Current public sentiment towards the housing market?

[Jister]

Do any of the bears on this post not wonder why builders are still paying record prices for land?? - the purchase of Dalymount park for €65 million as well of tens of millions for small parcels of land in Ballsbridge are just two recent examples. Surely these people and their coterie of highly paid advisers are clued into what is happening in the property market?

Perhaps these developers have the €65m in the bank from previous developments and know that no matter what happens by way of a crash, its paper profit/loss and the market will eventually come back (might take 30 years though)

Is there also a bit of arrogance and power involved? That guy (Sean Quinn?) seemed to become an overnight celebrity when he bought Jurys.

 

[SteveyWonder]

I'm new to this thread. Long time lurker etc. I have to be honest though, but I had much of this debate with an estate agent friend of mine last March - I've since sold both my properties at astonishing prices. I'm moving to Germany with my family for a new job next October and, whilst I have enjoyed being in Ireland for most of my life, I just feel too many things have changed for the worse + I am beginning to despise the upwardly-mobile, middle class parasites that seem to be springing up all around me.

It's the young guys starting off below me I feel sorry for. Yes they have plenty of work, but their relative pay is pittance considering the money flowing through the country and the cost of living (particularly house prices). How long this situation will continue, I don't know. I remember when I got my first job out of college - I could run a car and live in a nice house all paid for (after 2-3 years of saving) with one salary.

Anyway, it's guys like this (who were buying whilst I was being told to sell) that I feel have been sold false promises:
http://www.askaboutmoney.com/showthread.php?t=24656

Can someone do the math on this please (I'm no expert)? 405k over 35 years with rental income of 1050-1200 pm? Landlord subsidising tenant to the tune of several hundred euro per month - never thought I'd see anything quite as ridiculous as this. We have indeed "entered a new paradigm".

 

[Remix]

Do any of the bears on this post not wonder why builders are still paying record prices for land?? - the purchase of Dalymount park for €65 million as well of tens of millions for small parcels of land in Ballsbridge are just two recent examples. Surely these people and their coterie of highly paid advisers are clued into what is happening in the property market?

Look at the US housing market. The developers there just kept going right up until the situation they now find themselves in: possibly the biggest oversupply slump in about 50 years !

 

[StoppedClock]

Do any of the bears on this post not wonder why builders are still paying record prices for land?? - the purchase of Dalymount park for €65 million as well of tens of millions for small parcels of land in Ballsbridge are just two recent examples. Surely these people and their coterie of highly paid advisers are clued into what is happening in the property market?

It would seem to me that much of the excellent analysis on this post is on why property should collapse. There is virtually no evidence of a collapse however apart from a few small price adjustments of properties that were probably overvalued in the first place anyway.

Out of interest Art having posed the question and gotten a number of (IMO) decent responses the most telling of which would be Remix's example from the US, have you changed your view at all or are the bulls as blind to bear arguments as we bears are accused of being to bull ones?

 

[Maine]

Do any of the bears on this post not wonder why builders are still paying record prices for land?? - the purchase of Dalymount park for €65 million as well of tens of millions for small parcels of land in Ballsbridge are just two recent examples. Surely these people and their coterie of highly paid advisers are clued into what is happening in the property market?

The biggest gamblers on property in ireland have been the biggest winners. Hence the above will continue for at least another 12 months.

Also I do think we should have more respect for Dell - they have provided alot of wealth and jobs to Ireland. The insane property market is not their fault nor is our rocketing cost inflation.

 

[blindjustice]

There is virtually no evidence of a collapse however apart from a few small price adjustments of properties that were probably overvalued in the first place anyway.

Out of interest Art having posed the question and gotten a number of (IMO) decent responses the most telling of which would be Remix's example from the US, have you changed your view at all or are the bulls as blind to bear arguments as we bears are accused of being to bull ones?

dont mind em stoppedclock the post was OBVIOUSLY a joke

 

[whizzbang]

Also I do think we should have more respect for Dell - they have provided alot of wealth and jobs to Ireland. The insane property market is not their fault nor is our rocketing cost inflation.

No disrespect against Dell, they are a good company that have brought a lot of employment to Ireland. That being said their responsibility is to their shareholders and not the Irish. If they can make more money by opening a plan in Poland and (maybe) closing a plant in Ireland thats what they have to do.

 

[Jister]

Can someone do the math on this please (I'm no expert)? 405k over 35 years with rental income of 1050-1200 pm? Landlord subsidising tenant to the tune of several hundred euro per month - never thought I'd see anything quite as ridiculous as this. We have indeed "entered a new paradigm".

I did a quick check and repayments on €400K would be ~1830 pm, so if he got a tenant then the subsidy would be ~800pm, add on insurance, fees, maintenance, rate rises etc. and the subsidy is over €1000pm.

 

[Art]

Out of interest Art having posed the question and gotten a number of (IMO) decent responses the most telling of which would be Remix's example from the US, have you changed your view at all or are the bulls as blind to bear arguments as we bears are accused of being to bull ones?

I never sought to give the impression that I was bullish. Quite the opposite. Indeed as you will see from other posts I have added elsewhere, I have put my investment property that I bought 5 years ago on the market. I was just curious to hear what people's opinion was. I do believe that there will be a crash for all of the reasons that have been outlined so eloquently elsewhere. However I do think that it is a good six months away.

The question I asked was I believe a valid one and was one that had not been raised before despite there being more than 2,400 posts.

 

[Duplex]

Do any of the bears on this post not wonder why builders are still paying record prices for land?? - the purchase of Dalymount park for €65 million as well of tens of millions for small parcels of land in Ballsbridge are just two recent examples. Surely these people and their coterie of highly paid advisers are clued into what is happening in the property market?

It would seem to me that much of the excellent analysis on this post is on why property should collapse. There is virtually no evidence of a collapse however apart from a few small price adjustments of properties that were probably overvalued in the first place anyway.

Highly paid advisers that only get paid if the deal goes through, think about it. No deals, no pay for advisers on the vendors or buyers side. There were highly paid advisers in Japan, Hong Kong, Bangkok, London etc. etc. who called it wrong for their clients, they didn't see it coming. I'm sure that Irish advisers will use the same defence (essentially the ignorance defence) when the crash gathers pace here. 'I'm sorry Mickey but how was I to know'

 

[StoppedClock]

I never sought to give the impression that I was bullish. Quite the opposite. Indeed as you will see from other posts I have added elsewhere, I have put my investment property that I bought 5 years ago on the market. I was just curious to hear what people's opinion was. I do believe that there will be a crash for all of the reasons that have been outlined so eloquently elsewhere. However I do think that it is a good six months away.

The question I asked was I believe a valid one and was one that had not been raised before despite there being more than 2,400 posts.

Sorry Art, usually such questions are posed by bulls, answered by bears then posed again in some other guise elsewhere, anwsered again and so on (more so on HousePriceCrash.co.uk admittedly). It was unsual to get so many answers in such quick sucession and for the person asking to still be logged so I thought I'd try and rope me a bull...


Edit: There is virtually no evidence of a collapse does sound quite bullish (even though it is probably true )

 

[SteveyWonder]

I did a quick check and repayments on €400K would be ~1830 pm, so if he got a tenant then the subsidy would be ~800pm, add on insurance, fees, maintenance, rate rises etc. and the subsidy is over €1000pm.

Oh deary deary me. He was obviously thinking "capital appreciation", "capital appreciation", "capital appreciation".

 

[room305]

I did a quick check and repayments on €400K would be ~1830 pm, so if he got a tenant then the subsidy would be ~800pm, add on insurance, fees, maintenance, rate rises etc. and the subsidy is over €1000pm.

That's assuming he can get a tenant for 12 months of the year. Normally, landlords calculate based on 2 months vacant for every 10 months occupied. This pushes the subsidy to greater than the rent he is receiving!

It's philanthropy rather than investment.

 

[room305]

The question I asked was I believe a valid one and was one that had not been raised before despite there being more than 2,400 posts.

There have been similar questions asked. An alternative one is:

"If a property market collapse is so imminent then why are bank shares valued so highly?"

I think the answer to your question is:

Because if they don't another developer will. In almost all property busts developers continue to develop right up until the crash occurs. If they are mid-way through a development it usually makes more economic sense to finish the development and flog the properties, even if you have to cut prices and/or offer massive incentives to buyers. Like anyone in one line of business, developers only know how to develop, so while there is profit to be had they will continue to do so, even during a crash. When there is little incentive to develop they will stop developing and start amassing land banks awaiting the next upswing in property prices.

 

[SteveyWonder]

It's philanthropy rather than investment.

Lol.

Incidentally, how much capital appreciation would you need to break-even on this 405k mortgage, assuming rents stay static?

Are we in to 700-800k for a 2 bed territory? Can anyone experienced in these things do the math? Is there the opportunity cost of availing of 5% savings deposit accounts that must also be factored in?

A 1000pm mortgage defecit equates to 12k per annum (plausible given vacancy rates and the fact that tax is due on loss-making rental income for non-residents), or a required capital appreciation of 12k per year, just to break even.

Now 12k per annum is about 20k worth of salary? I'd sooner have this in a medium-high risk pension equity fund, than tied up in a ultra-high-risk, tax inefficient property.

 

[ninsaga]

Now 12k per annum is about 20k worth of salary? I'd sooner have this in a medium-high risk pension equity fund....

.......so why don't you?

 

[Jister]

If I had €400K in my pocket this minute what would I get for it in the bank - 4% interest soon enough, once rates rise again = 16k PA. and I can access the €400K at short notice.

If I bought an appartment for €400K I would get €1200pm for 10 months = 12K and out of that comes expenses etc. so lets say 10k.PA I am also risking my capital and will have fees, taxes etc. buying and selling it etc.

 

[SteveyWonder]

.......so why don't you?

I have a pension already thanks, and I maximise the taxation system here as much as I can. All I was saying was that there are much better ways of making money than being sucked past the event horizon that is the Irish property whirlpool of dreams.

The Poles and Lithuanians are here to lap up as much of this water as possible, before it all gets sucked down the plug-hole, along with the dreams and ambitions of literally tens of thousands of young Irish people with over-zealous expectations.

Once the water hole has dried up, it'll be time to move on to the next oasis.

 

[Duplex]

The Poles and Lithuanians are here to lap up as much of this water as possible, before it all gets sucked down the plug-hole, along with the dreams and ambitions of literally tens of thousands of young Irish people with over-zealous expectations.

Once the water hole has dried up, it'll be time to move on to the next oasis.

A fine analogy.

 

[ninsaga]

....that there are much better ways of making money than being sucked past the event horizon that is the Irish property whirlpool of dreams.

....would you care to elaborate on what better ways there are (or have been) in making money over the last few years. Property has yielded hughly...what investment do you know of has or is now capable of the same level or returns?

ninsaga