Dublin property prices falling by €4,500 a month

[Coles]

here's a question for you all. if you were offered a 2 bed apartment in south dublin for around 200k would you take it? think of yourself as a single FTB working in dublin and bear in mind the current trend in the market, as you see it. also give a reason why.

Depends on a number of factors... If it was near the Green Line Luas, near amenities, was at least 850sqft, fully fitted, and could acheive a yield of at least 8%, then yes.

[Sidewinder]

here's a question for you all. if you were offered a 2 bed apartment in south dublin for around 200k would you take it? think of yourself as a single FTB working in dublin and bear in mind the current trend in the market, as you see it. also give a reason why.

Depends on a number of factors... If it was near the Green Line Luas, near amenities, was at least 850sqft, fully fitted, and could acheive a yield of at least 8%, then yes.

Well said. The bulls tend to dismiss bears by claiming we're all subversive malcontents. The truth is that we're financially aware.

Property rent yields of 2-3% when the cost of money is 5% simply does not make sense in the real world. Irish property is a terrible "investment" right now. But. If property returned to a state of normality (rental yields of 8%+, under 5x income, etc.) then property would be a good buy.

There are much better (and much more liquid) ways to make money than property right now. Buying property now is financially insane.

[Twin Towers]

oh yeah and were so loaded that the bubble will NEVER burst and house will become so expensive that soon we will be living in trailer parks like in the states!
http://www.finfacts.com/irelandbusiness ... 6514.shtml

Nothing wrong with living in a trailer park y'know. Did it myself and it was cool. Friendly place too.

[pluralist]

Take a look at apartment blocks around the countryside in particular at night time and see how many lights are on.

The countryside is going to suffer the most rather than Dublin. There are small towns and villages almost 100% dependant on construction. How many places entirely consist of a pub shop maybe a post office and a builders providers?

Yes and I think this is a point that has been missed - the geographical spread of the unoccupied properties. I think the ESRI said there were very few unoccupied properties in Dublin. Certainly, from anecdotal evidence, I'm not aware of that many unoccupied houses or apartments in Dublin.

[pluralist]

here's a question for you all. if you were offered a 2 bed apartment in south dublin for around 200k would you take it? think of yourself as a single FTB working in dublin and bear in mind the current trend in the market, as you see it. also give a reason why.

Depends on a number of factors... If it was near the Green Line Luas, near amenities, was at least 850sqft, fully fitted, and could acheive a yield of at least 8%, then yes.

Well said. The bulls tend to dismiss bears by claiming we're all subversive malcontents. The truth is that we're financially aware.

Property rent yields of 2-3% when the cost of money is 5% simply does not make sense in the real world. Irish property is a terrible "investment" right now. But. If property returned to a state of normality (rental yields of 8%+, under 5x income, etc.) then property would be a good buy.

There are much better (and much more liquid) ways to make money than property right now. Buying property now is financially insane.

In your yield calculations, are you working on the basis after tax or before tax yields?

For example, I am paying around €1,000 per month on my mortgage.

But I am getting owner occupier tax relief worth €200 per month, plus mortgage relief of around €70 per month.

So the cost to me is really only €750 per month or so.

If I rented the apartment, I would not be entitled to claim the owner occupier relief. I would reckon on rental income of around €10,000 per annum, at a conservative estimate, after tax at the top rate that's €6,000 or so, add on the mortgage interest relief brings it up to €6,800 or so.

I paid around €180,000 for the apartment, so my yield would work out at about 3.8% per annum (I think).

Is my calculation correct?

Or should I calculate it on the basis of my current outstanding mortgage, rather than the original purchase cost?

One thing is clear - basing it on the alleged current value of the apartment of around €300,000, the yield just looks silly.

[Coles]

This is what I'm getting at, Coles. There can be no more than 250,000(empty housing units). But it might be significantly lower than that.

I've been thinking a bit about this.

...The census shows that on 'census night' 300'000 units appear vacant. 50'000 are holiday homes/second homes. So therefore 250'000 appear to be unoccupied investment properties. But of course not all are.

...Some occupants are on holidays, or deliberately avoided making a census return. I suppose 20'000 would be a fair figure to cover the number of units that are unoccupied because the occupants are abroad.

...So we end up with a very disturbing figure of 230'000 housing units that no census return was made for. This is disturbing for a number of reasons. Firstly there is the possibility that there is a massive overhang of investment properties that could come on to the market very quickly. Secondly there is the possibility that a large portion of these properties were occupied, and that the number of occupants that didn't get listed on the census could be as high as 690'000*!

...Any combination of these two possibilities is very worrying. If the occupants that didn't make the census return are predominantly migrants (undocumented or not), this would indicate a very considerable underclass.

...But, either way, the property market is fuc-ed.

*assuming an occupancy rate of 3/unit.

[Coles]

here's a question for you all. if you were offered a 2 bed apartment in south dublin for around 200k would you take it? think of yourself as a single FTB working in dublin and bear in mind the current trend in the market, as you see it. also give a reason why.

Depends on a number of factors... If it was near the Green Line Luas, near amenities, was at least 850sqft, fully fitted, and could acheive a yield of at least 8%, then yes.

Well said. The bulls tend to dismiss bears by claiming we're all subversive malcontents. The truth is that we're financially aware.

Property rent yields of 2-3% when the cost of money is 5% simply does not make sense in the real world. Irish property is a terrible "investment" right now. But. If property returned to a state of normality (rental yields of 8%+, under 5x income, etc.) then property would be a good buy.

There are much better (and much more liquid) ways to make money than property right now. Buying property now is financially insane.

In your yield calculations, are you working on the basis after tax or before tax yields?

For example, I am paying around €1,000 per month on my mortgage.

But I am getting owner occupier tax relief worth €200 per month, plus mortgage relief of around €70 per month.

So the cost to me is really only €750 per month or so.

If I rented the apartment, I would not be entitled to claim the owner occupier relief. I would reckon on rental income of around €10,000 per annum, at a conservative estimate, after tax at the top rate that's €6,000 or so, add on the mortgage interest relief brings it up to €6,800 or so.

I paid around €180,000 for the apartment, so my yield would work out at about 3.8% per annum (I think)

Is my calculation correct?

I think I'll pass this one over to Prof Sidewinder. I'm actually just a subversive malcontent. :wink: (I would imagine that your situation is ideal because your mortgage is low for someone hitting the upper tax rate.)

[pluralist]

I think I'll pass this one over to Prof Sidewinder. I'm actually just a subversive malcontent. :wink: (I would imagine that your situation is ideal because your mortgage is low for someone hitting the upper tax rate.)

Yeah, I'm probably one of the lucky ones. When I hear about what some are paying, it just frightens me.

I'm pretty bearish overall, maybe not quite as bearish as Sidewinder, but I generally agree with his analysis.

[Coles]

I think I'll pass this one over to Prof Sidewinder. I'm actually just a subversive malcontent. :wink: (I would imagine that your situation is ideal because your mortgage is low for someone hitting the upper tax rate.)

Yeah, I'm probably one of the lucky ones. When I hear about what some are paying, it just frightens me.

I'm pretty bearish overall, maybe not quite as bearish as Sidewinder, but I generally agree with his analysis.

I've yet to see him wrong but this should be interesting...

5% by Q1 2008 is odds-on, I'd say.

I'll take you up on that. €100 says it wont. Given my 'economic illiteracy' and your obvious expetise in the area, you shouldn't be afraid?

Yer on. ECB base rates 5% or higher in March/April 2008. €100.

Easy money 8)

[ibis]

ESRI Report on empty houses.

A quote I particularly love:

"The effects on house building in the counties affected by tax schemes is particularly striking. A high proportion of the building in these counties is of dwellings that are now vacant. While beneficial for the building industry and landowners in these counties, the effect has been to greatly raise the housing costs for new young households setting up in these counties. The negative effects of this on the growth prospects of these counties, especially of those counties in the BMW region, must be taken into account when assessing the impact of the tax schemes."

The tax schemes in question were the Resort Scheme and other rural renewal schemes. Laugh? I nearly started.