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Irish property market bound for recovery

Euroland

When the property markets around the world begin to recover it's time to have a look on the future of the Irish property market without negative paranoia and discuss it.

Pending Sales of Existing Homes in U.S. Rose 6.4% in August

http://www.bloomberg.com/apps/news?pid=20601068&sid=aFH0zI40heAc

Do you believe that the Irish property market would stabilise soon and start to grow slowly by 2011?

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asdasd

I just advised anyone who has the cash and are in it for the long tem to go and buy. If investers get a sniff the prices will go back up. It simple Ecconomics?

You are an investor. These mythical "smart investors" who rush into buy residential houses dont exist. Smart investors - that is corporate investors - stick to commercial real estate.

"Investors getting a sniff" means nothing. The investors in Irish property were generally single actors, normal people, not companies, most of whom are now underwater or bankrupt. They are not coming back in. Neither are foreign investors. So it will be people like you trying to get a fast buck.

In your situation, given the guaranteed ncash flow situation you did ok. In terms of getting the capital back - try this one. Imagine that property is not at bottom. Say it falls back by 20%. What are the chances of you getting your 100% return?

You will need an increase of 150%, after it drops by 20%.

gurramok

John_999 wrote: »

On the property side of things I have a house and I had cash put by for a rainy day so I have bought one of these apparments about a week ago on the burbs of dublin . Its a 2 bedroom and at the peak of its power it was going for 299k and was actully sold but the buyers pulled out last minute ..Over the last 3years it went from 299k to 249k to 199k to 160k. I put an offer of 130k in so we agreed to split the difference. I got it at 145k. The most I could get from the bank was 80% LTV meaning I had to have 20% of the mortgage. Now fortunately I had 50% up. I have a fairly hefty mortgage as is and had no problem getting cash from the bank with negitive equity on my first house.

What? The bank loaned you the money for a 2nd property while you were in negative equity on the first property. So you gave them 75k cash up front as a deposit and they loaned you 75k for the apt.

I find that hard to believe. If they did, our banks still have not learned anything.

QUOTE=John_999 wrote: »

So it firstly dispels the crap about no value out there on the market. As Del boy says he who dares and I do dare. I reckon in 20years I will have doubled my investment easily( I dare anyone to come up with a statistic to prove me wrong). Secondly it shows the banks have money again to loan but there are being more prudent and making sure that the owner of the property is putting in more capital upfront. Well done banks . Thirdly no one here has brought in what Nama and Lisbon will do for the ecconomy or the prices on properties. Ireland have historically mirrored the US ecconomy with a lag. The U.S is now in an upturn ditto the main players in Europe Sure the U.K have had there 3rd monthly rise in property prices this year. The market is bottoming out here guys. There were 5 other appartments going for dearer than the one I have bought and 3 of them have sold in the last month. So this isnt statistics this is info from the ground.

This is Ireland, not the US nor the UK. Each market has domestic issue of their own just like the UK does not have a severe overhang of property for example.

John_999 wrote: »

The better news for me is that I have someone a family member ready to move in and they have garunteed me that they will be staying there for at least 2-3years cha-ching

So lets see the rent they are paying pays the mortgage and also gives me just under 200 euros a months extra happy days.

Good for you. Hope they are watching the crashing rental market and shop around.

John_999 wrote: »

Now just a note of caution. I had this money waiting for the property to go under. It has my friends I think anyone waiting for it to slide further is mad. As its 50% or under than boom time and remember when Nama comes in anyone with difficaulty paying the mortgage will be helped rather than have there property repossessed that was part of the bail out details of Nama. But anyone struggling I would strongly advise not to do what I done as I said I had start up cash.

They are not mad, just sane people. Please elaborate where NAMA will prevent repossessions.

John_999 wrote: »

If you bought a property in the last 5 years which you are in negitive equity even if you have lost your job (the majority of people take out mortgage protection) and the banks will try to help you renegotiate payments(brought in by Nama)..Why would you sell unless your stupid and inbred ?

Answer = No therefore the availalbility of property will come down over the next year or so

Please elaborate where NAMA will prevent repossessions. Also elaborate how the overhang will clear within the year.

John_999 wrote: »

Also does anyone think that if Nama recieves aload of these properties. They will not let them all go out together. They will slip stream them therefore lowering supply. The government now has this power and I know your question what will they be doing with the rest. RENTING THEM TO PEOPLE WHO ARE FECKED, BROKE, REFUGEES etc.

Thats the idea to control the market at the taxpayers expense. It won't work.

John_999 wrote: »

There is further evidence of this slip streaming. I had my eye on a place out in City West ..right beside where the new Luas line is going. The properties last year were takin off the market. I know a guy who works for the same company but in a different branch and he said they were taken off as they know once the luas line is completed they will get much more for them next year 2010.

They were overpriced in the first place, what makes it certain they will go back to this price or above it next year? (Luas won't do it)

John_999 wrote: »

Its hard to say what will happen but lets see what happens on this rollercoaster ride which is the irish property market. If you have cash and are in for the long term. Now is the time to buy not next year as I garentee you the foreign investers are waiting to swoop. An old saying wait till the blood on the street has dried before taking action, but that is too late ...you need to be out there shedding the blood. Get in before these fecking inverstors.

But hey what do I know...see you later I am off to spend my 200Euros extra that I am getting.:)

Wonderful insight. Hordes of foreign investors buying up Irish property this year, more spin.

Any more insights you like to share with us?:rolleyes:

asdasd

So you gave them 75k cash up front as a deposit and they loaned you 75k for the apt.

I find that hard to believe. If they did, our banks still have not learned anything.

Well, actually the bank is not acting imprudently there at all. Not in terms of the risk to it's investors. The property has to fall more than 50% before they lose money, even if the mortgage is in arrears they are quids in.

John_999

You are an investor. These mythical "smart investors" who rush into buy residential houses dont exist. Smart investors - that is corporate investors - stick to commercial real estate.

Sorry I did mean foreign investors and investors who buy in Gluts and they do exist in the property market lets not fool ourselves here.

"Investors getting a sniff" means nothing. The investors in Irish property were generally single actors, normal people, not companies, most of whom are now underwater or bankrupt. They are not coming back in. Neither are foreign investors. So it will be people like you trying to get a fast buck.

Really it means nothing. It means that well lets see all the negativity around Ireland over the last 3 years

The Tiger killed
No to lison
Nama
Tribunals
etc
House prices down at 50%

Then factor in the rest of the world on an upturn this is documented everywhere.

So why wouldnt you try and invest in Ireland when its at its lowest?

And why shouldnt I make a fast book. If I have the kahunas to give it a go.

As for these property companies being bankrupt. The declare bankruptcy have their capital in another a/c and let the company slide and start up with a new company. If you look at Nama it was one of the big issues raised that this is a loophole which legally cannot be closed off.

In your situation, given the guaranteed ncash flow situation you did ok. In terms of getting the capital back - try this one. Imagine that property is not at bottom. Say it falls back by 20%. What are the chances of you getting your 100% return?

You will need an increase of 150%.

Over the next 20 years very very good as said even the most pessimistic ecconmists reckon there will be a sizeable increase between the price of property today and in 20 years time.

If you want stats on this check out all countries and all areas in the world on a 20 year basis

has all proptry increased between 1989 - 2009 I would say yes
has all proptry increased between 1969 - 2089 I would say yes
etc.

these are the facts.

gurramok

asdasd wrote: »

Well, actually the bank is not acting imprudently there at all. Not in terms of the risk to it's investors. The property has to fall more than 50% before they lose money, even if the mortgage is in arrears they are quids in.

I see what you say but to me it says that anyone with negative equity with a pile of cash in the bank can borrow further on an asset which probably won't fall in half in price as you stated.

It just speaks of further indebtness for the borrower(cash gone into 2nd asset) where the bank is taking a risk that the borrower won't fall behind in payments on both mortgages(1st one is the more risky one).
Suppose we need figures on how much negative equity, size of mortgage and salary of what the poster has to dig deeper. I suspect he is a very high earner to pose a much lower risk for the bank than the average joe.

asdasd

My guess is he is civil service. Banks love a guarnteed income in a downturn. They own the mortgage, not (just) the house. so if you have to pay back the mortgage, and have a certain income, then why not?

i think that John_999 could have done better with his money, and he will lose capital. But he has monetised his 75K into 200 a month, Which is something I suppose.

John_999

Quote:
Originally Posted by John_999

On the property side of things I have a house and I had cash put by for a rainy day so I have bought one of these apparments about a week ago on the burbs of dublin . Its a 2 bedroom and at the peak of its power it was going for 299k and was actully sold but the buyers pulled out last minute ..Over the last 3years it went from 299k to 249k to 199k to 160k. I put an offer of 130k in so we agreed to split the difference. I got it at 145k. The most I could get from the bank was 80% LTV meaning I had to have 20% of the mortgage. Now fortunately I had 50% up. I have a fairly hefty mortgage as is and had no problem getting cash from the bank with negitive equity on my first house.

What? The bank loaned you the money for a 2nd property while you were in negative equity on the first property. So you gave them 75k cash up front as a deposit and they loaned you 75k for the apt.

I find that hard to believe. If they did, our banks still have not learned anything.

Well I was offered it by AIB, First Active (rolling into Ulster bank). I can meet you anywhere and show you the documentation if you want

Quote:
Originally Posted by QUOTE=John_999

So it firstly dispels the crap about no value out there on the market. As Del boy says he who dares and I do dare. I reckon in 20years I will have doubled my investment easily( I dare anyone to come up with a statistic to prove me wrong). Secondly it shows the banks have money again to loan but there are being more prudent and making sure that the owner of the property is putting in more capital upfront. Well done banks . Thirdly no one here has brought in what Nama and Lisbon will do for the ecconomy or the prices on properties. Ireland have historically mirrored the US ecconomy with a lag. The U.S is now in an upturn ditto the main players in Europe Sure the U.K have had there 3rd monthly rise in property prices this year. The market is bottoming out here guys. There were 5 other appartments going for dearer than the one I have bought and 3 of them have sold in the last month. So this isnt statistics this is info from the ground.

This is Ireland, not the US nor the UK. Each market has domestic issue of their own just like the UK does not have a severe overhang of property for example.

True it isnt but as stated if you look at the historical stats this is what has happened. Dont shoot the messanger on this one. The overhang as stated will be reduced maybe a year is a little too short but over the next number of years. The government now has a big interest in the property market and property will go into a slipstrem system, as its the only way to reduce supply and with NAMA who controls the supply -ans the government. I am not condoning it and I am not saying its fair but that is what will happen

Quote:
Originally Posted by John_999

The better news for me is that I have someone a family member ready to move in and they have garunteed me that they will be staying there for at least 2-3years cha-ching

So lets see the rent they are paying pays the mortgage and also gives me just under 200 euros a months extra happy days.

Good for you. Hope they are watching the crashing rental market and shop around.

Once again they are a relative of mine and have agreed this.

Quote:
Originally Posted by John_999

Now just a note of caution. I had this money waiting for the property to go under. It has my friends I think anyone waiting for it to slide further is mad. As its 50% or under than boom time and remember when Nama comes in anyone with difficaulty paying the mortgage will be helped rather than have there property repossessed that was part of the bail out details of Nama. But anyone struggling I would strongly advise not to do what I done as I said I had start up cash.

They are not mad, just sane people. Please elaborate where NAMA will prevent repossessions.

They didnt say they would prevent but have told the banks to help people who are going into default its in the documentation. Also how many places have been repossessed thus far...Not a lot I think I seen a figure of under 100 and the majority of these are people who have not paid there mortgage for 2 years +

Quote:
Originally Posted by John_999

If you bought a property in the last 5 years which you are in negitive equity even if you have lost your job (the majority of people take out mortgage protection) and the banks will try to help you renegotiate payments(brought in by Nama)..Why would you sell unless your stupid and inbred ?

Answer = No therefore the availalbility of property will come down over the next year or so

Please elaborate where NAMA will prevent repossessions. Also elaborate how the overhang will clear within the year.

answered above its in the documentation surrounding nama

Quote:
Originally Posted by John_999

Also does anyone think that if Nama recieves aload of these properties. They will not let them all go out together. They will slip stream them therefore lowering supply. The government now has this power and I know your question what will they be doing with the rest. RENTING THEM TO PEOPLE WHO ARE FECKED, BROKE, REFUGEES etc.

Thats the idea to control the market at the taxpayers expense. It won't work.

NAMA is going ahead mate and there is nothing you, I or the man in the moon can do to stop it.

Quote:
Originally Posted by John_999

There is further evidence of this slip streaming. I had my eye on a place out in City West ..right beside where the new Luas line is going. The properties last year were takin off the market. I know a guy who works for the same company but in a different branch and he said they were taken off as they know once the luas line is completed they will get much more for them next year 2010.

They were overpriced in the first place, what makes it certain they will go back to this price or above it next year? (Luas won't do it)

True I am just stating what was said to me. but if guys who sell property for a living are taking the risk it says enough for me.

Quote:
Originally Posted by John_999

Its hard to say what will happen but lets see what happens on this rollercoaster ride which is the irish property market. If you have cash and are in for the long term. Now is the time to buy not next year as I garentee you the foreign investers are waiting to swoop. An old saying wait till the blood on the street has dried before taking action, but that is too late ...you need to be out there shedding the blood. Get in before these fecking inverstors.

But hey what do I know...see you later I am off to spend my 200Euros extra that I am getting.

Wonderful insight. Hordes of foreign investors buying up Irish property this year, more spin.

Any more insights you like to share with us?

Hey I am just trying to make my way through this like the rest of us. I dont like seeing things the way they are but I just dont want the big investors getting in there before first time buyers.

John_999

Guramock and asdasd

You sound like two intellegent fellas and no I work in the private sector with a modest salary...I think that the country is in a state but I have answered as honestly and with facts and figures. I cant do anymore...as said proof is in the pudding for me to invest and have someone else pay this mortgage with an extra 200 on the side is just too good to pass up

North_West_Art

I was speaking to a solicitor friend of mine yesterday. His business dealt with the sale of roughly 2 houses per day a during the boom... his office have handled 15 sales this year so far.
Two days ago he had a couple in his office who bought a 4 bed two story detatched with conservatory on little less than 0.5 acre site for 260k as an investment 3 years ago... they would accept 140k today just to get rid of it.

Im in Donegal by the way...

John_999

North West Art - good post something with facts and figures. I think they would be mad to sell but thats just me. I am only telling you what I see in the estate agent that I bought though. hehe tell them I will give them 120 for it

asdasd

John_999, I think in your case the buy wasnt that bad an investment, but you could have done better with 75K.

On a note about formatting. to quote someone you can use the quote symbol ( the quote bubble). There is also a multiple quote option on the bottom, but I dont even understand that.

John_999

where was the property based north west

John_999

asdasd

how could I have done better? not being smart just interested to know?

asdasd

John_999.

well you say that property rises over the long term. That is true, but as i said ireland situartion is different from the rest of the world. Here is something else that always rises over the long term - stocks, or stock indices. If you put money in the Chinese stock market index you would get to 400% in 25 years I guess. You wouldnt get the rental income in that case though,

But hey, if you are happy with the investment, good for you. You probably wont be in negative equity after 25 years :-)

wEll done on saving 75K on a moderate salary in the first place, btw.

John_999

well its been built up between me and the wife over 10 years...stocks and shares are just as volatile if not more so. but then again I aint an expert in it. I know a little more about the property market in Ireland which is why I went for it.

ZYX

asdasd wrote: »

John_999.

well you say that property rises over the long term. That is true, but as i said ireland situartion is different from the rest of the world. Here is something else that always rises over the long term - stocks, or stock indices. If you put money in the Chinese stock market index you would get to 400% in 25 years I guess. You wouldnt get the rental income in that case though,
.

So Asdasd, I assume you have borrowed and saved hundreds and thousands of euro and invested it in "Chinese stock market". Out of interest how much have you invested there? I mean it is going to earn 400% in 25 years so it must be a huge amount. Or are you simply advising John999 to do something you would never do?

gurramok

That rental income is variable and has costs/vacancy periods associated with it so its not 100% guaranteed. We don't know its location either.

John_999 wrote:

True it isnt but as stated if you look at the historical stats this is what has happened. Dont shoot the messanger on this one. The overhang as stated will be reduced maybe a year is a little too short but over the next number of years. The government now has a big interest in the property market and property will go into a slipstrem system, as its the only way to reduce supply and with NAMA who controls the supply -ans the government. I am not condoning it and I am not saying its fair but that is what will happen

The only way the govt through Nama can control prices to make it profitable for the taxpayer is to slash prices to entice buyers en masse like those foreign investors you speak of.
At present, the market is overpriced in alot of areas. We don't see the hordes buying now, i don't see why they will in a couple of years with this hard recession unless they see Celtic Tiger Mark II re-emerging :P

John_999 wrote:

They didnt say they would prevent but have told the banks to help people who are going into default its in the documentation. Also how many places have been repossessed thus far...Not a lot I think I seen a figure of under 100 and the majority of these are people who have not paid there mortgage for 2 years +

You talking about the 1 year moratorium on holders in difficulty? If so, that was agreed outside and before Nama?
Repossession court cases start about this month co-incidentally after their long summer break, we'll have to wait and see what happens

John_999 wrote:

Hey I am just trying to make my way through this like the rest of us. I dont like seeing things the way they are but I just dont want the big investors getting in there before first time buyers.

Question for you. If as you say lots of other countries have bottomed out in their markets, why would a foreign investor invest here when one can get much more value for money outside Ireland when investing in property?

asdasd

Or are you simply advising John999 to do something you would never do?

I tend to keep my money in the money market. I generally invest in stocks, and then back into the money market. None of this is rich stuff - less than 100K in total.

The only problem with investing in the stock market index is that you have to keep it in there to guarantee the return.

I was responding to his claim that property always rises over the long term. A stock market index also rises over the long term as it rises in line with GDP.

Since the GDP of China is rising at about 10% a year, its stock market tends to follow suit, and has fallen this year, so the price is good.

A stock index is an index that follows the trend in a total market or certain parts of it. It is not an investment in a particular stock, which is - of course - riskier.

The problem is to get the returns you have to lock the money up. I will do that when I am 25 years away from retirement with money I can afford to not touch.

( the ways things are going 25 years from retirement is possibly 45).

ZYX

asdasd wrote: »

I tend to keep my money in the money market. I generally invest in stocks, and then back into the money market. None of this is rich stuff - less than 100K in total.

The only problem with investing in the stock market index is that you have to keep it in there to guarantee the return.

I was responding to his claim that property always rises over the long term. A stock market index also rises over the long term as it rises in line with GDP.

Since the GDP of China is rising at about 10% a year, its stock market tends to follow suit, and has fallen this year, so the price is good.

A stock index is an index that follows the trend in a total market or certain parts of it. It is not an investment in a particular stock, which is - of course - riskier.

The problem is to get the returns you have to lock the money up. I will do that when I am 25 years away from retirement with money I can afford to not touch.

( the ways things are going 25 years from retirement is possibly 45).

So the answer is you have nothing invested in Chinese Stock Market. By the way way do to get returns you do not have to invest money for 25 years. You have to invest it while market is growing.

asdasd

So the answer is you have nothing invested in Chinese Stock Market.

The answer is clearly, not yet. I will. I thought that was obvious. The ability to read is tantamount to discussion on boards.

By the way, the argument needs to be argued against, or in favour, on it's own merits. Is an investment of 75K in the Chinese market index, better or worse than investment in the Irish property market. Not spurious arguments about whether a poster is doing that or not. Plenty of investors and pension funds are doing what I am suggesting, far more than are investing in Irish property.

So ignore me. Try the argument.

ZYX

asdasd wrote: »

The answer is clearly, not yet. I will. I thought that was obvious. The ability to read is tantamount to discussion on boards.

By the way, the argument needs to be argued against, or in favour, on it's own merits. Is an investment of 75K in the Chinese market index, better or worse than investment in the Irish property market. Not spurious arguments about whether a poster is doing that or not. Plenty of investors and pension funds are doing what I am suggesting, far more than are investing in Irish property.

So ignore me. Try the argument.

It is part of the rubbish people come out with here. "Don't buy that property" "you are mad to pay that", "Offer 20% less", "invest in Chinese Stock market" when clearly the people giving the advice would not do the same thing.

Is €75K better in John999's property (which I have never seen and could not possibly comment on) or in Chinese stock market? Obviously I don't know but as you are doing neither I don't think you should comment either.

asdasd

Is €75K better in John999's property (which I have never seen and could not possibly comment on) or in Chinese stock market? Obviously I don't know but as you are doing neither I don't think you should comment either.

Youa re beiginning to bore me. I was polite to John_999 but not you you.

a) i invest in stocks
b) I will invest in the chinese ( or other ) index when I can afford to lock down money.
c) None of this is relevent to whether the Chinese stock market is better or not than investing in a country with huge over hang of property.

you again fail to read. If I had no money I could still suggest the Chinese Stock Market rather than the Irish property market both of which have risks.

You are the one personalising the issue, and when I reply that I intend to invest in China, that is not enough. still the issue must be personalised.

the real issue is whether 75K is better spent on property in Ireland, or the stock market in China.

At the moment I would say China. However, one of the advantages of property is that you get to buy the property on the margin , and you cant do that with stocks. Or if you can, you cant rent out stocks. John_999 is getting his relative to pay down some of the equity.

I wouldnt rule out buying property in ireland sometime - I have property in France which has guarnanteed rent for 11 years. The guaranteed rent is the important thing, otherwise I would be screwed.

John_999

See comments in bold

That rental income is variable and has costs/vacancy periods associated with it so its not 100% guaranteed. We don't know its location either.

its garenteed for the next 3 years as stated

Quote:
Originally Posted by John_999
True it isnt but as stated if you look at the historical stats this is what has happened. Dont shoot the messanger on this one. The overhang as stated will be reduced maybe a year is a little too short but over the next number of years. The government now has a big interest in the property market and property will go into a slipstrem system, as its the only way to reduce supply and with NAMA who controls the supply -ans the government. I am not condoning it and I am not saying its fair but that is what will happen

The only way the govt through Nama can control prices to make it profitable for the taxpayer is to slash prices to entice buyers en masse like those foreign investors you speak of.
At present, the market is overpriced in alot of areas. We don't see the hordes buying now, i don't see why they will in a couple of years with this hard recession unless they see Celtic Tiger Mark II re-emerging

Eh no the government will squeeze supply as stated why would they drop the prices it will feck everyone up. The reason why people are not buying is because of confidence..but think about investors and what they see

Lisbon - positive
Nama - too good to be true for investors

Quote:
Originally Posted by John_999
They didnt say they would prevent but have told the banks to help people who are going into default its in the documentation. Also how many places have been repossessed thus far...Not a lot I think I seen a figure of under 100 and the majority of these are people who have not paid there mortgage for 2 years +

You talking about the 1 year moratorium on holders in difficulty? If so, that was agreed outside and before Nama?
Repossession court cases start about this month co-incidentally after their long summer break, we'll have to wait and see what happens

No this is written in to the legislation of Nama. Check it out for yourself.

Quote:
Originally Posted by John_999
Hey I am just trying to make my way through this like the rest of us. I dont like seeing things the way they are but I just dont want the big investors getting in there before first time buyers.

Question for you. If as you say lots of other countries have bottomed out in their markets, why would a foreign investor invest here when one can get much more value for money outside Ireland when investing in property?

Becuase other markets are on the up. If you are investing to try to figure when the bottom is ..You dont wait for prices to go up.

John_999

asdasd

As for the stocks well judging by my pension the so called experts have got it terrible wrong over the last year as my pension is only 70% of what it was so a layman like me would probably be crusified

John_999

asdasd

Becuase other markets are on the up. If you are investing to try to figure when the bottom is ..You dont wait for prices to go up.

Thats true, we are saying that it is not nearly the bottom yet. That said you got a property for a 75K loan, I dont think you will be in difficulty even if the apartment remains unrented for some time.

asdasd

pension the so called experts have got it terrible wrong over the last year as my pension is only 70% of what it was so a layman like me would probably be crucified

So you are prepared to think long term for property but on a yearly basis for stocks?

John_999

well its made a loss the last 2 years...as I say I dont know enough about it to try it.

asdasd

That said, I think that John_999 may make some money on this house if he rents it out for the long term. For most people the problem is getting that income to rent it out. with that income it is a clear win for John_999.

I can still think he should have held on a bit longer, and he lost money there ( by not buying the same house cheaper). But his particular situation looks to be ok, provided he can guarantee a lodger.

John_999

well we will have to agree to disagree I have got the house for less then half of what it was...and with Nama coming in there will a floor on the property prices ... so even if it falls it will not be too much so yeah it is a risk but over the long term I can see it being a good investment