# Anyone experience negative equity on their house?



## Flippo (27 Jul 2004)

Bought a new house in west Dublin in a new housing estate in Dublin last year. The final house in the estate was sold two months ago. 
The price of the surrounding houses has gone down by €30 grand.  Has this happened to anyone else in Dublin???
Don't know why this has happened...estate is very nice and the neighbours feel very happy with the area also.

I think the houses were overvalued when purchased....I haven;t heard much about this kind of thing happening before.....or are people too afraid of mentioning in case word spreads???


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## Guest (27 Jul 2004)

A few questions...

(1) Is this an investment property or your principal private residence?

(2) Does any transient fluctuation in house prices have any real and immediate impact on you (e.g. if you are staying put for the time being and don't want to or have to liquidate the property then it is arguably irrelevant)?

(3) Are you sure that you mean negative equity? This would normally only happen if prices dropped by c. 8% given that most properties are bought with a maximum of 92% mortgage and require a c. 8% deposit up front which means that the buyer immediately secures 8% equity in the property.

> I think the houses were overvalued when purchased.

Why did you buy then?


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## Tiger (27 Jul 2004)

*Overvalued...So Nothing Unusual Then...?*

-"I think the houses were overvalued when purchased".

Yeah, yours and just about everyone elses' house which has been purchased recently!!!


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## shnaek (27 Jul 2004)

*Re: Overvalued...So Nothing Unusual Then...?*

news.bbc.co.uk/1/hi/busin...570814.stm


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## TetALee (27 Jul 2004)

*We're all doomed*

www.thisislondon.co.uk/ne...758?source
www.findaproperty.com/cgi...oryid=6365
www.findaproperty.com/cgi...oryid=6366
www.thisislondon.co.uk/ne...20Standard
www.telegraph.co.uk/money...xcity.html
www.timesonline.co.uk/art...15,00.html


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## Guest (27 Jul 2004)

What has the price of property in London/UK got to do with the price of property in Ireland? It's a completely different market with different influencing factors (e.g. interest rates, demographics, supply/demand, tax issues etc.).


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## comparison (27 Jul 2004)

*house*

I would argue there is a fair degree of similarity in both markets. Both have seen an explosion in buy to let recently which now is starting to slide. Both have seen rental values drop. Britain have had the start of the upswing in interest rates, I do agree you cannot compare the degree of house building in both countries as we are producing 6 times as many houses per head of population.


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## gimme (28 Jul 2004)

*doomed*

The difference between Ireland the Uk is that Uk can put up interest rates to curbe house prices going too far out of the first time buyers.  Ireland does not have that facility.  Ireland has to wait for CBE to do something about interest rates and they will not take little Ireland into consideratio!!


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## N0elC (28 Jul 2004)

*The original point*

Just to get back to the original posting:



> The price of the surrounding houses has gone down by €30 grand. Has this happened to anyone else in Dublin???



Would this be due to the effect of stamp duty ? It is possible that no stamp duty was payable on the new houses, while second hand houses would be priced down to reflect the effect of this tax. This often happens, and will wash out over a period of a number of years.

Personally, I don't see why we offer such tax adavantages on new builds as opposed to second hand houses. It just creates house price blips, that benefits no-one other than the developer.

As for whether or not it was overvalued at the point of purchase, surely this would have been picked up by the mortgage company's valuer ? Did the purchase price approximate to the valuation ?


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## Joe Sod (31 Jul 2004)

*re UK Market*

It seems many commentators in the UK are saying that property prices there have peaked. The peak they say was brought on by the Bank of England raising interest rates and quashing the excess demand in the market. There are more commentators there now brave enough to predict an actual crash something which they shyed away from doing for the last few years. 

The same is bound to happen here, there is no way that our property market can continue  towards the sky blissfully denying the laws of gravity. When the prices start falling in the UK it will trigger a crisis of confidence in our own property market which may happen even without the ECB raising interest rates that much.

Our property market was on a sustainable path up to around 2001 when the high tech recession happened. Up to this time the property market was dominated by first time buyers and returning immigrants coming to work in Ireland. There was alot of speculation in the market also with people buying to let but they didnt dominate the market. However since 2001 speculation and rising propert prices themselves have been fueling the market. People were putting there money into housing because they had fled from the equity market. Also the government was aiding this process because they wanted to maintain the construction boom in order to keep down unemployment figures. But the construction boom for the last few years was not based on sound fundamentals and demographics but on speculation. The construction boom was actually fueling the construction boom with some of the biggest speculators in the market involved in the construction industry.


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## gimme (31 Jul 2004)

*uk market*

It is widely predicted that the UK Bank will be rising interests rates  again next week!  Also the high cost of fuel will be also adding to the inflation price.  Ireland will suffer the most from this because the majority of properties have heating based on oil.


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## TetALee (31 Jul 2004)

*UK Market*

news.bbc.co.uk/1/hi/business/3936889.stm
business.timesonline.co.u...41,00.html
news.bbc.co.uk/1/hi/business/3933455.stm
www.reuters.co.uk/newsPac...ction=news


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## gimme (31 Jul 2004)

*UK market*

www.thisismoney.com/20040...80571.html


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## Joan (1 Aug 2004)

*housing market*

Prices are overvalued by auctioneers therefore buyers should be very careful now not to pay very much over the odd for property because there is no way that they are going to get it back now.   

I have been monitoring house prices in Ireland and found that after 1 to 2 years when a property has not sold they it is taken down to its proper value and I have seen that to be from 20 - 50k that is a lot of money.  So bear in mind always that property is overvalue by that amount.


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## Marie (1 Aug 2004)

*negative equity?*

I'm not at all convinced that TetALee's illustrations of the UK situation apply to the Irish property market.

The pattern of purchasing here is almost the inverse to what I understand happens in Ireland (Dublin, anyway!) insofar as there is always a sharp fall-off of property sales during the summer months here.  Add the fact we're about to get a 5th interest-rate hike in a year next Thursday...........and finally add that consumer borrowing has gone over the trillion pound mark and you get a small (very small!) pause.  The "negative-equity" crisis here in the early 90's had minimal results on the long-term value of property.  All it meant was that for between 5 and 10 years IF a home-owner whose property was worth a bit less than s(he) originally paid for it sold THEN there would be a net loss of a few thousand.  The solution was to stay put until property prices began to rise again.

I suggest the Irish (or at least, the Dublin!) situation is different to conditions in the UK.  The opening-up of the EU has had more effect in terms of immigration to Ireland with what looks like most settlement in Dublin.  Though there has been a massive house-building programme around Dublin's environs over the past three years this has been very quickly absorbed as it was needed and neither that nor the ubiquitous "second-property-rented-out-by-amateur-landlord" phenomenon appear to have depressed property values.  

As someone who has just (regretfully acknowledging I can't manage to maintene from UK for next 3 years till I retire/return Dublin) sold the family home in Dublin I am aware that in 5 - 10 years time it may have appreciated a great deal in value.  Even if it does not the purchaser wants it as it is a good sound house with a large garden 2 miles from city-centre with good public transport shops etc.  Amenity and preference are not affected by the market and negative equity is a concept which I suspect is being reified and given importance beyond its status.  Enjoy your home!


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## Fr Ted (2 Aug 2004)

*Investors get out of Residential Property & into Commerc*

scotlandonsunday.scotsman...=880012004


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## property (3 Aug 2004)

*joan*

I work with a person who owns a home in London and Edinburgh he was letting out the property in Edinburgh but it has been empty for the last six months because he could not get tenants for it.  It is now costing him money and wants to get rid of it.   He is fortunate because he does not have a mortgage if he had then he would be in real trouble.  That is how the buy to let market is going.


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## Tom (3 Aug 2004)

*Irish market*

I'm a little confused. Are we now discussing the English, Irish, or Scottish property markets ? All are very distinct and different.


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## Red (3 Aug 2004)

*Irish market*

Tom, I agree. The topic should stay focused on the Irish market.  
Rgds
RED


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## Flippo (4 Aug 2004)

*Re*

Thanks everyone for the responses.......I don't think stamp duty would have an effect of over 30 grand reduction in the house price given that to by the same house for the original price (i.e. €260,000) second hand, the stamp duty would cost circa €8000 more....thus not nearly as much as the €30,000 difference.


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## gmme (5 Aug 2004)

*re*

Tom it is amazing how the UK property market is linked to Ireland when it is on the way up.  However when the UK market is falling then it has got nothing to do with the Irish Property market at all???


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## Marie (5 Aug 2004)

*perspectives on property market*

I agree with Gmme on the subjectivity of many of the exchanges here.  The initial poster was worried that her/his home purchased last year might be worth 30K less now and raised the subject of "negative equity".  As an emigrant Dubliner living UK with firsthand knowledge of both the Dublin and UK property-markets (owning property in both!) I offered my mite.  Other posters offered links to information on "negative equity"; then someone quibbles that we "should" be talking about - specifically - the IRISH property market!  

This "small island mentality" has increased to an alarming degree recently and frequently surfaces on AAM.  As an anthropologist I can speculate that it's a cultural defence against accellerated change, a little earplug against the Celtic Tiger's roar.  However I don't think it is constructive or an aid to people informing themselves of the realities of the contemporary world or contemporary financial developments.  There are new and powerful forces in operation today, including the multinationals; the globalising ethos has swept away many more locally-based structures.  Irish demographics and governmental policy, taxes, employment patterns etc. whilst important, operate in a broader context.  The experience and perspective of the Irish abroad might be of constructive use to those who remain "on the island" in averting expensive misdirection.

"Negative equity" and house repossessions are painfully similar whether they occur in Tinaheely or Timbucktoo.


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## Diddums (5 Aug 2004)

*Think Global, act local baby*

Would this explain why the property market in Limerick boomed in the late 80s and collapsed in the early 90s at the same time that the London market did ?

I think the correlation between the Irish markets and other ones is very weak. If you have any evidence to the contrary, please bring it to the table. Otherwise, you're just talking rubbish Marie.


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## Marie (7 Aug 2004)

*Clarification*

There might be a difference Diddums (ahem!) between articulating an informed opinion and pointing to a piece of investigative journalism.  If you read my two posts on this thread you will see that nowhere do I indicate I am claiming or quoting authority.  In fact, I don't know if the original poster paid 30K over the odds for a house, if s(he) is now in negative equity, if the Irish housing market is about to crash, if the Irish housing market is connected to anything else in the universe.......or not!

However not knowing (hence being in the same position as every other lay observer) does not make an attempt to join in discussion which might clarify or move towards some greater knowledge is not, therefore "rubbish" and I do not accept your pejorative dismissal (which incidentally adds nothing to the discussion and veers on "flaming").

Bye bye Diddums!  ;rupert


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## TetALee (8 Aug 2004)

*Personal Bankruptcies at 40 Year High in UK*

I wonder what effect this may have on the UK housing market?

news.bbc.co.uk/1/hi/business/3542288.stm


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## Mick1166 (27 Feb 2008)

Flippo said:


> Bought a new house in west Dublin in a new housing estate in Dublin last year. The final house in the estate was sold two months ago.
> The price of the surrounding houses has gone down by €30 grand.  Has this happened to anyone else in Dublin???
> Don't know why this has happened...estate is very nice and the neighbors feel very happy with the area also.
> 
> I think the houses were overvalued when purchased....I haven;t heard much about this kind of thing happening before.....or are people too afraid of mentioning in case word spreads???



Hi,
I bought my house on Sept 07 in West Dublin for 785K and today I checked myhome.ie website and found that the price for the remaining houses like mine dropped 60 K. Did not think the house was overprice otherwise I had not bought it.
I am quite happy living here but I am really upset with the whole situation, Is there a way to claim this money back from the builder? In these cases, should the individuals with negative equity get a tax relief? Not to forget that the Revenue gets money in a transaction with a positive equity.

Any good idea would be highly appreciated.

Mick


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## paddi22 (27 Feb 2008)

when the house was bought the buyer made an informed choice to purchase at that price. i don't see why revenue or the tax payer should bail them out becuase they feel they have lost money. Its not practical, what if someone was to buy a house cheap and 'under priced', should they have to pay extra to revenue when the value goes up then?

No-one forces anyone to buy a house, if purchasers choose to pay inflated prices it's their own fault, harsh at it is.


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## Costigan (27 Feb 2008)

I'm presuming from that purchase price that you were using equity you accrued from rising prices on another house to help finance the new one.  You wouldn't have paid any tax on that gain if it was a PPR.


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## demoivre (27 Feb 2008)

Hi Mick - in Sep 07 I bought shares on the ISE - today they are worth 60k less than I paid for them  - didn't think the shares were overpriced when I bought them otherwise I wouldn't have bought in to them. I am quite happy with the companies I bought in to but I am really upset with the whole situation, Is there a way to claim this money back from the ISE? Should I get tax relief because I'm down on paper? Not to forget that the Revenue got stamp duty from me when I bought.
Any good idea would be highly appreciated.


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## Miles (27 Feb 2008)

demoivre said:


> Hi Mick - in Sep 07 I bought shares on the ISE - today they are worth 60k less than I paid for them  - didn't think the shares were overpriced when I bought them otherwise I wouldn't have bought in to them. I am quite happy with the companies I bought in to but I am really upset with the whole situation, Is there a way to claim this money back from the ISE? Should I get tax relief because I'm down on paper? Not to forget that the Revenue got stamp duty from me when I bought.
> Any good idea would be highly appreciated.



Sarcasm is the lowest form of wit.


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## truthseeker (27 Feb 2008)

Miles said:


> Sarcasm is the lowest form of wit.


if the house had gone up in value would you be looking to offer the builder the extra money or contacting the revenue to tell them youd like to pay more tax?


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## MrMan (27 Feb 2008)

> Prices are overvalued by auctioneers therefore buyers should be very careful now not to pay very much over the odd for property because there is no way that they are going to get it back now.



Two things, firstly as many people point out a property is worth what it sells for, and if anything auctioneers have been blasted in the past for putting too low a value in order to drive up interest, now your saying its the polar opposite. Secondly how can anyone say there is no way your going to get it back now, that just makes no sense. Markets go up and down, just cause its going down doesnt mean that the reverse wont happen.



> I have been monitoring house prices in Ireland and found that after 1 to 2 years when a property has not sold they it is taken down to its proper value and I have seen that to be from 20 - 50k that is a lot of money. So bear in mind always that property is overvalue by that amount.


After 1 or 2 years its time for a property to reduce value, but do you really think that this is the case with the majority of houses on the market. If that were the case there would be many of us out of work. Property can be over or under valued by any amount ther is no definitive answer on this subject.


With regards to Mick's post I'm presuming that he is pulling our legs. You are right?


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## bacchus (27 Feb 2008)

MrMan said:


> With regards to Mick's post I'm presuming that he is pulling our legs.



I guess Mick is taking the Mickey


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