Future price of Irish properties

I'm intrigued at the property comparison with European capitals as I could currently own a 2-bed apartment outright (i.e bought entirely on savings) in the centre of Brussels whereas I would be stretching myself to own a 2-bed apartment in Adamstown far from the centre of Dublin.

According to international salary comparisons in my line of work, Belgium pays better.

Unfortunately I have no particular gra for Belgium but it does outline the insanity of the whole situation here...

I made the mistake of staying out of the property market for various reasons in the late 90's and early 00's. I've spent my time saving to ensure I'm not totally priced out of things here but baulked at the poor value for money available in the property market.

I like the somewhat tongue-in-cheek argument of self-perpetuation raised before. It is that we are importing 1000's of builders from Eastern Europe to build houses for investment purposes to be rented to 1000's of builders from Eastern Europe. Last invester in will suffer in what seems to me somewhat of a pyramid scheme.

Is it not the case that years of future incomes are being spent now due to over lax lending policies and low interest rates. Once interest rates rise my guess is that we catch what is now called "Dutch Disease" in 2008/2009 once the SSIA splurge ends. This is a deflationary shock with years of sub-par consumer spending and investment. Cue sane property prices hopefully.

Gearoid

walk2dewater said:

I really havent a clue what you're saying, but I generally get the impression you either havent read my posts or are misinterpreting them.

My last post made the point that people promoting higher property prices are actually the ones promoting 'doom and gloom'. Higher prices from here forward is in fact the PESSIMIST view in my opinion, it is truly a gloomy outcome if prices become x15, x20 average salaries. The ability to buy a cheap, well-built place of your own is a good thing for society, surely, is it not?

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I certainly have not misrepresented what you said. Your opinion of what people assuming prices will go up being a pessimists view is hillarious. What is good for society is of no importance when talking about this what is happening or may happen. Things change neither good nor bad just different. If you assume people must buy houses and accept they can't then you are the pessimist. The first problem is people don't have to own property our culture is changing this could be part of it. I would also like to point out that many young people stayed at home when they couldn't buy when unemployment was high. THe same is still the case just for different reasons. A fall in marriage rates maybe seen as bad for society but others would say at least we don't have people trapped in marriage.
The economic reason of owning a home as you get older is really important. How much gold will you need to provide an income to pay rent as inflates?

One mans junk is another mans gold. As I pointed out it depends on how you look at you are teh pessimists to assume people are doing everything out of meaness.
"It is THEM who begrudge young Irish people cheap property prices. THEY very much need to sell on for higher prices in the future."
This is a negative and pessimistic view of why people want house prices to go up. It assumes a negative intent and a negative need. Lighten up.
"I hope my house price goes up so I can retire early. "So in your world that means the person is promoting doom and gloom that prices will go up! You are saying they are the pessimist.
You made a decission to remove yourself from property and foreign currencies. That is fine but that does not suit most people and if you did it in the last 6 years and plan to live in ireland maybe that is not such a good idea. You are assume a negative will happen which is the pessimist's view.
I am assuming changes will happen neither negative nor positive. This is not a misrepresentation of what you have said but maybe you meant something else?

gearoid said:

Cue sane property prices hopefully.

Gearoid

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A positive view from sombody hoping to get into the Irish market

"You are assume a negative will happen which is the pessimist's view."

So when I shorted MSFT and made money I was a pessimist? If by purchasing a Put on the S&P500 for August 2006 makes me money then I'm a pessimist? If the doctor says stop smoking it may kill you he's a pessimist? If I think it's going to rain and I bring an umbrella I'm a pessimist? In fact, if the weatherman says it's going to rain, he's a pessimist, is he?

I think you're confusing pessimism with having an opinion based on facts and having the knowledge and balls to make wise decisions.

As the cliche goes, "I change my mind when the facts change, what do you do sir?".

If I though Irish property was good value, I'd be all over it. Facts as I SEE THEM, is that its ripe for a nasty fall.

And I stand by my assertion that further price increases in Irish property represents a gloomy, doomy world for the younger generation. What a horrible outcome if todays youngsters have to get into debt x15, x20 their incomes just to own a roof over their head.

WTTW

Loki,
Sorry about this, but sane property prices for me would mean a 20-30% fall!

Why should anyone pay 300k for a poorly built 2-bed apartment far from anywhere where they have to pay a 1000 euro plus a year maintenance charge?

I think the current boom is a disaster for this economy in the future.

I don't want to get into what seems to be to be a bit of a spat but I do tend to the walk2dewater's point of view more than yours.
Gearoid

walk2dewater said:

If I though Irish property was good value, I'd be all over it. Facts as I SEE THEM, is that its ripe for a nasty fall.

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"A tendency to stress the negative or unfavorable or to take the gloomiest possible view:"
If prices crash this is a bad thing nobody thinks this will be good. You beleive this negaitve is going to happen.


http://dictionary.reference.com/search?q=pessimist

walk2dewater said:

And I stand by my assertion that further price increases in Irish property represents a gloomy, doomy world for the younger generation. What a horrible outcome if todays youngsters have to get into debt x15, x20 their incomes just to own a roof over their head.

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That is nice but this is not symantics this is your view that people are doing this with intent and begrudgery as you said.. THis is not casue and effect of warning about smoking may kill you but an assumption why people want prices to go up or down. You are assuming the worst in people that is not a positive view and as you can't know what people are thinking you are assuming the worst. THis is a pessimist view. Not a point of debate. Everyone else here has talked about people hoping their house go up in value with eternal optomisim. You are simply wrong to say people hoping prices go up are pessimists becasue you can't know their intent and ignore a crash is a negative thing. You can argue their view has negative effects but you don't know intent and assume the worst.

This is all I will say on this point now. You can beleive what you want but there are some things that are simply wrong or right and not a point of view.

gearoid said:

Loki,
Sorry about this, but sane property prices for me would mean a 20-30% fall!

Why should anyone pay 300k for a poorly built 2-bed apartment far from anywhere where they have to pay a 1000 euro plus a year maintenance charge?

I think the current boom is a disaster for this economy in the future.

I don't want to get into what seems to be to be a bit of a spat but I do tend to the walk2dewater's point of view more than yours.
Gearoid

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I know but you are positively hoping you can afford and not negatively hoping that people will be ruined so you can buy. Or did I get you wrong?

The actual problem with the market is not the point just the assumption of intent.
Somebody hoping for something they think is positive is not a pessimits' view even if their wish is bad for others.

Loki said:

If prices crash this is a bad thing nobody thinks this will be good.

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You are forgetting about the people who can't afford to buy houses TODAY. A fall in prices would be welcomed by them.

Loki said:

I know but you are positively hoping you can afford and not negatively hoping that people will be ruined so you can buy. Or did I get you wrong?

The actual problem with the market is not the point just the assumption of intent.
Somebody hoping for something they think is positive is not a pessimits' view even if their wish is bad for others.

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I'd like to pay less for an apartment/house than I would have to now. I suppose that if this situation were to come to pass then a lot of people would be living on negative equity. I'm formulating a view on a market, not wishing people ill. But, if house prices did fall considerably, I would have a much smaller mortgage proportionally. I suppose I'd be less worried about an investor losing their shirt than someone buying their PPR and suffering negative equity. My guess is I will eventually buy from a distressed investor letting to a group of Polish builders who are all headed back to Poznan! At the end of the day you have to look at it from your own personal viewpoint.

extopia said:

You are forgetting about the people who can't afford to buy houses TODAY. A fall in prices would be welcomed by them.

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It is a bad thing for the country nobody thinks otherwise. The extent of the damage is only what people would debate. If a person thinks what the want is positive then they aren't pessimists that simple. They have to think it is a bad thing.
I forgot nothing I just didn't think you were going to say something so ... (actually I can't say something polite as you appear to be a troll at this point)

Think what you like but you are either a troll or just unable to understand a standard English word. I really can't be bothered explaining it anymore and can not stay polite to somebody claim such a ridiculous use of a word and simply incorrect.

extopia said:

You are forgetting about the people who can't afford to buy houses TODAY. A fall in prices would be welcomed by them.

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Exactly, of course it would be. And it would be welcomed by future generations also. No one WANTS to pay these outrageous prices. I wish for todays youngsters a future of cheap, well-built, efficient, safe, housing that is close to amenities and transportation services. Do we want poor housing costing many multiples of salaries, with inevitablely ownership concentrated in just a few hands? I think not, that used to be called Colonalism. Lower prices is a GOOD thing!

Loki said:

It is a bad thing for the country nobody thinks otherwise. The extent of the damage is only what people would debate. If a person thinks what the want is positive then they aren't pessimists that simple. They have to think it is a bad thing.
I forgot nothing I just didn't think you were going to say something so ... (actually I can't say something polite as you appear to be a troll at this point)

Think what you like but you are either a troll or just unable to understand a standard English word. I really can't be bothered explaining it anymore and can not stay polite to somebody claim such a ridiculous use of a word and simply incorrect.

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You sound like one of those people who's got an enormous emotional, not to mention financial stake in HIGH Irish property prices.

I can sense it in your responses, you cannot accept the overwhelming evidence of overvaluation and the consequences, and are prepared to argue at every step of the way.

Perhaps your retirement will be delayed? Perhaps you've quit working for a salary because you think "you've made it" with property. If so, too bad. At least you still have left to reduce your exposure.

Loki said:

It is a bad thing for the country nobody thinks otherwise. The extent of the damage is only what people would debate. If a person thinks what the want is positive then they aren't pessimists that simple. They have to think it is a bad thing.

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I too don't view it as a bad thing if there was a correction in prices, true the economy would suffer and many would be left in negative equity but is it better for people to take on unrealistic loans at record low interest rates when there will be trouble once rates go up again. I haven't seen any recent reports which would indicate that rates will not be going north of 3% in a 6-12 month timeframe. Remember the ECB has one remit: to control inflation and if they view they it is getting too far above there target of 2% they will raise rates.

beattie said:

I too don't view it as a bad thing if there was a correction in prices, true the economy would suffer and many would be left in negative equity but is it better for people to take on unrealistic loans at record low interest rates when there will be trouble once rates go up again.

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Let me be 100% clear a crash is a bad thing no matter what. You have a differernt view of that fine. I am not talking about a price correction but crash.

The use of the word pessimist is incorrect and not open for deabte. It has a definition or a definitive meaning. The constant missuese of the word is what bothers me not the belief in future events as it is all speculative. Walk2dewater is using the word repeatedly incorrectly. He is doing this as either a wind up or ignorance. As I posted a definition I will go with as a wind up as indicated by his further digs at me about being emotional invested in property. I dislike people using words incorrectly is all.

All I have been saying is correcting the definition and understanding of what is a pessimistic view is. It depends on your point of view and not what outcome people think will happen. I wasn't really expressing any views but people seem to think I was.

A crash is bad for the economy is standard view and should be avoided if possible. I do not believe there will be a crash so debating whether it is good or bad with me is pointless that was not what I was saying. Read back and you will see my view about what will happen and what was being said.

What is the difference between a downward daily "correction" and a crash?

a fall in house prices would be bad in short run but good in long run. prolonged periods of house price rises causes capital and taleted employees to be drawn away from productive industries both indigineous and foreign ,it causes an over reliance on construction sector and related industries of banking/estate agency/etc,it reduces peoples disposable income and makes an economy less competitve. also because young couples both have to work and commute long distances and cant be involved in community etc society suffers as a whole

people seem not to realise that renting isnt now dead money.
you can rent for the same price as an interest only mortgage,the amount you save on not repaying a mortgage can be invested in a pension with great tax benefits that instantly increases by by substansial amount depending on your tax rate.pensions return 10% a year ,you will at end of 30 years of doing this have substansial extra in your pension fund approximately equivalent to the price of a house at that time or even more.
when you take on a mortgage you are effectively "renting" the money to buy a house with and banking on the belief that house prices will always rise,that is a dangerous assumption.

roryodonnell said:

What is the difference between a downward daily "correction" and a crash?

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Call it whatever you like. I have outlined the "event" that is pending in earlier posts so won't describe the reasons or mechanism here. In my opinion, the "event" will be minimum 3 years long, likely much longer. It will involve periods of price drops, base forming, then massive gaps down; typical behaviour in bear markets. The tail end will record slower price falls than the beginning.

Some properties will find buyers only with massive discounts and will sit on the market for months and month on end, others will fair better. In terms of the general market, I think 50% fall overall is a reasonable minimum. That would only get us back to 2002 prices, which remember were double those of 1997.

By the bitter end, "property investment" will be a sour phrase with loaded connotations, and will be wildly out of favour.

Loki said:

If a person thinks what the want is positive then they aren't pessimists that simple.

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Huh? I don't understand...

Loki said:

(actually I can't say something polite as you appear to be a troll at this point)

Think what you like but you are either a troll or just unable to understand a standard English word. I really can't be bothered explaining it anymore and can not stay polite to somebody claim such a ridiculous use of a word and simply incorrect.

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Sorry, don't understand this either. What exactly are you trying to say?

I take it you consider me a troll because I pulled you up on your lack of understanding of the planning laws and how they apply to the subdivision of houses?

(By the way, I still don't understand your point about house subdivision and how this relates to property values. Around where I live, and in many other parts of the inner suburbs, older houses that used to be in flats are in fact returning to single family use more often than the other way around. If someone wants to rent or buy smaller accomodation than a house there are plenty of small apartments available).

walk2dewater said:

Call it whatever you like. I have outlined the "event" that is pending in earlier posts so won't describe the reasons or mechanism here. In my opinion, the "event" will be minimum 3 years long, likely much longer. It will involve periods of price drops, base forming, then massive gaps down; typical behaviour in bear markets. The tail end will record slower price falls than the beginning.

Some properties will find buyers only with massive discounts and will sit on the market for months and month on end, others will fair better. In terms of the general market, I think 50% fall overall is a reasonable minimum. That would only get us back to 2002 prices, which remember were double those of 1997.

By the bitter end, "property investment" will be a sour phrase with loaded connotations, and will be wildly out of favour.

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I agree completely. As one poster said before, I can't wait to hear all the complaints on Joe Duffy, giving out about the fact that they weren't told property prices would drop, that the government should do something about it.

roryodonnell said:

I agree completely. As one poster said before, I can't wait to hear all the complaints on Joe Duffy, giving out about the fact that they weren't told property prices would drop, that the government should do something about it.

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Oh God I don't think I could take that...no really I couldn't. Couldn't we just get Marian Finucane back on LiveLine for just one big property whinge day instead?

takers for a 1050sqft three bed semi - all mod cons in D16 Rathfarnham?

€0.5million serious offers only (you deal with the stamp duty additionally)