# Is now a good time to sell?



## ainec (19 Aug 2004)

Not sure if this is the right place for this post but......

I bought an apartment in Dublin City Centre in Jan 02 for 76k. It has recently been valued at 230k by one agent & 240k by another. 

I am living & paying the mortgage on my own & am getting to the point where I would like some flatmates again! So I considering selling up, investing the profit (which is not inconsiderable) and getting back on the ladder again in another 2/3 years.

What I am wondering is, will there be any stamp duty implications & is it a good time to sell - am I mad???


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## Guest (19 Aug 2004)

> What I am wondering is, will there be any stamp duty implications & is it a good time to sell - am I mad??

No stamp duty (clawback) or CGT implications if you sell your PPR and decide to rent. Whether or not it's a good idea or this is a good time to do so is difficult to say and largely dependent on you own personal circumstances and needs. This topic might be of interest:



What Brendan says in this topic about whether or not owning a house is advisable might also be of interest.



If you crave flatmates why not take one or more in under the rent a room scheme and collect up to €7,620 p.a. rental income tax free (and with no SD or CGT implications) while retaining ownership of a valuable asset in your PPR?


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## techman29 (19 Aug 2004)

Just wondering ainec, how did you manage to get an apt. for 76k in 2002?

I would have thought that the average price at that time was far higher than that.

Just curious, what area of Dublin is it?


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## Spacer (19 Aug 2004)

*..*

Don't forget the stamp duty you'll have to pay when you buy your next property.  

If you thought it was bad on 76K, calculate the liability on the price of what you would be likely to buy in a couple of years time.


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## ainec (20 Aug 2004)

*Replies*

Thanks for replies folks.

Renting a room out is not an option as it's a 1-bed.

Purchase price was 176, not 76 (apols) but there was no stamp duty as ftb & under the threshold.


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## Cathy (20 Aug 2004)

*UK House Prices Going Down*

This is what's happening to UK house prices,

www.ntlworld.com/partners...454446.php

I wonder if we're far behind?


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## Cathy (20 Aug 2004)

*UK House Prices Going Down*

and,

www.thisislondon.co.uk/ne...20Standard


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## MAC (20 Aug 2004)

*Apartments in Dubln*

For what it's worth I believe that prices of apartments in Dublin will drop significantly over the next 12-18 months. The amount of supply coming on stream is ridiculous and there are no investors out there. 

Rents have dropped, the buy to let lads are getting caught short having assumed it was easy money. In particular the apartmentswhich are not central in Dublin will suffer.

MAC


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## Bubble (20 Aug 2004)

*Construction Website*

I'd agree, I've heard a few say the same.  They're even talking about falling prices on the UK Construction Industry website.

It's not like developers & builders to talk about falling prices!

[broken link removed]


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## MAC (20 Aug 2004)

*Apartments..........*

Interesting link Bubble,

I think that apartments are more at risk than houses although there will be a knock on effect. Invariably people will be buying an apartment as a 1st step on the ladder but most move on to the house scenario at the family formation stage so I think in Dublin (and by this I mean within say 5 miles of city centre) houses will remain pretty insulated but the volume of apartments coming in stream does not augur well ie. more supply than demand leading to falling rents --- but to let landlords who borrowed 100% jumping ship (even at a loss) and overall drop in prices for apartments.

I actually do know someone trying to sell an apt. at present - no joy! Ouch!

MAC


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## Guest (20 Aug 2004)

*Apartments in Dubln*

>  For what it's worth I believe that prices of apartments in Dublin will drop significantly over the next 12-18 months.

> I think that apartments are more at risk than houses although there will be a knock on effect.

No offence MAC but these are simply opinions based on some vague generalisations. Ultimately nobody can predict the future. In relation to the original question "is now a good time to sell" this should be less an issue of market timing and more an issue of whether or not the property holder needs to liquidate the asset to use the cash or else to invest somewhere else where s/he anticipates getting a better return. All this guff about what might happen in so many months, years, decades irrelevant and futile. Timing the markets is a mug's game. Buy when you need to. Sell when you need to.


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## cerberus (20 Aug 2004)

*investors don't do that*

A lot of the "real" property investors have cashed in.
Its like the shares investor, its the amateurs and small investors that get caught when the bubble bursts, the serious ones have left or hedged their bets.
If prices fall back 10% thats €30-40k at minimum loss (it takes a bit of saving to actually save that out of your net salary.

I'm not saying it will happen but ther is always that chance.

0]


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## Guest (20 Aug 2004)

*investors don't do that*

> Its like the shares investor, its the amateurs and small investors that get caught when the bubble bursts, the serious ones have left or hedged their bets.

Serious investors can no more accurately predict the future than small ones. One person's bubble bursting is another person's downward fluctuation on the way to higher longer term gains.


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## cerberus (20 Aug 2004)

*look at the cycles - boom & bust*

Everything moves in cycles - 
the mutual funds in the US now have 40% in cash viz 5% in 2000.
the retail investor sat and watched his shares fall (some to 0 like baltimore) or to 1/20 of original value. the serious investor would have been out at 15% taking his loss and buying back in near the bottom.
How many big investors were caught in Eircom?

My point is, the serious investor moves at different time in the cycle than the amateur who are usuallt caught.

Most values return to the mean.


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## Paul (20 Aug 2004)

*look at the cycles - boom & bust*

-"Serious investors can no more accurately predict the future than small ones."-

But that's why stockmarket "professionals" are paid such large salaries, they're expected to make expert predictions based upon their experiences of the past - amongst other things.

If small investors are just as accurate at predicting future market variations then it would be a good idea for stockbroker companies to employ amateur investors at 1/10th the salary.


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## Guest (20 Aug 2004)

*look at the cycles - boom & bust*

> But that's why stockmarket "professionals" are paid such large salaries, they're expected to make expert predictions based upon their experiences of the past - amongst other things.

Doesn't matter - they can't predict the future regardless of whatever analysis of fundamentals or past performance that they do. Actuarial analysis of the relative risks of one investment over another is a different matter though.

> If small investors are just as accurate at predicting future market variations then it would be a good idea for stockbroker companies to employ amateur investors at 1/10th the salary.

Or child labour

www.arachnoid.com/stocks/index.html


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## Paul (20 Aug 2004)

*look at the cycles - boom & bust*

Interesting one-off experiment.

Though if this were conducted several times I wonder what the outcome would be?

If professional stockbrokers are no better at selecting stocks than 5 year old children, then why pay the huge salaries and bonuses?

The investment banks should be cutting costs and hiring staff on minimum wage.


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## cerberus (21 Aug 2004)

*interest rates*

4% by end of year will sort this argument out.
keep you cash dry, there will be bargains to be had


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## JackSpratt (21 Aug 2004)

*Euro Zone interest rates on way up, says BoI economist*

[broken link removed]


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## gimme (21 Aug 2004)

*auctioneer speak*

Why do auctioneers advertise property as if it is food.  One add I have seen which says the price is 'mouth watering and sandwich between' .  Houses is not food and should not be described as if you are eating it!

I expect it will not be any advantage for auctioneer to advertise a house as have Oil centeral heating anymore because of the huge high price of oil, unfortunately most of homes in Ireland heating with Oil this will put a big strain on homeowers with bills as will as the predicted interest rates going up shortly in the Euro Zone.


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## MAC (21 Aug 2004)

*Timing the market*

Unregistered User - no offence taken.

I agree with a lot of what you have to say eg. Timing the markets is a mug's game. And I agree that no one can predict the future, well at least with a high degree of uncertainty.

However a few salient points:
- I did indicate that a friend has an apartment (good central location) on the market for a while with zero interest
- I am just closing on an investment property which I am selling. I spoke to 3 agents in relation to it's disposal about three months ago - everyone of them told me there was NO INVESTORS buying. This location is perfect for investors.
- Interest rates are heading north probably 5% by end of 2005
- Half decent locations cost 30-40 times earnings for investment purposes
- Supply for apartments is huge and loads more coming on stream
- Salaries over the last 2-3 years (in the real world, not the world of benchmarking) have risen at a fraction of property prices in Ireland

Based on the above I still think we are looking at a fall in apartment prices... and I think Dan McLoughlin was pretty in line with this recently.

MAC


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## cerberus (21 Aug 2004)

*i agree with mac*

mac
Are you exiting the scene completely or only in aparts?
0]


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## MAC (22 Aug 2004)

*Exiting the scene?*

Hi Cerebus,

No not completely, but I recall back in 2000 (Nasdaq etc.) that not taking something off the table can be a costly mistake. After a good run since the mid nineties I think it would be irresponsible not to hedge at this stage given the points I made above.

MAC


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## cerberus (22 Aug 2004)

*nasdaq*

As someone caught up in the telecom bubble, I totally agree.
hedge and diversify
and take something off the table
0]


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## gammage (22 Aug 2004)

*uk*

news.bbc.co.uk/1/hi/uk/3587588.stm


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## tyoung (22 Aug 2004)

*only an fool or an academic...*

This is in reply to Mr Blank's position.
With respect, your argument is EHM run wild. EHM(efficient market hypothesis) was originally proposed by a pair of academics based on the observation that US fund managers were unable to to beat the US stockmarket. Leaving aside the fact that since fund managers dominate the market we would expect the average manger to have average returns, a couple of other observations.
 The Irish property market(even the apartment market) is not the US stockmarket. There are FTB, trader uppers, seasoned investors etc with sound reasons to buy. On the other hand there are speculators  and others stretching themselves to get on "the property ladder".. The market is simply not efficient or comparable to the US stockmarket.
 Secondly the whole point of EHM is reversion to the mean. After a period of outperformance a fund manager tended to underperform until his overall performance fell back towards the average. Well the Irish property market has had a spectacular unparalleled outperformance in the last 7 to 8 years. Time for a little reversion to the mean?
 So prices are high on the basis of  income multiple or renal yield, Interest rates are at record lows and likely to rise and supply is coming on at a record pace...
  The future is unknowable but this may be return free risk.


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## Guest (22 Aug 2004)

*only an fool or an academic...*

My allusion to the EMH was in the context of the points raised about stockmarket "experts". Nowhere did I say that the Irish property market was governed by the EMH though. I stand over my point that the right time to sell is when you need the cash - or you decide that there is a better investment opportunity out there to switch to. We probably agree on more than we disagree to be honest.


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## KP (23 Aug 2004)

*"if you want to belong, own; if you want to live, rent&*

observer.guardian.co.uk/c...60,00.html


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## KP (23 Aug 2004)

*House Prices Going Down Again in UK*

www.sky.com/skynews/artic...86,00.html


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## gommage (24 Aug 2004)

*House prices*

House Prices Down Again
House prices have fallen for the second month running as the market continues to feel the effects of rising interest rates, latest figures show. Monthly growth has been steadily falling since reaching a peak of 0.9 per cent in February.Property Web site Hometrack says prices in England and Wales dipped by 0.1 per cent during the month to August 18.It is the second month in a row they have fallen by 0.1 per cent, and monthly growth has been steadily falling since reaching a peak of 0.9 per cent in February this year.The group said that during August the number of people looking to buy a new home also fell by four per cent, wiping out the excess demand there had been in the market.At the same time the level of the asking price sellers achieved fell for the fourth month in a row to 94.9 per cent, the lowest since September last year.Across the country 26 counties saw price falls during the month, while prices stood still in 21 and rose in just 10.The largest price falls were seen in Surrey, north and east London, East Sussex and Berkshire, where prices dipped by 0.4 per cent.The highest increase in the cost of property was seen in North Yorkshire, where prices rose by just 0.2 per cent.John Wriglesworth, Hometrack's housing economist, said: "Recent interest rate rises continue to take their toll on the housing market this month as house prices take another tumble."House prices are now very near their peak in terms of affordability and the recent housing boom now appears to be well and truly over."We do not, however, expect any housing market crash. Providing bank base rates remain below five per cent, present house price levels can be supported.''


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## Guest (24 Aug 2004)

Still don't see what relevance all these UK reports have to the Irish property market - which, in actual fact, is not  a very fragmented market and perhaps not really assessable as a single one anyway...


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## MAC (24 Aug 2004)

*Actually lads - it's probably too late at this stage!*

www.unison.ie/irish_indep.../11317.pdf


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## D (24 Aug 2004)

*Actually lads - it's probably too late at this stage!*

MAC,

You seem like a pretty clued in and realistic investor and based on this I would like to get your thoughts on something.

I bought a house in Dublin 7 (Cabra) 8 months ago for 240 and put another 20k into totally refurbishing it. My plan is to let it out for 2-3 years and then all going well move in myself.

However, recent reports have me wondering about the market and I'm not sure if I would be better off selling now, holding the capital for a few years and then buying again at the right time. What do you think about the market in this area going forward?


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## MAC (24 Aug 2004)

*Cabra....*

Hi D,

I don't pretent to be able to predict the future but I do have an opinion. I know the area reasonably well as I am originally from Phibsboro.

Cabra is very central and this has been a big attraction for the yuppies (probably like yourself  who have been buying in the area in recent years. I think it will continue to improve from the reputation it had years ago.

The most exposed area I would see going ahead is with apartments. Look around your area (the development at Reilly's Bridge for 6 THOUSAND UNITS, the Premier Dairies site, The old Finglas Road - apartments everywhere!). Yesterday I was in Smithfield on business and couldn't believe the number of apartments that are being built there.

So to summarise you have a house (which is good) in a location which is on the up and if you can afford to hang onto it I think you will have rental demand and any downside on the capital value should be minimal.

Have a stiff drink!
MAC


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## Guest (24 Aug 2004)

> I bought a house in Dublin 7 (Cabra) 8 months ago for 240 and put another 20k into totally refurbishing it. My plan is to let it out for 2-3 years and then all going well move in myself. However, recent reports have me wondering about the market and I'm not sure if I would be better off selling now, holding the capital for a few years and then buying again at the right time. What do you think about the market in this area going forward?

Seems to me that anybody who may be starting to panic after 8 months in the property investment game may not have done their homework properly in the first place in order to assess the viability of their investment, how various events might impact it and how long one planned to stick with it all going to plan (within certain parameters). If it's any consolation I'm sure you're not alone.


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## D (24 Aug 2004)

*Comment*

I have lived in the area all my life so I know it pretty well and the reasons MAC listed are the same ones I used when I bought it.

However, Its hard to find a unbaised commentator on this subject and that is why I put the question to MAC. I believe in seeking advice from genuine and experienced people at all times and not just when things go wrong.

So MAC, thanks for your comment.


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## MAC (24 Aug 2004)

*............*

No problem D, best of luck with it..... and stay away from all those apartments!  

MAC


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## ARDDARD (26 Aug 2004)

*Right Time To Buy/Sell???*

I bought a 3 bed investment house recently in Galway City in a very good location and have taken a longterm view on the property.
As everyone is aware rents have dropped but I have noticed an  influx of 'NEW' Europeans from the accession countries into the rental market looking for work in this country. The economic indicators for full time employment are on the up so that will be good for the rental market!!.
Panic to sell now will only benefit the ones who are prepared to 'bottom fish'.
People who are worried about interest rate increases can protect themselves by fixing for 1 to 2 years to ride out the storm.


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## TirOileain (27 Aug 2004)

*Re: Right Time To Buy/Sell???*



> People who are worried about interest rate increases can protect themselves by fixing for 1 to 2 years to ride out the storm.



I don't think that's really much of a protection. A "storm" could happen anytime and it's not much good fixing for 1 year and then to be hit with interest rises after that. I would expect a longer fixed term of 5-10 would be proper protection?


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## Guest (27 Aug 2004)

*Re: Right Time To Buy/Sell???*

> People who are worried about interest rate increases can protect themselves by fixing for 1 to 2 years to ride out the storm

You may be protecting yourself against fluctuating repayments in this way but you will most likely not protect yourself from higher costs - i.e. you will generally pay a premium over prevailing variable/tracker rates if you fix, particularly over the medium/long term. Fix if you can't afford fluctuating repayments. Don't fix in an attempt to time the markets and save money (on interest charges). Don't forget that fixing also reduces flexibility (e.g. hefty penalties normally apply if you want to accelerate the repayments or redeem the mortgage early such as when you decided to liquidate an investment property).


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