Selling to rent in anticipation of house prices falling?

Re: House Prices

euphonyTEL said:
House prices are an ENORMOUS BUBBLE , caused not least by the willingness of the banks to lend into and fuel the bubble and the gullibles who believe that house prices simply CANNOT fall.

Every bubble bursts in the end but I predicted a slow puncture not a bang and advised accordingly .

What exactly is your analysis , if any ??????
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The alleged bubble is irrelevant to those who are buying to live in a place for the forseeable future and can afford to service the mortgage (within the margins of a reasonable rate stress test). If the worst was to happen and such buyers got into a negative equity scenario what does it matter? They have a house to live in and on which they can afford the repayments. Investors piling into the market often blindly (just look at some of the basic queries posed by people in that situation on this forum!) is another matter altogether. Many of these may get burnt but that's a risk that you take in business. Unfortunately many of them don't seem to recognise that such investments are business or objectively assess the risks involved.
 
Re: House Prices

ClubMan said:
The alleged bubble is irrelevant to those who are buying to live in a place for the forseeable future and can afford to service the mortgage (within the margins of a reasonable rate stress test). If the worst was to happen and such buyers got into a negative equity scenario what does it matter? They have a house to live in and on which they can afford the repayments.
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That analysis is absolutely correct in itself . Most people will not be 'bothered' by neg eq on their PPR and will not be forced to sell at a neg eq point and 'take a loss' . I did stress to the OP that the reentry costs to the market are ,crudely, 15% and that I did not see him realise that it a given year
Investors piling into the market often blindly (just look at some of the basic queries posed by people in that situation on this forum!) is another matter altogether. Many of these may get burnt but that's a risk that you take in business. Unfortunately many of them don't seem to recognise that such investments are business or objectively assess the risks involved.
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Yes but thats the ENORMOUS problem that has been stored up for us by the ongoing bubble.



  • They will panic on a large scale
  • They will liquidate on a grand scale
  • the Banks will take a big hit on their loan books
  • they will make the entire housing market tank
  • the Banks will have very little funding left to reflate anything useful to the economy, having blown it on the investor muppets
  • a general financial panic will ensue and the sheer illiquidity of the economy, caused by illiquidity in the banks, post bubble bursting, will have a further deflationary effect that will reinforce the initial falls with other falls in subsequent years .
In terms of hard predictions I say there will be no such thing as a 100% morgtage or a Neg Am mortgage by 2009. 90% will be the max again. For investors it will be a 75% mortgage max as I stressed in my initial answer to the initial post.

I now turn to AKA who is correct in his/her analysis of the PPR buyers situation save the following.

  • his/her affordability works if both parties are in fulltime employment, factor is a baby or two or a P45 in a downturn of sorts and affordability is out the window .....although you can have a payment holiday of one year after 3 years of paying , a delayed Neg Am phase if you will.
  • over 50% of purchases are NOT PPRs , holiday homes or investments is what they are , these fools (the recent ones) will tank the market not the PPR owners who will be hit by the turbulence. Huge interest there may be but who funds it and is it predicated on the myth that house prices must go up all the time ???
  • Net immigration into Ireland is nowhere near as important as Irish Household formation , Poles will live 10 to a house and save money liek Paddy did in Kilburn and Boston in the late 1980's or have we totally forgotton?? 'Irish' households once formed are 2 to a house and take up 5 times more houses per capita than immigrants often tend to.
  • the enormous numbers of new houses built in the past few years...and THEN rented......tend to explode the 'dingy rental' myth n'est pas ?????
  • the immigrants will piss off when the building boom is over, they are here to build or replace those who have gone building from the factories that used to employ them . More empty properties and more investor panics
I still think the OP will not realise 15% in one year though and as Brendan correctly said the OP will pretty have to time a 20% fall perfectly in exactly the right year and end up in a better home/area thereafter and a profit thrown in , my tea leaves are out of focus there head .

Therefore I cannot help him/her predict that 'perfect year' and advised him/her to plan on bottom feeding off the panicking investor community when the bubble bursts, and the bubble will burst .
 
I like reading these discussions but tend to sit on the fence a bit myself as, generally, both sides are well put.

However, something I never see mentioned is what would happen the property market if a multi-national such as Intel was to up and leave for India / Israel. This is something I believe has become more likely after the EU directive with regards to tax breaks for Intels expansion here and subsequent development of a plant in Israel.

In, particular, if Intel were to go, the whole of North KIldare and West Dublin would be greatly affected. Would this then have a knock on affect for the rest of the country?
Any opinions on this?
 
In relation to property prices falling I get sick and tired of consultants, people in the know and financial experts generalising about property prices in Ireland.

As far as I am concerned Dublin is a separate entity than the rest of the country and parts of Dublin within this boundary have great diversity also. It all boils down to location, closeness to the City and surrounding infrastructure.

There is also market segmentation as the value or cost of houses and apartments bear no resemblance to each other in the market place.

I tend not to look at Irelands current situation but also what did happen in other countries with similar infrastructure problems like Italy, Spain and England.

If prices were to fall and I believe that they will affect the Greater Dublin area and Country towns mostly, these will be hit hardest and mainly at the mid to top end.

If interest rates increase, which they should as the trend has been moving downwards for the last 5 years they will impact those who can least afford it.

Prices now in the greater Dublin region are unreal; people are committing themselves to mortgages of up to 35 years on two bed apartments in bad areas paying out over €330K.



My question to you all, is what is driving the property prices up? , One answer greed! It’s now a sellers market and buyers are getting a pounding with increases nearly every month.

I looked at a seafront property last week in Clontarf, it was guided for auction at 1.9 Million, it reached 2.35 M but was then taken out of the auction and reenlisted at 2.6 Mill. Nearly 40% increases from guide to final listing price, what was the reason? Greed.



I think the apartment market in un-established areas is very, very fickle, people are just buying on the blind and they will suffer the consequences. They are ignoring apartment sizes and development density.Some developments are already going through rough stages like Northwood in Santry , Applewood in Swords , where investors have had to go to Social Welfare or Health Board for tenants much to the detrement of others.





Places like Rome have seen wandering house prices and interest rates for years, but property in the City or within 10/15 minutes drive has been insulated from price decreases, only moving between +/- 4% and +/- 8%. Why because they are close to all amenities and to economic opportunity for residents.



The drop will come, but not to those who have purchased properties, which have many positive intangible and intangible factors, which will appeal to the market. Look beyond the four walls and the nice brochures people.
 
dieter1, you are not the only one. The thought of doing such a thing has crossed my mind. However, rising property prices have continued to prove all cassandras wrong (myself included) so trying to predict if and when the property bubble is going to burst or deflate moderately has thus far been a relatively futile exercise.



If you consider your apartment to be purely an investment what would you do with the profits from its sale? Sitting on in risks your pot devaluing in real terms due or becoming a tempting cash pile to dip into if and when required. Any other investments would also carry varying degrees of risk and you could easily lose more if a drop in property prices was mirrored by a general global recession and/or stock market downturn.



However, if or when the property bubble does burst one or more persons will have had either the chutzpah or fortitude to sell at the right time whilst all around them panic and finger-pointing sets in. To paraphrase David McWilliams: in a credit fuelled economy you don’t want to be the last buyer!
 
I would not be an expert but... I reckon the biggest thing that we can predict to happen in the time frame outlined at the start of this thread will be the maturing of all those thousands of SSIAs putting 37+K in the pocket of many couples. One per cent increase in mortgages may happen but all that cash will only send the property market one way.
 
Some analysts have speculated that, based on the fact that c. €40K is only about the deposit on a house these days, maturing SSIAs may not have the significant impact on the property market that some people have predicted.
 
Dieter,one of the columists for the Sunday Business Post tried this last year or the year before.I see all the same arguments here and remember reading his article where he had to buy back in a year later but paid 15% more for a house which was smaller than the one he originally owned.He said at the time his friends were trying to console him that he should not have looked at his family home as an investment! If I could remember his name I'm pretty sure you could read it from the archives at the SBP.At the time I was thinking the same as you,but after reading this guys experience I gave it a miss as he had researched it far better than me and still went wrong.i.e. lost money.
 
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