Property & house prices

Watched the “late late” the other night with Derek Brawn & an auctioneer on it arguing about house/property prices. Brawn was obnoxious even if you wanted to agree with him. The auctioneer was showing examples of the correction in the prices. Very interesting reductions on some developments. Brawn kept shouting him down, talking directly to the audience with little sound bites. Personally I think were getting back to realistic values on most property. Its hard to know, as very little is selling.

One guy in the audience was going to rent forever "as they do in most of Europe". No explanation of how he was going to pay the rent in his old age, if he got sick etc. I'm sure theirs policy's you can take out etc. I suppose if you can pay off your mortgage quick enough you'd save a lot in rent & have an asset to sell in your old age.

http://www.youtube.com/watch?v=HfzlldvI3vk

If there are more sellers than buyers, the price isn't realistic.

It's quite common to see new development reduced by upwards of 40% from the peak as banks put the squeeze on. My understanding is that sales are picking up at these new knockdown prices(although from basically zero!). I would expect another sharp fall as NAMA takes these developments loans over.

The secondhand market is suffering from a lack of realism as sellers aren't under the same pressure as developers. There's no reason for the wider secondhand market to fare any better than the new home market, so I'd see big falls still to come to bring prices down below 50% of the peak price.

As for auctioneers, according to them we've been turning the corner for almost 2 years...

Prices will continue to fall over next 3 years by 15/10/5 percent.

That auctioneer had to say prices had bottomed out. Did you expect him to talk himself out of a job. He lied. Would you believe a Banker, Builder, Farmer, Vintner or Auctioneer in Ireland after the mess they have all made of this country.

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Originally Posted by stojkovic

Prices will continue to fall over next 3 years by 15/10/5 percent.

That auctioneer had to say prices had bottomed out. Did you expect him to talk himself out of a job. He lied. Would you believe a Banker, Builder, Farmer, Vintner or Auctioneer in Ireland after the mess they have all made of this country.

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or Fianna Failer, Fianna Gaeler, Teacher, Guard, or Priest as well:)

I read somewhere that house prices have risen for the last 3 consecitive months. Ill see if i can find it but its hard to find good news when its being buried by the media so much. On the same day Today FM where running a story about how house prices are down 18 % from 2 years ago !!!!! Wow what a shocker.

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Originally Posted by stojkovic

Prices will continue to fall over next 3 years by 15/10/5 percent.

That auctioneer had to say prices had bottomed out. Did you expect him to talk himself out of a job. He lied. Would you believe a Banker, Builder, Farmer, Vintner or Auctioneer in Ireland after the mess they have all made of this country.

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I believe some prices will fall further.A bit like the stock market, Its always hard to call where the bottom is though. The other thing is you may have the chance of buying now, where you want. Some apartments etc will continue to fall , but not maybe all second hand/trader up housesin the more desireable areas.
The other side is most home owners would love to see it bottom out, so that their percieved negative equity is less. One point made is the a house should be a long term investment, you'll never get the level of capital appreciation that we've had over the last few years.

If there's any more "I read" or "I saw" in this thread, I'll lock it. Post evidence or shut your mouth.

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This report is over the period, from the 15th of March to the 20th of April 2009.

40% of all properties have now dropped their price at least once while 20% have dropped the price more than once.

The drops per day was 103 down from 150 last report.

There were 3,708 drops and the average drop was €41,989.
Over the same period there were 136 increases and the average increase was €179,120.

The 3,708 properties reduced the price by just over €155.7 million in total.

The 136 properties raised their price by just under €24.3 million in total.

Time on the Market

more than 3 months 80%
more than 6 months 71%
more than 9 months 57%
more than 12 months 42%
more than 15 months 20%
more than 18 months 7%

The average number of days properties have been listed is 325 days (11 months) up from 310 days since the last report
You can See the Report by clicking here

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http://www.irishpropertywatch.com/

The difficulty will almost all facts on property is that the people providing the information have vested interests. Prices look good value not but that is only when you compare with previous prices. With unemployment on the rise it is hard to see prices increasing anytime soon as unemployed people do not buy property. Given the glut of empty property I can't see anyone under pressure to buy due to location either...

I guess the only way to spot the bottom is when/if prices start to rise again? Is there any evidence of that?

The focus on house prices is something of a hangover from the Celtic Tiger when houses were liquid assets to be traded like shares.

Affordability is a more relevant measure for most people, unless you are in negative equity and want to move again (a small minority).

Affordability is certainly the key factor for individuals, but prices are the key indicator for the markets, which makes it an indicator for individuals. I may wait until next year to buy my first house, for example, because buying at the bottom of the market may give me a slight edge when it comes time to buy my second - and hopefully last - house in 3-7 years.

Unfortunately the data that's available to me is complete crap, because we still don't have actual selling price metrics in Ireland. Which is crazy. Data can be anonymised.

adam

I'd recommend www.thepropertypin.com to anyone interested in this topic.
Some good analyses there, both on property prices and on the economy in general.
Missing the bottom is preferable to catching a falling knife, but on the other hand family circumstances can dictate timing as much as the market. Personally I don't see the bottom happening until 2011, just my opinion though. The impact of NAMA on the market is a big unknown.

Value is also an issue for lot of people, people are, by and large, now not buying houses as they don't think they are value at the moment, as the majority of the population have the perception that houses are going to continue drop in price.

I've just bought a house myself, I'm thinking maybe i'm mad - but as long as its affordable and good value in the long term i think its a good time to do it.

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Originally Posted by dahamsta

Unfortunately the data that's available to me is complete crap, because we still don't have actual selling price metrics in Ireland. Which is crazy. Data can be anonymised.

adam

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True. In the Sunday Times property supplement page 2 this week they speak about this. seemed to imply this is goign to change.

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Originally Posted by Real ale Madrid

I've just bought a house myself, I'm thinking maybe i'm mad - but as long as its affordable and good value in the long term i think its a good time to do it.

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If you're buying to live, even if it's just for 5 years or so, you're perectly sensible.

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Originally Posted by Real ale Madrid

Value is also an issue for lot of people, people are, by and large, now not buying houses as they don't think they are value at the moment, as the majority of the population have the perception that houses are going to continue drop in price.

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You've also got to factor in reduced earnings now due to pay reductions and increased taxes. Increased unemployment is continually reducing the pool of people who can potentially purchase a house. Banks are also lending on lower valuations and more stringent criteria. Those factors with others are going to continue driving prices down, we're nowhere near the bottom.

Derek Brawn may have been obnoxious but he only behaved like property bulls and vested interests in the market have behaved in the media over the past decade or so.

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Originally Posted by Poor Student

Banks are also lending on lower valuations and more stringent criteria. Those factors with others are going to continue driving prices down, we're nowhere near the bottom.

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Having been through the process myself in the last few months - this really hit home, the banks are actually scared to lend and won't give people a single cent over the 92% of a house value, esp for those entering the market.

Its going to be a long while yet before the demand for houses gets close to the supply.

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Originally Posted by Real ale Madrid

Having been through the process myself in the last few months - this really hit home, the banks are actually scared to lend and won't give people a single cent over the 92% of a house value, esp for those entering the market.

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Would that be an indicator that banks think prices will fall further?

EBS have a dedicated section offering top up mortgages now. They seem to be actively pushing that too. I suppose it is a means of getting more business but less risky depending on percentages.

[QUOTE=pete;1155554]Would that be an indicator that banks think prices will fall further?
QUOTE]

Well don't think its an indicator for that - its just one of the criteria for getting a mortgage. Higher Loan to value percentages are probably available, e.g 95% to others - although not myself as we're first time buyers. Although the days of getting a 100% mortgage are over for the time being id imagine.

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Originally Posted by pete

Would that be an indicator that banks think prices will fall further?

EBS have a dedicated section offering top up mortgages now. They seem to be actively pushing that too. I suppose it is a means of getting more business but less risky depending on percentages.

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The reason banks aren't lending is because they've been told to increase their capital ratios by regulators, government and "the market". In the absence of private capital funding, the only way of doing this is by not lending.

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Originally Posted by OneRedArmy

The reason banks aren't lending is because they've been told to increase their capital ratios by regulators, government and "the market". In the absence of private capital funding, the only way of doing this is by not lending.

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While that's the major factor falling values should also encourage banks to seek higher deposits in case of early repossession. The more rapidly declining the market, the less likely a deposit will hedge against a loss on a bad loan over time.

I think you all give banks too much credit. monkey see monkey do in most of them...