The future of Dublin property

Re: Re

Alex,

This is getting a bit boring now. We're going around in circles.

Have a good weekend & maybe we'll clash again in future posts, or maybe we'll actually agree on something.

Toodle pip,
J
 
I agree

I've been involved in a couple of long debates before and they do degenerate into 'I'm cleverer than you are' followed by 'no, actually, if you look closely enough, you'll find (and I'm sure everyone else will agree), that I'm cleverer, wittier, richer, more attractive than you'. So lets call it a day - although if anyone else wants to debate the parental handout issue, feel free.

Good luck with your house and Sue, good luck with your house. I'm saving for my children's house deposits (I'm 34 and I'm not joking (about the deposits, not my age!)) so good luck to them too.
 
Re: alex

So who won out of Jane v Alex?

Maybe they could get together and buy a house :D
 
Re

While Alex And Jane were going hammer and thongs"(Jane's).

Red said above

Sue,
"My parents were going to buy a property as an investment and rent it out but decided to wait a few more years and give me the deposit instead, no strings, she said, "I hate seeing you pay all of that money for nothing" and she's right"

Red replied
Your parents should have bought that property, and rented it to you. Owning your own home will not solve many of the problems you mentioned.
Rgds
Red


I read in a paper at the weekend that it is possible for parents to register for VAT, as sole traders before buying the house This would allow them to claim back the VAT from the outset, and could effectively get an interest free loan from the VAT man. The main advantage would be that this would reduce the amount that the parents would have to borrow to purchase the house. The parents would then rent the house to their offspring and also charge VAT. The article was by a Donal Buckley. Anyone know if this is above board.

Billo
 
Re: Re

The article can be accessed here if you register with independent.ie

I thought the article was totally simplistic and possibly misleading.

There is a potential cashflow advantage to be gained by a property investor if they register for VAT when purchasing a property. The whole plan works on the basis that the investor recovers the VAT on purchasing the property, charges VAT on rents and whenever the VAT remitted on rents exceeds the original reclaim amount, they are then allowed by the Revenue to de-register.

However, there are some serious pitfalls which were not mentioned in the article.

First off is the possibility of a hefty VAT charge arising (13.5% of the sale value) if the property was sold before deregistration took place.

Secondly the article was written on the basis that this could be a way for parents to help their children get on the property ladder, where the kids could pay market-value rent to the parents. However, it was not mentioned that in this situation the parents would find themselves being taxed on this income. When the initial capital allowances run out and the level of mortgage interest relief declines, the tax bills could be heavy.

Mention was made in the article of an income tax saving over five years of €20,470 on rent from the property, yet no explanation was given as to where or how this tax saving would arise.

The article also mentions that if/when the property is gifted to the child, they would have to pay capital acquisitions tax on the value of a home worth more than €365,000. - For a start the relevant 2003 CAT threshold is EUR441,198. Secondly this would be assessed on the net value of the gift (i.e net of mortgage), not the value of the house. Thirdly, there was no mention of a probable CGT hit on the house as a rental property.
 
Average house prices are misleading, at least in Dublin. In Dublin there are always are a couple of million plus euro houses sold each month, which ups the average price. It would be better if statistics provided the median price, i.e. the price you are most likely to encounter when looking to buy. Remember you really are buying a mortgage and the ?housing service? that your house provides. If you can afford the mortgage and have no need to move, fluctuations in the price of your house are irrelevant. Once you are happy with your house and the ?housing service? it gives you, its value is irrelevant unless you have to sell. If there is a drop in house prices soon after you buy and you need to re-locate you may find yourself in negative equity, or the transaction costs of moving may be greater than any profit you may make on the sale. You have no way of knowing what price your house will get ten ? twenty years down the road.
 
house prices

As the reply trail on this topic will testify to - discussions on house prices are never ending. Most the discussion revolves around a macro view of the market and the economy. For those considering getting into the property market and are concerned about timing, general market conditions are only part of the puzzle.

Firstly ask yourself: Can I get the deposit together and can I afford the repayments? ( Assuming a 2% increase in interest rates)

Considering 'you have to live somewhere', what is the alternative to buying? If the choice is rental and you are going to pay the equivalent to a mortgage repayment - you may as well buy. At least you own an asset. Yes, it may depreciate ( when the real estate market went bust in the UK in the eighties - property prices lost on average 15% ) but how would that compare to what you would have spent in paying rent over the same period.

In addition, whether the market goes up or down after you've bought, it won't put any more ( or less ) money in your pocket. The question you will still be faced with is - can I afford your mortgage repayment? If you can then you can protect yourself to some extent from the crash by waiting for the market to recover over time. Property prices dropping by 15% is of no concern to you if you are not selling !!!

The property market may be a great conversation starter but each individual needs to examine their own circumstances, alternatives and make an appropriate decision.
 
.

PM - that a good view on it.

I think people should also consider that a property crash may coincide with a no-jobs experience.
 
Property bubble

Will the property bubble burst now that the was in nearly on its way and whe petol and oil prices goes up will this make everything mush more expensive
 
Collapse......

Not sure of the logic here Mairead, surely people in Ireland still need places to live. In fact if oil prices go up then prices in and around Dublin should icrease?

Anyway looking at the DOW and the NAS right now it looks like there is a high degree of relief that the uncertainty is being removed and the war is finally underway (they are obviously assuming a short war.... George Dubya is a visionary right?).

I'm sure the yanks have planned in greater supply of oil ie. lower prices into the war plan scenarion modelling.


MAC
 
House bubble

If petrol goes up it must effect everything such as deliveries to shops and transport flying etc., house prices are falling in England according to rightmove website and their land registry reports.

France is going into recession and Germany is also in recession the two largest countries in EU hopefully Ireland will not be effect because of this and especially Dublin as it is already very expensive now there.
 
Re: House bubble

Hello Mairead30,

I’d tend to disagree with your analysis that property prices are likely to fall.

The websites that you cite give little evidence for a property price fall. Rightmove doesn’t provide any commentary on the overall state of the market, while the [broken link removed] indicate that prices have risen on average 22% year on year in the UK.

Other sites such as Hometrack , or [broken link removed] indicate that prices are likely to slow, or fall slightly in some areas. However, few are predicting a big price fall, as interest rates and unemployment are still low and falling.

The situation for Irish house prices is very different though however. Irish rates are even lower than those in Great Britain, and, as you point out, with the economic problems facing France and Germany, are likely to fall in the short term, and are unlikely to rise substantially in the longer term.

The Economist ran an article recently, which rainyday referred to in a previous posting (but I can’t find !), which said that Irish house prices were substantially overinflated, due to the strong house price growth over the past 5-6 years. The Economist, being the oracle of the “gloomy science”, tends often to be pessimistic and alarmist. One press commentator recently quipped that they had predicted six of the last two global recessions.

The problem with their analysis, is that it rationalised from the general (property prices in NY, London, Amsterdam) to the particular (Dublin). Our strong economic growth, high rate of household formation, and low start point all meant that house prices in Dublin and other parts of the Republic were likely to storm ahead. Over the past two or three years, they have begun to slow down to inflation plus a couple of percent, which is probably sustainable.

All this analysis would go out the window though, should a little dictator in a far off oil rich land prove difficult for George W, and President Blair to oust. A prolongued Gulf War II could be catastrophic for the world economy, while a quick one could give the global markets and economies just the shot in the arm that they need at this point.

So in summary, I would see little reason to be alarmed about Irish house prices falling.
 
Re: House bubble

Have some of these postings been moved ?

I had a lot of links included in my posting above, which now seem to have been deleted !

:mad

Do I have to re-key them all ?
 
Re: House bubble

Noel your original post is still Nothing has been deleted.

The links should now be restored. Apologies for the editing oversight.
 
Economist article on house prices

This is the Economist article that I referred to in my post above.
 
house bubble

This is the article that I was referring to have I got it wrong?

War and terrorism fears hit housing market

By Ananova

The slowing housing market has received a further blow as a survey showed more than half of people looking to move home are concerned that war and terrorism fears are affecting the market.

According to a survey conducted by property website rightmove.co.uk, 58.6% of people looking to move believe the market is being hit by these fears.

In London, 50% of active house-hunters say the concerns are directly affecting their home-buying behaviour, although only 32% of property seekers nationally say this.

The survey also showed annual house price rises in London have dropped from 18.3% in February to 10.9% in March, with a 2.7% fall for the month.

Managing director Ed Williams said: "It is unclear how deep or long-lasting concerns over war will prove to be.

"The situation has some parallels with the situation after September 11 when people continued to look at property on the Internet in huge numbers but took a few months to turn that interest into real commitment to move."

The figures could be of particular concern for the housing market as they reflect the views of people who are still looking rather than those who have decided to stay put.

Rightmove's house price index shows that the headline rate of annual house price increases fell by 1% from 23.5% in February to 22.5% in March. The monthly increase of 1.2% was entirely accounted for by increases in the north and parts of the Mid lands, with southern parts of England showing no change.

It also showed a sharp increase in the number of properties available for sale, in stark contrast to this time last year, when a shortage of available property was becoming apparent.

Copyright Ananova 2003 all rights reserved

17/03/03 07:17
 
Price Crash

The trend for falling in houses prices in 2001 was reversed last year mainly because of Charlie's reintrodcution of interest relief in Dec 2001 for investors and ECB rate cuts in 2002. These are once off measures whose effects will not last in the medium to longrun. With unemployment rising, real disposable income falling, general consumer sentiment declining, euro appreciating and housing supply set to outstrip demand - prices are likely to decline over the next 2-3 years. I think the real problems of people over borrowing over the past 5-6 years will only become evident when euro interest rates return to their long run average.

All this talk that Ireland is a special case is misleading. If anything Ireland is more exposed to global trends than many of our larger neighbours. If the US experiences a double dip, US firms in Ireland are not likely to keep hoarding labour as they did during the 2001 recession. The job cuts will be swift and reality will quickly return to an overpriced housing market.
 
Bits....

Read an article in the UK Financial Mail that the average Irish home costs 6 x salary.

The Irish housing stock increased by 4.8% last year.

Can it continue? Not a chance. Let's face it, if Ireland hadn't joined the Euro Ireland would now be in recession. It needed high interest rates to curb everything. It's simply putting the big POP off until later. Problem is the fall will then be greater.

Buying a house? Long term you can't go far wrong buying a house (unless of course you live in Japan!!), short term? Big problems!

Handouts? I hope to be in a position that I can help my kids out when they come to buy a house. It would be nice if I can pay a chuck of their deposit. Will I get involved in the Mortgage? Not a chance. I won't be held accountable if it goes wrong for them, by all means I'd help them but I won't get too involved. As long as they're responsible this won't happen them.

BTW when I die they get the lot anyway!!
 
You must log in or register to reply here.
Back
Top