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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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Comments

The_Conductor

asdasd wrote: »

But his particular situation looks to be ok, provided he can guarantee a lodger.

Thats the knux of it for most investors. Occupancy levels are falling, and defaults among tenants are rocketting. Simultaneously the government is pulling mortage interest as an allowable expense from investors- sharply ratchetting up their costs. Unless you can get an ROI of almost 10% (allowing for an industry average 14% vacancy rate), it simply doesn't add up. If you have a good tenant- a reasonable rental income, minimal costs, and buy at a good price- the cards are stacked in your favour- most prospective investors have none of these cards upfront though.

The_Conductor

John_999 wrote: »

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

John- average Dublin house prices have fallen by 38% and apartment prices by 52% since July 2006. The price you got- is more a reflection of what is considered fair market value- than anything else.

Nama have nothing to do with residential property prices. Their loan portfolio has a minimum value of EUR5m per loan. There is a working assumption that these are 'performing loans'. The non-performing loans are in the main Irish development land banks. Over 1/3 of NAMAs assets aren't even in the Irish Republic..... Just what do you imagine is the floor NAMA is going to put on property prices? If we are cutting people's social welfare by 10%, knocking another 6-10% off the public sector, and another 4.8-5.2% fall in private sector activity (as is all forecast for 2010)- its a valid assumption that this will be reflected in houseprices. I don't put any credence in the thought that this will only be reflected in other non-essential goods- it most certainly will be reflected in the accommodation sector. The floor in the housing market at present- HSE rent allowance payments- which are in themselves going to be cut significantly.

All investments should be viewed in the longterm- its good that you're doing so. A lot of people got incredibly greedy during the boom years- expecting 15-20% capital appreciation year on year- sometimes buying apartments and houses off the plan, with no intention of ever letting them- just leave them sitting there getting more and more valuable (in their eyes) day by day........ A reasonable rate of capital appreciation is ~1-2% over the CPI (which unfortunately is in itself in negative territory). Historically- among all asset classes- and adjusted for inflation- houses have in fact been a far better investment than the stock market (but commodities such as timber or sugar have in fact delivered consistent returns almost twice as high again). Any investment is a punt- the level of return a reflection of the riskiness associated with that punt. Any certain investment- gives a low but consistent return. This is why pension companies own so many forests........

ZYX

asdasd wrote: »

.

I can still think he should have held on a bit longer, and he lost money there ( by not buying the same house cheaper). .

This is my point asdasd. You have never seen his property. You do not know anything about it but you can say he paid too much! You are basing this on what you believe average prices are but you do not know how his property relates to average price. He may have gotten a really good deal, he may have got a really bad deal. You do not know yet you are prepared to criticise his decision.

So in the same way you believe the Chinese market will rise 400% in next 25 years, clearly some companies will rise far more than that and some will plummet even cease to exist. The same happens with property. It depends on type the of property, where it is, how easily it is to rent, how much rent is, how much was paid for property and what the future demand is likely to be for this property. Despite knowing none of these points you tell John999 he should have invested elsewhere.

smccarrick wrote: »

John- average Dublin house prices have fallen by 38% and apartment prices by 52% since July 2006. The price you got- is more a reflection of what is considered fair market value- than anything else.

Do you have a source for this.? Not disputing just interested....bit more than our old erratic friends in the ESRI/PTSB would tell us

The_Conductor

MG wrote: »

Do you have a source for this.? Not disputing just interested....bit more than our old erratic friends in the ESRI/PTSB would tell us

I don't know where they come from- those are the Primetime figures.

John_999

John- average Dublin house prices have fallen by 38% and apartment prices by 52% since July 2006. The price you got- is more a reflection of what is considered fair market value- than anything else.

Exactly its what the person is prepared to pay but the question is has it bootomed out?

Nama have nothing to do with residential property prices. Their loan portfolio has a minimum value of EUR5m per loan. There is a working assumption that these are 'performing loans'. The non-performing loans are in the main Irish development land banks. Over 1/3 of NAMAs assets aren't even in the Irish Republic..... Just what do you imagine is the floor NAMA is going to put on property prices? If we are cutting people's social welfare by 10%, knocking another 6-10% off the public sector, and another 4.8-5.2% fall in private sector activity (as is all forecast for 2010)- its a valid assumption that this will be reflected in houseprices. I don't put any credence in the thought that this will only be reflected in other non-essential goods- it most certainly will be reflected in the accommodation sector. The floor in the housing market at present- HSE rent allowance payments- which are in themselves going to be cut significantly.

Nama has everything to do is residential prices if prices go up the government make money on property. Dont think for one second that Nama is doomed to fail the the government will do everything to make sure that prices at the very least stabilise. Also the floor here is to give banks working captial to lend again. So even though your right about the property type and where they are located. you cannot deny the 5-6 banks that are being bailed out.

Also if you look at the commercial end of property it actually went up last quarter (go figure)

once again with peoples wages as I said wages is down but so is cost of living and cost of buying a propety. So where is your valid assumption that this will increase prices?

And lets be clear about the floor. The floor is what the gov paid for these loans. Investers have been bailed so there is more optimism out there.

All investments should be viewed in the longterm- its good that you're doing so. A lot of people got incredibly greedy during the boom years- expecting 15-20% capital appreciation year on year- sometimes buying apartments and houses off the plan, with no intention of ever letting them- just leave them sitting there getting more and more valuable (in their eyes) day by day........ A reasonable rate of capital appreciation is ~1-2% over the CPI (which unfortunately is in itself in negative territory). Historically- among all asset classes- and adjusted for inflation- houses have in fact been a far better investment than the stock market (but commodities such as timber or sugar have in fact delivered consistent returns almost twice as high again). Any investment is a punt- the level of return a reflection of the riskiness associated with that punt. Any certain investment- gives a low but consistent return. This is why pension companies own so many forests........

As stated in my first post I would not advise anyone to do is if they aint got the cash. But on saying that. If you were a first time buyer, why not buy now. A mortgage is usually between 20 - 25 years. The price of there property will go up by at least 50 - 100% in that time.

John_999

Just on the property its a 2bed penthouse in Ashboune town center..Included in the price was all of the show house furniture. As I say I cannot see it going down any more I have seen sale agreed on the same apartments for 170 - 210k now I think that the buyer would have had some sense and bid in at a lower value. But these properties are starting to move. The threshold between wanting to buy and having to sell is narrowing by the day

North_West_Art

John_999 wrote: »

where was the property based north west

Near Raphoe John

John_999

Ashbourne is in Meath but literally a 5 - 10 minute drive from dublin airport

oflahero

Nice to see this debate still going thanks to the optimist minority view! Great to be able to throw the ideas around.

John_999, though: I'm surprised by your goal of doubling your investment in 20 years with this buy-to-let apartment. All you have to do to double your money in 20 years is a stick it in a conservative savings account and let the magic of compound interest do the rest. 3.6% net will do it. You would do far better in a tracker mutual fund, especially given your 20 year time frame. Hope the apartment works out though, be nice to your tenant!

As regards NAMA being a cushion against repossessions: I'm afraid that NAMA isn't the answer to individual mortgage trouble. It won't help individuals one jot. It's there to recapitalise the banks, period. Banks suddenly won't become caring, understanding institutions post-NAMA - they're just in the same old game of maximising profits, and they will seek to kick the same number of people out of their gaffs, NAMA or no NAMA. This is why temporary bank nationalisation is the only credible, reasonably fair alternative to NAMA.

gurramok

John_999 wrote: »

its garenteed for the next 3 years as stated

Do you have a plan after 3 yrs as after all its 20yrs as you state?

John_999 wrote: »

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

Where to start. Eh no. Have you noticed the economy crashing? It don't matter how they try to put a floor on prices when hardly anyone can afford those prices. Thats been the case for years hence the housing crash.

Unless those mysterious foreign investors you speak of who overlook the numeorous non-Irish markets for the Irish market and fork out billions to get that return. All fantasy.

Bailing out Nama won't provide sustainable employment levels, its miniscule on this front. The recovery will come from separate investment in industry/services whenever that comes.

John_999 wrote: »

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

Show us. Provide the proof.

John_999 wrote: »

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.

They are not all on the up. Why not invest in Spain??

PS - learn how to use multi-quotes.

ionapaul

This NAMA does sound fecking amazing, you all have to agree! EVERYONE wins, from the government down to the plain man on the street. I hope we get a NAMA each and every year, so we can make €10b per annum - better than finding more oil than Saudi Arabia underneath the midlands!

All joking aside, good luck with the purchase John_999, hope it works out.

John_999

welcome to the optimist party Oflahero

Nice to see this debate still going thanks to the optimist minority view! Great to be able to throw the ideas around.

John_999, though: I'm surprised by your goal of doubling your investment in 20 years with this buy-to-let apartment. All you have to do to double your money in 20 years is a stick it in a conservative savings account and let the magic of compound interest do the rest. 3.6% net will do it. You would do far better in a tracker mutual fund, especially given your 20 year time frame. Hope the apartment works out though, be nice to your tenant!

Yeah this is an option but I reckon that with someone else paying the mortgage + the 200 extra a month + what ever the appartment is worth in 20years if far and above what you would get by savings?

As regards NAMA being a cushion against repossessions: I'm afraid that NAMA isn't the answer to individual mortgage trouble. It won't help individuals one jot. It's there to recapitalise the banks, period. Banks suddenly won't become caring, understanding institutions post-NAMA - they're just in the same old game of maximising profits, and they will seek to kick the same number of people out of their gaffs, NAMA or no NAMA. This is why temporary bank nationalisation is the only credible, reasonably fair alternative to NAMA.

There has been murder in the dail all parties have said that if Nama is to go through that banks cant just feck out mortgage holders....

John_999

Quote:
Originally Posted by John_999

its garenteed for the next 3 years as stated

Do you have a plan after 3 yrs as after all its 20yrs as you state?

Quote:
Originally Posted by John_999

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

Where to start. Eh no. Have you noticed the economy crashing? It don't matter how they try to put a floor on prices when hardly anyone can afford those prices. Thats been the case for years hence the housing crash.

Unless those mysterious foreign investors you speak of who overlook the numeorous non-Irish markets for the Irish market and fork out billions to get that return. All fantasy.

Bailing out Nama won't provide sustainable employment levels, its miniscule on this front. The recovery will come from separate investment in industry/services whenever that comes.

Quote:
Originally Posted by John_999

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

Show us. Provide the proof.

Quote:
Originally Posted by John_999

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.

They are not all on the up. Why not invest in Spain??

PS - learn how to use multi-quotes.

Plan after year 3 is to try and rent again. I mean no guarantee its a risk.

As for the ecconomy crashing. Mate its was in the process of crashing as far back as 2 years ago. Its on the ground in a wreck with fire fighters putting out the flames.

As I said its at the bottom and I believe that people will look at this and start buying again. We can debate this till the cows come home it will be interesting to see what the ERSI figures for Q4 of 2009 and Q1 of 2010 show

On employment if you look at the trend its starting to reduce and will eventually stop going up after that there is only one direction for it

I invested in a property overseas and got absolutely raped the company went into liquidation and I lost the deposit which is why I am sticking to domestic here.

John_999

Ionapaul - I never said I supported Nama I am just trying to get my point accross. Look no one knows whats going to happen. Ireland may have an a-bomb fecked on it tomorrow...but people think it was just a bail out for banks and developers or for inflation of the bubble again. I think its more to stabilize...now there are probably better ways to do it, but they had to do something.

gurramok

John_999 wrote: »

Plan after year 3 is to try and rent again. I mean no guarantee its a risk.

Hope you have factored in what rent you charge then assuming your mate is paying market rent, just in case that 200 quid is wiped out

John_999 wrote: »

As for the ecconomy crashing. Mate its was in the process of crashing as far back as 2 years ago. Its on the ground in a wreck with fire fighters putting out the flames.

As I said its at the bottom and I believe that people will look at this and start buying again. We can debate this till the cows come home it will be interesting to see what the ERSI figures for Q4 of 2009 and Q1 of 2010 show

You believe the economy is at the bottom(we wait and see on that one), that does not necessarily mean the housing market is. Quite different factors involved (listed in this thread earlier) in both.

As stated, you believe the lack of buying is due to a lack of confidence, how wrong can one be.

John_999 wrote: »

On employment if you look at the trend its starting to reduce and will eventually stop going up after that there is only one direction for it

You mean unemployment? As stated on other threads, we need employment numbers as well as up to date emigration numbers to see whats going on as a shed load were thrown onto Fas courses from the dole queues in Sept.

John_999 wrote: »

I invested in a property overseas and got absolutely raped the company went into liquidation and I lost the deposit which is why I am sticking to domestic here.

Fair enough. That does not mean a German investor will pick here over every other country!

John_999

gurramok wrote: »

Hope you have factored in what rent you charge then assuming your mate is paying market rent, just in case that 200 quid is wiped out

You believe the economy is at the bottom(we wait and see on that one), that does not necessarily mean the housing market is. Quite different factors involved (listed in this thread earlier) in both.

As stated, you believe the lack of buying is due to a lack of confidence, how wrong can one be.

You mean unemployment? As stated on other threads, we need employment numbers as well as up to date emigration numbers to see whats going on as a shed load were thrown onto Fas courses from the dole queues in Sept.

Fair enough. That does not mean a German investor will pick here over every other country!

Hey I never said it wasnt a risk. I have some cash to fall back on aswell. I believe we are coming to the end of a cycle with property and the economy all indicators are there for it being at the bottom. As I stated previously property market here has mirrored the activity in the U.S with a lag but with Ireland.

As for the ecconomy I reckon we have ****ty budget ahead but I think that alot of pressure is on for public spending to decrease sorry public sector guys but you are paid far too much

Tech3

There is no signs of the housing market stabilizing for the next 3 years at least.

I came across this 3 bed detached in Longford where house prices have been hit the worst. This one in particular is moving closer toward the 'affordable value' it seems maybe another 10 to 20%.

The problem is there is some bit to go for other semi detached properties spread over the entire country to get to this realistic level.

John_999

Tech2 I reckon that property closer to the bigger cities will stablize sooner and at a higher price? Longford is in the middle of nowhere

gurramok

John_999 wrote: »

Hey I never said it wasnt a risk. I have some cash to fall back on aswell. I believe we are coming to the end of a cycle with property and the economy all indicators are there for it being at the bottom. As I stated previously property market here has mirrored the activity in the U.S with a lag but with Ireland.

You believe both countries property markets are linked in a cycle with a lag, disagree here.

John_999 wrote: »

As for the ecconomy I reckon we have ****ty budget ahead but I think that alot of pressure is on for public spending to decrease sorry public sector guys but you are paid far too much

You know they will strike and fight tooth and nail any cutbacks in pay or numbers. And welfare will be an issue to be cut back.
The govt has to save about 4bn per annum until 2013 to get the public finances on track.
Now, why would an investor invest in houses here with social upheaval on the streets with relation to that factor taken in isolation?

Tech3

John_999 wrote: »

Tech2 I reckon that property closer to the bigger cities will stablize sooner and at a higher price? Longford is in the middle of nowhere

Longford is a town and this is in the middle of the town. There is a high number of semi detached houses that are worse locations. I agree that properties will be higher in bigger urban centres like Cork, Limerick and Galway but semi detached houses are too expensive still in these areas. The house I referred to probably still has more to drop.

John_999

I never said they were linked...I just think that they both happen to be reaching the bottom of the cycle at the same time...

So regardless of what happens in the public sector..I just think that the public sector should take the cuts as its happened all over the private sector. I mean the pissing and moaning about the pension levy..Why should I be paying for these feckers pension. The got bench marked up in the good times so they should be bench marked down in the bad..thats the way it should be

John_999

Well tech I dont know how far back you have gone in this post..If your thinking of buying slap in a price of 25 - 30% lower and see if the seller bites?

Tech3

John_999 wrote: »

Well tech I dont know how far back you have gone in this post..If your thinking of buying slap in a price of 25 - 30% lower and see if the seller bites?

I'm not interested in buying in that area or be it any area until prices are more affordable. Denial is still very strong out there and a drop of 25-30% would be very painful for the seller.

I'm also not keen on long commutes to where I work where property prices are more expensive. The rental market has completely stagnated where I currently rent so I would not be surprised at even more houses going on the market in a matter of months.

John_999

Hi Tech as said read previous posts. I believe we are at the bottom You should be able to get a property for at least 50% of what it was worth in the boom. Gov will control the flow of property on the market via nama. This will decrease supply...Now it will work different in the big cities not too sure how the ghost towns will go?

spockety

John_999 wrote: »

Hi Tech as said read previous posts. I believe we are at the bottom You should be able to get a property for at least 50% of what it was worth in the boom. Gov will control the flow of property on the market via nama. This will decrease supply...Now it will work different in the big cities not too sure how the ghost towns will go?

How will the government control the flow of 2nd hand property?

John_999

Well in the worst case scenario. if properties default the government own them via Nama. So it wouldn't be prudent for them to over supply property as it will drive the price down. Which is not in there interest so if it happens they will drip feed the property to the market...I don't agree with this but that is what will happen

Diarmuid

John_999 wrote: »

Hi Tech as said read previous posts. I believe we are at the bottom You should be able to get a property for at least 50% of what it was worth in the boom. Gov will control the flow of property on the market via nama.

I admire your optimism but I wouldn't invest in it. Based on other housing bubble bursting, Ireland has a world of pain to go yet.

John_999

Well thats the risk...that I have taken but as stated I dont see as a risk if you are looking long term Ie 20 years..the only stat out there for a period of 20years is that the price of property regardless of where it is. will go up.

Tech3

John_999 wrote: »

Hi Tech as said read previous posts. I believe we are at the bottom You should be able to get a property for at least 50% of what it was worth in the boom. Gov will control the flow of property on the market via nama. This will decrease supply...Now it will work different in the big cities not too sure how the ghost towns will go?

Yes as said by yourself, if you think its the bottom your either ill informed or a vested interest. I would like you to give facts as to why you think the market is stabilizing. Last month the rate of decline increased showing signs of the crash becoming even worse.

The housing market is a very small part of NAMA, the residential market makes up the large majority of the loans. Therefore NAMA will have very little effect on the housing market. Anyway the NAMA legislation has not come into law of yet as the Greens have yet to cast their vote on it.