Current public sentiment towards the housing market?

[BigM]

the market is about to correct itself it has to theres no way it can keep going its well and truly out of kilter with wages, (by the way I earn over fifty thousand a year with bonuses of up to ten grand as well as other nixer work and I can't buy a house)

Exactly - when someone on a good salary plus bonus can only afford a (decent) house if the bank is willing to lend him 10x his annual salary, in a rising rate environment, there is obviously, fundamentally something wrong with the market. (Oh no, I forgot, our situation is completely different! )

 

[howstrange]

Maybe the pro/anti-speculators/Commie-vs-Capitalist/Govt intervention-vs-freemarket argument could be continued in a separate thread?
It may reflect people's current sentiment to housing/social/govt policy but not exactly towards the housing market.
Arguing the merits of various possible govt initiatives is not the same as arguing the affects of said initiatives.

My sentiments exactly!! There has been a few occasions on this thread where it has got boring with posters running off on different tangents. Lets try and keep it on topic!!

 

[room305]

The value of the land is dependent on the possible income that it can raise. So if you do build the hotel on the land, the value of the land rises accordingly as the income derivable from that parcel of land goes up. I have no doubt you would endeavour to separate the hotel from the land, but that's fallacious as the hotel cannot exist independently of the land that it's built on. If you hire the land to the hotel owner (separate) to build on, the land is still earning money via the landhire agreement and as such, its value will still change accordingly. Your example is ill thought out.

Your response is ill thought out. Why would the value of land change dependent on the income of a business operating in a building on the land. Does the value of a house rise and fall with the income of the owner? Did AIB's profit last year change the price of its headquarters when they were put up for sale? When a festival is held in a field on a farmer's land does the value of the field increase for the duration of the festival? Are commercial leases negotiated on the basis of how much profit the company makes?

 

[Duplex]

Back with the subject at hand - I notice lately that the more expensive properties are turning up on MyHome and the less expensive (so called starter) properties are turning up more frequently on DAFT for parts of north County Dublin. Has anyone else noticed this sort of split?

Yes. It seems that Daft is the 'low rent' Myhome, hence The Irish Times decision to buy Myhome I guess.

 

[phoenix_n]

My sentiments exactly!! There has been a few occasions on this thread where it has got boring with posters running off on different tangents. Lets try and keep it on topic!!

Second that. I was really tiring of that to. Best to keep the thread on sentiment and perhaps less 1-1 bickering.

 

[gearoidmm]

Well thats a fair question. First of all there is a distinction between speculators for profit and buy to let landlords. The way to approach it is first of all to deal with the speculators by putting prohibitive taxes on the PURCHASE of second and subsequent properties, graded higher with each property. This prevents this endless tail chasing up the tower of price rises which we have today. Not to make it so prohibitive that its impossible to own a second or even a third house, but enough to take the profits out of flipping, and general speculation.

Secondly, landlords and buy to letters are already priced out of the market, so the situation as it stands is lethal for renters. With rental returns being so far below even interest repayments, there is no point in buying to let as of about last year some time. Its just not economical.

I think you have missed the point to be honest. The situation at the moment is great for renters. Rents are lower both in absolute and real terms than they were in 2001. This is because of a huge increase in available rental properties over the past 4 years. Anyone who lived in Dublin in 2000-2001 and endured the horrors of queues and interviews for shabby rooms in shabby houses for extortionate amounts will agree that we don't want to go back to that again.

At the moment it makes no sense to invest in BTL properties as the return that you would get is less than the return on money in a savings account. As a result of oversupply, rents are low and we are starting to see rationality returning to the market. Eventually, the amateur investors will realise that prices are not going much higher and will find something else to put their money into. At that stage, we renters will still need somewhere to live. Who would you rather rent from, a landlord who makes his living from renting and is professional and organised or a rank amateur who owns one property as a sideline.

The market needs investors just as much as it needs FTBs. My biggest fear is that my landlady realises that she could make more money by selling my place than she does from renting it to me - where would I live then.

I'm no fan of flippers and those who sit on properties for capital appreciation but taxing investors out of the market makes no sense

 

[Calina]

Your response is ill thought out. Why would the value of land change dependent on the income of a business operating in a building on the land. Does the value of a house rise and fall with the income of the owner? Did AIB's profit last year change the price of its headquarters when they were put up for sale? When a festival is held in a field on a farmer's land does the value of the field increase for the duration of the festival? Are commercial leases negotiated on the basis of how much profit the company makes?

You didn't understand, did you? The land value is dependent on the income that can be extracted from that land. The AIB deal - if you like - was not dependent on AIB profits, it was dependent on 1) the amount of money that the buyer of the AIB site could derive via a leasing agreement, plus what he could expect to charge for reuse of the site at the end of the lease (convert it to apartments, for example). Personally I think he seriously overpaid but that's another day's debate.

Commercial leases are negotiated on the basis of how much the company is willing to pay for the use of that land or property, not how much they are likely to make on it. Their profit is of secondary importance to the land owner who is leasing the land to them. The value of the land is dependent on the rent paid on it. If you own the land on which you are operating a business, then the nature of that business will have a bearing on the value of that land.

You might like to explain how you would value land given that it appears to be linked to nothing more substantial than a wisp of air. It's not based on use, it's not based on income derived, so what is it?

 

[Calina]

Yes. It seems that Daft is the 'low rent' Myhome, hence The Irish Times decision to buy Myhome I guess.

I've only noticed the tendency in the last few weeks however, so I wonder if it's an effect of the decision rather than a cause of it.

 

[whathome]

Second that. I was really tiring of that to. Best to keep the thread on sentiment and perhaps less 1-1 bickering.

I'll third that! I know when I see a particular name or two that we're in for some tedious circular bickering. It's the lengthy point-for-point non stop rubbish that puts everyone to sleep.

...best keep it to current sentiment for sure

 

[Calina]

The market needs investors just as much as it needs FTBs. My biggest fear is that my landlady realises that she could make more money by selling my place than she does from renting it to me - where would I live then.

I'm no fan of flippers and those who sit on properties for capital appreciation but taxing investors out of the market makes no sense

I'm of the opinion that the rental market would be better served by people who were interested in actually running a business rather than making a killing. Tententwenty's idea is interesting, but upside down. If you need serious investors in the market, you need to make it attractive to them to be in there. In truth, the taxation idea that I would favour is major taxation on a first investment property with a sliding scale down as you get to about 5 properties and up. The caveat on this is that the rental side of things would have to be regulated and policed a lot more effectively than it is currently being policed.

Making it more difficult to abruptly exit the rental market as an investor would have gone a long way towards stemming capital appreciation I think. Your fear is a wellfounded one as it has happened to me twice (from investors realising they couldn't fund two mortgages and subsidise rent that was below their mortgage outgoings). In short, we need a viable rental market (as opposed to the mess that was here late nineties). But we don't need the extremes of requiring massive capital appreciation to make it worth while either.

It interests me that people can't see that a middle way is possible - we appear to have a load of accommodation units now, so supply/demand should at some point balance out. Why is there an assumption that we have to benefit only owners or only investors? Currently the big winners are speculators and they are the only section of the equation that add no value other than house price inflation. If you are buying to live in or buying to let, that's fine, but buying to flip, or buying to sit on does not benefit the economy in anyway.

 

[tententwenty]

Anyone who lived in Dublin in 2000-2001 and endured the horrors of queues and interviews for shabby rooms in shabby houses for extortionate amounts will agree that we don't want to go back to that again.

Err I lived in Dublin in that period, renting, and I got a nice place close to town at a reasonable price. Yes, there were a lot of holes in the ground I was shown, but they are still there, still being rented. Hasn't changed much at all really.

Who would you rather rent from, a landlord who makes his living from renting and is professional and organised or a rank amateur who owns one property as a sideline.

I know plenty of landlords that make their living from renting, and rent out dirty holes putting the minimum of effort in them. I won't be losing any sleep if they have to take up actual productive employment in order to make a living. I mean get a job, the horror. Besides that, once the mortgage on a couple of properties is paid off, even with land taxes, you could make a decent living on two or three houses.

The market needs investors just as much as it needs FTBs. My biggest fear is that my landlady realises that she could make more money by selling my place than she does from renting it to me - where would I live then.

No, you're missing the point here. I'm drawing a distinction between buy to let and investors - theres a significant difference there. And see, even the current situation today has you worried that you will be turfed out. Whoever buys its probably won't be letting it out, since thats economically futile, but letting it sit and grow in capital appreciation.

I'm no fan of flippers and those who sit on properties for capital appreciation but taxing investors out of the market makes no sense

Not landlords - investors.

 

[whathome]

there we go again

 

[bearishbull]

Firstly can the debate about land taxes etc start a new thread if required ,off topic arguments do nothing for the thread except clog it up.
Secondly considering rents are lower now than 6 years ago can you imagine the case if immigrants were'nt arriving by the planeload!! rents would be even lower and prices may have already corrected. The EU accesion in 2004 gave the market an extra push, albeit short term. Apartments coming on stream all over Dublin, cant see rents going much higher in real terms, recent investors must be starting to feel the pinch of the rate rises,give them another year and low/zero/negative capital appreciation and they'll be rushing to exit the market.

 

[Calina]

POI - investors very often equal landlords. Landlords rarely equal speculators. What you describe as an investor is what gearoidmm considers to be a landlord. What you consider an investor is a speculator.

 

[Duplex]

Calina the IT's decision to buy Myhome at the top of the market makes no economic sense to me?. But it meet with board approval.

By way of light relief

The Auction scene form The Coconauts (1929) a Marx Brothers film dealing partly with the Florida land bust. (Grouch lost a packet when the bubble bust in 1926)

Famous quote 'You can even get stucco, boy can you get stucco'

http://www.youtube.com/watch?v=dJNGo3kVLts

 

[Calina]

Firstly can the debate about land taxes etc start a new thread if required ,off topic arguments do nothing for the thread except clog it up.
Secondly considering rents are lower now than 6 years ago can you imagine the case if immigrants were'nt arriving by the planeload!! rents would be even lower and prices may have already corrected. The EU accesion in 2004 gave the market an extra push, albeit short term. Apartments coming on stream all over Dublin, cant see rents going much higher in real terms, recent investors must be starting to feel the pinch of the rate rises,give them another year and low/zero/negative capital appreciation and they'll be rushing to exit the market.

agreed on the landtax first off.

secondly, another contributor to shoring up rents, certainly in parts of Dublin are the HSE rent payments. In parts of Dublin, that exceeds market rent for a lot of properties.

That being said, I would expect that the rental market will take a brief hammering as people try to cash in on their investment properties, particularly if they are subsidising rents.

 

[gearoidmm]

Calina the IT's decision to buy Myhome at the top of the market makes no economic sense to me?. But it meet with board approval.

If you look at it a different way, it makes perfect sense. Myhome.ie revenue does not depend on house sales but on number of ads and how long they remain online. The very best time to buy it is when the market is turning, loads of properties are going online and staying online (or being renewed due to lack of interest)

 

[bearishbull]

Use tax incentives to encourage long term ownership/renting, tax heavily those buying and selling investment property within only a few years. We need landlords and incentives work as seen by student accomodation etc. Anyway all the incentive of the past resulted in the massive supply being built every year so they may be counterproductive in years to come. No more property taxes / capitalist-socialist etc PLEASE!!

 

[Calina]

Calina the IT's decision to buy Myhome at the top of the market makes no economic sense to me?. But it meet with board approval.

On the face of it, it makes very little sense to me, with an increasing number of estate agents also using DAFT. It's entirely possible that they have a nice little business plan stashed away for it but given their subscription model for internet access to IT content online, I'd be surprised if it was very innovative. The only thing I can think of is they are expecting that people will always - to some extent - be buying and selling houses, even if the speculatory mania dies down.

I question - based on available information and considerations - whether it was really worth what they paid for it, particularly given that I thought the IT wasn't the steadiest financially. Must have been wrong there. But basically, I think they overpaid for it. Buying it is fine and dandy, for the reasons that gearoidmm has mentioned. Still doubt it was worth what they paid for it, even if you could claim it was the top of the market. Was anyone else interested in it at the time? Can't remember.

 

[tententwenty]

Use tax incentives to encourage long term ownership/renting, tax heavily those buying and selling investment property within only a few years. We need landlords and incentives work as seen by student accomodation etc. Anyway all the incentive of the past resulted in the massive supply being built every year so they may be counterproductive in years to come. No more property taxes / capitalist-socialist etc PLEASE!!

Yup sounds good to me. Nothing wrong with a good healthy debate earlier on but now its getting a bit silly. Can we also get a seperate thread for posters crying about other posters discussions, and not adding anything to the site themselves?