Dublin property prices falling by €4,500 a month

[Coles]

Coles,

very uninformed post and critique of stamp duty.

Do you think so? I'm sorry to disappoint you.

If Stamp duty were to be abolished, what public services would you recommend should be down-graded? Health? Education? What alternative taxation would you introduce and how would you suggest that should be done politically?

talk about a straw man argument. when cgt fell to its current level of 20% the effect was that the tax take from cgt rose substantially. sometimes a fall in the rate of tax leads to an increase in the tax haul.

Right...? If stamp duty were abolished there would be NO tax take from stamp duty. If stamp duty were reduced the only way to INCREASE stamp duty receipts would be to increase the rate of sales/purchases. Is that a good idea?

Why can you not accept that stamp duty is a component of the property price?

its not. its a tax. its a sunk cost which you'll never recoup to be squandered by the government on a bloated civil service paid more than the private sector, or "health? education?" as you so elequontly put it.

Oh... but that's a different argument. Nobody likes paying tax, and most of us feel that tax is 'squandered by the government' but why get rid of stamp duty over any other form of taxation? Would it not be more appropriate to campaign for civil service reform or TD's wage cuts?

If you believe that abolishing stamp duty will somehow reduce the 'price', and lessen the burden on the purchaser, I would ask you to provide evidence for this

impossible for ireland as we have always had stamp duty. how about we compare house prices in canada/australia/continental europe where stamp duty, if any, averages at a few thousand euro maximum. surely thats a better comparison. or do you follow the govts and retailers' assertions that things have to be more expensive in ireland because we're an island nation and if we didn't have to pay higher prices then we'll spend it all on drink?

I think RoC has dealt with the important part of this in an above post. The rest isn't really relevant.

Over the last five years, property investors have bought into the Irish market fully aware of the existance of stamp duty.

you could have said the same about the window tax levied by the british government on irish cottages in the 18th and 19th centuries. just because it was in place does not make it right. what about FTBers (myself included) who had to fork out over eur20k in stamp. money i did not have. i had to take out a car loan to pay it.

Are you sure that was a good idea?

There are a multitude of far more important issues that affect the price of housing in Ireland that need to be tackled. You should read Michael Hennigan's excellent Finfacts article on this topic.

[Coles]

Y'know, I've been following this thread for 4 months now, as I know quite a few people earning decent salaries who are holding off on buying their first property (in Dublin) because they're hoping the market will fall back to something approaching reasonable prices, but despite all the doom and gloom on this thread, and the scoffing of posters like Sidewinder, prices remain absurdly high...

If prices were falling by €4,500 a month since this thread started, that'd be a €70,000 drop in average price by now

Where did you get the figure of €70,000? Should that not be €18,000?

[badinage]

Where did you get the figure of €70,000? Should that not be €18,000?

my bad... I'd been calculating it as 4,500 a week... It all makes sense now...

[ibis]

If prices were falling by €4,500 a month

Its never going to be a steady drop like that.

But I sincerely believe we will see 50% drops by the time prices start to pick themselves up again. We could be looking 5 to 10 plus years for that to happen.

I urge anyone who thinks I am "just spouting doom and gloom" to do a bit of research on our economic fundamentals especially the ins and outs of our construction industry and then take a look at how things have panned out in the likes of the US, UK Japan etc etc after their bubbles.
SOFT LANDINGS DO NOT EXIST.
Its going to end badly and its already started.

Imagine for a moment that nominal house prices stabilise for 5 years, so that your €400K house is still at €400K.

Assume inflation of 5% per annum.

After 5 years, your house is actually worth €330K in 2007 money...

Same calculation, but with nominal house prices dropping at 3% per annum, and your house will be worth €258K after the five years.

[MichaelHennigan]

Prices in the new home market are being supported currently by add-on lollipos while the insiders in the second-hand market are banking on a surge post the general election to charge up the market with the prospect of an adjustment in stamp duty.

But the damper of an ECB rate of 4% in June and the summer period is likely to result in job shedding by property related services - estate agents, mortgage brokers etc at a time when the current shakeout in manufacturing is likely to continue.

The headline rate of price increases/falls may not show the whole picture and will give fodder to bank economists to discern silver linings, no matter how thin. However, we do not get monthly volume data in the short term and even a slight price increase may not signal that the market is holding up.

The real danger will happen when 5-10 units are for sale in a typical apartment complex because of affordability and employment concerns.

[politicaldonations]

Prices in the new home market are being supported currently by add-on lollipos while the insiders in the second-hand market are banking on a surge post the general election to charge up the market with the prospect of an adjustment in stamp duty.

But the damper of an ECB rate of 4% in June and the summer period is likely to result in job shedding by property related services - estate agents, mortgage brokers etc at a time when the current shakeout in manufacturing is likely to continue.

The headline rate of price increases/falls may not show the whole picture and will give fodder to bank economists to discern silver linings, no matter how thin. However, we do not get monthly volume data in the short term and even a slight price increase may not signal that the market is holding up.

The real danger will happen when 5-10 units are for sale in a typical apartment complex because of affordability and employment concerns.

Michael can you refer to the lag in the PTSB/ESRI index when reporting on it on finfacts? No media outlet refers to the lag and the asking price index from daft is a better guage of current state of market. Of course when volumes are low like at present prices can still rise on the smaller volume of properties (usually due to a higher quality/better located mix of properties sold in the indices) while wider market is in trouble. The TSB/ESRI index showed 2nd hand 3 bed properties declined in the january report but this refers to property sales from several months ago and things have gotten worse since so expect overall PTSB/ESRI index to go negative over next few months.

[Sidewinder]

So I should wait 5 years before buying a house?

That's giving a lot of money to some greedy landlord

Oh FFS, not the "rent is dead money" lunacy again....

Riddle me this. Currently I share a 3-bed Galway city centre apartment with secure off-road parking with 2 mates. We fork out the princely sum of an entire €300 a month each on rent. The most recent market price for a similar apartment in the same block is €400,000.

Now tell me why it makes any sense to fork out €2000+ every month, plus maintenance costs on the property, on a 40 year interest-only slave mortgage to the bank?

Rent is dead money when - and listen carefully for once - when you can get a 25-year repayment mortgage on a property for roughly the same or only a little more than the rent would be.

In every other case it makes more financial sense to rent.

I could rent this entire apartment just for myself, and put another €1000-odd euro a month into a savings plan, and still be paying less than a mortgage.

You might like to enslave yourself to being stuck working for the bank for the next 40 years, but some of us actually have some basic fecking cop on, and financial acumen.

[stewiegriffin]

u could also try squatting.soon there will be rows and rows of unsold property round de place.a crowbar and a new set of locks and bobs your uncle

[feargach]

... maybe the bust is even here just beginning.

It could be long and drawn-out. But if it's short and vicious, people could be back to profiting off property by 2009!

If the price of a 3 bed semi falls to say 220K by early 2008 and recovers to 230K by mid 2009, it's still a modest profit.

[Sidewinder]

If the price of a 3 bed semi falls to say 220K by early 2008 and recovers to 230K by mid 2009, it's still a modest profit.

When you factor in 5% switching costs (isn't that the standard rule-of-thumb?) it's no profit at all in nominal terms, and after another 5% inflation yer making a real loss. Genius investment strategy there

Put your 220K in a nice savings account where you'll be able to get 7.5% guaranteed by then, a real gain of 2.5% above inflation for absolutely no hassle or risk whatsoever.

The numbers simply don't add up on Irish property and haven't done for years now.