Property investment NI

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michelle123

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We have eventually got 25 k together as a down payment for our first home. Problem is we don't think it is a good idea to buy in the republic at the moment and are thinking of leaving it till the end of the 2007 or 2008 to see how house prices pan out.
However my other half is from Derry and property prices seem to be continuing to rise there. My question is do you think it is a good idea for us to invest that money in a house in Derry - and rent it out for a couple of years ? or do you think we'd be better of to invest the money elsewhere

Any advise would be great ..
 
There was a report by Halifax that was in all the papers last week, saying that house prices in NI rose faster than any other UK region in 2006, and they expect the growth to continue in 2007. According to the Irish Times report (23 Dec):
Halifax and Nationwide, the UK's largest building society, both anticipate rises throughout 2007 and even into 2008.
This view is endorsed by the Council of Mortgage lenders and the Royal Institute of Chartered Surveyors.
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House prices in Derry have risen considerably in the last few years - some as much as 30% in the last year. An article in the local press recently siad that further growth was expected in 2007. One for the main reasons for such growth is supply and demand. The is quite a young local population so demand is high but there have not been many new builds in Derry in the past year, plenty of land is passed for building new homes but as land prices are rising too the developers are not pushed about actually building. So 2007 may not be any different than 2006. But some words of warning; in many instances now rental income falls short of the cost of the borrowing so expect to shell out some money to cover the shortfall. E.g. the levels of rental income for a 3 bed terraced or semi is £450 - £500 per month, the lower end of 3 bed houses (which may need some work) would start at £130k. I have some investment properties in Derry and recently have tried to buy another but alarm bells started ringing when the properties I was looking at were all existing investors looking to get out... maybe it has peaked or is close to peaking, who knows? To confuse you even more i have a friend working in an estate agents who keeps a considerable list of potenetail purchasers and expects to be very busy in the new year and beyond. Hope this helps
 
Who knows?

The fact that rent doesn't cover the mortgage really should tell you something.

What was the rental yield?
 
michelle123 said:
However my other half is from Derry and property prices seem to be continuing to rise there. My question is do you think it is a good idea for us to invest that money in a house in Derry - and rent it out for a couple of years ? or do you think we'd be better of to invest the money elsewhere
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I'm from Derry. House prices there have reached ludicrous levels. £180K for a terraced house in Pennyburn? £250K for a three-bed semi-d in an estate off the Crescent Link? Madness. Especially when you consider the state of what we shall loosely refer to as Derry's "economy". Highest unemployment, lowest wages, and most persistent deprivation anywhere in these islands? And you think it's a good prospect for high rental income?

Sure, buy, if you fancy spending the next 30 years as a DHSS landlord and the joys of negative equity for the next decade.
 
Rents haven't covered the mortgage for lots of properties in the north for many years. Rents seem very low in comparison to the now massive prices being achieved for house sales. It's debatable whether rents will now start to climb to keep up with those rises.
I think a lot of the recent price rises are due to investors from the south pumping money into the north as they have seen the writing on the wall for property investment here. So in a way the price rises are artificial and not due to any feel good factors or big economic gains in the north. If you decide to go ahead in Derry pick somewhere close to the Uni as at least you should be able to rent to students for ten months of the year.
I don't want to sound too negative as lots of people have made a packet in the last few years, but I wonder how long it can continue for?
Also the costs involved in aquiring an investment property and selling it again in a year or two to buy your own place will eat into your €25k.
 
I've had an investment apartment in Derry for past 5 years. It is well located in the City Centre and the yield is 6 1/2 %. Finding a tenant has always been easy. However there has not been any movement in resell values of apartments until recently so I think it is a good time to get involved as the property boom has only started there.
 
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A. Walsh said:
I've had an investment apartment in Derry for past 5 years. It is well located in the City Centre and the yield is 6 1/2 %. Finding a tenant has always been easy. However there has not been any movement in resell values of apartments until recently so I think it is a good time to get involved as the property boom has only started there.
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Is the current 6.5% yield calculated against the purchase price 5 years ago or is it against its current valuation? If the latter then happy days ....
 
It's based on the original buying price of 60,000 stg. The value dipped a year later but now I see a similar property on daft website for sale at around 90,000 euro.
 
A. Walsh said:
It's based on the original buying price of 60,000 stg. The value dipped a year later but now I see a similar property on daft website for sale at around 90,000 euro.
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Maybe I have mis-read your post. The apartment was purchased five years ago for £60,000 (which at todays conversion rates is about €91,000), and you have recently seen a similar property on daft.ie for around €90,000

Which would mean the value has not increased in five years.
 
not impossible. the FT has just published an analysis of land registry data in the UK which shows that house prices rose 31% in the past three years but that the price of the average new flat has actually fallen 0.9% over the same period.
 
My mistake the price is 96,000 euro Apartments in Derry have not been selling well - perhaps because houses have been so cheap to purchase.
 
Can you confirm please...

the apartment five years ago was £60,000 (which at todays conversion rates is about €91,000), and the similar property you have recently seen on daft.ie is just €96,000?
 
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