Fear factor dominating Ireland's property market

Sheila O'Flanagan, Novelist

3rd Oct 2011

Sheila O'Flanagan is an internationally best-selling novelist and former sovereign bond trader.

The most recent daft.ie property report comes amid turbulent times on stock markets which have seen some of the biggest falls and subsequent rises since the collapse of Lehman Brothers in September 2008. The cause of these roller-coaster rides is the European sovereign debt crisis which is dominating the global economic agenda. European leaders have been trying to deal with a pan-European problem as though it were the responsibility of the few, rather than the many. The markets have seen these efforts as risible and have punished the Eurozone accordingly. However the problems of Europe are also the problems of the world, and leaders of other countries and other economies have begun to put the pressure on European policymakers to get their house in order to avoid a return to global recession.

UK Chancellor George Osborne complained that the international community is 'losing patience' with Europe; in the US both President Obama and his Treasury Secretary Timothy Geithner have tried to galvanise European leaders by saying that the crisis is 'scaring the world' and that the threat of 'catastrophic risk' needs to be taken off the table; Christine Lagarde, recently appointed MD of the IMF, and with an in-depth knowledge of some of the Eurozone's darkest financial secrets, noted that the challenge 'could not be more urgent'.

Until now, stop-gap measures have been made on a regular basis by politicians who are more concerned with approval domestically than the bigger picture, and who therefore disagree over the best course of action. Like the Hydra of Greek mythology, as soon as one disaster is averted by last minute intervention, two more appear in its place. Meanwhile the modern day Greeks protest daily about the austerity measures being imposed upon them and edge ever closer to a sovereign default.

The last few weeks have brought deep pessimism lifted by occasional bouts of (possibly irrational) optimism, and the overall background to world economic issues remains still extremely difficult. Notwithstanding their comments about Europe, both the UK and the US have major debt problems of their own. The fact is that growth and stability are still a long way off for economies that have spent the last decade gorging on debt. During those times, world markets were motivated by greed. They are currently motivated by fear. Fear in markets is much more powerful than greed.

Fear continues to provide the backdrop to the Irish housing market because it is impossible to view it in isolation from all other markets. The rationale for buying a house might be more self-motivating than for equities or commodities, but when the reward is uncertain and the fear is palpable it is a decision that can easily be deferred. Notwithstanding a tendency to seize on any piece of positive news and hope that it signals a return to economic stability if not growth, it is only when the possibility of either being sustainable is evident that the fear of the participants is outweighed by the prospect of reward and they become motivated towards taking action. If the fear factor was taken away, would the Irish domestic market be considered value for prospective home owners? Clearly, the trend has been unremittingly downwards as the bubble-inflated prices of the peak continue to undergo a savage correction. The question now is whether seeing prices at about half their peak-time levels provides a natural floor from which buyers see value again, thus signaling a change in the trend.

The daft.ie report shows that property prices in Dublin are 53% below their peak valuations. Around the rest of the country, price declines of between 40-50% from the peak are the norm, with only Mayo (37%), Kerry (38.1%) and Limerick City (39.5%) showing smaller declines. As far as corrections go, it's a substantial one. Is it enough? For a real and definitive change to take place in the perception of the housing market in Ireland, a real and definitive change in people's perception of their ability to service mortgages has to take place too. In order for them to make an informed decision, they need to be confident about their long-term employment prospects, the value of their net incomes and the direction of interest rates in the future. The Irish economy continues to lose jobs and the government's troika-led austerity measures continue to affect net incomes which makes it difficult for potential purchasers (and current mortgage holders) to feel confident about their ability to service their debt. However even if they are, they also are faced with an additional problem, the lack of liquidity in the market. This is not the same as a lack of available stock. The stock of houses, at 59,000 is close to the 18 month average and slightly lower than the 62,000 average in 2008-2009. But availability of houses does not equate to a turnover of houses, because the market is constrained by the low level of mortgage approvals by banks who have locked the stable door long after the horse has bolted, and who cannot access international credit markets in a meaningful way. Furthermore, dysfunctional credit markets, courtesy of banks with paranoia about counter-party risk, do not provide a stable background from which a sustained recovery can be made.

The average time a property spends on the market has come down by two weeks since last year, which, for optimists, could provide a level of comfort, although that average hides sharp differences in location: it takes about 4 months for a house to sell in Dublin but 13 months in Ulster. The property bubble was a consequence of plentiful cheap credit and lax lending. Even if the Eurozone leaders finally stop kicking the can down the road, the availability of credit in Ireland is likely to remain extremely limited for the foreseeable future. The market may be near the bottom but it can still spend a considerable amount of time there before the trend changes.


HIGHLIGHTS:

Sale Index
Asking Prices, Residential Sales

Stock and flow of properties
Stock and Flow of Sale Properties


SNAPSHOT:

Snapshot of Asking Prices Nationwide
Snapshot of Asking Prices Nationwide

Discuss This Article

  • Re: The Daft House Price Report Q3 2011

    Posted By: Justin Date: Monday October 3, 2011 @06:56AM

    Excellent news! The Irish are finally wising up to the fact that prices are over-inflated here. Not only selling, but also rental prices are down--as they should be. Another 10-30% drop would be about right. People need to realize that the days of high selling/renting are over. Fact.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Anonymous Poster Date: Wednesday October 5, 2011 @02:36PM

    I am currently trying to find some official reports and figures about rental prices going down, as my dear landlord has decided to rise my rent while we are in a recession. Anyone has any tips?

    Thanks in advance

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Mary Date: Thursday October 6, 2011 @12:16AM

    A drop in the order of 50% with 2 bed properties averaging at 105k euro looks like a bottom to me. The average income of 35k x 3 is a historical ratio norm for mortgages and means properties are now affordable to first time buyers.

    Extreme negativity and fear creates market bottoms, and while people were unaware of a top taking place in 2007 the reverse may also be true now.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: alan Date: Thursday October 13, 2011 @10:47PM

    I dont think we are near the bottom yet!!!

    interest rates @1.5%, who would take on such a huge interest rate risk??

    doubts over Irelands continued membership of the Euro... ie having a mortgage in a more highly valued currency..

    the quality of the properties are terrible

    the increasing taxes coming on top of already levied

    bad weather

    you would be mad to buy

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Daft Prices Date: Tuesday December 20, 2011 @08:46PM

    Well I didn't hear anyone stop in the heady days of 2006, the fact is, simple there is no way as I did pay boom prices, and sensibly sell my property at a bargain basement and probably lose close 200,000 euro in the process, so it will need be rented out, ok there may be bargains to be had, but I doubt there are too many like myself that will lose 200,000 euro or more if they can possibly avoid it.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Justin Date: Monday October 3, 2011 @07:00AM

    Right: "in the US both President Obama and his Treasury Secretary Timothy Geithner have tried to galvanise European leaders." But what did the US Federal Reserve do? They have said interest rates will remain close to Zero until 2013. What does that mean? They expect the recession to last until 2013. Conclusion? No rebound in housing/renting prices until (possibly) 2013--if ever. Good to know the truth.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: mrbee Date: Monday October 3, 2011 @01:07PM

    10 - 15% below asking price is certainly not a cheeky offer, not considering the seller probably factors in a 10% drop in asking. I have been in the same situation as you. I have put offers in on a couple of houses. One didn't even bother getting back to me, and I now think they have rented it out. the other one took it off the market. did some work on it, put it back on a while later with 20K knocked off the price. go figure

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Italian living in Dublin Date: Monday October 3, 2011 @09:56AM

    We have been around looking for a house for the last year and half. Strangely (or not..) two house we liked and we put a cheeky offer on (around 10-15% less than asking price) were taken off the market and rented out. So, I wonder if that's it. I mean renting are still high (at least in Dublin) and homeoweners who do not have to move, will prefer to rent out a place than sell it on the cheap.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Sarah Date: Monday October 3, 2011 @12:48PM

    Hi Patso,

    You use the phrase "in terms of" allot. Other than that I think you are spot on. I read your response to Dr. Constantin Gurdgiev's report on property prices for Q2. You also made some predictions that this year would be very bad for the housing market based on the same assumptions made in the Q3 Daft report by Sheila O ‘Flanagan.

    Apart from the fact that you like to say that you have been right so far "in terms of" your predictions, which is as easy as shooting fish in a barrel in our current economic climate; do you think that Justin above is correct in assuming that Property prices will continue to degrade until 2013 or do you see a silver lining in the clouds?

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Patso the fatso Date: Monday October 3, 2011 @07:42PM

    Sorry no silver lining in the cloud. In fact I see a thunder storm approaching. This recession will continue well into 2015 and then if we have achieved any savings and reduced our capital spending sufficiently, and also balanced our budgets in accordance with what we are told by Europe; then we will start to see some improvement in our economic and social circumstances. Until then we will be scrapping for business, and there will be a lot of internal turmoil, high unemployment and a lot of emigration. Even by 2015 house prices will not be increasing in value but at least they will have started to stabilize.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Patso the Fatso Date: Monday October 3, 2011 @10:29AM

    While the report, especially the opening two pages courtesy of the delicious Sheila O ‘Flanagan, presents interesting reading in terms on the effects international politics and policies are having on property prices; I still feel that we are not getting the true picture, and that figures are being messaged to reflect a brighter
    Take for example the statement “The average asking price between June and September nationwide was just below €195,000 compared to €366,000 in mid-2007”.

    Well this is quite preposterous frankly, because for those keen eyed individuals amongst us the same figure of €195,000 was stated as the march to June national average and has not changed since, so if the property market in general has further declined in value by 3.5% as this same report purports, then this figure should read close to €188,000.

    This was the first thing I have noticed about the report, and as I have said the rose tinted glasses appear to have come off in terms of realism in terms of effects of macroeconomics and political pressure on the Irish property market. It appears that Daft.ie have adopted a “tell it like it is” policy in terms of information snippets.

    The report does however still suffer the same old fragility in terms of solid figures and facts. This is not to say that the report is not factual; indeed referring back to my earlier statement €188,000 is technically “just below” the figure of €195,000 and therefore Dafts’ statement cannot be defined as untrue.
    I refer to this type of reporting as “fuzzy logic”, where you give the potential reader information in such a manner that they still remain vague about the content, yet still feel that they have a handle on the situation.

    The great frailty about these types of reports is that they are based on asking prices and as we all know now, it is seldom that a property makes the listed asking price in the current market environment.

    I write on this topic fairly frequently now as I have a vested interest in the market. And while I have money invested in property I would sooner hear the actual facts rather than the tiresome “positive spin” rhetoric. Many potential sellers have unrealistic ideas of how much they should be asking for their property when they decide to sell nowadays. Subsequently they are forced to reduce their asking price to encourage potential buyers. This unrealistic view is often reinforced by reports such as these. It is critical that potential sellers do more investigation and background research for themselves so that they may initially establish a firm and reliable asking price. Where then do you get that information? You should contact your local estate agent and enquire about recent “sale agreed” properties in your area. The estate agents might then be able to give you a more accurate account of what properties similar to yours are making on the market presently.

    I know that Daft and MyHome would not serve the market well by “spooking” people. This is probably why we so often read such optimistic reports. I say optimistic because I feel that the declination figures are grossly underestimated (and I know from personal and professional experiences that people are selling below asking price and that selling prices are accelerating downward in both Dublin and Cork where we have offices) in terms of percentage drop over a three month period.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Bonio Date: Thursday October 6, 2011 @12:27AM

    local house prices have dropped to 85k euro for a 2 bed and 50k for investment property, I fail to see how that trend can continue.

    People won't commit financial suicide just because others want to bargain hunt, they'll just take them off the market and rent them out. A lot of houses are still advertised at prices as they were a few years ago, and although the agents say ' you could get 10-20k off this, if you could the price would already have been altered to suit. So when the few priced at ridiculously low levels , (to attract buyers who are still waiting to see if they can get a better deal still) are eventually sold, the remaining property will be back at former higher levels. Where does that put you if you find you sold into the bottom of the market ?

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  • Re: The Daft House Price Report Q3 2011

    Posted By: patso the fatso Date: Monday October 3, 2011 @01:34PM

    Oh to my eternal shame. I m
    istakenly spelled massaged, messages in my earlier comment. Such are the dangers of writing long messages via smartphone.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: still waiting to buy Date: Monday October 3, 2011 @02:15PM

    not sure "fear factor" is quite the right reason for lack of house sales.

    there is enough money on deposit in irish banks, to buy all thee residential stock in the country many times over. the frugal are currently having it their way. as properties seem like "good value", they are selling for a reasonable price.

    if the banks returned to their previous manner of lending, we would have a return of the reckless borrowing. and why not? before the collapse, people were people were prepared to live the high life, all the luxuries, the holidays in the sun, no expense spared.........sure what if something goes wrong- we can then put our names on a housing list. safe in the knowledge that they'll hardly put you in jail for it, so what can they do? and if they didn't think that before the collapse, they certainly must do now, as we can all see, you can lose millions and still drive around in flash cars and live the high life, or lose couple of hundred thousand, and throw back the keys.

    the frugal, i believe are slowly starting to spend, but taking everything into a relative perspective, the prices are still too high. economy not expected to grow for another while, another sever austerity budget on the way meaning less money in the pocket again meaning less money to pay a mortgage.

    we are so unwilling to accept the possibility of house prices returning to 1997 levels, but if wages are dropping and taxes and expenses are rising, then that's the level we're heading for. anyone noticed how little mileage you now get for €50 of petrol/diesel.

    in truth, i don't think we're that far off the bottom, by that, i see 20-30% off current selling prices as the bottom. at that stage, there will be a relative value to be had. but for the banks, even a possible stabilising of the market is not enough to justify a change in current lending policies- the uncertainties regarding income remain a great challenge.
    i'd love to see a market return, not dominated by greedy investors. i've looked at house in really good family estates, turned into shacks by the owners to rent out more rooms. equally, some homes were turned into shacks by the tenants.

    so the current market as i see it is- vendors who realise where we now are, are accepting the current price offered, and those who don't are ending up waiting 2 years to find a buyer.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: TP Date: Monday October 3, 2011 @03:40PM

    Just bought a house last week in need of renovation. Banks would not give me money citing that the asking price was BELOW their minimum threshold for mortgages. So I'm not allowed be sensible and buy a cheap house? How stupid. I arranged with seller and solicitor that I would buy it directly in yearly payments - no banks involved. Is this the future?

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Would like to know what houses sell for Date: Wednesday October 26, 2011 @05:27PM

    I know this is a difficult question to answer in the ROI as everything is so secretive.
    I notice one or two people who have been actively looking for property. Do you have any idea of what the average % difference between asking and selling prices are?

    Also I notice that some people quote an offer of 10 - 15 % below asking price as cheeky. I don't think it is in the present market (depending on your position). I think as a maximum you should be looking to finish at a minimum of 20% below the asking price, depending on the price to begin with?

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Anonymous Poster Date: Thursday November 3, 2011 @11:07AM

    We applied for a mortgage recently and were refused because the bank said the house was too cheap! Ya gotta love the rational!

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  • Re: The Daft House Price Report Q3 2011

    Posted By: BMD Date: Monday October 3, 2011 @09:37PM

    I worked for a building company from 1994 to 1998. They where building & selling houses in Lucan for 50k euro they were making ~10k profit
    Firstly can you imagine what the developers where making at the height of the boom ~ 200k per unit secondly where is all this money gone since in many cases there was no personal guarantees on developer loans (i am sure nama has some clue)
    Houses are still making ~ 200k in lucan which is 4 times what they were selling for in 1997.
    1997 was the beginning of the economic boom in Ireland currently we are in a recession which will last another 2 to 3 years as a best case scenario worst case the recession continues for 8 to 10 years similar to Japan or we enter a depression.
    If under any of the above scenarios house prices should be less than 1997 therefore we should expect further drops of 75%

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Bonio Date: Thursday October 6, 2011 @12:36AM

    ..re a further drop of 75%

    2 bed houses are being priced at 105k, that's the build cost excluding the land. A further 75% reduction would take it to about 25k , am I missing something here ?
    nobody would choose to sell that low. If the govt can create a situation when distressed owners are taken out of the market so they can rent their homes or stay on as part owners, the property market will probably return to normal over a period of a few years.

    The ghost estates are mostly in the north west and as they are probably owned by Nama will be sold/end up as community housing for rental.

    12% unemployment means 88% of the population are still in employment, and the worst hit group are generally the under 25's.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Nelly Date: Thursday October 6, 2011 @10:22AM

    I agree in principle with the first statement you made. House prices after 2000 also went up because of rising employment costs, site costs and raw material costs.

    In 1995 I was able to build a house after paying 18,000 euro for the site; for 22,000; a standard three bed 1120 square foot. I paid brick layers, plasterers and electricians the going rate. At a total build cost of around 43,000 euro, my house was considered expensive. Granted I did a good job on it.

    In 2004 I went to build a house along with my son. It cost 105,000 for a site five doors down from my own house. And it cost him 180,000 to build a four bed 1350 square foot with attic conversion. 96,000 of that figure were spent on labour costs and the remainder was spent on materials and fees to South Dublin County Council for dishing the path, water connection to the mains etc. The material costs making up the majority of the remainder, I can't remember what the fees to SDCC cost but these were unavoidable yet acceptable.
    In January, I decided to put an extension onto the back of my house. I was surprised to see how much costs had come down. I was quoted 35 euro per electrical socket by the electrician. That is about half what I paid for the same job in 2004. Also the block layer charged about half the cost I was charged in 2004. Similarly, plaster work. The only charges that didn’t come down too much were the plumber fees which had only come down by about 30-35%. Material costs were half what they were in 2004. I put in French doors at the back of the house and also double glazed wall to floor panels at less than half the prices I was quoted before.

    So when you say that property values cannot drop as the fixed costs will always determine the basement value; you have to factor in that fixed costs have also reduced including site costs, labour. The only fixed costs that have not come down noticeably are the charges by councils and connection costs.

    That said I think that property values will continue to fall for the foreseeable future. I think as long as labour costs are reducing and material costs are reducing, we will have a knock on affect. Also you have to consider the other critical factors like how easy it is to get a loan from the bank. Also how much the bank will give to people and the criteria they use to determine how much you can borrow. Then there is the effect of government budgets on household income which further reduces the ability to service loans, and this has a knock on effect.
    In my opinion, house prices have the potential to fall a lot further, but not by 75% of current net property value. Perhaps by 35-40% over the next three years from where they are now. Rents will also come down too as property prices decrease. If rental prices remained the same and property prices reduced by 40% over three years then that would mean that it would be cheaper to buy than rent if you could get a mortgage. But this cannot happen because then the rental market would collapse and it would be cheaper to rent than to buy. If you see what I mean.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: john randell Date: Monday December 10, 2012 @11:43PM

    I reckon u could be right pierce we could be heading for a depression and along the same lines of japans property market they had a collapse similar to ours in 1989 and prices have still not recovered

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  • negative equity

    Posted By: help! Date: Wednesday October 5, 2011 @10:02PM

    Can someone tell me if you can just stop paying your mortgage, even if you can afford it? We are wasting our money as we are already trying to sell our apartment for €150000 less than what we paid for it in 2006. We want to retire back to our country, but struggle to sell.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Anonymous Poster Date: Thursday October 6, 2011 @01:59PM

    I would advise you not to stop paying your mortgage. If you hand back your keys to the bank, claiming that you can no longer afford to repay your mortgage; the bank may pursue you for the outstanding balance. You are effectively in a contract, enforceable by law. Failure to live up to your side of the contract will not release you from your obligations. In fact, the bank will likely pursue you legally through law to recover any outstanding balance + legal costs.
    That is not to say that your situation is hopeless. If you have decided that you can no longer meet your mortgage obligations (cannot meet repayments due to insufficient money coming in to meet repayments does not count as bankruptcy), then you are best advised to speak with your bank. You might be surprised how accommodating the bank will be to your individual case.
    Naturally, you can argue that your asset is devalued into negative equity (selling the asset will release less capitol than was originally paid for it. It is now worth less than you paid for it) and that it is unfair that you should be expected to pay the full mortgage because it now has less capitol worth than before.
    The bank will simply state that you would not be having these thoughts if the situation was the opposite and your asset had appreciated in value. The court will see this point as fair and will settle in favour of the bank.
    Imagine if everyone just decided to stop paying their mortgage. What do you think would happen? There would be enforced repayments and offender’s accounts would be frozen. On top of this there would be thousands of cases in front of the courts. The costs would be carried by the people who broke the contracts.
    If you simply leave the country, I don’t know what the banks can do about it actually. I have already heard that people have done this before. I suspect that you will not be able to return to work in Ireland at the least without settling accounts with the bank. I suspect that your name will be black listed. This will certainly affect you if you work as an accountant or solicitor, but it may not have the same bearing if you are otherwise.

    I would think twice about it and perhaps legal advice should be sought.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Big Joe Date: Friday October 7, 2011 @10:25AM

    From the Irish times this morning:


    Prices down 60%
    THE CSO says house prices have fallen nationally by 43 per cent since 2007. MyHome and Daft say they’re down by 42 per cent and 48 per cent respectively.
    But agent Sherry FitzGerald says they’ve fallen by 57.5 per cent nationally, and by a whopping 62.3 per cent in Dublin since the peak of the market.
    What are buyers and sellers to make of it all? All the figures are accurate as far as they go, but are based on different information. The CSO bases its figures on mortgage drawdowns. MyHome and Daft base theirs on asking prices – but houses aren’t necessarily selling for those amounts.
    Sherry Fitz economist Marian Finnegan says that in effect, prices are back to 2001 levels, basing this “on live up-to-date market analysis without any lag which an analysis of mortgage drawdowns is subject to”.
    DNG boss Keith Lowe agrees with Sherry Fitz that average prices across Dublin are down around 58/60 per cent since the peak of the market in March 2006.
    “We base that on a basket of properties that we revalue each quarter.
    “The CSO figures are very credible but don’t reflect the fact that one in three buyers in Dublin are cash buyers.”
    And of course the percentage drop depends a lot on location: properties that sold for over €500,000 in good times are down by around 67 per cent says Lowe. In south Dublin, the average fall is 63 per cent, in north Dublin, 58 per cent and in west Dublin, 54 per cent. (The real high-flying properties can expect worse again – like the 78 per cent drop in Derek Quinlan’s Shrewsbury Road house.)
    Both DNG and Sherry FitzGerald are basing their figures on actual prices achieved for homes they have sold.
    Everyone of course is asking how low can prices go. Says Lowe “My opinion is that prices will continue to fall until we have a fully-functioning mortgage market.”
    Ed Carey, residential chief of the Society of Chartered Surveyors Ireland (SCSI), says agents know prices are down 50 to 60 per cent – but says it’s time to move away from using the peak of the market as a reference point.
    “If I have to sell a house, what I need to know is how much it might make today.” You’ll find that out, he says, by calling local agents.
    If we had a property price register of course, we could check this at the click, well, of a mouse (check out Mouseprice.com to see how easy it is to get information across the water.)
    In the meantime, let’s hope that the Government plans to keep its promise of passing the law setting up a register before Christmas.


    http://www.irishtimes.com/newspaper/property/2011/1006/1224305320540.html

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  • Re: The Daft House Price Report Q3 2011

    Posted By: David Date: Saturday October 8, 2011 @08:30AM

    Prices may be back to 2001 levels but so what? The average Homeowner who bought from 2001 back have on average 40%+ of their mortgage paid (10 out of the average 25 year mortgage). In addition to this inflation in the intervening period will have boosted this further.

    is a common fallacy being advanced that if prices are back to 20o1 levels then everybody who bought in 2001,02,03,04 etc are in negative equity. This is simply not the case as in the majority of cases the properties would have been purchased with at least a 10% deposit. When you then factor in the number of years paid off the mortgage up to the present day in addition to the eroding qualities of inflation then in most cases these homeowners are not in negative equity at all!

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  • Re: The Daft House Price Report Q3 2011

    Posted By: someone waiting to buy Date: Saturday October 8, 2011 @02:58PM

    i agree in relation to sherry fitzgerald now giving a true reflection of current house prices and the level they've dropped since the peak.

    in my own experience, the way i have been able to get to grips with the market and current prices, is that i've been actively bidding on homes for quite a while. as a result, i know what a particular house went for, give or take 5 grand or so,
    you build a certain type of relationship with estate agents after a while. they kind of know how much you have to spend, whether you are a cash buyer or are mortgage approved and generally have a sense for knowing if your financial position is as you say.

    i think there still are people who haven't done their figures and think they caan afford to take a risk. there are still people out there who are making offers without the funds to back them up, and there are people who genuinely don't expect a request for additional funds from the bank to be declined.

    in most cases, the banks are doing more of a forensic examination of your accounts, your employment record, savings/loan debt record before they decide how much you can afford to repay. other factors such as those which they must try to predict, in particular the upcoming budget, which in most cases will reduce the disposal income of most people.


    when dealing with estate agents, having heard tales of woe, i've been suspicious of other "offers" and have called their bluff. in most cases, the sale will have gone thru, but in addition to the facts presented to you and the research you've done, i think it's wise not to ignore your gut feeling. an example of this is, that one or two houses i've been outbid on, go sale agreed, only to be back on the market 3 or 4 weeks later.

    well i think i'll be someone waiting to buy a little longer. if i have on 6months more, i''ll be able to put a new car on the driveway too.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Patso the Fatso Date: Monday October 10, 2011 @04:11PM

    Hi someone waiting to buy

    I like your way of thinking. I am also very suspicious of the "other bidder" who suddenly appeared when my client decides to put in a firm bid in.

    Of course you have to be very careful accusing people nowadays; buy the natural feeling is to doubt the situation. I saw houses go up in value by 8% in value during this type of bidding war in the past. All because "the other bidder" was willing to bid higher than my clients. And then came the line; "I feel that if you increased your bid by ten to fifteen thousand you would put the deal out of "the other persons" reach.

    I agree with you totally. Well said.

    As a buyer you must always be prepared to walk away from a deal. Seller asking too much - walk away. Suspicious planning appeal - walk away. Planning permission refused several times on same site -walk away. Estate agent trying too hard to push the deal on you - stick to your original offer or -walk away. Legal strings attached -walk away.

    As they say in Liverpool.....you will never walk alone. Other people who get legal advice on these issues are prepared to leave such time consuming deals for dead. In a market where property prices are declining at a rate of between 14% - 18% year on year, there won’t be a sudden turn around. There won't be a sudden rush for properties. With another budget looming ahead of us and further austerity measures also; the scene is set for further a continuation in declination of property prices.

    I have said it before and I will say it again continuously until things do improve; there is no silver lining in sight for the property market. It’s a matter of supply and demand, and lack of available credit. There is too much supply, no demand and it is difficult to get credit. This is a market wide phenomenon. It is happening everywhere. It is basically a correction to 15 years of a wild property market. It won’t be retrained in three years.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Positive Spin Date: Monday October 10, 2011 @01:22PM

    I was informed today that RTE were doing a revisit to the Future Shock program made back before the boom. The program was based on speculation that there might be a bust in the Irish property market; an unthinkable thought at the time.
    My colleague suggested to me that the presenter of the show, one Mr. Richard Curran, now famous for Irish Dragons Den; was encouraged to make a follow up program placing a positive spin on current events. The idea being that a program suggesting that there is life returning to the Irish property market, would spur investors on and cause people to spread positive notions about Irish property opportunities; a self fulfilling prophesy so to say.

    I tried to follow up on the story and came upon the following link to a story

    http://www.scsi.ie/publications/press_releases/scs_press_releases_2011/suntimes

    It was all sounding too good to be true until I read the following statement:
    Prices can’t fall much further — the latest report from the estate agency network Sherry FitzGerald, which has historically been accurate, says prices in Dublin have fallen by 62.7% since the peak and 57% elsewhere. Meanwhile, the supply of family homes is shrinking.

    It all looked so good and honest and spin free until I read the lines "Meanwhile, the supply of family homes is shrinking".

    This is absolute clap-trap. I have been monitoring the Irish property market for three years now and I have watched the number of properties on the market grow steadily for the past few years. In fact, last weekend there was a substantial correction to the number of properties on the market in Dublin. Daft.ie updated their information and instead of there being 6347 properties on the market, there were 6267 properties on the market.

    However I have seen this type of correction at least ten times over the past three years, and when seasonally adjusted the figures reflect that there are now more properties available on the market than at any time in over the past 13 years in Ireland. In Dublin specifically, the number when seasonally adjusted suggests that by next spring (traditionally the busiest time for property deals) there will be in excess of 7,000 properties on the market. At this period last year there were 5,620 properties listed on the Daft.ie website for the Dublin area. Now this figure is in excess of 6,200.

    The worrying thing about this years’ figure is that even during the middle of the summer when most sales are concluded, the numbers remained stubbornly high. I am not a doom merchant, but after the Fianna Fail shenanigans and all the lies we were told before, I am not going to ignore lies when I read them. Especially when this type of misinformation is exactly what caused the problems in the first place.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: martin Date: Tuesday October 11, 2011 @02:49PM

    Whereas you are right to a degree the overall picture now is after a 10% to 15% further correction, prices are in an area where it may not be possible to build a house for the money that can be achieved.

    Take a 3bed semi of 1050ft2.

    If the final average price in Dublin is 200,000 (after the 15% reduction from todays prices) then the cost per ft2 will be 190ft2

    If you add all the costs from land costs vat ,local authority fees, and professional fees the toat costs before building account for about 107/ft2


    Build price less the other costs = 190/ft2 - 107ft2 =83/ft2

    Now if the business is based on a 15% profit margin as in most businesses then the build cost of 72/ft2 ( 83/ft2 less the profit margin) will have to cover all other costs including overheads and risk.

    At that price the effort would be unsustainable to the builder and the banks who finance them.

    The variables are land, material and labour costs.

    The land cost above is about a 75% correction from 2007 figures and labour costs have come down about 40% from 2006 figures. Material costs have if anything gone up about 7%

    What will happen is a continuation of no new buildings for the forseeable future and when things start to turn as they always do we will get another panic and prices will rise rapidly.

    Ronan Lyons spoke last night on Frontline about ensuring that the same bubble does not re emerge and not one person listened to him.

    The 6000 to 8000 units for sale in the city at present will be like a puff of smoke when the market starts again and without a credible plan we will see another cycle of rising house prices and the government seeing a rising tax take will be reluctant to intervene to stop it.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: paul Date: Thursday October 13, 2011 @01:57PM

    The only difference will be the banks will not have limitless amounts of cash to give out, what you are saying will not happen for this reason. House prices will only increase at a drastic level if the banks have the cash, this is simple logic.

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: someone waiting to buy Date: Monday October 10, 2011 @08:50PM

    yeah, patso the fatso, you just hit a nail on the head in relation to the line "if you go 15grand more, you'll put it out of reach". i've heard that one a few times, and usually when there's one you have your heart on, or possibly one that is in a hurry to sell.

    i'm a little suspicious. in many cases, "some one who previously viewed the property" is resurrected. it's not harning the vendor, if an estate agent has contacts waiting to be notified of a bargain. not that such a thing exists, but, some buyers may be in a more advantageous position than others???

    apart from wanting to buy at the right price, my other motivation for waiting for the next round of reductions, come the january, apres budget sales, is that about 5 or 6 years ago, i was almost laughed out of more than one estate agents, after enquiring about the properties in the window with their advertised prices. luckily for me, i stopped short of p[anic buying, and saddling myself with a mortgage whichwould condemn me to eating the same st bernard cornflakes i was brought up on!!

    as i've said before, in a way, i admire the estate agents, if i were selling a house, i think i'd like that they were using any tool available to sell for as high a price as possible.

    i'm kind of surprised every now and then on this site, we hear from people "who've just bought a house"- the style of formation of sentences used by one or two of these, reminds me of two estate agents in particular...... or am i just paranoid? one thing for sure, is when i do eventually buy, probably beginning of summer/autumn 2012, i hope i don't feel the need to trawl these property sites no more!

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  • Re: The Daft House Price Report Q3 2011

    Posted By: martin Date: Tuesday October 11, 2011 @12:59PM

    Looking at the recent Daft data the following applies


    Accepting that the price of houses will fall say another 10% to 15%


    Take a 3 bedroom house in Dublin in the north and south side

    North side South side

    203,000 216,000 Value includes 15% fall from values above


    Rental Income from the same semi's

    North side South Side

    1,071/month 1,382/month (based on Daft's data )



    Rental yield

    North Side South Side

    6.1% 6.3%

    Based on the above we have properties which would seem to be investor friendly with ok yields and a house price which is only going to rise.

    With One and two beds the picture is


    Selling prices of 120,000 and 173,000 respectively (Based on Daft data)

    Rents are 850 and 1050 respectively (Based on Daft data)


    Rent Yields are 8.5% and 7.2% respectively

    Overall the market is now telling me that the opportunity to invest and rent is strong and getting stronger albeit at the lower prices expected.


    Anecdotal evidence suggests that supply is tight if you wish to rent in the better areas and it is difficult to find good rental accomadation.

    I am an investor on the sidelines looking in and for the 1st time since 2007 the market is reaching an equiliberium of sorts.


    My own humble opinion is that the market is now within 5% of the bottom and the 10% to 15% is the over correction in the market.

    Its probably time to look seriously at investing in specific areas now.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Patso the Fatso Date: Wednesday October 12, 2011 @10:46AM

    Fair play to you Martin!!!
    You are single handedly trying to talk the market out of recession. It’s a pity the European Union and most other sensible people don’t agree with you.

    “Based on the above we have properties which would seem to be investor friendly with ok yields and a house price which is only going to rise”

    Wow, after your stunning display of ignorance I am nearly at a loss for words. Your figures appear to be solid enough mind you. Let’s put your calculations to the test.

    Going with your figures which are based on what Daft.ie and other similar websites tell you (the holy bible in terms of reliable information for high profile property investors like yourself); a three bedroom house on the Southside of the city is selling for €216,000.

    You say that rental yield on such a property is €1382/month (really) based on Datfs data.

    That’s an annual yield of €16,587 or 7.6%

    Why this all sounds excellent (until I investigated further using Dafts own website)
    There are several areas on the Southside where you can buy a 3 bedroom house for €216,000 plus euro.
    Dublin 24 is the example I chose to illustrate my point. Here you can buy a three bedroom property for as little as €217,000, see link.

    (http://www.daft.ie/searchsale.daft?s[cc_id]=ct1&s[a_id]=ga5&s[mnp]=200000&s[mxp]=300000&s[bd_no]=3&refine.x=41&refine.y=26&refine=Refine&search=1&s[search_type]=sale&s[furn]=&s[refreshmap]=1&search_type=sale&fr=default)

    However the rental yield is not as high as you appear to think. Properties in Dublin 24 are generally not achieving the advertised rental income that is being asked. This aside, a quick look at average rent in this area is around €950 euro.

    http://www.daft.ie/searchrental.daft?s[cc_id]=ct1&s[a_id]=pc22&s[mnp]=&s[mxp]=&s[bd_no]=3&refine.x=30&refine.y=13&refine=Refine&search=1&s[search_type]=rental&s[furn]=&s[refreshmap]=1&search_type=rental&fr=default

    So let’s say you pay €217,000 for a house. You rent it out and get €950 euro a month. The yield is €11,400 per year.

    You get a loan from the bank under the buy-to-let scheme which allows you to borrow 75% of the money needed for a 25 year mortgage.

    That means you borrow €162,750 and stump up the remainder money yourself. Interest rates vary so we will go for the average rate for investors on this scheme which is just above 5.4% (let’s say 5.3% to be fair).


    Well there’s a shock; monthly repayments are €980



    So you are already making a loss of €30 euro a month before you pay back the bank.

    On top of this there are the new charges the government is introducing, maintenance costs, and solicitor plus estate agents fees.

    Not to mention the fact that if property prices fall by another 15% you will be in negative equity.

    And also the fact that you yourself have tied up €54,250 of your own money with no return.

    If you are an investor please come to my shop. If you want to double your money safely however, I suggest you fold it over and put it back in your pocket.

    Pat

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  • Re: The Daft House Price Report Q3 2011

    Posted By: martin Date: Monday October 17, 2011 @08:03PM

    Pat

    My last two sentences were

    "My own humble opinion is that the market is now within 5% of the bottom and the 10% to 15% is the over correction in the market.

    Its probably time to look seriously at investing in specific areas now. "

    I believe we are at a point when there will be a small recovery in certain areas where demand is strong and supply weak.

    This is happening as we speak as there is a dearth of suitable two bed and three beds in certain areas.

    The doom mongers are always going to say the sky will keep falling in but logic says that the market will recover and it always has and always will.

    Buffet said "buy when everyone is selling and sell when everyone is buying."

    The actual building costs of a new unit be it one, two or three bed are now higher than the selling costs.

    Buying and selling are difficult decisions in a market such as this so reason, common sense and experience are essential to minimise your risk and give yourself the best chance of asset appreciation.

    By the way Pat, use of emotive language ( "Wow, after your stunning display of ignorance I am nearly at a loss for words.") beside the immediately following ("Your figures appear to be solid enough mind you.") has me at a loss of trying to contextualise your use of english.

    Perhaps your convoluted use of language is a signpost of your convoluted view of the market.

    In any event Pat don't worry it's not your money.

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: Anonymous Poster Date: Thursday October 13, 2011 @09:40AM

    Every agent I have spoke to regarding a recent 'sale agreed' price has been vague. They were happy to boast about the sale figure when property prices were very high, now they don't seem to want to admit that houses are selling for less than marketed for - else they would tell you the 'sale agreed' price!

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: no crystal balls here! Date: Thursday October 13, 2011 @04:11PM

    i am a estate agent working in the dublin area,
    it is a common acceptance between agents that actual sales prices are down about 65-75% from peak, depending on property type and location, most asking prices are reflective of the market within the last 6 -12 months but many not realistic of todays values, a property placed on the market today should take into account prices are still falling and should be priced accordingly, properties that have been hanging about need to be revised as it taints the figures, one thing that i have found is that if a distressed sale is marketed at a lower price to ensure a swift completion and value is apparent there is interest, be it mostly in the lower end of the market, as a rule of thumb i see 30% of marketed properties as being grossly over priced, and the remainder (70%) roughly being 30-40% higher than what they could complete at, my geuss is the market will fall 30-40% over the next 2 maybe 3 years then pan out for quite a few years before any steady rise will take place, nothing will happen fast, we all need a reality check and accept we are only 4 years into a prolonged 15-20 year cycle!

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: Anonymous Poster Date: Thursday October 27, 2011 @02:56PM

    Totally agree with market still overpriced, have had sale agreed on 2 different properties in last year, only for the deeds to be in a mess, and on both times have been sale agreed on over 30% less than asking price. What amazes me is how little one buys for a QUARTER Mill....

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: open tweet Date: Wednesday October 26, 2011 @11:30AM

    Did anyone see the news yesterday about the continuing fall in property prices in dublin. Am I mad to buy now?

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: Anonymous Poster Date: Thursday October 27, 2011 @05:48AM

    Look at the collapsing.net website for your area. The falls in house prices are shown in terms of asking prices, but the percentile drops are still staggering. Your not mad to question decisions not yet made, but if you ignore the current trend you would be taking a big chance. Two years ago it was said that the market had reached the bottom. How many people now wish that they had not listened to that advice!

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: Anonymous Poster Date: Thursday October 27, 2011 @11:09AM

    Well done Martin,

    You got your school teacher to write a retort. Not a bad idea considering your first effort.

    Try not to be at too much of a loss at trying to contextualise my use of English, I was educated in Munich so at least I have an excuse if I occasionally make a mistake (That’s Munich in Germany, not Munich in Dublin; just in case you try to invest there).

    It is not often that I meet people with such a ready appreciation of the complexities of modern financial and economic markets. Why, by virtue on one single witty and appropriate quote, you were able to encapsulate entirely the perfect investment strategy. Be careful, Wall Street will be after you.

    I would also like to thank you for your kind compliments. I am sorry I made you cry. And thank you for putting my mind at rest about my money too. For a second there I had to check my back pocket; I was afraid you had gotten your hands on my stash.

    As Leonardo once said “He who wishes to be rich in a day will be hanged in a year”. (That was Leonardo da Vinci, not Leonardo the teenage mutant ninja turtle just in case you decide to quote it in tomorrow’s class).

    If you need any more pointers on the market by the way, my opinion, which is generally based on other people’s opinions and reputable sources, is that the market will continue to fall well past the 10%-15% basement you alluded to. In fact, if you bother to read back over the past few quarterly reports you will soon discover that I have hit the nail on the head with my predictions in terms of property devaluation thus far.

    And sorry I couldn’t let this go.

    “By the way Pat, use of emotive language (“Wow, after your stunning display of ignorance I am nearly at a loss for words.") beside the immediately following ("Your figures appear to be solid enough mind you.") has me at a loss of trying to contextualise your use of english.”

    What a statement; designed to undermine my self confidence and highlight my poor English. I was going to point out to you that my original statement was purposely misleading to emphasise the irony; then I decided not to do so; deciding that this would only have me trying to explain to you what irony means. Ultimately I made the decision to go ahead and educate you.

    The structure and intent of your sentence quoted above means to emphasise my poor use of English. However there is irony in the fact that you failed to use a capital letter for the word “English”, thus highlighting your own ineptitude.

    Patso

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: David Date: Thursday November 3, 2011 @01:26PM

    Well Patso AKA Nosradamus! It is very easy to call a falling (or rising) market and even a stopped clock is correct twice a day.

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: Patso the Fatso Date: Monday November 21, 2011 @01:01PM

    Dear David,

    Have you heard the one about Property prices......?

    Check your watch, I am correct again. Second time today.

    Property prices in Dublin and all major centres continue to fall. When will people start to realise that it is the only outcome. CSO say 3.1% fall in the Dublin area in a month. With their history for exaggerating the facts in a positive manner, this figure may even be as high as 5%.

    For all of those readers who read my original post on the state of the Irish property market over a year and a half ago, and who took positive action on the basis of my arguments then, fair play to you. I am sure you are grateful for my advice to sell.

    For those of you still teetering on the brink of a decision, my advice is still to sell now. I see plenty of room for further devaluation in property prices in Ireland. In fact I will reiterate my initial calculations.

    Next June you can expect to see in excess of 7000 properties on the market in Dublin alone.

    Property prices will decline by 14.8% - 15.5% based on increasing numbers of available properties for sale and also on budgetary considerations, second home levies, maintenance costs, lack of credit. Etc, etc....

    In December 2012 the government intends to introduce further Austerity measures which will heap further pressure on the property market.

    Some analysts say that figures will realistically bottom out when the reach 1999 prices. I do not see this happening. I see a correction back to 1995 levels.

    In other words, Average four bedroom houses in Dublin South €180,000 by 2014. Similarly average three bed semi-detached house in south county Dublin €140,000 by 2014.

    I know some of you are reeling from the shock and accuracy of my predictions, but I shoot from the hip and even though my predictions appear to suggest that it will be cheaper to buy a house than to build, when there is such an oversupply of properties on the market, that is exactly what will happen.

    Sorry for giving you a dose of reality David. You seem like such a nice chap. But your personal situation is only one of many that this news will affect.

    Pat

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: Fabian Date: Saturday October 29, 2011 @09:03PM

    Does anyone see the merit in selling a property in the current environment and taking the hit of a 30 to 50k loss (this is the difference between the price the house would now achieve and what is left of the mortgage). At the moment, savings could account for most of the deficit. The cost of renting a similar property would be in the region of 10 to 12k a year which is less than the current mortgage repayment. More realistically though, the 10 to 15% annual price fall that we have seen for the last number of years, if continued, would mean a further loss of 15 to 20k per year on the sale value of the property. My head is telling me it is the logical way to go, but I'm finding it difficult to get impartial advice.

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: killygrogan Date: Thursday November 3, 2011 @09:59AM

    http://www.ronanlyons.com/category/propertymarket/

    Check out this address, Ronan's analysis is based on evidence first, ideology second and he has no special interests aside from guessing the truth.

    • Reply to this message
  • Re: The Daft House Price Report Q3 2011

    Posted By: Patso the Fatso Date: Friday November 4, 2011 @02:26PM

    Excellent Site you found there Killygrogan,

    I would have to agree that this set of reports by Ronan Lyons changes my earlier opinion of him as an economics reporter. His estimation on the Irish housing market is covered from different historical calculation methods which all converge to indicate that the devaluation in Irish property prices will continue for at least another two years or until the average house price falls 60% from peak historic value. So if a house is currently valued at 300,000 euro, it can be expected to drop to at least 240,000 before reaching the base price.

    Naturally, a worldwide recession or other cataclysmic event will have a further negative effect on property prices if it should happen.

    Patso

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  • Re: The Daft House Price Report Q3 2011

    Posted By: cash buyer Date: Monday October 31, 2011 @02:41PM

    I have a friend whose parents from china are thinking to buy a house here in Ireland. they are cash buyer and they really like a house down in Bettystown, a 4 bedrooms detached house near the sea. The house is about 30years old but in a good condition with an garage which can convert to another bedroom. It will cost 180000euro. I read the above report and I am a bit concerned whether it is the right time for them to buy the house now. The house is in a good location and also with a good size of garden. can anyone give me some opinion on this? should they wait for a bit longer or buy it now? thanks.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Messi Date: Friday November 4, 2011 @09:51PM

    There seems to be a realisation /acceptance that prices will fall further ....by how much nobody knows . Prices are back now to 2001 levels and there may be an overcorrection to come .
    In any case if a bank lends 100k for a house @ 4.5% interest it has to finance the money at 3% so there is very little profit in it for them maybe 1000 a year . It is much more profitable to sell car loans at 7.5% with little risk , the bank could always reposses the car .
    AIB and BOI are making alot of statements in their accounts that they are reducing their loan portfolios and are not giving out new mortgages for fear the market will drop further and the debt will turn sour .
    Who are the people selling at the moment , well my guess is that they are investors not owner occupiers , most people buy houses and then stick with the mortgage come thick or thin.
    As time goes by and mortgages are repaid the problem of the bubble disappates i.e. if you bought in 2001 you have 1/3 rd of the mortgage paid so its not so bad .
    The average mortgage is 154k and the average house price is 180k so overall it doesnt seem to be a problem.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Patso the Fatso Date: Thursday November 10, 2011 @10:58AM

    Ah my weekly rant.

    Thanks David for your kind compliments above. Some people only want to hear the good news and live in a world cushioned from reality. I am sorry to say that even RTE is reporting on events of material interest to the property market. Why today alone the main headline was designed to sent shock waves around Europe.

    EU WARNS OF RISK OF NEW RECESSION

    "The European Commission has cut its growth forecast for the EU to just 0.5% for 2012.

    It says growth has now stopped in Europe and will not restart until mid-year.

    Commissioner Olli Rehn said there is a risk of a new recession unless action is taken.

    The forecast says Ireland's economy will grow at 1.1% next year, the same as its estimate for 2011."

    http://www.rte.ie/news/2011/1110/eurozone-business.html

    So I am sorry to deal you a dose of reality but the effects of European policy and politics is going to have a very serious knock on effect on us here in Ireland.

    On top of this the government is planning to introduce a very strict austerity package in the form of a budget in December which will effectively remove close to 3.8 billion euro from the Irish tax payers pockets.

    Necessary, i know if we are going to meet our obligations to Europe over the coming year,but it will have further serious effects on mortgage holders abilities to meet repayments.

    People who have investments in property who are already feeling the pinch will have further cause to examine their ability to meet commitments.

    You astute readers and property watchers out there have no doubt been watching the figures relating to properties for sale in Dublin and all major centers. Most people will note from their observations that the number of properties on offer appear to be dropping (from 6533 in June to just over 6060 at present) in Dublin and some of the other large cities.

    What some of you may have not realized is that the selling season is effectively over and that traditionally there is very little activity in the market at this time of year. More and more sellers are trying to rent out their properties rather than sell but the big problem with this tactic is that there are now a growing number of rental properties coming available which will effectively push down rental prices.

    Its a vicious circle. Rental yields dropping means property price decline.

    The frightening news from Europe does not help put confidence back in the market. The December budget will also have a depressing effect.

    Sorry but my estimation of the property situation remains the same as before.

    Property prices will continue to decline. By my best estimation, property prices will decline by a further 14% next year. Thats year 0n year decline. In other words if yur property is currently estimated to be worth 300,000 euro; by this time next year it will be worth 258,000 euro.

    Lets see if I am correct again.

    David, you can take your hands from your eyes now and go back to reading about princesses and castles.

    Patso

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  • Re: The Daft House Price Report Q3 2011

    Posted By: happy punter Date: Friday November 11, 2011 @10:11PM

    Two years ago I got mortgage approval from AIB bank for 380K. My wife was made redundant before we got a chance to buy. When we did find a property and put in a bid on it, the bank told us that we could not secure the mortgage on my income alone. six months later my wife started a new job in the IFSC but because she wasn't in the job long enough the most we could get mortgage approval for was 268K. So we waited for her 12 months probation period to end and went back to the bank. In the mean time things have tightened up considerably, now even with good credit history, secure jobs and 33K in savings we only qualify for a mortgage of 270K which means if we want to buy a house in Dublin we are limited to the 300K market. It's not the sellers strangling the market, its the bankers.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Swiss Poster Date: Wednesday November 16, 2011 @08:23PM

    I'm currently living and working in Switzerland and have done so for the past 7 years and I can tell you that people investing in property here typically aim to put up a minimum of 20% of the cost of the property. This obviously means that for a loan of 380K you would need something closer to 80K up front, If the bankers in ireland applied this rule from the begining you would be able to afford the house that you deserve because it wouldn't have increased out of range. That should have been the self regulating effewhit hat would make the creation of the bubble impossible but it was destroyed due to the cheap and easy credit offered by the banks.
    The mortgage you are being offered now should be in line with what you can afford while considering the various risks, security of job, volatility of the market etc. and if the property you want has not adjusted to the level which matches the credit being offered you then you need to adjust your expectations or the market has more adjusting to do.

    Half the people i work with own their own residences and the other half are not bothererd that they don't. If the price was right they might consider buying but because it's not particularily good value they are more than happy to rent. That's why we in ireland are in this trouble. There was a serious diconnect between the money being payed and the value of what was purchased. Everybody believed they had to own their own property in ireland and proceeded to pay rediculous amounts for shoddy constructions built by self declared builders out to make a quick buck.
    I was amazed when i first came here at the different level of quality of building . The builders are highly educated craftsmen who have pride in their work. In ireland eveyone knows at least one person who was a so called builder during the golden years, guys we went to school with who couldn't get their head around long multiplication were suddenly entrusted with creating the most valuable asset most of us are ever likely to invest in and we made millionares out of all of them .I find this unbelievable.

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  • Re: The Daft House Price Report Q3 2011

    Posted By: Pierce Date: Tuesday November 22, 2011 @10:49AM

    Take the figures for the 2-beds in Dublin.

    Average them out and you get 191,666euro.

    Divide this figure by the "traditional" income multiple of 3.5 and you get 54,761euro.

    Ireland's GNP per capita is 24,023.68euro so the average two-bed in Dublin has NOT become affordable for the average couple. (http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gnp_pcap_pp_cd&idim=country:IRL&dl=en&hl=en&q=irish+gnp+per+capita)

    Personally, as someone who hopes to spend the next 5years in Australia the only way out I see for the Irish property market is returned emigrants like myself purchasing 2 - 4 bedroom homes sometime in the second half of this decade, apparently that is what keeps New Zealand property values strong.

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