Allsop Auction

antiskeptic · 08-07-2011 10:38am

smccarrick wrote: »

The ECB (Wim Duisberg) have publicly stated that 'normalisation of interest rates implies a rate of 4 to 4.5%'
Whether or not the peak at these levels- or how long it takes them to reach these levels, is a bit like asking how long is a piece of string. It all depends on external factors- while the primary concern of the ECB is to fight inflation- they have shown themselves to be moderately open to political pressure/interference......

Do I think Irish prices will drop another 20-30%, sure I do. However bad things are now- things are only going to get a whole lot worse- there is another 4.5 billion to be siphoned off by the government in December's budget, and by their own admission most of the low lying fruit has already been picked. We are in for a torrid time- we ain't seen nothing yet, as the song goes. So- severely limited lending, on top of a contracting economy, and unemployment rates that look to stay stubbornly at 13-14%- well, its not rocket science.....

Dr. Constantin Gurdgiev appears to take a more benign view..

One more slightly technical factor is important to the consideration of the future of the property markets here. Looking at historical monthly data from 2005 through present, continued declines in asking prices are now putting renewed pressure on rents, which remain out of sync with long-term relationship to asking prices.

Using a simple rule of thumb that at the long-term real interest rates of 3% (the scenario toward which we are heading with ECB policies), the ratio of household income to purchase price should be around 2.8:1, the 3 year horizon average property prices projections based on per capita income in Ireland is in the region of €156,000. That is about 13.4% below today's average asking prices, allowing for a 5% sales discount currently - or 57% below the peak.

In other words, the vicious cycle of low yields and collapsing capital gains still has some room to run before Irish property markets can see a sustained stabilisation.

http://www.daft.ie/report/

Without even getting into details I can't see how this could be so. The downward slope of housing price decline is so steep you'd need something dramatic (like sudden, large-scale MNC inward investment or a total writedown of our debt) to wrench it out of it's nosedive.

Newtons 2nd Law applies: "Objects in motion (house price rate of decline) continues in that direction and at speed unless acted upon by an external force"

I'm trying to see where those external forces will come from (a handful of cash buyers with money burning a hole in their pocket at Allsop auctions notwithstanding) but can't figure it out.

The_Conductor · 08-07-2011 10:57am

I have fundamental issues with Dr. Gurdgiev's figures.
First off- the ECB themselves consider an interest rate of 4 to 4.5% to be 'normalisation' of interest rates. How long it'll take them to get there is open to debate- most commentators reckon it could be 3-4 years, depending on what happens with the global economy (which appears to be spluttering).

I don't understand how he can consider 2005 to present- to represent 'historical' data- we were in a sodding bubble from 1997 or so onwards- his dataset is skewed.......

His figures are assuming an average per capita income of around 57k- another figure that seems as though its randomly pulled out of thin air......

We have 300k vacant properties nationwide, and allegedly over 20k vacant apartments (not houses) in Dublin alone- where are we going to offload these? Net migration is outward again- and while we are undergoing a baby boom- it'll be 20-25 years before any of the tots are in a position to seek their own places.......

We are sucking out another 4.5 billion from the economy in December, have an unemployment rate pretty constant around 14%, interest rates that are increasing, an effective mortgage default rate of just under 12% (incl. those who have come to arrangements with their lenders) etc..... Any comments about a recovery are wishful thinking in the extreme. He is quite right about rental levels being out of kilter though- they are being artificially supported by the state via the RA and RS schemes (though its proposed to chop this too come December).

While hes not implicitly saying so- I genuinely think that Dr. Gurdgiev's assessment is, despite his comments, overly rosy and divorced from reality.

antiskeptic · 08-07-2011 11:42am

smccarrick wrote: »

I have fundamental issues with Dr. Gurdgiev's figures.

First off- the ECB themselves consider an interest rate of 4 to 4.5% to be 'normalisation' of interest rates. How long it'll take them to get there is open to debate- most commentators reckon it could be 3-4 years, depending on what happens with the global economy (which appears to be spluttering).

I don't understand how he can consider 2005 to present- to represent 'historical' data- we were in a sodding bubble from 1997 or so onwards- his dataset is skewed.......

His figures are assuming an average per capita income of around 57k- another figure that seems as though its randomly pulled out of thin air......

We have 300k vacant properties nationwide, and allegedly over 20k vacant apartments (not houses) in Dublin alone- where are we going to offload these? Net migration is outward again- and while we are undergoing a baby boom- it'll be 20-25 years before any of the tots are in a position to seek their own places.......

We are sucking out another 4.5 billion from the economy in December, have an unemployment rate pretty constant around 14%, interest rates that are increasing, an effective mortgage default rate of just under 12% (incl. those who have come to arrangements with their lenders) etc..... Any comments about a recovery are wishful thinking in the extreme. He is quite right about rental levels being out of kilter though- they are being artificially supported by the state via the RA and RS schemes (though its proposed to chop this too come December).

While hes not implicitly saying so- I genuinely think that Dr. Gurdgiev's assessment is, despite his comments, overly rosy and divorced from reality.

What possible reason(s) could he have not to include such factors into his thinking? He appears to set his predictions of house price deflation on a single influencing factor (annual household income as a fraction of house price)

SMC wrote:

His figures are assuming an average per capita income of around 57k- another figure that seems as though its randomly pulled out of thin air......

The language used is confusing. I'm taking that figure to refer to average household income.

"Using a simple rule of thumb that at the long-term real interest rates of 3% (the scenario toward which we are heading with ECB policies), the ratio of household income to purchase price should be around 2.8:1, the 3 year horizon average property prices projections based on per capita income in Ireland is in the region of €156,000. That is about 13.4% below today's average asking prices, allowing for a 5% sales discount currently - or 57% below the peak."

Quite how you figure there is but 13.4% to go before bottom - when in the same breath you've said that;

Nationwide, asking prices are down 5% in three months through June 2011 - the steepest quarterly decline in 18 months.

..is beyond me. It's like saying you can pull the plane out of that near vertical dive with only a 100ft to go between you and the ground.

irishh_bob · 08-07-2011 12:08pm

smccarrick wrote: »

The ECB (Wim Duisberg) have publicly stated that 'normalisation of interest rates implies a rate of 4 to 4.5%'
Whether or not the peak at these levels- or how long it takes them to reach these levels, is a bit like asking how long is a piece of string. It all depends on external factors- while the primary concern of the ECB is to fight inflation- they have shown themselves to be moderately open to political pressure/interference......

Do I think Irish prices will drop another 20-30%, sure I do. However bad things are now- things are only going to get a whole lot worse- there is another 4.5 billion to be siphoned off by the government in December's budget, and by their own admission most of the low lying fruit has already been picked. We are in for a torrid time- we ain't seen nothing yet, as the song goes. So- severely limited lending, on top of a contracting economy, and unemployment rates that look to stay stubbornly at 13-14%- well, its not rocket science.....

where do you see farm land prices , many believe farm land is bucking the trend and according to the farmers journal yesterday , its on the way back up

The_Conductor · 08-07-2011 12:12pm

Bicky wrote: »

Anyone any idea what the Dublin 1 pub was withdrawn at? Lot 36.

It was withdrawn @ 475k with a minimum reserve of 485k

antiskeptic · 08-07-2011 12:20pm

irishh_bob wrote: »

where do you see farm land prices , many believe farm land is bucking the trend and according to the farmers journal yesterday , its on the way back up

Did farmland undergo boomtime increases too (aside from farmland that could be potentially rezoned into building land)?

I'd imagine the factors influencing that sector are markedly different than those controlling building land

The_Conductor · 08-07-2011 12:39pm

irishh_bob wrote: »

where do you see farm land prices , many believe farm land is bucking the trend and according to the farmers journal yesterday , its on the way back up

Bob- there are a different set of fundamentals at play with farm land prices- however I would have serious doubts that farm land prices are stable, never mind on the way up.

The big issue with farm land prices- is the lack of transactions hitting the open market- and similar to the residential market- severe issues in accessing credit for potential buyers (though its argued that there is a cadre of potential buyers out there who are cash buyers)........

The SFP is underpinning farm prices at the moment- however the uncertain nature of a number of the schemes, along with problems accessing the latter REPS schemes for former participants- and the proposed broadening of the SACs- are limiting factors, totally ignoring the issues with credit etc.

Farming certainly is undergoing a rejuvenation at the moment- the numbers enrolled in the remaining agricultural colleges, and doing the Teagasc online courses- are at 15 year highs. The Farmer's Journal are leveraging information like this to suggest that farming is somehow immune from the downturn- when the likely explanation is more that over the past 20 years there were ample opportunities for the children of farmers to make a living independent of farming- and those opportunities are now a lot harder to come by- so there are a cadre of young farmers out there trying to make a go of things, where previously they'd have fecked off to Dublin or elsewhere, a large majority of them working in construction.

There is a degree of demand from these young farmers for land- however many of them are suggesting that opportunities are more abundant in the UK or elsewhere than here (have a look at the British Farming Forum).

At the end of the day- land prices have to reflect their income generating potential. The SFP has decoupled production from subsidies- and in a rational market- someone should be able to look at a land type, do a back of the envelope calculation of what they can earn farming the land, and thus what its worth to them........ We're not rational creatures though- and the attachment to farmland has historic links to our dispossession by landlords of bygone years.

Is farmland increasing in price? Only so far as farmers or potential farmers have access to credit- which is diminishing....... It doesn't matter what the inherent demand is- if people don't have cold hard cash to backup their wish to acquire land- and akin to the residential market, this is the limiting factor at present (though there is always going to be an inherent value associated with farmland, that being its income generating potential- which does not exist with residential property).

irishh_bob · 08-07-2011 12:39pm

antiskeptic wrote: »

Did farmland undergo boomtime increases too (aside from farmland that could be potentially rezoned into building land)?

I'd imagine the factors influencing that sector are markedly different than those controlling building land

the rise in farmland prices during the boom dwarfed every other sector , land could be bought in 1996 for around 2000 pound per acre , in 2007 , it was costing nearly 20 k ( euro ) per acre , im talking about farmland , not land for development

irishh_bob · 08-07-2011 12:44pm

smccarrick wrote: »

Bob- there are a different set of fundamentals at play with farm land prices- however I would have serious doubts that farm land prices are stable, never mind on the way up.

The big issue with farm land prices- is the lack of transactions hitting the open market- and similar to the residential market- severe issues in accessing credit for potential buyers (though its argued that there is a cadre of potential buyers out there who are cash buyers)........

The SFP is underpinning farm prices at the moment- however the uncertain nature of a number of the schemes, along with problems accessing the latter REPS schemes for former participants- and the proposed broadening of the SACs- are limiting factors, totally ignoring the issues with credit etc.

Farming certainly is undergoing a rejuvenation at the moment- the numbers enrolled in the remaining agricultural colleges, and doing the Teagasc online courses- are at 15 year highs. The Farmer's Journal are leveraging information like this to suggest that farming is somehow immune from the downturn- when the likely explanation is more that over the past 20 years there were ample opportunities for the children of farmers to make a living independent of farming- and those opportunities are now a lot harder to come by- so there are a cadre of young farmers out there trying to make a go of things, where previously they'd have fecked off to Dublin or elsewhere, a large majority of them working in construction.

There is a degree of demand from these young farmers for land- however many of them are suggesting that opportunities are more abundant in the UK or elsewhere than here (have a look at the British Farming Forum).

At the end of the day- land prices have to reflect their income generating potential. The SFP has decoupled production from subsidies- and in a rational market- someone should be able to look at a land type, do a back of the envelope calculation of what they can earn farming the land, and thus what its worth to them........ We're not rational creatures though- and the attachment to farmland has historic links to our dispossession by landlords of bygone years.

Is farmland increasing in price? Only so far as farmers or potential farmers have access to credit- which is diminishing....... It doesn't matter what the inherent demand is- if people don't have cold hard cash to backup their wish to acquire land- and akin to the residential market, this is the limiting factor at present (though there is always going to be an inherent value associated with farmland, that being its income generating potential- which does not exist with residential property).

thanks for the quick reply

i myself am not at all convinced that farmland prices are on the way back up , i spoke to an auctioneer quite recently and he put it simply , the banks have put up a wall , they are simply not lending and thier is nothing to suggest the banks will loosen the purse strings in the short term , as for your point about the uk , land in the uk is on a par with ireland now , anyone who sold farm land in ireland in 2007 could have bought three acres for every one acre sold here , land in the uk has shot up in the past number of years where as land here has more than halved

derealbadger · 08-07-2011 12:59pm

i know that a farm of 58 acres sold last week good land in east Galway for € 430k which equates to €7.41 k per acre

Dymo · 08-07-2011 1:25pm

antiskeptic wrote: »

Did farmland undergo boomtime increases too (aside from farmland that could be potentially rezoned into building land)?

I'd imagine the factors influencing that sector are markedly different than those controlling building land

Farm incomes will be up 30% on 2 years ago this year, so more money in the marketplace for farmers to buy land, as land is a commodity product to farmers.

irishh_bob · 08-07-2011 1:43pm

derealbadger wrote: »

i know that a farm of 58 acres sold last week good land in east Galway for € 430k which equates to €7.41 k per acre

sounds about right , farmland in galway falls somewhere in the middle in terms of price range throughout the country

jmayo · 08-07-2011 3:01pm

antiskeptic wrote: »

Did farmland undergo boomtime increases too (aside from farmland that could be potentially rezoned into building land)?

I'd imagine the factors influencing that sector are markedly different than those controlling building land

Oh by God it did, especially in areas around Dublin where there was a knock on affect from the property bubble.
Land with possible development prospects near towns and villages rocketed.
You had the non farmers (solicitors, auctioneers, EAs, builders, developers, etc) deciding they wanted to play lord and lady muck and they decided they would buy few acres with big house or build a big house with required stables.
A lot of that bunch have fallen on harder times and the half built mansion sitting on the few acres with stables out back are now for sale.

Farmers all over the country who had sold sites, development land or land for new roads were flush with cash and either reinvested it in land elsewhere or sometimes just bought bank shares.
Other farmers suddenly had access to greater credit and could now afford to try and expand.
The price of pure farm land got to a stage where you would need to be farming it for generations for it to make a return commensurate with it's cost.

smccarrick wrote: »

Bob- there are a different set of fundamentals at play with farm land prices- however I would have serious doubts that farm land prices are stable, never mind on the way up.

The SFP is underpinning farm prices at the moment- however the uncertain nature of a number of the schemes, along with problems accessing the latter REPS schemes for former participants- and the proposed broadening of the SACs- are limiting factors, totally ignoring the issues with credit etc.

Not to mention what the end of CAP, milk quotas, etc.

smccarrick wrote: »

Farming certainly is undergoing a rejuvenation at the moment- the numbers enrolled in the remaining agricultural colleges, and doing the Teagasc online courses- are at 15 year highs.

This is because of the amount of unemployed sons that a number of years ago had been involved in construction, be it as labourers, tradesmen or just driving one of the farms tractors working on sites.
Then the daughters were finding work in retail.
That has all dried up.

smccarrick wrote: »

The Farmer's Journal are leveraging information like this to suggest that farming is somehow immune from the downturn- when the likely explanation is more that over the past 20 years there were ample opportunities for the children of farmers to make a living independent of farming- and those opportunities are now a lot harder to come by- so there are a cadre of young farmers out there trying to make a go of things, where previously they'd have fecked off to Dublin or elsewhere, a large majority of them working in construction.

Exactly.

smccarrick wrote: »

There is a degree of demand from these young farmers for land- however many of them are suggesting that opportunities are more abundant in the UK or elsewhere than here (have a look at the British Farming Forum).

At the end of the day- land prices have to reflect their income generating potential.

They didn't back in the 70s or during the construction bubble.
In fact when foreign farmers viewed our landprices they were agog.

smccarrick wrote: »

Is farmland increasing in price? Only so far as farmers or potential farmers have access to credit- which is diminishing....... It doesn't matter what the inherent demand is- if people don't have cold hard cash to backup their wish to acquire land- and akin to the residential market, this is the limiting factor at present (though there is always going to be an inherent value associated with farmland, that being its income generating potential- which does not exist with residential property).

The thing about land is that we have a very very limited supply in this country, so when land becomes available neighbouring farmers move haeven and earth to try and buy it.
They even ignore sane valuations.
Think of "The Field".

I think our land changes hands on average ever 100 odd years whereas in other countries it is much more frequent.

irishh_bob wrote: »

the rise in farmland prices during the boom dwarfed every other sector , land could be bought in 1996 for around 2000 pound per acre , in 2007 , it was costing nearly 20 k ( euro ) per acre , im talking about farmland , not land for development

In Kildare, Wicklow, Meath, Dublin and Louth it was often 30,000.

jmayo · 08-07-2011 3:03pm

derealbadger wrote: »

i know that a farm of 58 acres sold last week good land in east Galway for € 430k which equates to €7.41 k per acre

Did that nice farm in Portumna ever sell ?

Dymo wrote: »

Farm incomes will be up 30% on 2 years ago this year, so more money in the marketplace for farmers to buy land, as land is a commodity product to farmers.

You do know they were starting from very low base ?

derealbadger · 08-07-2011 6:37pm

jmayo wrote: »

Did that nice farm in Portumna ever sell ?

You do know they were starting from very low base ?

this farm would be quite close to portumna its kiltormer/clontuskert area

ei.sdraob · 09-07-2011 1:10pm

Reserve 50K

Sale Price 177K

madness, madness I tell ya, especially considering that less than 2KM down road one can get this larger apt for less and not have to spend a small fortune on renovations and insulation

The_Conductor · 09-07-2011 1:28pm

ei.sdraob wrote: »

Reserve 50K

Sale Price 177K

madness, madness I tell ya, especially considering that less than 2KM down road one can get this larger apt for less and not have to spend a small fortune on renovations and insulation

The second one is a leasehold apartment, with current management fees of 2k per annum....... The first is a freehold house. Admittedly the first needs considerable work- however you're not comparing like with like.......

amdublin · 09-07-2011 1:41pm

smccarrick wrote: »

The second one is a leasehold apartment, with current management fees of 2k per annum....... The first is a freehold house. Admittedly the first needs considerable work- however you're not comparing like with like.......

And that second yoke is a vile monstrosity

Bigger is not always better.

The_Conductor · 09-07-2011 2:05pm

amdublin wrote: »

And that second yoke is a vile monstrosity .

ei.sdraob · 09-07-2011 2:14pm

smccarrick wrote: »

The second one is a leasehold apartment, with current management fees of 2k per annum....... The first is a freehold house. Admittedly the first needs considerable work- however you're not comparing like with like.......

Sorry you right, i linked to wrong one there are a few of them for sale at around that price.
I am talking from the point of view of renting (after renting previously in same area) B would bring in more rental while A is tiny and run down. I wouldn't buy either as PPR.

To pay 177K for a over-glorified shed with little prospect (ha no pun intended

re Prospect Hill) of making your money back via renting (i presume that was the reason this was bought) in this day and age is the height madness (unless whoever bought it is laundering money....), maybe 70K due to location but no more, the "house" needs at least another 50-100K just to make it livable

edit:

* rental around prospect hill for that sized home is around €600 a month @ 177K that's 24 and a half years
* rental for 4beds for B is around €1100 @ 160K thats 11 years

Which of these is closer to the rent*12*14 formula often used around this forum for discussing sale prices in relation to rent.

lotusm · 23-09-2011 9:54am

Hi ... Does anyone know is there a live link to the allsop auction in Dublin today.... I know there was one at the last auction ...can't find the link now :rolleyes:

AshAdele · 23-09-2011 10:16am

http://www.auction.co.uk/irish/ResultsLive.asp

nothing on the page yet as the auction hasn't started.

lotusm · 23-09-2011 10:34am

cheers Ash....

Spiritofthekop · 23-09-2011 1:59pm

Nice to see the houses finally dropping in price & people getting realistic...

Houses & Apartments now selling for under 100,000...good to see.

This is only the start of it!!

House prices are going to continue plummet for years

paul71 · 23-09-2011 2:30pm

antiskeptic wrote: »

Pretty property in Cork went for over twice it's 270 reserve. Someone will be pleased!

Don't think liquidators have emotions!

Spiritofthekop · 23-09-2011 4:26pm

Spiritofthekop wrote: »

Nice to see the houses finally dropping in price & people getting realistic...

Houses & Apartments now selling for under 100,000...good to see.

Although 2 houses went for stupid money in blackrock..some 2 bedrooms apartment went for MORONIC money...some people just have no brains..

apartment will be nearly free they will be so cheap in a few years time

This is only the start of it!!

House prices are going to continue plummet for years!

Tigger · 23-09-2011 5:21pm

58 grand home seems like the right direction

http://www.auction.co.uk/irish/LotDetails.asp?A=749&MP=24&ID=749000046&S=L&O=A

11.5 years rent bought this

zom · 23-09-2011 8:42pm

Property prices -50%, rents -30%. It's good to be landlord.
And in current banking climate with all the hassles of getting mortgage seems like there will be more and more tenants...

washman3 · 23-09-2011 9:27pm

Spiritofthekop wrote: »

Nice to see the houses finally dropping in price & people getting realistic...

Houses & Apartments now selling for under 100,000...good to see.

This is only the start of it!!

House prices are going to continue plummet for years

Well said, brave comment. was counting the moments until the first attack on you from the vested interests. Normally you would have been savaged in the first hour. wonder where they've all gone.??
Probably posting on the anti Martin McGinnis thread. He has them scared s..tless as well.

Villa05 · 23-09-2011 10:42pm

zom wrote: »

Property prices -50%, rents -30%. It's good to be landlord.
And in current banking climate with all the hassles of getting mortgage seems like there will be more and more tenants...

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Allsop Auction

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