House Market Weakening?

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Glenbhoy said:
RE: Waterford:

Surely not, I was watching househunters last night, where the lady was advising a couple who'd sold up in clondalkin and had bought down in Carlow somewhere, they were hell bent on getting the rest of their money into an investment property. Anyway, they were taken to Waterford where the adviser was quoting 850per month for a student 3 bed semi, 700 per month to families (longer than term time), massive rental demand from students, professionals and best of all, capital appreciation of 10% or 15%. So she pointed out to them that if they paid 200k, it'd be worth maybe 230K next year!!
They were also taken to Carlow, where apparently 1 bedroom apartments are in massive demand, cost 170K, rent approx 600pm (shortfall not a problem cos they were putting 100K surplus from dublin house into the house anyway).
Anyway, the program finished with the couple looking at a place in Rathdowney (excellent rental potential due to the local mart every second Tuesday).
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That bint on Househunters gets right on my tuppeny bits. The braying asinine delivery, the superficial analysis. Hint for any participant in this shoddy property porn, when that silly woman makes a sweeping statement about future house prices, get her to sign a warranty backed by a cash bond to be paid in the event that her ludicrous Tarot card style forecast doesn't come to pass.
 
I often think what kind of economy is this where so many people can make so much free money from doing absolutely sweet F.A.
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Its called capitalism. Simply put, the market values your assets more highly than it values your labour.

Also, it is not free money. It is the reward or economic rent earned by your money (which is a factor of production, same as your labour) - money which you would have invested somewhere else had the returns not been so attractive.

You and your money were providing a service - providing rentable accommodation to those who couldn't afford to buy, or didn't want to, or wanted a short-term housing solution etc. So to say it is free money and that you did nothing for it is wrong.
 
Sherman, do you think that is the way most people in the country view their decision to buy a second property. A sound, geared economic investment, with returns of x% over a period of x years, due to the high risk being taken and service they are providing to the community - or do they simply take a punt ? - that's the view I took when I bought - I was young and didn't really understand much about investing (still don't).

The properties I bought were empty most of the time and I was paying the mortgage on both when they were empty.(Was a strain but I didnt care because they were increasing in capital value)....do you think I would have done this if, in my simplistic view, I was not going to get loads of apparantly free money at the end when I sold up ?
It was not the yield that I was in it for - it was the unreal capital growth.

I have a friend who is a female garda in a rural part of the country.
She bought five properties between 1994 and 1998. She has recently sold the last of them and is now worth well over a million Euros due to capital appreciation of said assets.

She considers this to be free money - just like winning the lotto.....

EDIT - You are technically right Sherman, just to be clear.
 
Why was ther demand from Students, in May? maybe this was an old show?
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Yeah, very few of these programs tend to be live broadcasts.
when that silly woman makes a sweeping statement about future house prices, get her to sign a warranty backed by a cash bond to be paid in the event that her ludicrous Tarot card style forecast doesn't come to pass.
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I was thinking myself that there may be a potential legal comeback if her predictions don't come to pass. I mean there's plenty of evidence of her assertions in front of the nation (or at least the saddo's who don't get out on wednesday).
 
I am living in Galway. There is panic buying going on at the moment. First Time buyers are prepared to pay crazy prices for small properties up to 10 miles from the city centre.

All City Centre properties are going for Auction now and fetching mad prices.

My impression is that the shrewd investors are cashing in most of their chips as they forecast that a slump is coming.

At the moment it would be crazy to buy anything, the only winners are going to be the Banks and the Taxman.

When the SSIA mania is over watch prices tumble.
 
snuffle said:
HI Beattie, I am a renter in Waterford, and from what I have been observing for the past few months there is a slowdown in both lettings and sales.We;ve decided to remain renting after doing the math (to buy the house we currently rent at 700 a month would have cost 1200 a month over 35 years to buy, and this was before the hike in interest rates). Rents, especially for houses as opposed to the new apartment schemes, have fallen dramatically in the past few years, we are now paying far less to rent the same house than we did 5 years ago.

The abundance of brand new apartments in the city centre means many rental accomodation units are being left empty as tenants can pick and choose from so many. Rented houses in the private estate I live in have bene empty for up to 8 months now, even after the owners have renovated in the hopes of attracting new tenants. Many of the new apartment schemes, even the more prestigious ones, have a good number of unoccupied units also.

I also continue to keep an eye on the property market (in the vain hope that a house will come on the market that would make financial sense for us to buy!) and smaller townhouses that were on at say 200k are now creeping back down towards 170k. Houses that were last year attracting 275k are now back down to around 260k. My husband would be dealing with estate agents on a day to day basis, and there does seem to be a slowdown in the number of houses they are managing to go sale agreed on.

I;m not sure if this is just a slow time in the market, a jump in the number of new builds coming on stream meaning people are not all rushing to bid on a small number of properties, or if it has reached a point where average wages in the area are just not enough anymore to get a large enough mortgage on to purchase a decent house. From personal experience, though, ourselves and many of our friends are observing the same trends - one example - friends of ours bought their first house recently, a small townhouse for 205k. 4 months after they moved in, a house in the same road (all houses on this road are identical) went for 215k and they were happy to know their own house was rising in value, or so it seemed. this month, houses on that road are on at 195k. Cue unhappy faces, understandably enough.

I am no financial whizz, but have been observing what is going on via friends who are getting on the ladder, others like ourselves who continue to rent, and possibly the most interesting development of all - local papers have always carried ads for mortgage providers, first time buyer seminars, etc, but in the past 2 weeks alone the ads have gone from a quarter-page in size to half or full-page adverts with more sensationalised language used in the text, possibly indicating that banks and brokers are getting a little more antsy about getting the customers back in the door and applying for mortgages.

If your relation is in a position to sell, and he is not attracting tenants who will help generate revenue for him, the property and rental markets - from my observations - seems to be at least on a plateau, if not on a slightly downward trend.
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Thanks Snuffle, it is good to hear what it is like on the ground, I only get to see it every 6 weeks or so when I am down. I suspected that the student market was going to be murdered by the S50's springing up down there. I would only think there will be a further fall off in rental prices in the next 6-12 months. I have heard of apartments being offered for rent if the bills are paid but I didn't know what to make of those reports.
 
agreed, Beattie! have seen apartments being offered with lots of extra incentives to tenants such as free broadband and cable, free parking spaces, integrated wireless entertainment systems, first 2 months rent-free, all bills inc. refuse collection paid for, and lots of high-spec furnishings like layzee-boys, plasma widescreens, etc etc. many landlords are having to go all out to attract tenants it seems, and some are trying to get out now while prices are still so high. Most of the houses for sale in the estate I live in are former rented houses whos owners are finding it impossible to service a mortgage with no tenants to subsidise it. Depressing for the BTL investors, but good news for renters like myself as rents continue to be quite low in general in comparison to previous years.
 
This Terenure (D6W) apartment complex is quite near me and it's very rare for them to come to market.
As a regular peruser of daft.ie, there are always vacancies in this complex so I always assumed there
are some investors holding on for capital appreciation if not for regular income.
Now in the space of a few weeks, 4 have come to market. I've never seen that before !!

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whathome said:
Has anyone noticed marked increased supply and a slower market in recent weeks?

We have been very active in looking for our next house since February. We are sale-agreed on our current house, we had been getting worried about rising prices and lack of supply during our search for somewhere to move to. In the last four weeks however, things seem to have turned slightly, certainly in the areas we're focused on in north east Dublin. Could it be concern about the interest rate rise next week?

In the past few weeks, we've noticed:
- Properties staying on the market longer
- Some price reductions
- Fewer people at viewings
- Less aggressive bidding wars
- Properties coming back on the market having been sale-agreed
- Far more houses for sale in general
- Increased withdrawals at auction
- Higher proportion of ex-rental investment houses on the market

Has anyone else noticed this recent trend? We are getting quite concerned about committing to a larger mortgage should this be early indication that the market has turned.
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Myself and the Wife were house hunting around that time in the Killester/Clontarf area. Serious bidding wars went on a got very dishartened. Although, these areas were always expensive and it was peak selling season at the time, Jan-March. We settled for Malahide instead, close to families and babysitters.

On the property market in general, FTB, like me, who bought over 5 years ago, who have recently married and had children, now wish to move/settle in a more desirable location with good facilities and school places. Such places as Lucan/Clonee which have seen massive increase in popluation with no match in infrastructure where the typical areas FTB of 5 years ago gravatated towards due to price. Now these people (lets call them STB), who wish to trade up, are competing against each other in their native/preferred locations and pushing the price upwards (As seen on the northside in the first quater of the year with prices rising around 25%).

If the FTB smell blood and detect that the property prices are plateauing or even falling slightly, they make take that once in a life time trip to Oz instead, adopt the wait and see approach or may even conclude, finally, that they have finally missed the boat. This will place futher downward pressure on prices and have a cyclical effect where more FTB will wait even longer and wait "'till there boat comes in".

Investors with vacant properties will be forced to sell if the anticipated capital appreciation does not materialise, further increasing supply, adding further downward pressure to properties in this sector. It will be like throwing water on a chip pan (but in a macro economic sense :)). People will wonder why could they not see it happening
 
Remix said:
This Terenure (D6W) apartment complex is quite near me and it's very rare for them to come to market.
As a regular peruser of daft.ie, there are always vacancies in this complex so I always assumed there
are some investors holding on for capital appreciation if not for regular income.
Now in the space of a few weeks, 4 have come to market. I've never seen that before !!

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the savy investor gets out early!
 
dont see any signs of market slowing here in glasnevin,a 3 bed terraced house nearby just sold for 45%more than an identical one sold for 18months ago! owner told me she had 25 bids,house sold by private treaty for 15% more than asking price.
 
i think the graph may be a fair bit out on my own experience bought in 90 for 40k sold this year for 172k,and im quite sure dublin prices have outstripped my gain if you could call it that
 
Remix said:
This Terenure (D6W) apartment complex is quite near me
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That complex was built 10 years ago or more. The investors would be quite experienced.
 
2Pack said:
That complex was built 10 years ago or more. The investors would be quite experienced.
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What kind of "investor" would be interested in them at the current price? You can see the rents they fetch on daft.

With expenses, stamp, vacancy etc. you'd likely be looking at a 1% - 2% yield.

It would be a timing the market gamble on future capital appeciation at the time when interest rates are heading up up up !
 
One argument I always hear/read in the media against the possibility of a house price crash is the fact that we only built 80,000 houses this year and we need to build 85,000 next year. If there are so many houses on the market and for rent presently can someone explain the need for more builds to me?
 
kane3000 said:
One argument I always hear/read in the media against the possibility of a house price crash is the fact that we only built 80,000 houses this year and we need to build 85,000 next year. If there are so many houses on the market and for rent presently can someone explain the need for more builds to me?
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To satisfy the demand of the investors (30% of new builds)
 
kane3000 said:
Thats fine Redo, but that only explains 25,000 to 35,000 new builds.
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actually its 40% invetment (dont know whether this figure takes account of people moving and keeping old house as investment) and its more than enough to keep prices rising.funnily there is a strong demand for properties from people to actually live in ! many of these people have entered the market earlier than they may have as they are afraid of being priced out if they wait untill they had earlier planned to,so many are buying at 26 instead of 30 for example. if investor purchases were half of what they are now prices i bet would not be rising and would be lower and rents may be a bit higher.i wonder how many properties are stitting empty in cities?
 
I assume the supply/demand issue must be resolved pretty soon. If we are building 80,000 units p.a. and the net population growth is in the order of 100,000 p.a. then we are adding sufficient housing to cope with 150-160,000 people per year. Even if we were "under-housed", the explosion in building must be heading to an equilibrium point.
 
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