Current public sentiment towards the housing market?

[Bedsit]

Agents on edge over waning interest in buying homes

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1674662&issue_id=14536

"[FONT=Verdana, Arial]ESTATE agents are waiting nervously to see if buyer interest is still on the wane, as the autumn season takes off in the coming fortnight.[/FONT]

[FONT=Verdana, Arial]Some property agents say inquiries and the numbers of people registering for new developments have increased 25pc on last year. However, others say the market is "not as strong as last year" due to the recent hikes in interest rates."[/FONT]

 

[delboy159]

Just to drag this thread back towards public sentiment and not whats happening 18,000 miles away or value divided by rent etc.....

I have knowledge of a local development (commuter belt county) as a cousin of mine was involved from day one with planning etc. When they originally started moving on this small development around April I was told the prices they intended pitching the houses at. There were one or two delays and prices will release on Friday - at 23% above what they were thinking in April/May.... The original prices were high, but manageable, these new prices are as expensive as I've ever seen in the area - by far.... Way above what people expected....

If the houses sell in the coming weeks (which I will report back on) then public sentiment is without a doubt bullish..... If they drop by 10/15% then things are stabilising - but still strong and if a few houses end up going for 25% less than the asking (which is still around their intended asking 4/5 months ago) then the market is moving bearish.....

Would people agree that this is a good test of the water in the coming days and weeks?

 

[Calina]

Cash flow would not be effected as rent=mortgage

Currently in my area, mortgage = approx 1.5 rent. So the maths would be different for a lot of people. To make the rent = the mortgage I need a capital injection of oh 100K.

 

[macbri]

Interesting article from the examiner especially with so much housing stock still to come on the market.

I was looking at some recent statistics on demographics of recent ftbs in Ireland.I was amazed at the high percentage of people less than 25 who make up this figure(from memory 15%)

Again this must be unique in Europe

 

[macbri]

I'm talking about sydney rents not Irish(I'm based in sydney)

 

[macbri]

II think its' useful to show whats' happening in sydney market as it bears similiar demographics,population to Ireland.

Suppose point I'm trying to illustrate that rents will eventually equate to house prices.In Irelands' case due to stock overhang,house prices will decrease rapidly and more severly than Sydney.

 

[Calina]

Why do you believe that rents will go up? Do you not think that with 100k units coming on stream next year that this will only add to the existing overhang in the market?

See, the problem I have with this is that I am not convinced that rentals will escape totally unscathed.

If you have a lot of people trying to sell investment property - which is one of the expected drivers of increased sales supply - the only way that will avoid having an immediate impact on rental supply is for all those investments-for-sale to be unoccupied. Sure there is anecdotal evidence that a lot of them are unoccupied. But not all of them. As a lot of landlords are in the game for capital appreciation, they are likely to want to sell before they think the market crashes, and a sale is one of the exceptions to Part VI tenancies. Certainly they need to give notice but my experience in landlords selling houses that I have been renting is that it rarely plays out nice and sweetly.

So if there is a rush of investment properties to sale, I strongly suspect that there will be a tightening of rental supply as well. As in, as sales supply increases, rents will rise. However - if those houses are not selling for any price because the supply of buyers has sort of dried up, I think that rents will level out as supply comes back on track and investor-owners, unable to sell, need to stem their losses on an going basis. They will rent out then.

In short, I think upheaval in the property sales side of things will bring upheaval - temporarily - in the rental market also.

 

[whathome]

Interesting finfacts article on the Central Bankers meeting in Wyoming.
It looks like ECB rates could go directly to 4% rather than 3.5%.

http://www.finfacts.com/irelandbusinessnews/publish/article_10006997.shtml

"Last week, Danish bank Danske, in a report said that the ECB may be persuaded by inflationary pressures to take its policy rate directly to 4% - not 3.5% as Danske currently expects"

The article also mentions the Sydney property crash and falling asking prices in the UK.

 

[room305]

So if there is a rush of investment properties to sale, I strongly suspect that there will be a tightening of rental supply as well. As in, as sales supply increases, rents will rise. However - if those houses are not selling for any price because the supply of buyers has sort of dried up, I think that rents will level out as supply comes back on track and investor-owners, unable to sell, need to stem their losses on an going basis. They will rent out then.

In short, I think upheaval in the property sales side of things will bring upheaval - temporarily - in the rental market also.

This could easily happen alright. Landlords toss their tenants out so they can offload their property. However, once they find themselves unable to sell they will be (as you mentioned) looking to get their tenants back to help reduce their monthly losses ...

Just how much of a rental discount do you think you could command in this scenario

 

[nacho_libre]

Would people agree that this is a good test of the water in the coming days and weeks?

I would certainly agree that this could be an indicator of how public sentiment is
at the moment. I'd be very interested to hear how the properties are selling.

It is definitely more relevant to us than whats happening in Oz.

 

[Raskolnikov]

"Another rule of thumb is that a fair house price is 125 times the monthly rent. If a house rents for $2000 per month, then a fair price is $250,000."

Historically, that was true. However, as long people treat houses in a speculatory manner, that figure will remain redundant. Even if there was a crash, there will always be those who will treat housing as a commodity to be bought and sold, so I don't see that figure becoming relevent in the short/mid-term.

 

[Calina]

This could easily happen alright. Landlords toss their tenants out so they can offload their property. However, once they find themselves unable to sell they will be (as you mentioned) looking to get their tenants back to help reduce their monthly losses ...

Just how much of a rental discount do you think you could command in this scenario

Depends. Realistically, if supply then outstrips current supply I'd expect at least 10% of my current rate across the board. Depending on how localised excess supply is, rentals in some places (eg Lucan, parts of Swords, parts of Sandyford - all places with lots of new supply) may take a bigger hit.

 

[StoppedClock]

Historically, that was true. However, as long people treat houses in a speculatory manner, that figure will remain redundant. Even if there was a crash, there will always be those who will treat housing as a commodity to be bought and sold, so I don't see that figure becoming relevent in the short/mid-term.

Disagree that it is irrelevant. Assuming that we accept that a fair house price is 125 times the monthly rent then we can work out the fair price and know if we are getting good or bad value. Very relevant in any purchase IMO.

 

[liteweight]

Depends. Realistically, if supply then outstrips current supply I'd expect at least 10% of my current rate across the board. Depending on how localised excess supply is, rentals in some places (eg Lucan, parts of Swords, parts of Sandymount - all places with lots of new supply) may take a bigger hit.

Parts of Sandymount?? Definitely not. A builder kept one apartment block in Sandymount for rental. He could have sold them 10 times over but did not want to and never intended to. Any other builds in Sandymount are tiny (no more space) and enquiries are starting to be made as soon as hoarding went up! I know this because if I could get one, I'd buy it!

 

[miju]

does anyone here think that the indo article today which is here looks remarkably like an advertorial ???

i've refrained from doing so until now but i'm gonna make a call on level of price drop of 33% off the average price of a €400k house , this equates to a €140k drop in price which i believe is very plausible and bring us somewhere to 2001 levels.

my reasoning / sentiment behind this is as follows:

i'm on average wage and a mortgage of €800 from discussion with others they'd would be affordable and not over stretch to any major extent.

the historial average length of a mortgage is 25 years so €800pm by 25yrs = €260,000

obviously interest would have to be factored into mortgage but you get my point. i know it seems like back of beermat calculations above (and it is to an extent but it's a figure i've arrived at from talking to about 20 people over the last while and what they feel would be a bearable mortgage without killing themselves financially)

so this isn't a strong analysis of a drop with data it's more a sentiment driven calculation which is after all the topic at hand here

 

[Bedsit]

Conspiracy Theory?

A number of friends of mine bought houses in commuter land a few years ago for about 190K. These are worth today in the region of 300K. They have now decided to move closer to Dublin and have bought second houses (also in the region of 300K). The bank advised them against selling their existing property and was willing to lend them the extra cash to purchase the new house. The reasoning of the bank manager was that the rental income from the first house would cover the first mortgage. So they now have in effect a combined mortgage of more than 400K (a figure that they would not have qualified for in the first instance).

In the case of a slowdown or crash they may find themselves in a situation where they cannot rent their first property and have to service a mortgage of 400K. In the worst case scenario prices may drop by around 50%, and they may be forced to sell their first property by the bank for about 150K. They would live in their new house (everyone needs a place to live) while still servicing a mortgage of 250K.

From the banks point of view would this be a win win situation as they would not incur any loss in the above scenario? Also how many of these types of people are there out there at the present time?

 

[SHARP]

Conspiracy Theory?

A number of friends of mine bought houses in commuter land a few years ago for about 190K. These are worth today in the region of 300K. They have now decided to move closer to Dublin and have bought second houses (also in the region of 300K). The bank advised them against selling their existing property and was willing to lend them the extra cash to purchase the new house. The reasoning of the bank manager was that the rental income from the first house would cover the first mortgage. So they now have in effect a combined mortgage of more than 400K (a figure that they would not have qualified for in the first instance).

In the case of a slowdown or crash they may find themselves in a situation where they cannot rent their first property and have to service a mortgage of 400K. In the worst case scenario prices may drop by around 50%, and they may be forced to sell their first property by the bank for about 150K. They would live in their new house (everyone needs a place to live) while still servicing a mortgage of 250K.

From the banks point of view would this be a win win situation as they would not incur any loss in the above scenario? Also how many of these types of people are there out there at the present time?

If there is a crash, then it won't just affect the ability to rent a property..........what if they can't actually sell the house.......at all - then what?

 

[StoppedClock]

does anyone here think that the indo article today which is here looks remarkably like an advertorial ???

AFAIK the Irish Mortgage Corporation (IMC) is owned by Hooke and McDonald so not surprising that Geoff and Frank would be talking the market up.

 

[Calina]

Parts of Sandymount?? Definitely not. A builder kept one apartment block in Sandymount for rental. He could have sold them 10 times over but did not want to and never intended to. Any other builds in Sandymount are tiny (no more space) and enquiries are starting to be made as soon as hoarding went up! I know this because if I could get one, I'd buy it!

I was talking about Sandyford. I'll go and edit above. Apologies. But I do want to clarify that I'm talking about rental supply in this case, not sales supply.

 

[Calina]

A number of friends of mine bought houses in commuter land a few years ago for about 190K. These are worth today in the region of 300K. They have now decided to move closer to Dublin and have bought second houses (also in the region of 300K). The bank advised them against selling their existing property and was willing to lend them the extra cash to purchase the new house. The reasoning of the bank manager was that the rental income from the first house would cover the first mortgage.

Banks do not have anyone's interest but their own at heart. One of the big contributing factors to a fall in supply of starter homes has been a failure to sell on. If banks have likewise been advising people to keep their starter homes in addition to providing ever insane loan amounts, then they really should be taken out and very heavily punished - hit them in the profits if necessary - for contributing to a major economic issue for the country as a whole.

/end moral judgement.