Didn't the estate agents say 3 months ago that we were plateau'ing and that prices would move up soon and the level of interest in new developments that had re-priced was unprecedented.........:)Quote:
Originally Posted by Student Mullet
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Didn't the estate agents say 3 months ago that we were plateau'ing and that prices would move up soon and the level of interest in new developments that had re-priced was unprecedented.........:)Quote:
Originally Posted by Student Mullet
Allied Irish BankQuote:
Originally Posted by Poor Student
I wouldn't have a clue to be honest, I'm a public transport kinda guyQuote:
Originally Posted by Sam_Heggy
:)
I hear that economist guy Bacon is doing the whole "I told you so" routine. He must be the back seat driver...
Lots of people can now do the "I told you so" routine. McWilliams, the Economist magazine amongst others*. No reason why they shouldn't.Quote:
Originally Posted by pete
*Me also. But I have very little schadenfreude as I'll suffer financially like most people.
i was in cork about a month ago - this topic is something i don't alot about in recent times as i live in the uk - but basically i was talking to a developer - i asked him what was going on in terms of the housing market - he said basically that this day has been coming for a long time and he believed that "greed amongst builders/developers" was the prime cause ,any thoughts
"Crash" is a word I struggle with.
For example if the value of something is 100 and in 10 years it goes up to 600 but in year 11 it drops to 550, the word "crash" is a leap
There is clearly a drop off the the utter insanity of growth in house prices but while in isolation in the last 12 months there has been a signifcant drop, looked even in the medium term, crash is a leap
Having said that, if you bought 12 moinths ago, you have a negative return - if you bought 10 years ago you still have a massive profit
So my post really tells you nothing - I'll get me coat.......
Problem is though, there is property up here for example that, when bought new a 3 bed semi in a good area was sold new 3 years ago for €210k the same property is advertised with estate agents for €195k as guide price.Quote:
Originally Posted by Angus
I love the way the media churn out the "E3m home now going for only E2m". Like who gives a...?
I presume some homes are selling or all the Estate Agents would have closed? My definition of crash is when cannot sell anything.
I wonder are investors buying now? Just like shares best to buy in the slump. Will prices increase again?
Wouldnt have thought investors will buy now - obviously better to buy at the beginning of the rising cycle, not at the end of it.Quote:
Originally Posted by pete
Prices will rise again, but you'll have to wait 7 years, give or take, for the cycle to repeat again.
Of course some stuff will always sell. However, the amount of properties for sale has been increasing steadily over the past while indicating that stocks in general are not shifting.Quote:
Originally Posted by pete
Quite the opposite, specuvestors pulling out of the market are reducing the prices as they were helping fuel inflation. Beware of a dead cat bounce in a cycle. It's nowhere near the bottom yet.Quote:
I wonder are investors buying now? Just like shares best to buy in the slump. Will prices increase again?
I'm told we're approaching that situation with property ...or property in a particular price band at least. I visited a spanking new showhouse last weekend where they've cut the asking price from 360K to 315K.Quote:
Originally Posted by pete
Two of the houses I've looked at in recent times have been on the market for nearly 12 months. They're priced in the 350k region and I'm hearing that not only are the asking prices dropping but they're just not getting any offers at all. Peoples confidence is through the floor in terms of job security etc.
On the other hand my own house is on the market a little over a month for under 200K and with minimal marketing we've two offers of the asking price.
There's a set of flats down the road from me that have been on offer for at least a year, and not one of them has gone yet.
A year down the line there should be some good deals going, but will the Bank lend you the dough, and what kind of interest rates will you be paying?
Hard to see the Banks been so eager to lend to speculators in the near future particularly with the rental market in decline.
A good deal in the context of what though? 2006 overvalued prices?Quote:
Originally Posted by cheifo
On banks lending to speculators. PTSB, one of the major players in the mortgage market, have pulled their buy-to-let mortgages. http://www.rte.ie/news/2008/0620/mortgage.html
Also, on Pete's point about estate agents closing, Lisney have asked employees to take a 10% pay cut. http://www.rte.ie/business/2008/0620/lisney.html
A 7% drop in three years....?!Quote:
Originally Posted by Sam_Heggy
That's some crash...... :eek:
You wouldn't even scratch your bumper with that sort of slow motion impact...
The difference between the property market in England and Ireland is very illuminating.
The decline in Ireland started earlier and has gone deeper. It appears primarily to have been triggered by a relatively quick change from under-supply to over-supply in the market.
On the the hand, Britain has been incapable of addressing its housing under-supply problem (more homes were built in the Republic in 2007, for example, than in all of Britain - despite a population almost 15 times bigger there) which, coupled with cheap credit, drove the last property boom. What is screwing the property market in Britain now is largely the latter of those two market drivers - the mortgage situation. There is still a lot of pent-up demand - it's mostly just struggling to borrow at rates it feels comfortable with, or waiting to see what happens.
American banks have a lot to answer for.
I'd widen that to banks in general have a lot to answer for.Quote:
Originally Posted by dcfcsteve
They are now reaping what they sowed in terms of the CDOs, CDS' and a lot of the other financial sleight of hand that was supposed to distribute risk more effectively (reminds me of the saying that when you're playing poker and you can't work out who the mug at the table is, its probably you). One of the interesting stats is that whilst sub-prime mortgages were a US phenoma, European banks (the mugs at the poker table) bought most of the packaged stuff thats now defaulting.
BUT, in Ireland and UK we have the additional problem of mortgages that originated as prime, but are now sliding into sub-prime due to affordability issues. That is much, much more of a problem for our economy and we can't really blame America for that.
See, that's where they're going wrong. If they advertise them as apartments they'll flog them in no time :DQuote:
Originally Posted by pineapple stu
DEVELOPERS START TO PANIC
Two of the country's leading property companies are offering home buyers interest-free loans in an attempt to stimulate activity in the housing market.
Glenkerrin Homes, run by developer Ray Grehan, and Radora, which is controlled by Bernard McNamara and associates, are offering packages to assist would-be buyers at key Dublin locations.
Builders step in where lenders fear to tread; a lack of money and a lack of confidence - that is how Ray Grehan of Glenkerrin Homes assessed the problems in the housing market.
AdvertisementFellow developer Mr McNamara's apartment development in Elm Park in Dublin 4 has already seen prices fall 20% to attract buyers.
Radora is now offering interest free loans of up to 30% of the selling price to be paid back within five years.
According to a statement, Glenkerrin is stepping in to help out those no longer able to secure loans of up to 95%.
Potential buyers of its properties Stillorgan, Ballinteer and Lucan will have to pay 5% of the asking price. They can then avail of an interest-free loan of 15% of the price to be repaid in seven years.
[QUOTE=Reality Bites;1013603]DEVELOPERS START TO PANIC
Glenkerrin is stepping in to help out those no longer able to secure loans of up to 95%.
Potential buyers of its properties Stillorgan, Ballinteer and Lucan will have to pay 5% of the asking price. They can then avail of an interest-free loan of 15% of the price to be repaid in seven years.[/QUOTE]
The slight catch to the Glenkerrin "interest free loan" is that you pay them back 15% of the value of the property in seven years. i.e. if the property increases in value by say €100000 in that seven years you pay back the original 15% plus 15% of the increase in value. No so "interest free" now is it?
This was confirmed by Ray Grehan the boss of Glenkerrin this morning on the breakfast show on newstalk.
That's rubbish, sure there's no property crash, ask the lads above who said so. And it certainly hasn't caused a recession!
adam
Let me get this straight. I want to buy a €300k flat. I only have €15k saved. The bank will only give me 80%, €240. So I get an interest free loan of €45k from the developer.
Five years time, when I haven't been able to put away €45k in savings because paying off my mortgage (especially the first five years) is such a strain on my finances, I don't have the loan money to pay back. Developer takes my thumbs. Is that how it works?
It seems to only benefit a buy-to-let investor.
Surely its the opposite?Quote:
Originally Posted by Reality Bites
Its a somewhat pragmatic decision to finally accept that there was no demand at the previously advertised prices and they are trying to stimulate the market with more realistic prices.
I'd also imagine their bankers are strongly in favour of getting some cashflow going. Read into that what you will!
PS I admire them for trying to capture a bit of any potential upside, its bit cheeky, but neither here nor there in the grand scale of things.
You need to be able to afford both the mortgage and the loan from the developer. Its no silver bullet solution. It simply replaces the credit union loan or other personal loan that people previously tended to get to cover the deposit which banks have no interest in granting.Quote:
Originally Posted by noby
Also, as part of your mortgage assessment the bank will want to know how you are funding the other 20% of the purchase price (over the 80% they will lend). If they get a sniff you're borrowing it, whether it be from a developer or elsewhere, they'll likely reduce your borrowing according.
Basically what the developer is doing is selling an 85% share of the property now and he is holding an equity stake of 15%. Which you agree to buy off in seven years time at its future market value. i.e. Win-Win for the developer.
I wouldn't say its win-win, particularly given the sunk cost the developer has invested in purchasing the land and building the properties, both at top rates.Quote:
Originally Posted by sparkey
This is all about providing cashflow to service the loans as banks are getting antsy. Also, the banks are also likely to have taken equity stakes in a number of developers as part of re-structuring debt.
Totally agree with your second sentence. But if a developer realises 85% of his sale price now he will have covered his development and land costs with possiblly a bit to spare. Then he hopes to recoup his profits in seven years time in quite possibly better market conditions and with more added value.Quote:
Originally Posted by OneRedArmy
I believe it is fairly common for Developers to keep the last units & rent them. I know in my complex they kept about 10% of the units & are still renting. I suppose having 15% of different apartments is not that much different than keeping the last 15% in their own name.Quote:
Originally Posted by sparkey
I suppose the main difference is the interest free bit.
IF prices increase the owner of the 85% could (industry jargon warning!) "release equity" to pay the 15% if not able to save it.
That's different though - they do that because they can keep control of the management of the estate/ complex/ block until all units are sold. This way they can cream it on the maintenance fee's rather than handing it over to a Management Company that is responsible to the residents. It's just another money making racket.Quote:
Originally Posted by pete
Are you sure your not Ray Grehan the boss of Glenkerrin Developments in disguise:). As this was the backbone of his sales pitch on radio this morning.Quote:
Originally Posted by pete
As Macy said above. Also it is a way of deferring their tax liability by not selling all of a development in the one tax year, but still servicing the loan with the rent money. If the property is still kept in the development name then it can still be sold on as a new property even though it may hve been rented out for a year or two.Quote:
Originally Posted by pete
Tax liability makes some sense. My complex was finished 6 years ago & Developers still have up to 10% of the units rented. There was downturn in 2003 which is why I thought they kept the units in their name. If they wanted to sell since then they would have had no problem. The Management Company is controlled 100% by residents & Developer has no bigger input than anyone else.Quote:
Originally Posted by sparkey
The IF was a big one ;)
Depends on how far the sale price has fallen as to whether there is any surplus. Based on what I'm seeing, I doubt it.Quote:
Originally Posted by sparkey
Also, I'd say from what we know now, the chances of property values being materially higher in 7 years time is less than 50%. It took the UK the guys of a decade to escape from negative equity.
Property Crash programme on TV3 last night with Karen Coleman, interestly enough Ray Grehan felt it was nothing to do with Developer Greed, more the lack of Zoned Land:confused:
Lack of land supply for variety of reasons must have pushed land prices up. This of course could be lack of zoned land as well as people sitting on zoned land. I don't know the reason but there must be hundreds of acres of land inside the M50 in Dublin yet builders were spreading the suburbs into neighbouring counties.Quote:
Originally Posted by Reality Bites
Interesting (well to me anyway) article in yesterday's Independent: http://www.independent.co.uk/news/uk...n-1012202.html
follows the domino effect of a woman losing her job in a window sealant company, all the way to the top
Presumably there was an initial lack of supply early on (ie 5-10 years ago), which accounted for early price rises, but with the huge overcapacity at the minute and resulting fall in prices that long ago ceased to be a valid reason and pyramid-selling tactics took over.Quote:
Originally Posted by Reality Bites
You Just got to Love Estate Agents , browsing on one of their websites I laughed when i saw what they are now calling the Property Crash - Its no longer a Price Correction, Its an Advanced Price Correction !!