Houses prices, how low will they go?

[Royal rover]

taken from today's indo -

http://www.independent.ie/business/personal-finance/property-mortgages/price-of-average-home-has-tumbled-by-836458000-1600605.html

According to daft.ie prices are now back down to what they were in 2005 which the average price droping by 58,000 - most of us know that this was always going to happen but possibly not to this extent - there's every chance that they'll drop to 2002 prices by 2010- it's ok for those planning a long stay - but what about who bought second homes for rental income or to make a quick £, i'm from a surburb of dublin and i couldn't get over the amount of property (apartments ) on the market, and those what have never even sold - so what do people think will happen in the long term? four years ago i tried to get a morgage i was earning 35000 per annum - my mate was a broker - and told me if i could get a 25000 deposit he would get a morgage for 300,0000, and i could possibly borrow the deposit i know a few who did that. i would get the morgage on the condition that i would of rented out a room lets say at 350 per month - at that time payments were roughly between 1000 and 1100 per month when interest rates were good, anyone any views on this

[Billsthoughts]

nobody knows and anyone who tells you otherwise is a liar

[hula4]

taken from today's indo -

http://www.independent.ie/business/personal-finance/property-mortgages/price-of-average-home-has-tumbled-by-836458000-1600605.html

According to daft.ie prices are now back down to what they were in 2005 which the average price droping by 58,000 - most of us know that this was always going to happen but possibly not to this extent - there's every chance that they'll drop to 2002 prices by 2010- it's ok for those planning a long stay - but what about who bought second homes for rental income or to make a quick £, i'm from a surburb of dublin and i couldn't get over the amount of property (apartments ) on the market, and those what have never even sold - so what do people think will happen in the long term? four years ago i tried to get a morgage i was earning 35000 per annum - my mate was a broker - and told me if i could get a 25000 deposit he would get a morgage for 300,0000, and i could possibly borrow the deposit i know a few who did that. i would get the morgage on the condition that i would of rented out a room lets say at 350 per month - at that time payments were roughly between 1000 and 1100 per month when interest rates were good, anyone any views on this

have you looked into the possibilty of getting something under the affordable housing scheme?

[Fr Damo]

[quote=Royal rover;1086575]taken from today's indo -

http://www.independent.ie/business/personal-finance/property-mortgages/price-of-average-home-has-tumbled-by-836458000-1600605.html

I spoke to a commercial property developer before xmas (around in the 70/80s as an insurance/assurance broker) who said the rents being achieved are the best albeit crude estimate of what a house is worth.

EG, You have a house in an estate where a rent of 1000/pm is being achieved. This works out at 12k pa. Now multipy that by 20years and you get 240k. Most imvestors work off a single figure yeild so at 6% yeild that house is actually worth about 225k.

In my case, I bought in July 05 at 215k a house sold in Jan 07 for 242k next door but rents are only 800pm. This means my 3 bed semi in an average estate is propably worth about 180k.
I know it is a very objective way of looking at things but house prices previously seemed dictated by no science what so ever.

[dahamsta]

The DAFT report is based on asking prices, not selling prices.

http://www.irishtimes.com/newspaper/property/2009/0115/1231738223261.html


Recent house-price surveys are based on the asking price rather than what the property actually sold for, writes Orna Mulcahy , Property Editor
HOUSE PRICES IN some parts of Dublin have dropped by as much as 50 per cent since the peak of the boom in mid-2006, according to the country’s leading estate agency chain. It claims that house price surveys have consistently underestimated the real fall-off in values.
Michael Grehan, managing director of Sherry FitzGerald, says that a report this week by property website Daft.ie, which showed a 15 per cent fall in house prices last year, doesn’t tell the full story, since the research is based on asking prices rather than those actually achieved.
Information on actual sale prices has been restricted since last year when the National Consumer Agency told agents that they could no longer reveal sales results without written agreement from both buyer and seller. Property sale information is covered under the Data Protection Act.

[OneRedArmy]

[quote=Royal rover;1086575]taken from today's indo -

http://www.independent.ie/business/personal-finance/property-mortgages/price-of-average-home-has-tumbled-by-836458000-1600605.html

I spoke to a commercial property developer before xmas (around in the 70/80s as an insurance/assurance broker) who said the rents being achieved are the best albeit crude estimate of what a house is worth.

EG, You have a house in an estate where a rent of 1000/pm is being achieved. This works out at 12k pa. Now multipy that by 20years and you get 240k. Most imvestors work off a single figure yeild so at 6% yeild that house is actually worth about 225k.

In my case, I bought in July 05 at 215k a house sold in Jan 07 for 242k next door but rents are only 800pm. This means my 3 bed semi in an average estate is propably worth about 180k.
I know it is a very objective way of looking at things but house prices previously seemed dictated by no science what so ever.Somebody used this rationale (same yield based approach) the other day on radio to predict that the total peak to trough price fall will be 80%. Who knows?!

What we do know is that all the major indices are overstated for the reasons Adam stated above.

It is verging on impossible to value property as the number of transactions is so low. So unless the house next door has changed hands in the last month or two, I don't think anyone can say they can approximate the current value of their own property.

The real wild card here is repossessions. Historically banks in Ireland haven't repossessed, but that may not hold true going forward. And experience in the UK and US tells us that when banks repossess, they want to get cash in quickly and to do this will accept a price 20-30% lower than the market value to get a quick sale. This then has the impact of dragging the value of non-distressed sales down with it in a spiral of doom.....

Anyway, thats enough cheeriness for one lunchtime!!!