Dublin property prices falling by €4,500 a month

[EvotingMachine0197]

Good god, every time this thread pops up, I summarily crap myself. I wish the title wasn't so frightful.

You must understand, I need to keep my head buried in the sand for the next 6 months in order to avoid Hari-Kari. This thread is not helping matters.

[Coles]

Coles i thought the moderate slow down in price growth would you know be supported by the likes of you?

I do support a moderate slow down in price growth, but I have many friends who bought houses over the last year with 35 year mortgages. I would prefer if prices increased to provide them with a buffer before the bubble bursts. And it will burst.

[Coles]

"Economist Jerome Casey, who is editor of the Building Industry Bulletin in a report in 2003, said that site costs account for 42.5% of the cost of a house nationwide. Casey said that typically in the mid 1990s, Durkan Brothers sold apartments off O'Connell Street for £35,000 to £40,000 (€44,440 to €50,790) for which the site cost was £5,000. Currently, both the Irish Council for Social Housing and private house builders are reporting city house site costs at up to 50% of the house price. Outside the cities, site costs can represent up to 40% of the house price. For the country as a whole, site costs may now constitute 42.5% of the house price, an increase of almost 30 percentage points on the pre-boom position. In Dublin that increases to 50%. Overall the Irish figures are grossly out of line with the rest of the developed world.

Casey's conclusion means that up to eight years in the life of a normal 25 year mortgage now goes to pay for the excess in the price of the site."

-Finfacts
There's lots of interesting property stuff on this link, and most of it is a lot more up-to-date than the above quote.

[AFJROTC Cadet]

THE price of apartments in Dublin city centre is falling by up to €4,500 a month, and those in south Co Dublin and Galway city are also on the slide, according to a market survey.

The analysis, prepared by Daft.ie, reveals a number of property price anomalies starting to emerge. The survey is based on prices sought for homes featured on the Daft.ie website, the country’s largest property site. - Sunday Times

How big are those apartments?

[feargach]

We already have 127K units lying empty.

Whaaaat?!?

Do you have figures to back that up?

If so, then I concur with the crash predictors

[revereie]

I reckon anyone buying a home that hasn't factored in a possible fall in the value of their home after buying is really rather foolish.

Also, where people buy homes - they generally intend, or should have intended, to live there for quite a number of years at least. To buy a long-term asset in the hope of short-term gains is ill-advised at the very least; if it weren't, short-term financing instead of long-term financing e.g. mortgage loans would be more readily available.

So, anyone on a 35 yr mortgage may take a small 'hit' over the next 5-7 years but will instead have the remaining 28-30 years to make up for it. In the context of the overall market, those buying to sell quickly and are 'stuck' with their new home should be very few in number and were a little stupid to begin with.

Any investor who invests without considering all the implications e.g. rental yields deserve everything they get.

[zakalwe]

i bought a property 2 years ago, sold it recently for a profit of Eur100k and now have bought another with my girlfriend in which i intend to live for the next 3-5 years (minimum). the 100k represents a greater portion of my new property than my old one so my mortgage has decreased in real terms.

it was a bit of a fast one and one i wouldn't advise any of my friends doing (the risk of it backfiring were quite high). i got lucky and managed to cash in on a part of the property boom (which kicked off when i was still in school!!!).

i think the property market has stall or slowed but do not think that prices will crash. the current guide prices (rediculous in my book!) have to be 're-evaluated' and brought to more realistic levels.

[Sidewinder]

We already have 127K units lying empty.

Whaaaat?!?

Do you have figures to back that up?

If so, then I concur with the crash predictors

The census found 230,000 "empty" properties. Somebody somewhere did an analysis and came up with a figure of 127K actual homes that are lying empty, bought by investors and not rented out purely for capital appraciation. The other 103,000 are a mix of holiday homes and houses full of Polish lads who refused to answer the door to the census people. I'll try and track down the article concerned...

Also, our old pal David McWilliams on Ghost Estates

[asknoquestions]

Hi

Are there any historical examples of real estate crashes for one economy within a common currency area? The Japanese example is interesting but that was (arguably) partly caused by currency speculation. In the UK property crash of the 80s it was caused by a high interest rate due again to defence of a currency.

Ireland seems to be experiencing low interest rates (negative in real terms) but although this is fueling the economy there is no real risk of high rates that could result in a crash because interest rates are not set for our economy.

What is surely more likely than an interest-rate induced crash is a gradual erosion of competitiveness. Could this erosion be the correcting mechanism that provides the soft landing?

(Other dangers exist with losing competitiveness in a common currency area of course.)

former East Germany after reunification, though it was probably more a soft landing than a crash.

Cash rushed in from the West in the anticipation that prices and the economy generally would rise to West German levels. It did not happen and prices have been static or falling since the mid 90s.

[Sidewinder]

On the issue of vacant properties, this piece from Davy Stockbrokers (from Sept 2005) is interesting.

Not only did they get the 2006 estimate of vacant properties bang on the money at 230K, they estimate just half of these are holiday homes, and that the actual building rate needed - including immigration, native population increase and replacement of obsolete old stock - is a mere 65K units per annum.

Undersupply me arse.