotal evidence but was at a wedding last week and one of the girls was German.

She pays 505 for her apt with a balcony.

Here in North Dublin I pay 575 along with another flatmate who pays 575.

Decent apt - nothing amazing though.

Ush1

DeanAustin wrote: »

Agreed but the original point from the poster still stands if I understood it correctly. You buy a house for 200k that you intend to live in until you die then it doesn't matter if it increases in value to 500k value or drops to 100k.

Obviously, if you bought it cheaper then that's better for you, but you're not really affected by negative equity in this instance.

I agree but the point is that now all things aren't equal as they were back in 2005 unfortunately. Salaries have gone down so while you might be able to pay the mortgage with todays prices, 2005 replayments have slipped from your grasp.

glass_onion

Hindsight is a wonderful thing.Of course,i think most of us knew that this could not had last.

It just reminded me of an program called the popes children.Made back in 2006.It seems like another world now when you look back on it

http://www.davidmcwilliams.ie/the-popes-children-watch-online

LooksLikeRain

Trigger Happy wrote: »

I would love to see the figures behind this.
ie, if you bought a 300k house on a 25 year tracker mortgage (say, 1% above ECB rate) during the boom...what would your total repayable amount be?
Then to compare that with buying a 150k house at standard interest rates today.

The figures would be interesting. Of course if the ECB start increasing rates (which they will likely do from late 2014 onwards) then each increase hurts the former more than the latter?

Anyone here clever enough to work out the figures?

First in 2005
300k at 1% tracker at 25 years in 2005.
Repayments would be € 1583 per month.
Using an average ECB rate of 3% for the period 2005 to 2013 (conservative)
By 2013 capital would be reduced to € 232k. Repayments would now be at 1.5% which is € 1226 per month. So in 2013 monthly repayments would be € 1226 per month with 18 years remaining.

Now in 2013
150k mortgage for 25 years at current rate of 4% is € 780.
So taking into consideration failing house prices and rising mortgage costs it is better to buy now than in 2005.

Rainer

.jacksparrow.

Ush1 wrote: »

I agree but the point is that now all things aren't equal as they were back in 2005 unfortunately. Salaries have gone down so while you might be able to pay the mortgage with todays prices, 2005 replayments have slipped from your grasp.

Saying salaries have gone down to make a point is too much of a sweeping statement.

Not everybody's salary has gone down, in fact I'd say its a small minority.

LooksLikeRain

FlashD wrote: »

Because years later (when the house should have been paid off and is secure in your ownership) you're still paying a whopping big mortgage which takes a huge slice of your salary every month.....money you should be using for other things, like putting your kids through college or retirement savings.

Jeez...it's not rocket science!

Your right its not rocket science, its just maths. Negative equity does not impact your repayments unless you use the Anglo irish system!

100k mortgage at 4% for 25 years is € 528. In calculating this repayment, the value of the property is not used. It is only the repayment variables as per any loan which are used.
Negative equity has the same effect on your current mortgage repayments as the colour of your car has on your car loan repayments.

Rainer

Balmed Out

LooksLikeRain wrote: »

First in 2005
300k at 1% tracker at 25 years in 2005.
Repayments would be € 1583 per month.
Using an average ECB rate of 3% for the period 2005 to 2013 (conservative)
By 2013 capital would be reduced to € 232k. Repayments would now be at 1.5% which is € 1226 per month. So in 2013 monthly repayments would be € 1226 per month with 18 years remaining.

Now in 2013
150k mortgage for 25 years at current rate of 4% is € 780.
So taking into consideration failing house prices and rising mortgage costs it is better to buy now than in 2005.

Rainer

what about the 8 years of rent?
what about futurs interest rate levels, likely to make a massive difference

Alf Veedersane

.jacksparrow. wrote: »

Not everybody's salary has gone down, in fact I'd say its a small minority.

I can't speak for everybody but I would doubt it's a small minority.

UCDVet

.jacksparrow. wrote: »

Saying salaries have gone down to make a point is too much of a sweeping statement.

Not everybody's salary has gone down, in fact I'd say its a small minority.

http://www.irishexaminer.com/ireland/average-annual-salary-falls-to-40775-213305.html

This was the most recent information I could find....

For people with jobs, the average wage is down 4.5% since 2008. From what I understand, we've also reduced certain tax credits, introduced new taxes, raised fees. On top of that, my rent is higher, my Dublin bus pass costs more, my electricity bill is higher and groceries cost more than they did in 2008. I don't think there is anything that has gotten cheaper (as far as I can see).

Unemployment has gone from 3.7% to 13.3%
http://www.tradingeconomics.com/ireland/unemployment-rate

I wouldn't be surprised if the average worker in Ireland has 10% less purchasing power than the average worker in 2008 when you consider the actual wage, the taxes, and the increasing consumer price indexes or whatever they call them.

It also means if your household had two incomes in 2008, there would be something like a 20% chance of either you or your partner having lost their job.

Having said all that, I'm sure you are right in the sense that some people weren't affected by the recession at all, but find it a convenient excuse.

MonaPizza

Hannibal Smith wrote: »

No you did not forsee what was going to happen. No one could forsee what was going to happen with Leman Brothers, how quickly it would crumble and how it would effect the rest of us. That is total arrogant nonsense

Really?

I'm a big fan of Mike Whitney. I keep up with his articles all the time. Here's some for you. Check the dates:

http://www.informationclearinghouse.info/article15689.htm

http://www.rense.com/general79/collapse.htm

http://www.informationclearinghouse.info/article16164.htm

cournioni

UCDVet wrote: »

It's called 'hindsight' and it tends to be 20/20.

Lots of people, including top economists and investors believed, in good faith, that the housing market was stable. And it wasn't just an Irish thing, the same thing happened all over the world.

Why would someone pay half a million euro for a house in Cavan or Mullingar? Well....

1.) Prices were increasing. If you didn't pay half a million now, you'd have to pay 600k next year and 750k the following the year.

2.) It's not a flat cost....because it's such a solid investment, the 500k you pay now, is probably going to be worth 900k when you go to sell it. In fact, if you believe housing prices are going to continue to increase, it makes the most sense to buy the most expensive house you can afford.

3.) That's what *they cost*. The first time I went to a restaurant in Dublin - I paid three euro for one glass of coke. Refills were not included. I know, for a fact, the actual cost of a glass of coke is less than 20p. Why would I pay 3 euro for something that I know costs a tiny fraction of that? Because it *costs* 3 euro, and I want one. If you want a house and all of the houses cost X, you'll either *not* get a house, or pay X.

Most people that made money in the real estate boom weren't smart, they were lucky. Most people that lost money in the real estate bust weren't dumb, they were unlucky. But regardless, it's really not fair to look at things now and say, 'Ohh yeah, *obviously* that was a bad decision'.

Instead of economics, make it about science. Take Einstein, he was the top of his field, and using the best information he had, he thought Quantum Physics was 'wrong'. Now quantum mechanics is taught as part of any university-level science curriculum. This is like calling my Grandmother stupid because, in 1950, she agreed with Einstein, a leading expert in science, on a scientific issue she didn't actually understand. But she trusted the experts and took a stance many experts shared.

Even the most basic Economics tells you that markets are cyclical, what made the property market any different? Any "top economist" that overlooked that surely should have a rethink about their job title. I agree with you saying that hindsight is 20/20 but speaking as a man who was in his mid twenties and itching to move out of the family home at the time, even I saw the dangers in what was happening.

Tens of thousands of houses being built for a island with the population of under 5 million, ridiculous and unaffordable prices for houses. People surely had to ask themselves the questions, who are all of these houses for and where are they getting all of the money to buy them? I know I couldn't afford one then, and wouldn't be able to afford one now with my wages, there's plenty of others who thought the same as me.

Like Amalia Green Soul, I do feel for people that bought back then, but I cannot for the life of me, understand why people would put themselves in so much debt just to own something that might not be worth as much in the future.

MonaPizza

Valetta wrote: »

They were just guessing, the same as all the others who "predicted" the opposite.

They weren't guessing at all. They had the facts and the figures to back up their predictions.
What you're saying is total, head-in-the-sand, refusal to admit you were wrong.

MonaPizza

Defiler Of The Coffin wrote: »

I do recall Shane Ross saying in his Sindo column that "the property market is on stilts, get out now" at least two years before the actual crash happened. So you can't say that the warning signs weren't there. The Irish property market and economy as a whole was still in serious trouble regardless if Lehman Bros collapsed, it may have hastened the demise but it was still inevitable.

Hear! Hear!

Those who got out of the stock market pre-1929 Wall Street Crash did so when they heard shoe-shine boys giving stock tips. The time to get out of the Irish property market was when you were coming home from a night on the lash and your taxi driver was discussing his portfolio of chalets in Bulgaria.

chopper6

A media-backed circus with people like the Indo cheering it on...even when it looked like the arse was falling out of the market,the Indo still stuck it's oar in..


http://www.independent.ie/opinion/analysis/the-smart-ballsy-guys-are-buying-up-property-right-now-26307728.html

Oh yeah and Gerry Ryan telling people on his radio show "Buy now it'll never be cheaper again...my mate Harry Crosbie says so"

cournioni

UCDVet wrote: »

Equity also has an impact on your ability to obtain credit.
Equity also has an impact on your ability to relocate.

Any sort of loan/mortgage has an impact on ability to obtain credit. If all loans are paid off on the property, the equity (negative or positive) on the property has no impact on the ability to obtain credit.

Like I said, equity only matters if you are looking to sell on your property (i.e. what you'll receive in return for what you paid). If you are looking for a home, it should be a home for life. If you are looking for a property or a house with the view to relocate in future, then you should rent. Investing in property or investing in anything always carries risk, especially when people obtain large amounts of credit to do so.

UCDVet wrote: »

Now, throw in a recession with lots of people earning less, being taxed more, and losing their jobs - and having a negative equity can be a serious problem.

I purchased a house in 2007, fully expecting to live in it for 10+ years. But, unlike so many in this thread, I cannot see into the future. In 2007 I would have never, in a million years, predicted that I would be living in Ireland. I also wouldn't have predicted my employer shutting down the company; nor could I have predicted my wife's future medical problems.

In order to get a new job, I needed to move. There were lots of jobs, in lots of cities, but not where I was. I sold in 2010 and was lucky, I made a nice profit, but it was just that, luck. Had my house been in a different city, I could have just as easily lost 100k rather than making 25k.

Calling people who bought a home hoping for it's value to increase greedy is like calling people who put money into a pension hoping for it's value to increase greedy, or calling people who go to college hoping for a better job greedy.

Putting money into a pension is not, in any way the same as what was going on during the boom. Investing in a pension is not funded by credit for a start. Likewise going to college is very different as you can take your knowledge with you wherever you go to gain employment.

Buying properties with large mortgages (20 years+) and looking to sell them on is a big risk because if it fails you are stuck with the property (which will not move) and the life time mortgage that comes with it.

Like I said, I have sympathy for people that have invested in property, but I still cannot understand the willingness to get tied down to a massive mortgage in any market never mind a boom like that unless the level of risk was lowered drastically. Especially if it is not viewed as a home for life.

Hannibal Smith

Hannibal Smith wrote: »

No you did not forsee what was going to happen. No one could forsee what was going to happen with Leman Brothers, how quickly it would crumble and how it would effect the rest of us. That is total arrogant nonsense

I didn't say I could foresee everything that was going to happen. I said I knew there was no way house prices like those were ever going to be sustainable in Ireland.

dj jarvis wrote: »

they were thinking they needed somewhere to live - no social housing available ,
renting was dearer than buying lets not forget,

so in conclusion - should they have all stayed in the box room in their mammys or lived in tents.

as someone said already , hindsight is a great thing ,
can not compare knowing what you know now to the info available at the time, there was FULL employment with good prospects and pay.

people need houses - people had good jobs , not such a crazy leap when you put the ducks in line and look at in context

No, they could have just rented, like I did, and like most people I know did. I had flatmates in their thirties with good jobs who were refusing to buy because the prices were so insane.

Having a good job and wanting a house is normal. Getting a 100% mortgage on a house worth 500,000 euro in Cavan or paying half a million euro for a shoebox apartment in Dublin like whatever her name is (journo who used to get posted about here all the time) is a crazy leap.

ash23 wrote: »

Not everyone is affected by negative equity because they bought as an investment. Life changes, family sizes grow, couples separate, jobs are lost and taxes are increased.

I bought in 2006. It wasn't an investment property. We were a young couple and we bought a family home with the intention of never having to move. We separated and are still saddled with the house because we can't afford to sell and neither of us can afford to get the mortgage on our own.
That's life.

But I really hate hearing people a few years younger than me pretend that they knew all about the property boom and were "wise" not to buy. In fact, most were just too young to be considering buying.
For those of us who were trying to set up our lives at the time of the boom, we were being bombarded with the panic around the prices increasing. Jeeze, I worked in a junior level of a financial institution and it was a no brainer that buying a house was better than paying twice a mortgage in rent. Because rents were also sky high at the time so the alternative was to stay living at home.
Banks were offering way over the odds of what was being asked for. Parents and those we looked to for advice were caught up in it too and the expression "rent is dead money" was bandied about like the new national motto.
The government were also throwing money at people. My daughter was smaller at the time and every year child benefit went up, a grand a year was given for childcare, wages were plentiful and most of those "in the know" were encouraging it.
As a young couple we sought advice from professionals and nobody ever told us not to go for it. If I went to a hospital and 6 doctors told me I should take an antibiotic, I'd take it. These people had degrees and years of experience. Why wouldn't we have believed them?

Most of them had agendas, didn't they?

I was watching celebrity apprentice the other night and there on my screen, as an advisor, was that guy from the program "I'm an adult get me out of here". He'd take a young person who lived at home and encourage them to take a 100% mortgage on a one bed studio, miles from their family and friends for an extortionate amount. That's what "advisors" were doing in 2006/2007.

If I'd been born 5 years earlier or 5 years later, I'd be either minted or have never bought. But life is what it is. For the most part, people didn't escape because they had some inside knowledge or wisdom.....they were just not in a place to buy at the time.

Don't think that's entirely true. I know plenty of people who held out because they knew prices were crazy.

And yep, advisors were doing that, but again, they had an agenda.

Going Forward

Why did they actually call the website Daft.ie?
Did they consider Stupid.ie aswell, were they taking the mick all along?