Current public sentiment towards the housing market?

Status
Not open for further replies.
Just heard from a friend in the Rosslare area.

A development there has had about forty people pull out and only two proceeding to sale.

I recognise this is very vague so will try to get more details.

music playing in the background here:
slash-dot-dash-dot slash-dot-dash-dot slash-dot-dash-dot slash dot-com dot-com
;)
 
paddyd said:
The buyers have not all just vanished into thin air. Whats happened is that the number of houses for them to buy has doubled since the new property season began in Sept. More choice means slower decisions. If I were a buyer, thats what I'd do, I'd wait.
If I were an investor however, I would avoid the market, but as a FTB, I think the best time to buy is still right now. If the house you are looking at represents good value, and in the right location, then my advice is to go for it. It won't be cheaper in 6 months time. It will be the same price, or marginly more expensive.
Click to expand...

If investors avoid the market which any sane ones would, that should mean that the 40% of new developments which were purchased by these very people will now be available to FTB's. Add in the huge supply thats around at the moment and maybe the 275000 empty properties as reported by the CSO. Is there that many willing FTB's?? Are all us FTB's who are now holding off in droves going to start absorbing all this supply?? I think there is a highly probable chance of this house in the right location being cheaper in 6 months!
 
howstrange said:
I think there is a highly probable chance of this house in the right location being cheaper in 6 months!
Click to expand...

I can't think of any locations that won't be cheaper in 6 months time. We have had countless instances of drops from salubrious areas to ones in commuterville so someone really has to have their head in the sand to contend otherwise
 
bearishbull said:
Love this line

For €381,000 ‘‘you could be looking at a slightly larger townhouse, in somewhere like Cabra, or a two-up two-down around Arbour Hill’’, Chambers added
Click to expand...

myhome.ie > Arbour Hill > 381,000 = One link [broken link removed]
 
whathome said:
Here's a link to the report:
[broken link removed]

Comment in the Deutsche Bank report on affordability:

partisan, could you tell us where in the [broken link removed]eport it says that housing is more affordable in Ireland now than the average over the last 16 years?
Click to expand...

Sorry, it is over the last 20 years (I didn't have the report to hand - so was working from memory, thought it started in 1990). Take a look at figure 4 on page 3. Our improved afforability is not as striking as Germany's but it's there none the less and is improved across all 3 data points (vis a vis 1990, vis a vis 1998 and average affordability over the last 20 years).

[broken link removed]

You can see on page 6 we score a 3.0 (a very good score) for affordability risk. Only Germany and Sweden do better. That report highlighted oversupply as a major risk for us (we're seeing this already I think) and our preference for variable rate mortgages (which I think just means that we're more comfortable with risk as a nation - maybe there is more chance of us going bust but there's more chance of us getting wealthy too - compare Warren Buffet's risk profile with the average punters for example ;-) ).
 
Originally Posted by paddyd
The buyers have not all just vanished into thin air. Whats happened is that the number of houses for them to buy has doubled since the new property season began in Sept. More choice means slower decisions. If I were a buyer, thats what I'd do, I'd wait.
If I were an investor however, I would avoid the market, but as a FTB, I think the best time to buy is still right now. If the house you are looking at represents good value, and in the right location, then my advice is to go for it. It won't be cheaper in 6 months time. It will be the same price, or marginly more expensive.
Click to expand...

howstrange said:
If investors avoid the market which any sane ones would, that should mean that the 40% of new developments which were purchased by these very people will now be available to FTB's. Add in the huge supply thats around at the moment and maybe the 275000 empty properties as reported by the CSO. Is there that many willing FTB's?? Are all us FTB's who are now holding off in droves going to start absorbing all this supply?? I think there is a highly probable chance of this house in the right location being cheaper in 6 months!
Click to expand...

I agree with this howstrange.

Paddyd has just confirmed that there is a huge increase in supply and stated that demand from investors should be waning, but then goes to say that prices will stay flat or rise. But surely this is a compelling argument for lower prices?

This is something I always find amusing. Some people seem prepared to use the supply/demand argument to justify rising prices only, never falling ones.

If inventory were falling dramatically and investor interest was increasing, I would be the first to predict big price increases. But the exact opposite is happening today.
 
Debtwish said:
I agree with this howstrange.

Paddyd has just confirmed that there is a huge increase in supply and stated that demand from investors should be waning, but then goes to say that prices will stay flat or rise. But surely this is a compelling argument for lower prices?
Click to expand...

Agreed, but how much lower? When rents began to fall a few years back, because there was severe oversupply in the market, price levels didn't collapse. Who is going to begin below cost selling? The vast majority of high-spec houses are newish units that cost their owners a lot. I don't see the builders dropping their prices much, they're cash rich...
 
partisan said:
Who is going to begin below cost selling?
Click to expand...

IO specuvestors that what to cut their loss here and and re-manipulate their mortgage in the Polish new builds, where he will sell before completion netting 10+% /annum.

partisan said:
Also the rental market is bouyant. If investors decide it is time to sell at the top of the market - rents and thus yields might actually rise!
Click to expand...

Bouyant like a rock. The new Irish are already leaving. There might have been some demand a few weeks ago but there were less than 2000 apartments to let in the Greater Dublin area last week. Today daft has over 2500.

One would think with all the apartments going onto the sales market that rental supply would dry up and price increases. But as some posters predicted it appears that the vacant properties are going onto the market and the new Irish see better prospects in a rising continental Europe than a peaked out Ireland. Oh I dare say some of them will take a mortgage with them and invest it more wisely than an April FTB.
 
partisan said:
Agreed, but how much lower? When rents began to fall a few years back, because there was severe oversupply in the market, price levels didn't collapse. Who is going to begin below cost selling? The vast majority of high-spec houses are newish units that cost their owners a lot. I don't see the builders dropping their prices much, they're cash rich...
Click to expand...

Below cost selling? Do you not mean below purchase price selling? There is always and will always be distressed sellers. Prices are set at margins and once a negative sentiment cycle is initiated it takes a lot to stop that. You seem to think the fact that a lot of people will hold out and not sell at lower prices will prevent market from falling further, this is not the case.

Builders will be quite happy to drop prices by 20% if they are'nt selling many of the properties they have recently built, builders hate getting stuck with properties in a flat or falling market as they have to continue paying interest on the finance for their developments and they want to get their hands on their capital for other projects. Builders would probably still make profits on properties being sold now if market prices dropped 20% overnight, once they could actually sell them .

Amateur investors will sell to bank profits or prevent further cash drainage once they see low/zero capital growth. Low capital growth makes investment less attractive so there will be less investors buying and less demand in total meaning prices would go lower.
 
partisan said:
Who is going to begin below cost selling? The vast majority of high-spec houses are newish units that cost their owners a lot. I don't see the builders dropping their prices much, they're cash rich...
Click to expand...

Builders cash rich?

Take a look at Grafton's net debt and how it is increasing year on year. It is now around €600m.

[broken link removed]

...And Pierse that are involved in several developments I have seen around my way - total liabilities due after more than one year > €40m.

[broken link removed]


This is not unusual in the building industry. Many builders carry significant liabilities on their balance sheets. This is fine in a bouyant market as cash flows comfortably cover service costs. But in a slowdown it becomes a problem. A builder cannot afford to sit on inventory for long - they have big bills to pay, and they will cut prices as necessary to shift it.

I agree with you that there will be stubborn owners that hold out for a better price, but if they are consistently being undercut by the developer down the road, they won't be selling their property in the short or even medium-term.
 
partisan said:
You can see on page 6 we score a 3.0
Click to expand...

You're right, I was surprised by this - it's a better number than I would have expected. Even with that, we still end up with the highest overall risk of a crash without any external stimulus.
 
I was driving through Rathgar village last night and saw that Gunne have closed thier offices there.
 
Bedsit said:
I was driving through Rathgar village last night and saw that Gunne have closed thier offices there.
Click to expand...


They've moved up the road to be amongst the dense cluster of estate-agents and lenders that is known as Terenure Village. ;)
 
whathome said:
You're right, I was surprised by this - it's a better number than I would have expected. Even with that, we still end up with the highest overall risk of a crash without any external stimulus.
Click to expand...

Risk / reward. We also have the most property wealth in Europe, and we fall to second when the contagion effect is added in.

Debtwish said:
Builders cash rich?

Take a look at Grafton's net debt and how it is increasing year on year. It is now around €600m.

[broken link removed]

...And Pierse that are involved in several developments I have seen around my way - total liabilities due after more than one year > €40m.

[broken link removed]


This is not unusual in the building industry. Many builders carry significant liabilities on their balance sheets. This is fine in a bouyant market as cash flows comfortably cover service costs. But in a slowdown it becomes a problem. A builder cannot afford to sit on inventory for long - they have big bills to pay, and they will cut prices as necessary to shift it.

I agree with you that there will be stubborn owners that hold out for a better price, but if they are consistently being undercut by the developer down the road, they won't be selling their property in the short or even medium-term.
Click to expand...

I'm not an accountiant, so I'm not 100% sure how to intrepret these, but do Grafton not also have 813.8 million in retained profits?
 
partisan said:
You can see on page 6 we score a 3.0 (a very good score) for affordability risk.
Click to expand...

This was the one figure in that report that seemed a bit strange I thought. If our affordability index was so good, then why have our personal debts been rising so fast? Is this explained by the lack of risk the Irish feel while taking on debt (since we've never encountered a full on bust before) or could it be that people are incorrectly reporting their earnings so as to get on the ladder?
 
partisan said:
Risk - reward.
Click to expand...

In a property market, you get maximum reward when risk is low (high yields and low income multiples).

The Irish property market right now is like a drunk who decides to have three more whiskeys before driving home. He might just make it but I wouldn't want to be a passenger!
 
Status
Not open for further replies.
Back
Top