Current public sentiment towards the housing market?

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conor_mc said:
But the American market is in an outright rush for the exit doors. Our vested interests are still in the "hide it from the masses" phase.
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Does anyone else take offense that there are now loads of advertisments for US proeprty in Irish papers? With titles like "There has never been a better time to invest in the U$"

off loading their junk property on us! Chancers!
 
whizzbang said:
Does anyone else take offense that there are now loads of advertisments for US proeprty in Irish papers? With titles like "There has never been a better time to invest in the U$"

off loading their junk property on us! Chancers!
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"Spend that SSIA in U,S of A..!!!.......yeeer haarr!"

A cowboy knows there's one born every minute.
 
I have been following this thread from the start with great interest. I do think house proces are insane but in saying that I have been waiting to trade up since April when I saw a house in an area I had always wanted to buy come on the market.

This was in a small 3 year old development of just 30 houses and this was the first house within that development to come up for sale in that time so I didnt want to let it slip by. Its definetly a home for life for me so market price fluctuations are not a real concern to me right now. My job is as secure as one can be and the price was within my means given that my own property had risen by 100k over the last 2 years based on other sales in my own area.

The seller was already building elsewhere so there was no rush to complete the purchase from them.

However I have gone sale agreed 3 times since July on my own property with the first 2 buyers pulling out of the deal just before contracts were to be signed. All going well I hope to complete this sale of my own within the next 2 weeks. So the FTB market is definetly more skittish over the last 4 months or so.


Now to my real question. I have just had a valuation done on the property I intend to buy by a person from the lenders panel. They put a value of 5k over my agreed purchase price on the property and a re-instatement value of the purchase price less 100k.

Now given that some people here are saying prices could tumble by upto 50%, can some one explain to me how a house can fall below its bricks and mortar cost to rebuild it? Or can it? because a 50% drop would place this house at 65k below its rebuilding cost. Is this possible? To fall from its current market value to its rebuilding cost would take a fall of 32%. This I could understand but surely no lower?

Any opinions appraciated.
 
Anyone hear Ger Gilroy on the radio this morning.

Had Jim Power and some TD on talking about whether stamp duty will be abolished. It was the usual bull-fest (or should that be bull-sh*t-fest :) ) about uncertainty about stamp duty being the only reason for a slowdown in prices increases.

Some texter said that instead of reducing stamp duty, the government should limit the length of mortgages, thereby reducing prices

Gilroy dissed this as nonsense saying that investors would jump in immediately and people would then be renting their whole lives. These bulls are just running out of excuses, it hilarious to listen to them. The bias is unbelieveable.

I used to like this guy on "off the ball", now he just comes across as an ostrich who has leveraged one to many buy-to-lets.
 
Tim123 said:
Now given that some people here are saying prices could tumble by upto 50%, can some one explain to me how a house can fall below its bricks and mortar cost to rebuild it? Or can it? because a 50% drop would place this house at 65k below its rebuilding cost. Is this possible? To fall from its current market value to its rebuilding cost would take a fall of 32%. This I could understand but surely no lower?

Any opinions appraciated.
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Do you think that construction sector wages might fall a bit if there were a crash and half the sector were laid off?

What about demand for building materials? Economics 101 - demand drops, prices drop.
 
Of course it can go below the cost of building it.

While not a perfect analogy, a toyota corolla costs 15K to make and sells for maybe 20K. 10 years later, the the will sell for <5K.

The "cost" of goods is paid for the first time something is sold (assuming the manufacturer wants to make profits :) ). Anytime it is sold after that, it is purely how much buyers are willing to pay for it.
 
Tim123 said:
Now given that some people here are saying prices could tumble by upto 50%, can some one explain to me how a house can fall below its bricks and mortar cost to rebuild it? Or can it? because a 50% drop would place this house at 65k below its rebuilding cost. Is this possible? To fall from its current market value to its rebuilding cost would take a fall of 32%. This I could understand but surely no lower?
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I'd take those "cost to rebuild" prices with a large dollop of salt if I were you. Do they include the cost of the land? Because the plot is about 40% of the cost of a new house these days IIRC. Another 25% is Government taxes, and only 35% is the actual cost of materials + builder's profit.

Plus, in any market (not just housing), there is no guarantee - ever - that the price buyers are willing to pay for an item will be higher than the cost of production. That's how firms go bust, industries decline, and markets allocate scarce resources more-or-less efficiently. Unless you believe that somehow property is a unique asset different from any other, and that property owners are entitled to profit on every transaction by divine decree!

Thinking that house prices "can never fall below cost" is just another bull argument that displays a fundamental lack of understanding of economics, to be honest.
 
powderblue78 said:
Anyone hear Ger Gilroy on the radio this morning.

Had Jim Power and some TD on talking about whether stamp duty will be abolished. It was the usual bull-fest (or should that be bull-sh*t-fest :) ) about uncertainty about stamp duty being the only reason for a slowdown in prices increases.
I used to like this guy on "off the ball", now he just comes across as an ostrich who has leveraged one to many buy-to-lets.
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Yes he was good talking about sport but I think he's no Jeremy Paxman...........You have to bear in mind the fact that so many of their competitions etc are sponsored by banks etc. Last week it was AIB and their 2 grand FTB offer. Altough usually newstalk has been very balanced since it started when you compare it to what you get on RTE.
 
Please stick to topic. If you want to discuss Newstalk please use the Letting Off Steam or the Shoot the Breeze forum.
 
conor_mc said:
Do you think that construction sector wages might fall a bit if there were a crash and half the sector were laid off?
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IMHO this is where the main problem going forward lies. If investors pull out of the market and we get back to a normal rate of house building then a lot of people will be laid off in the construction and subsequently service related sectors. As many of the people working in these sectors are immigrants, we are going to see an increase in the number of rental properties coming to market either for sale or to rent. This will eventually drive prices down in both segments of the housing market.

Also previous posters have mentioned that investors will only return to the market if they get an yield of 6%, which has prompted calls price drops of up to 30-50% in the price of property some areas. Again if there is downward pressure on rents then I think this figure could rise.
 
Tim123 said:
Now given that some people here are saying prices could tumble by upto 50%, can some one explain to me how a house can fall below its bricks and mortar cost to rebuild it? Or can it? because a 50% drop would place this house at 65k below its rebuilding cost. Is this possible? To fall from its current market value to its rebuilding cost would take a fall of 32%. This I could understand but surely no lower?.
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The re-instatement cost is for insurance companies to see what they could be liable for and there's no accurate way to measure it. Of course it's possible for the price of something to fall below it's rebuild cost since that's set by supply and demand.
 
Sidewinder said:
I'd take those "cost to rebuild" prices with a large dollop of salt if I were you. Do they include the cost of the land? Because the plot is about 40% of the cost of a new house these days IIRC. Another 25% is Government taxes, and only 35% is the actual cost of materials + builder's profit.

Thinking that house prices "can never fall below cost" is just another bull argument that displays a fundamental lack of understanding of economics, to be honest.
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I think you misunderstood me. I'm not saying thay cant fall, I'm asking can they fall? and if so why.

The answer earlier about falling wage costs make perfect sense, And the very reason for asking is that I have never studied economics which is why I ask those who seem to have a btter understanding than I do.. :)
 
Steady on Mr Mod.

Powerblue78 is quite right to raise the Newstalk point. Newstalk radio is currently going all out to influence public sentiment on the housing market, and that is what this thread is about, is it not?

Newstalk and their property ramping has been a bugbear of mine for many months, and it is clearly getting worse.
 
powderblue78 said:
Some texter said that instead of reducing stamp duty, the government should limit the length of mortgages, thereby reducing prices
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Actually I'd go so far as to say that 1) you need to limit the length of mortgages and 2) cap the salary multiples. The banks and lenders would go manic though - they're about to do nicely on increasing interest repayments.
 
THis is gas, everything is comming to pass in biblical proportions.

I reckoned car sales would dip before we saw the top of the iris Proeperytbubble and we have!

I posted as much ages and ages ago (my timming was a year or two out). Now we have another time posted on the Irish Property Forum (around abouts the time of the rasing of the stamp duty exmeption limit t 317.5K) that soon enough people would be crying out for it to be raised it wouldn't be enough poor FTB were hard pressed and sure enough it has also come to pass.

I am seeing other things happening that many other posters said would in fact happen and they seem to have been fairly spot on, its just the timming.

YOu couldn't have scripted the last 5-10 years of the Irish boom to anything less than classic text book asset bubble after another bubble and so it goes.

Obviously people enjoy pain here in Ireland but like a good party before hand.

Its a futile effort!
 
Maybe this is a very simplistic view point. But if house prices are stalled supposedly because of concerns over stamp duty. Then if stamp duty is reduced prices will rise to the new bands applied or if disbanded altogether.Also if nothing is altered in the budget FTB would be best to purchase because the market will return to normal i.e. on an upward slope.

The other side is that this 'blip' is not due to stamp duty concerns at all and is more to do with houses been over priced for FTB componded with interest rates going north.
 
Bedsit said:
IMHO this is where the main problem going forward lies. If investors pull out of the market and we get back to a normal rate of house building then a lot of people will be laid off in the construction and subsequently service related sectors. As many of the people working in these sectors are immigrants, we are going to see an increase in the number of rental properties coming to market either for sale or to rent. This will eventually drive prices down in both segments of the housing market.

Also previous posters have mentioned that investors will only return to the market if they get an yield of 6%, which has prompted calls of up to 30-50% in the price of property some areas. Again if there is downward pressure on rents then I think this figure could rise.
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I agree the domino effect is the big issue with the Irish housing market. The first domino is rampant house price inflation if that topples..........
 
powderblue78 said:
Anyone hear Ger Gilroy on the radio this morning.

Had Jim Power and some TD on talking about whether stamp duty will be abolished. It was the usual bull-fest (or should that be bull-sh*t-fest :) ) about uncertainty about stamp duty being the only reason for a slowdown in prices increases.

Some texter said that instead of reducing stamp duty, the government should limit the length of mortgages, thereby reducing prices

Gilroy dissed this as nonsense saying that investors would jump in immediately and people would then be renting their whole lives. These bulls are just running out of excuses, it hilarious to listen to them. The bias is unbelieveable.

I used to like this guy on "off the ball", now he just comes across as an ostrich who has leveraged one to many buy-to-lets.
Click to expand...

Yea have to agree on this one. I have to admit that I was quite spprised that he didn't have two out and out bulls on as Jim Power was quite moderate I thought (given that he works for a bank). It does seem like Gilroy has got a vested interest in keeping the bubble going.
 
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