Future price of Irish properties

[walk2dewater]

when enough people beleive something will keep going up for considerable future it will keep going up

Nail on head. Imagine, you don't lift finger and your wealth is rising exponentially day after day, week after week... you have regular, positive reaffirmation that this all 'makes sense'... dissenters are dismissed as heretics and unsavoury "begrudgers" by experts and elders... it makes you feel better about your commuting, long work days, time away from family... getting on that crowded DART at 7:30am with a smile on your face... one day, you'll have made it, thanks to 'bricks and mortar'.. you can never lose...

This mania is very very compelling, drawing in even the not-so dimwitted. Who would want the burden of going against that 'feel good' drug?

 

[Glenbhoy]

25-30% overvaluation - a mere trifle! Mind you I suppose most things in this sainted isle are 20-30% overvalued.

Agreed, but in the overall context sure a couple of hundred K is nothing anymore!!

 

[Loki]

Ok, so you havent a clue. Anyone else know why my rent is SOOOOO cheap?

I have a clue my mother never put up her rent as she feels guilty. AS she owns the house it is all profit so she doesn't mind letting the tenants save to buy for themselves. As a child I remember helping a tenat move into their new house. You see some landlords are nice!

 

[conor_mc]

The mentality of the amateur investor - a personal viewpoint...

Bought a house two years ago, took out a 92% mortgage of just under €200k. Now have over €100k worth of equity. A couple of months ago I was thinking about how to sort out some other financial issues, nothing major, just clear a loan maybe before my SSIA is due rather than clear it out of my SSIA. It dawned on me that my house had been making €1000 a week since I owned it. Think about that for a second.... in 2 years I've gone from scrimping and saving for a deposit to having a hundred grand in equity, just ready to be utilised. It's easier to make money when you have money, right?

Now, the only way I can put this €100k to work is to remortgage and invest in a second property... which will make another €1,000 a week and I'll have some sucker paying the mortgage for me, right? Okay, I know the gravy train won't last forever, but a smash-and-grab on the market might work, get in and get out in a 12-18 months, at the current rate the price will have risen €50k or so, making a conservative profit of €20k after stamp duty, CGT etc...... can't go wrong....

That was me two months ago. That's the mindset which drives the amateur investor, I believe. Rapid capital appreciation in your PPR and looking for some way to cash in on it.

 

[Berni]

is there anyway of ignoring certain posters on askaboutmoney?

Yes indeed! top of the page, "user cp" link, last option on the list.

 

[Loki]

Ok, so you havent a clue. Anyone else know why my rent is SOOOOO cheap?

I have a clue. My mother feels guilty when she raises the rent so she doesn't. SHe always hopes the tensaant will bea bale to save and buy a place themself. AS a child I remeber helping a tenant move to their new house. Some landlords are nice and as they own the property the rent is mostly profit so they don't care. Be grateful and stop thinking it is an indicator the market will crash.
THe other fact is some places will always be better residential homes than rental property and are worth as such. THis is how the property market is regardless of economics.

 

[Loki]

Ok, so you havent a clue. Anyone else know why my rent is SOOOOO cheap?

l

 

[ivuernis]

It's just a strange oul debate when there's only one poster who seems to represent the majority out there. I mean where are all the other property bulls?

"We swallow greedily any lie that flatters us, but we sip only little by little at a truth we find bitter." ~Denis Diderot

 

[Loki]

?
?

 

[ionapaul]

If you want to read comments from some posters who definitely DO NOT agree with the majority who post in this thread, simply navigate over to the 'Location, Location, Location' section of this forum and read the comments from those good folks who have bought apartments in some development in Stepaside...positively crowing about the apartments not being built yet, and they are making a couple of grand a week with the price rises! Every one of them planning to move out of these soon-to-be €500k 'starter homes' within a few years. We will see a national price rise of 20% this year? No-one talks about anything but property anymore...

 

[Calina]

Ok, so you havent a clue. Anyone else know why my rent is SOOOOO cheap?

Very few people competing with you to rent that property. Have you had to fight anyone off with your keys lately?

The impact of rental yield on future property purchase prices seems to be negligible at the moment. I really can't be a gambler by nature because I have to say if I were a property investor, I'd like the rental income to be covering both the interest and capital repayment at least. I don't want to take a loss for 30 years (because we're in this for the long term) and then make an unpredictable profit in 30 years.

 

[Glenbhoy]

Loki
And for 20 year in Italy it was cheaper to rent than buy yet they have the second highest home ownsership in the world. I am experience increased rent yields not less

Where do you get these figures from?

I would also like to see a few more dissenting voices on here, perhaps a red rag is required??

 

[Loki]

Ok, so you havent a clue. Anyone else know why my rent is SOOOOO cheap?

hello

 

[Loki]

Equally, how do you know that they are not?

I am not saying they are casuing anything so I don't have to prove they are doing anything. THe onus is on you.

Some reasons for me to believe speculation (which for me equates to non-rational investment) is rife:

1. Since I came back from the UK, I have been amazed at how many people talk about property as the right/only long-term investment, have multiple homes, tell you that it is their new pension etc. "The best time to buy is now", "Agh sure it will only go up". "Stocks and shares are very risky - put your money in bricks and mortar" I did not hear such generally positive sentiment in the UK market. I firmly believe that it is deeply-set in the pysche of Irish people that property is all that counts.
2. Advertisements on national radio for investment in Turkey/Dubai/Cape Verde islands etc. etc. - You don't get that in the UK, which is hardly a bearish market on property.
3. International property investment exhibitions in Dublin - a new event and where the signs are that it is the new Gold Rush - read the Investment forums on this site and you'll see people investing in places they've never been to and don't understand the local taxation market.
4. Low rental yields and gap between rental prices and purchase prices while investors still buy based on "the long term"
5. Significant numbers of empty properties in new builds being held for capital appreciation

etc. etc.

I see lots of car ads for very expensive cars and show rooms, actually masses of advertisement. Why? High ticket items generate huge profits but small %. Lots of advertisement money pumped into a very small market. So anything with advertisement is explained that way. ANy talk of it can be put down to the same just like cars. Magazines about it are property porn as our the shows.

4.Low rent yields would suggest it isn't a speculators market as there is little profit in it. How do you know there are investors? Any figures

5. Where? How many? A percentage maybe? Are you mixing up the holiday home estates.

Everything you have said is anecdotal at best. You might call it proof but it isn't.

Yep - like the UK in 1989, it just gets too expensive and FTB's cannot make the numbers work. Demand/belief fell off and the rest, as they say, is history. The UK crash in 1989 happened without any real BTL/speculator element.

What? How much did the prices "crash" by then? How do you know the casues? I mean basing it on what figure or is it another throw away comment? I just like proof to what people say as often ther is none and you get "I over heard this in the pub" type comments.

 

[Neffa]

What? How much did the prices "crash" by then? How do you know the casues? I mean basing it on what figure or is it another throw away comment? I just like proof to what people say as often ther is none and you get "I over heard this in the pub" type comments.

I'll give you one more answer, then I'll stop - I think you are determined to refute any evidence anyone gives you. I don't think these exchanges are going anywhere - we supply data, you say "that's not proof" and we go full circle. This is a speculative discussion and no-one can bring facts forward from the future but we can point to trends and similarities in the market today from previous crashes which make many of us on this thread think that we are heading for a similar state again.

So - final answer on your point - I lived in England for about 20 years, including the period of the crash in 89. During my time there, I rented and bought and sold property. I also know many hundreds of people who bought/sold during that time in many areas of the country. I know the price history (this is in the public domain in England - you can see by postcode the transaction price of all properties) of every house we looked at to buy and how it had fallen during the crash and recovered since. I read the papers, I can do research. The fact is that prices fell by 40-45% over the 12-18 months after the crash. If you are interested, you can see the detail with a quarter-by-quarter breakdown of prices, affordability and so on for each UK region at www.nationwide.co.uk. That will clearly show that affordability in SE England in late 1989 was at its all time worst position since 1957. So I think it is a reasonable view that the market became too expensive for the average buyer to make their monthly payments and the market corrected because buyers simply could not afford the stretch any longer. Hence my view that affordability and lack of faith in upward price movement crashed the market. Just like tulips did, just like tech stocks etc. etc.

 

[Loki]

I'll give you one more answer, then I'll stop - I think you are determined to refute any evidence anyone gives you. I don't think these exchanges are going anywhere - we supply data, you say "that's not proof" and we go full circle. This is a speculative discussion and no-one can bring facts forward from the future but we can point to trends and similarities in the market today from previous crashes which make many of us on this thread think that we are heading for a similar state again.

Where is this data? You didn't state any data you pointed out things that may indicate. That is opinion and I explained how what you said can be dismissed by an equally logical opinion. You can bring facts in and show how they prove you point but you haven't when I asked. Maybe there is proof on this thread but it is very long so what proof is there now. You listed 5 anecdotal points all of which I answered you decided instead of defending your points to blame me for not beliving you. Do you understand that?

So - final answer on your point - I lived in England for about 20 years, including the period of the crash in 89. During my time there, I rented and bought and sold property. I also know many hundreds of people who bought/sold during that time in many areas of the country. I know the price history (this is in the public domain in England - you can see by postcode the transaction price of all properties) of every house we looked at to buy and how it had fallen during the crash and recovered since. I read the papers, I can do research. The fact is that prices fell by 40-45% over the 12-18 months after the crash. If you are interested, you can see the detail with a quarter-by-quarter breakdown of prices, affordability and so on for each UK region at www.nationwide.co.uk. etc...

Can you actually give a more direct link I have no idea where this data is on that site. I still don't see how that will prove what you said. Markets move a lot especially based on local employment. I think that will prove more usefull to indicate local house prices. THe way I remeber house crashes in the UK is they were about employment and the speculators had come out of the market. Is that not as reasonable if not more reasonable as assuming FTBs got scared?

 

[walk2dewater]

I'll give you one more answer, then I'll stop - I think you are determined to refute any evidence anyone gives you. I don't think these exchanges are going anywhere - we supply data, you say "that's not proof" and we go full circle. This is a speculative discussion and no-one can bring facts forward from the future but we can point to trends and similarities in the market today from previous crashes which make many of us on this thread think that we are heading for a similar state again.

So - final answer on your point - I lived in England for about 20 years, including the period of the crash in 89. During my time there, I rented and bought and sold property. I also know many hundreds of people who bought/sold during that time in many areas of the country. I know the price history (this is in the public domain in England - you can see by postcode the transaction price of all properties) of every house we looked at to buy and how it had fallen during the crash and recovered since. I read the papers, I can do research. The fact is that prices fell by 40-45% over the 12-18 months after the crash. If you are interested, you can see the detail with a quarter-by-quarter breakdown of prices, affordability and so on for each UK region at www.nationwide.co.uk. That will clearly show that affordability in SE England in late 1989 was at its all time worst position since 1957. So I think it is a reasonable view that the market became too expensive for the average buyer to make their monthly payments and the market corrected because buyers simply could not afford the stretch any longer. Hence my view that affordability and lack of faith in upward price movement crashed the market. Just like tulips did, just like tech stocks etc. etc.

Neffa, the believers within the Church of Property don't listen to evidence from heretics. Thank god burning at the stake was banned a few years ago.

This report (i.e more "begrudgerism" and "doom-mongering" this time by meddling foreigners at Fitch Ratings) suggests that Ireland's economy is the 2nd most precarious after Iceland's, who incidentally have had to jack their rates up to 11.5% to protect their currency.
http://data.cbonds.info//comments/15643/Ba..._060206_ENG.pdf

 

[Calina]

I am not saying they are casuing anything so I don't have to prove they are doing anything. THe onus is on you.
I see lots of car ads for very expensive cars and show rooms, actually masses of advertisement. Why? High ticket items generate huge profits but small %. Lots of advertisement money pumped into a very small market. So anything with advertisement is explained that way. ANy talk of it can be put down to the same just like cars. Magazines about it are property porn as our the shows.

4.Low rent yields would suggest it isn't a speculators market as there is little profit in it. How do you know there are investors? Any figures

5. Where? How many? A percentage maybe? Are you mixing up the holiday home estates.

Everything you have said is anecdotal at best. You might call it proof but it isn't.

What? How much did the prices "crash" by then? How do you know the casues? I mean basing it on what figure or is it another throw away comment? I just like proof to what people say as often ther is none and you get "I over heard this in the pub" type comments.

Loki,

Regarding one point: rents are, at best, static, and falling vis a vis inflation. Renting now costs a lot less than it did 4 or 5 years ago. In general, this usually implies that demand has fallen vis a vis supply and this in the face of a working population increasing due to a large influx of immigrant labour. As demand clearly hasn't fallen, then by definition, the supply of rental accommodation must have shot up. Someone has to be buying property to let it because it's not appearing like magic. But the cost of servicing the debt on that property now often exceeds the rental income on that property, so there is no immediate interest in buying it, other than to assume that there will continue to be capital appreciation.

Personally I call that gambling, but some people call it speculating on the property market.

That's one point.

Regarding no 5 - there are reports that up to 40% of new builds are "unaccounted for" in terms of occupation. I realise of course that I could be wrong, but I work on the assumption that they are either unlet, or not registered as being let and not owner occupied. I assumed - someone with more knowledge in that industry can correct me - that most holiday homes would be described as owner occupied. As far as I'm aware, the bulk of building completed in the last year was in urban non-holiday areas so I can't see how holiday homes would account for very much of the property unaccounted for anyway.

While the onus may well be on Neffa to prove her position, it is not true to say there is no onus on you. In truth, you must prove your position too. An absence of proof for the opposing view does not automatically infer that your position is proven. If I am not mistaken, your view is that there will be no property crash, based on the following: people might subdivide houses into multioccupancy units, based on well they did it with Georgian houses and twenty-year olds share rooms in their parents' appartments in Rome.

To be honest, I find this less compelling than any of Neffa's supporting argument to say the least. I'd also add that I find your contributions difficult to follow and unclear on occasion which adds to my finding it ironic to seeing you nitpick about language, meaning and the abuse of same.

 

[Howitzer]

To be honest, I find this less compelling than any of Neffa's supporting argument to say the least. I'd also add that I find your contributions difficult to follow and unclear on occasion which adds to my finding it ironic to seeing you nitpick about language, meaning and the abuse of same.

Whilst I'd have to agree with all of your points I'm always more compelled to read any of L's points, not because I agree with them but because I don't. Nearly everyone on this thread disagrees with L but property prices still increase by the day. Unless L himself is buying property hand over fist there must be tens of thousands of other people out there who share his general stance.

How can everybody on this thread be virtually unanimous in their bearish viewpoint on property but be so out of touch with what the market says? It kind of smacks of "we're smarter than youism".

 

[Loki]

Loki,

Regarding one point: rents are, at best, static, and falling vis a vis inflation. Renting now costs a lot less than it did 4 or 5 years ago. In general, this usually implies that demand has fallen vis a vis supply and this in the face of a working population increasing due to a large influx of immigrant labour. As demand clearly hasn't fallen, then by definition, the supply of rental accommodation must have shot up. Someone has to be buying property to let it because it's not appearing like magic. But the cost of servicing the debt on that property now often exceeds the rental income on that property, so there is no immediate interest in buying it, other than to assume that there will continue to be capital appreciation.

A logical assumption but I have also heard rent has gone up and have experience of it. So to state rent is static is questionable. I am getting MORE rent now. I am not on my own, people I work with are complaining rent has gone up. Lower yield can be used to say that the investors are not entering the market too. Rent costs have not exceeded rental income for many people only some which is what people here are missing. THere is also more than one reason to invest in property.

Personally I call that gambling, but some people call it speculating on the property market.

I would agree if that is what people are doing but how do you know? THe indicators being used by people here can indicator other things too. What so sure?

That's one point.

Regarding no 5 - there are reports that up to 40% of new builds are "unaccounted for" in terms of occupation. I realise of course that I could be wrong, but I work on the assumption that they are either unlet, or not registered as being let and not owner occupied. I assumed - someone with more knowledge in that industry can correct me - that most holiday homes would be described as owner occupied. As far as I'm aware, the bulk of building completed in the last year was in urban non-holiday areas so I can't see how holiday homes would account for very much of the property unaccounted for anyway.

If there is areport I'll read it. If there is not I won't believe it as I have seen no signs of it. It is a very ambigious claim and flies in the face of the people in the property ques.

While the onus may well be on Neffa to prove her position, it is not true to say there is no onus on you. In truth, you must prove your position too. An absence of proof for the opposing view does not automatically infer that your position is proven. If I am not mistaken, your view is that there will be no property crash, based on the following: people might subdivide houses into multioccupancy units, based on well they did it with Georgian houses and twenty-year olds share rooms in their parents' appartments in Rome.

I never said it was fact and said it will be a factor that nobody is considering. I used it to point out people are talking economics and ignoreing the property stock in the market. I also provided evidence of somebody appearing to sell a property as I described.
I don't claim my view is right I am asking for evidence on a belief so I can understand and make up my own mind. People will agree with a view if it suits them whether there is proof or not. Remebr the sun does not rotate around the earth

To be honest, I find this less compelling than any of Neffa's supporting argument to say the least. I'd also add that I find your contributions difficult to follow and unclear on occasion which adds to my finding it ironic to seeing you nitpick about language, meaning and the abuse of same.

I am sure it is very easy for you to agree with a supporting view. If you find if difficult to understand people it is normally becasue they are saying something you are not used to thinking about or in a way you are not used to thinking. Disliking me or anything else doesn't make me wrong. Neffes argument has no facts or data. I ask for a basis and I am the bad guy? People here truely just want to talk to people who agree with them and not the facts.