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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

John_999

tech2 wrote: »

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.

I have got an interest I have just purchased an appartment ... Look at the threads going back. .... As for Nama ...Nama is going to be taking over loans for properties so it is.

As for facts well hows about the rest of the world are in a upturn. UK property prices have increased in each of the last 3 months. US is on the increase.

Lisbon being passed will also have an effect as will Nama

Yeah residential is the housing market - I dont understand your quote there it contradicts itself

The greens will just rollover ....Cowen will give them there Carbon tax and they will be happy as larry

Calina

John_999 wrote: »

Well in the worst case scenario. if properties default the government own them via Nama.

It is my understanding that this is true for new properties which form the basis of security on large developer loans only. Not second hand housing owned by - for example, mortgage defaulters.

oflahero

John_999 wrote: »

welcome to the optimist party Oflahero

haha, cheers, though I have to admit that I'm probably one of the more bearish round here, I couldn't in all conscience accept my membership card...

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?

This is indeed great for you, but you're probably in the minority market of commuter belt apartment buyers in having had a 75k deposit to put down. You'll do great if the rental market holds up (and you don't have a family fallout with the current tenant!) but in your returns you have to consider the opportunity cost of that 75k, which could achieve almost that 200 extra a month guaranteed in a savings bond.

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....

The banks are a law unto themselves I suspect - they proved that when the crisis first broke by getting their unconditional Lenihan guarantee last year when the government blinked first. They know they can do anything they please after that. These are the boyos who solemnly swore they were well-capitalised, doing well, in no need of cash etc. etc. *to the very second* before it was revealed that they were technically insolvent, please bail us out, and by the way we'll bring the whole financial system with us if you don't. A bit of wishy-washiness stuck deep in NAMA legislation - "please be nice to people in trouble" - is not going to stop lads with cojones like that.

John_999

Not sure about that...There are still alot of details to go through but you can be sure that Nama is coming and its in the interest of the gov to stabilize property prices..As stated I dont think its right but this is whats going to happen

Diarmuid

John_999 wrote: »

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.

Japans' current property prices are still 50% below their peak 18 years ago. Maybe they'll recover in the next 2 years though. :pac:

John_999

Oflahero...I suppose I don't want to look like I am in the camp of the gov bank or developers and I dont want people to start going yeah property has finished falling..

The point I tried to get accross is that property has fallen by 38% was the figure. I got the seller down to 55% of a cut by haggling so before the investors swoop ...at the very least 1st time buyers should look at the market...The basic mortgage is between 20 -25years ...Is there anyone on this post who thinks that the current price will not at least have gone up by 50% - 100% in that time..If there is I would love to see stats on this

Tech3

John_999 wrote: »

Not sure about that...There are still alot of details to go through but you can be sure that Nama is coming and its in the interest of the gov to stabilize property prices..As stated I dont think its right but this is whats going to happen

It wasnt right to have a property boom but thats what happened. What goes up must always come down. The average price of a house now is €230,000 which is unsustainable.

Who is going to buy these properties. More bad news on the jobs front yet again today:

http://www.independent.ie/national-news/midwest-suffers-fresh-jobs-blow-as-130-workers-axed-1907573.html

John_999

Diarmud, tech...

Listen as stated I am only telling you what I see the appartment I bought had 5 others which were dearer than mine. In the space of me getting the price I wanted putting the deposit and then actually getting the place 3 out of the 5 places went sale agreed. Now there is no stats there just cold hard facts from the front line.

gurramok

Is Ashbourne really 5-10mins from the airport?

Suppose the good thing is that its a penthouse and will be in better preference at thr ight price in 3 yrs time for your new tenant.

Did you factor in management fees? That 200quid you gain per mth will be swallowed up before you have expenses on that apt.

How about paying your taxes a a landlord? It must be around 50% tax now on rent received, anyone got figures?

The_Conductor

gurramok wrote: »

Is Ashbourne really 5-10mins from the airport?

Suppose the good thing is that its a penthouse and will be in better preference at thr ight price in 3 yrs time for your new tenant.

Did you factor in management fees? That 200quid you gain per mth will be swallowed up before you have expenses on that apt.

How about paying your taxes a a landlord? It must be around 50% tax now on rent received, anyone got figures?

Depends entirely on what his allowable expenses are- but mortgage interest as an allowable expense is being phased out for non-first-time-buyers and investors (and is due to be reduced for the FTBs).

Management Charges are an issue- the average Dublin management charge according to DAFT is 2,600 (its about 800 less outside of the Dublin conurbation- the difference is a combination of factors- the outstanding one being vastly higher insurance costs).

gdael

John_999 wrote: »

Oflahero...I suppose I don't want to look like I am in the camp of the gov bank or developers and I dont want people to start going yeah property has finished falling..

The point I tried to get accross is that property has fallen by 38% was the figure. I got the seller down to 55% of a cut by haggling so before the investors swoop ...at the very least 1st time buyers should look at the market...The basic mortgage is between 20 -25years ...Is there anyone on this post who thinks that the current price will not at least have gone up by 50% - 100% in that time..If there is I would love to see stats on this

I wouldnt count on investors.

I dont think there is any danger of investors swooping for the moment. The goverrnment have made it uneconomical for investors, so they wont be bothered buying in. What they need is stability - and that is one thing the government havent provided. They need to know their costs, and chopping and changing what are allowable expenses is not the way to attract investors.

We are about to close on our first house, hopefully withing the next few weeks. The reason we bought it is that having crunched the numbers we are significantly better off owning the house we are buying than renting the same house down the road as we are now, even with a rent reduction that we got several months ago. Add to that a bit of stability needed for family reasons and the decision made itself really.

John_999

well morning all. Firstly ashbourne is a 10minute drive to the airport via the back roads. I do it every day

As for the first time buyer here. There is doom and gloom and there is a lot of negativity for investors. But I think you are buying at the right time. I was reading up that it the most affordable time to buy a home when you compare wages vs house prices since 1933. Google this and you will find it.

I know people will say
but prices are going to drop
but people are still losing jobs
but people are still going to take cuts in there wages

All true

But the cost of living here is now at a fairly low ebb also if you factor in the good rate vs the Pound .. businesses and services realise that if they dont further reduce there prices that people will say **** you very much I am going north of the boarder for my xmas shopping...

So the cost of living in Q4 2009 will drop significantly.. Granted a lot will depend on the budget aswell..

anyway congrats on the new place if you have a mortgage over 20 years or more I think it is a sound investment:)

John_999

I think GDael you will be indicative of all first time buyers rents are dropping but at a slower pace to property prices over the last 3 years. So it is definately more attractive to 1st time buyers to buy...

gurramok

John_999 wrote: »

I think GDael you will be indicative of all first time buyers rents are dropping but at a slower pace to property prices over the last 3 years. So it is definately more attractive to 1st time buyers to buy...

Alot of that is based on temp 1% ECB rates. Those rates will go up soon, watch out for that.

Have you factored in management fees and taxes?

John_999 wrote: »

was reading up that it the most affordable time to buy a home when you compare wages vs house prices since 1933. Google this and you will find it.

Can't find it. Provide a link.

John_999

hi have a look at this thread

http://www.thepropertypin.com/viewtopic.php?f=4&p=308993

also although its through about ECB rate. most banks are offering fairly good rates over fixed terms. I got mine through AIB as they had the best, I reckon there will be a bit of a pricing war to drum up business between the banks which can only be good.

Once again dont take my word just look at what the banks are offering

spockety

John_999 wrote: »

I think GDael you will be indicative of all first time buyers rents are dropping but at a slower pace to property prices over the last 3 years. So it is definately more attractive to 1st time buyers to buy...

Talk about sweeping generalisations.

If I wanted to buy the house I'm renting at the moment, at the current prices being asked/achieved on streets nearby, I would be paying 30% more than my rent on a monthly basis.

This is based on a 25 year mortgage, making very conservative allowances for banks standard variable rates to hit only 5%, and only takes into account mortgage payments. Doesn't cover anything usually associated with home ownership (building insurance, life insurance, maintenance, etc.).

John_999

Thats a sweeping statement in itself. For first time buyers . They can go and get a property for less than what they are paying in rent. Ok it may not be the same location but they are out there. Not to mention the fact that rental outgoings is dead money...Hows that for a sweeping statment:)

John_999

Also if you look at the statement I said "I think" which means its an opinion it may be wrong or right but at this point in time no one can prove it. Sorry I am getting arsy here ...Need coffee

John_999

Spockety one last point ...everyone here is saying property prices has dropped by about 50%...I can assure the same drop has not happened in rent or if you have figures prove me wrong?

gurramok

Thats the same chart as the other thread here. Too many variables to have it in concrete. We don't know the average or a better measure median wage in this country and we are comparing apples and oranges to type of house available.

In the 80's and before for example, it was mostly houses that were bought. Post 2000, apts made a huge influx to the choice for the buyer.

Apts are generally cheaper than houses in a particular area. If we look at Daft for Dublin, its usually apts and a few houses in the undesirable areas which have become more affordable as you would not expect a worker on 38k to buy one of these!

Same for outside Dublin. Ashbourne as a commuter town shouldn't command a high price and rightly so you got your 2bed apt for 145k.

What are the banks offering now fixed? Do they offer 10yr rates? Hope anyone has factored in a jump in repayments once the fixed rate is up, it can't always be assumed that wages going up would cushion the borrower.

gurramok

John_999 wrote: »

Spockety one last point ...everyone here is saying property prices has dropped by about 50%...I can assure the same drop has not happened in rent or if you have figures prove me wrong?

No they have not. Some have dropped by 50%, some by 30% and various percentages, its not across the board.

To further on Spocketys point. I pay rent of 900 quid. To buy the apt, a similar apt next door is on sale for asking 295k. Thats way more in mortgage repayments than rent.

spockety

John_999, you're a recent buyer, so there will be no arguing with you. I understand that. We have seen it time and time again on this board. A few months after each time, I would wonder, "What ever happened to that guy who bought that property that now is surely worth 10% less than he paid? Wonder how he feels?". I will wonder the same about you in about 6 months, when we see yet another daft report saying that prices have fallen about 1.3% per month for the preceeding 6 months.

You say that rent is dead money. In a stable/normal market environment, I might be inclined to accept that kind of argument. But in a falling market?

Lets say I buy a house for 300,000 euro that I know can be rented for 1,000 euro a month. It would only take a fall in value of 4% in one year to have made it more worthwhile renting. This assumes an outright cash purchase, if you factor in mortgage interest the picture looks a whole lot different.

But anyway, as I say, there is no arguing I'm sure. Congratulations on your purchase (I mean that), I hope that you get great satisfaction out of owning your own home. Best of luck.

John_999

With AIB you could only get o loan of up to
27140

At the variable rate over 35 years it works out at 934 and this doesn't factor in your Mortgage interest relief. Now I now the interest will go up. But in saying that you are getting something for your money. The question for first time buyers over 35 years will the property be worth more than it is today. I would say yes.

So you have to calculate dead money 900 on rent or say even at 20% interest rate on this amount which would mean that you are paying roughly 452 a month on interest. Thats a very bad scenario I dont believe that interest rates will reach 20% but its still near half the amount spent on dead money. Also we havent factored in over the years your interest rates go down and money paid of capital loan goes up.

So my friend if I was you I would be on my way to AIB

Just a side note on how I got the figure 452

devide the amount
27140

by 5 to get 20% which is th mad interest rate I put in.

John_999

Spockety the details of me buying were I got it at 55% less than boom price I have a tennant (A relation) who has said they will rent for the next 3 years. I am in it for the long term so the only risk is if prices have not increased in 20years time and even at that the rent I am getting is currently covering the mortgage, interest, management fees with 200 Euros extra. So 200 * 3 * 20 = 7200. Not bad 10% of the mortgage and 3 years of it paid. Thats the worst case scenario for me...

As stated on previous posts on this thread I wouldnt advise anyone who has not got some capital to go for it. But I believe it is a good time for first time buyers.

spockety

John_999 wrote: »

With AIB you could only get o loan of up to
27140

At the variable rate over 35 years it works out at 934 and this doesn't factor in your Mortgage interest relief. Now I now the interest will go up. But in saying that you are getting something for your money. The question for first time buyers over 35 years will the property be worth more than it is today. I would say yes.

So you have to calculate dead money 900 on rent or say even at 20% interest rate on this amount which would mean that you are paying roughly 452 a month on interest. Thats a very bad scenario I dont believe that interest rates will reach 20% but its still near half the amount spent on dead money. Also we havent factored in over the years your interest rates go down and money paid of capital loan goes up.

So my friend if I was you I would be on my way to AIB

Just a side note on how I got the figure 452

devide the amount
27140

by 5 to get 20% which is th mad interest rate I put in.

Surely they're not the kind of calculations you did when weighing up your own purchase? :eek:

At 2.2% repayments are 934.
At 20%, repayments are 4,582.

You worry me now.

gurramok wrote: »

No they have not. Some have dropped by 50%, some by 30% and various percentages, its not across the board.

To further on Spocketys point. I pay rent of 900 quid. To buy the apt, a similar apt next door is on sale for asking 295k. Thats way more in mortgage repayments than rent.

I'm in a very similar situation.....the mortgage payments on the current asking price is more than in the rent.in fact, the interest element is more than the rent.

I'm not sure of the exact relationship between rent and mortgage payment (it's too simplistic to look at it purely as cash flow) but I'm pretty sure that the interest on the mortgage should closer or less than rent.

John_999

Spokety I was responding to Guromoks post where he was saying he was paying 900 a month on rent and that house next to it went for sale for 295. I just gave him a figure of 27140 which is what he can borrow if he was buying the house. You are wrong about the yearly price here its actually more you got your 4 and 5 mixed up its 5482 but if you devide that by 12 you get 456.33 which is still near half the 900 he is paying on rent or so lets weigh it up 900 of dead money and you own nothing or 456.33 and you own a house that should in 35 years go up in value. Hope this clears it up for you.

John_999

Well MG I was just going on the figures given by a fellow pessimist and the figures stand for themself. You are waiting roughly 50% of your money by buying and thats using an over inflated interest rate of 20% which I would say will not happen in my lifetime

gurramok

This is what on my screen John_999

John_999 wrote:

With AIB you could only get o loan of up to
27140

At the variable rate over 35 years it works out at 934 and this doesn't factor in your Mortgage interest relief

A loan up to what?

You say 35yr mortgage, thats not a fair comparison. Try 25yrs.

Also, you say "that the rent I am getting is currently covering the mortgage, interest, management fees with 200 Euros extra. So 200 * 3 * 20 = 7200"

You only added in the other expenses above in post #175 when I brought them up. You sure about your calculations?

20goto10

spockety wrote: »

Talk about sweeping generalisations.

If I wanted to buy the house I'm renting at the moment, at the current prices being asked/achieved on streets nearby, I would be paying 30% more than my rent on a monthly basis.

This is based on a 25 year mortgage, making very conservative allowances for banks standard variable rates to hit only 5%, and only takes into account mortgage payments. Doesn't cover anything usually associated with home ownership (building insurance, life insurance, maintenance, etc.).

The obvious difference being that you would own the property rather than renting it. Some people don't care and thats great for them, I say continue renting. But as an example I have friends who have just had a baby and cannot decorate the nursery room. Some people don't care about these things while other people do.

btw, your mortgage will never be less than the equivalent rent. Are you suggesting that being able to afford to own a home for cheaper than you can rent it is considered normal circumstances or is in somehow an indication of whether a house is over priced or not? Thats nonsense.