Current public sentiment towards the housing market?

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bearishbull said:
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How much would this house cost in Dublin?? Shows you how much houses can cost to build.
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Well its probably built in an infilled bog ..knowing Bonniconlon, so the land cost feck all.

1180 sq ft for €160k , and allowing land costs of €10k per site means the build and the profit came to €150k . As the markup is 25% at least the build came to €120k so thats 1200 sq ft (rounded) for €120k or €100 a square foot which is what people are told to expect.

The land would have been dirt cheap which explains the price and the area is hardly affluent or majorly desirable.
 
Firefly said:
To all those in the bear cave...if you're right and property crashes in the coming months, this will have wide reprocussions for the entire economy with almost all affected....what are you planning to do? i've heard some saying that they'd leave etc...if you're so sure it's gonna happen why are you waiting around? For those hoping to snap up a cheap property...you'll be joining a long queue. We can all give aruguments for/against a crash till the proverbial cows come home, but what are you doing about it??
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I don't think a property crash is imminent and I certainly won't be buying property when the crash does occur. Fools buy into dead cat bounces (although it is different if you are buying somewhere to live).

If you want to see where people are sticking there money it might be advisable to set up a separate thread. Don't want to stray too far off topic.
 
This my stab at finding the fundamental value of a modern two bedroom apartment in a town in West Meath, currently on the market at €220,000, with similar properties on the rental market at €500 per month.


Annual rent €6,000 less one month rent void and one month service charge.

Net Income: €5,000

Capatialisation rate: €5,000/€220,000 = 44

Net Yield: 44/100=2.27%

Valuation based on equated yield.

20 year Eurobond yield 4.2%
Risk weighting 4%

Equated Yield say 8%

Capitalisation rate 8/100 = 12.5

Valuation: Net Income x 12.5 = €65,000
 
Duplex said:
This my stab at finding the fundemental value of a modern two bedroom apartment in a town in West Meath, currently on the market at €220,000, with similar properties on the rental market at €500 per month
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Fair Value About €110-€120k which would be consistent with my stating that properties in the outer pale/midlands are valued at the moment so that a correction could go to 50% of current value. The midlands is the poorest region in ireland as measured by GDP and has been for years.

see [broken link removed]
 
phoenix_n said:
This is something you wouldnt want to be in your investment profolio in the current weakening market.

I was thinking about how much i would pay for this place. I put a figure of 80K. Max 100k (over 25 yrs at 4% would be 530 a month). Future rental yields would be about 700 max a month i think as it is a very old property.

But that is how, IMO, such property could crash substantially in price. From 380K to 80K/100K.
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If it was done up, I'd say it would rent for €1000/month, I would begin to think about buying this apartment if the gross yield was above 6%. If you could overlook the fact that the building looks very cold-war, it might start make sense for me at around €200,000

That's a drop of €180,000 (47%)

Edit : Note, 6% is way below the limit that many professional investors would buy at meaning they would only buy if the purchase price was even lower!
 
Duplex said:
This my stab at finding the fundamental value of a modern two bedroom apartment in a town in West Meath, currently on the market at €220,000, with similar properties on the rental market at €500 per month.


Annual rent €6,000 less one month rent void and one month service charge.

Net Income: €5,000

Capatialisation rate: €5,000/€220,000 = 44

Net Yield: 44/100=2.27%

Valuation based on equated yield.

20 year Eurobond yield 4.2%
Risk weighting 4%

Equated Yield say 8%

Capitalisation rate 8/100 = 12.5

Valuation: Net Income x 12.5 = €65,000
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Are you not including the other costs of being a landlord in your net yield? Maintenance insurance etc?
 
Duplex said:
Valuation based on equated yield.

20 year Eurobond yield 4.2%
Risk weighting 4%


Valuation: Net Income x 12.5 = €65,000
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But surely the Eurobond yield of 4.2% is the entire return, i.e. the bond is bought at par so the yield (including capital value return) is 4.2%.

I would think for a property we tend to expect a capital appreciation as well as a yield so an equated yield should be in the 3.5% to 4.5% region...even though I am a BEAR!
 
CapitalCCC said:
But surely the Eurobond yield of 4.2% is the entire return, i.e. the bond is bought at par so the yield (including capital value return) is 4.2%.

I would think for a property we tend to expect a capital appreciation as well as a yield so an equated yield should be in the 3.5% to 4.5% region...even though I am a BEAR!
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We'll assume 0% inflation.
 
People do still purchase to live in the property. In this case a "fair" price could perhaps be judged as perhaps 15 to 30% more than the price of renting an equivalent property on a 25 year mortgage at a rate of 5.5%

None of these are exact figures, but the point is if I want to buy a property to live in myself, and am happy to live there for a long time, then I use different figures to see if the price adds up, rather than the 6% yield expectation. A purchaser of a house to live in themselves would probably give the house a higher monetary worth than a proper investor looking for his 6% yield.
 
65k for an apartment??...bout the same price as a new 5 series...not much chance of that happening me thinks...
Firefly
 
phoenix_n said:
I was talking about a specific apartment
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different variables apply for apartments , management company transparent or no ?

managing agent doing job , expensive or no ??

sink fund able to pay for that roof that needs doing or those new windows ....or no , is there a sink fund ??

parking for 2 cars or no ?????

cannot really say mate.
 
Phoenix_n -- I actually live about 5 mins walk from those apartments (even though I've never seen them).

And while the one listed looks brutal the area is highly sought after. It is surrounded by lovely red bricks and is a very safe area.. I would rent that 2 bed (I know barely a 2 bed) in a second for €800 in the current rental market (assuming the place isn't damp or smelly or dodgy etc.)

Therefore based on an approximate 4% yield (not including stamp and running costs etc.) I'd pay €240,000 in a heartbeat and would up it to the low €300k's if the apartment was in good condition (better then the image the dark pictures give anyway) and might rent for €900/950. A typical 2 bed in that area rents for €1,200 easily, so your allowing for how bad the place looks when quoting 900/950 as a figure. 380k is crazy, but it's not as crazy as the small numbers your quoting.... That property should sell for the low 300ks - possible even 290k - no more...
 
delboy159 said:
Therefore based on an approximate 4% yield (not including stamp and running costs etc.) I'd pay €240,000 in a heartbeat and would up it to the low €300k's if the apartment was in good condition (better then the image the dark pictures give anyway) and might rent for €900/950. A typical 2 bed in that area rents for €1,200 easily, so your allowing for how bad the place looks when quoting 900/950 as a figure. 380k is crazy, but it's not as crazy as the small numbers your quoting.... That property should sell for the low 300ks - possible even 290k - no more...
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300K at 4% for 25yrs works out at 1500 a month repayments. I live in the area but have not seen them myself but even if max rent is 1200 ( i am working on the assumption of falling rents) you still are 300 a month short in terms of investment. Factor in tax,insurance,maintenance, i cannot see it getting the figure that you suggest.

I am not suggesting that the price would fall to 100K but on just looking at it as an investment vehicle it would suggest it could.
 
I see a flat roof and a big job to fix it . I expect a good sink fund in place for which a premium may be payable !
 
Firefly said:
65k for an apartment??...bout the same price as a new 5 series...not much chance of that happening me thinks...
Firefly
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As the investment market consumes 40-50% of new home production, I think its worthwhile approaching it from this angle. Prices in Tokyo are down 70% from peak, prices have fallen for condos in some US cities by 20% in a year. In London in the early 90's flats fell in some parts of South London by 50%. I know its hard to fathom but these things do happen when a speculative market crashes.
 
Firstly you are assuming rents will drop - if the property market bubble does pop or burst - output will decline which will have a knock on effect to the rental market which will stabilise rents if not increase them.

Also, a lot of investors (I'm making an assumption about this), will fork out their 400k all in for a place like this, but it might only be 250k of a mortgage - which the rent might just cover. Their own cash is capital appreciation investment and the rent covers their mortgage.

I've seen prices rocket around that area over the past 8 months and people have told me that the majority of purchasers are investors, but not 28 year olds looking to leverage to the hilt, they are older people who probably (and seem to) have a lot of cash to put into the deal...

You have to be realistic about the market, not just looking at the mortgage v rent formula, because a lot of investors are able to look beyond this.
 
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