It always amazes me when people mistake 200k of equity locked up in bricks & mortar, with 200k in the bank.
or that they don't equate equity release with debt.
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or that they don't equate equity release with debt.
liteweight
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It always amazes me when people mistake 200k of equity locked up in bricks & mortar, with 200k in the bank.
I don't think Phoenix mentioned equity.
Many people have made money in the last 6 years by buying low and selling high. CelloPoint
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I accept your point about those 'saps' who held off in the hope of a market correction - this though is the dogma of the bulls, which I don't believe applies in 2006. I think we both agree that to buy in 2006 would be financial masochism? In my opinion, Irish property is 'worth' 2002 prices.
*Warning: rant mode*
Definition of a sap: a gullible fool. Or, one who thinks the estate agent is your best mate, spends his saturday afternoon shopping in the latest shopping centre, bought a flat in 2006 in Rathoath for 400k on a 100% mortgage + help from the parents, thinks having a large Hollywood dvd collection is representative of his cultural sophistication, still plays computer games, reads GQ magazine, spends E50 getting his haircut but has to pay for it by credit card, lives for the weekend, to be seen drinking Hum-Dinger with fellow generics in 'the Odeon' on a Saturday night but can't afford a taxi home. Still asks parents for money, has a large personal loan which he uses to pay the ESB, gym membership, management company, broadband, foreign holidays. Will be bankrupt by the time he's 30, but sure he had a ball (at least he thought he was having a ball - he was unable to think outside the herd, but hey - what he never knew won't hurt him). The Irish identity crisis is very sad. I know lots of people like the above.
I don't think Phoenix mentioned equity.
If you are referring to people "cashing out" - I really think that number is low. I only know of one person who has truly cashed out and banked the proceeds. Everyone else I know of has merely 'transferred' the equity to different bricks and mortar.
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I know at least 4 or 5 who cashed out! Of those who put money back into bricks and mortar, their mortgage on a PPR is now much lower!!
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bren2002
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Do you really think that prices could drop that much? I was thinking more 25%, but 2002 levels would destroy the economy.
CelloPoint
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Yes. And I'm very pessimistic about the future of the Irish economy.
Why?
I'd imagine any answer would explain exactly why prices WILL fall to those levels.
I don't see how prices falling back to 2002 levels could destroy the economy.
CelloPoint
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This is a point. I'm involved with many start-up companies here in Ireland and I know the cost of commercial office space/workshop space is prohibitively expensive. I even know of one small 2 person company that has moved to Poland where they can rent a building, employ 2 more (english speaking) electronic engineers for the price of one Irish one and have an office secretary/administrator/translator. Plus, their personal expenses are far lower in Poland for the same work they'd be doing in Dublin anyway.
A correction would definitely help Irish businesses remain competitive.
The US economy is about to enter a recession, Oil prices, the twin deficits, a weak dollar, stagnant incomes growth, inflation, an inverted yield curve and a bursting housing bubble are happening now. Ireland will suffer badly when the US succumbs I'm afraid.
It depends who their market is. If they sell luxaries to the highly indebted then their sales might dry up if all of this equity money dissappears. ie fitting 42 plaza TVs in Ballyknacker.
If however you only sell to overseas then the cheaper wages and rentals could benefit you.
CelloPoint
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If you are an export-orientated, global business (the kind of businesses that the IDA and Enterprise Ireland are trying to promote), then your costs are almost certainly lower abroad.
I went sale agreed on a property a couple of weeks ago but all this talk about prices falling are making me think twice about it.Its hard to know whether to stick with it or stay renting for a few more months to see how things pan out.
It could easily be 2-3 years before things really go to the crapper
It could easily be 2-3 years before things really go to the crapper
CelloPoint
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What is your reasoning behind the 2-3 year time-frame?
Savvy you have to draw your own conclusions from the available evidence and reach an 'informed' decision.
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phoenix_n
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Best to give as much details on your purchase and then we can give you an informed opinion. For example if i had a house in Salthill i would ride out any storm because in the long run its still a good bet.
I cashed in.
(but nearly jumped in again this year)I'm looking at buying in a midlands town,3/4 bed +needs a bit of modernising, cost is less than 250.
Appears to be a quiet mature area(my words not the EA).
I suppose, its the mortgage that is scaring me, it will be almost double my rent, but then again my rent is very low, 600/month for a 3 bed detached house.
I agree with you on Salthill but the prices are savage there. I lived in Glenard Cresent for while and the houses there were not without issues but yet there still clearing 550+ on auction
Appears to be a quiet mature area(my words not the EA).
I suppose, its the mortgage that is scaring me, it will be almost double my rent, but then again my rent is very low, 600/month for a 3 bed detached house.
I agree with you on Salthill but the prices are savage there. I lived in Glenard Cresent for while and the houses there were not without issues but yet there still clearing 550+ on auction
CelloPoint
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If you want to feel better about your decision - just think of the mantra. If you say it enough to yourself and your family, it's not so bad anymore.
"That's what they've been saying for years now, and no crash has ever materialised"
"You can't go wrong with bricks and mortar"
"People thought I was crazy back in 1996, but look at me now!"
"At least you'll be on the ladder, and you can always 'trade up' in a couple of years"
...
Really though, you should weigh up the risks vs. the potential benefits in an analytical fashion. I think most people in here agree that, when you weigh up everything, Irish property represents an apalling investment. Even as a place to live in, buying a home costs you an arm and a leg.
I remember seeing 5 bed houses going up on the distributor road in knocknacarra a few years ago and thinking 'a quarter of a million, thats madness'
I suppose over time your perceptions of value for money change and I may have convinced myself that what appears to be a good price is a good price.
Cello, your right on the mantra.
You have to sit down and make an informed decision about what is the best decision for you as an individual. Its lunacy to just jump straight in blindly.
I suppose over time your perceptions of value for money change and I may have convinced myself that what appears to be a good price is a good price.
Cello, your right on the mantra.
You have to sit down and make an informed decision about what is the best decision for you as an individual. Its lunacy to just jump straight in blindly.
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