Irish Residential Property Investor Report: Spring 2010

[MortgageBroker]

Residential Property Investor Report, Spring 2010

The latest Residential Property Investor Report is now online.

Key findings:

c. 39% drops required in major cities before property investment starts to make sense when you look at it using the different valuations methods we used.

Most worryingly, leaving money on deposit beats property hands down over the short/medium term.

For the sake of balance we went a step further and got an independent critique of our methods giving reasons for why they could be better.

Any thoughts or opinions are welcome.

Residential Property Investor Report, Spring 2010

[MPB]

So house prices in Dublin are currently on Average 300k and would need to fall to 177k to make property investment worthwhile.

I sold in late 2000 and got 167k in punts which translates to roughly 212k in Euros.

This means that house prices based on achievable rents must fall to 1997 prices.

Is this a fair assumption?

[CookieMonster]

Residential Property Investor Report, Spring 2010

The latest Residential Property Investor Report is now online.

Key findings:

c. 39% drops required in major cities before property investment starts to make sense when you look at it using the different valuations methods we used.

Most worryingly, leaving money on deposit beats property hands down over the short/medium term.

For the sake of balance we went a step further and got an independent critique of our methods giving reasons for why they could be better.

Any thoughts or opinions are welcome.

Residential Property Investor Report, Spring 2010

Interestingly David McWilliams in an article in the Indo a few weeks used almost the same figure.

[Touché]

Must be some mistake,report doesn't tally with what Lennys been telling us...

[The_Big_Fellow]

Must be some mistake,report doesn't tally with what Lennys been telling us...

View it in Lenny vision, life is so much more colourful in Lenny Vision

[H.R. Haldeman]

So house prices in Dublin are currently on Average 300k and would need to fall to 177k to make property investment worthwhile.

I sold in late 2000 and got 167k in punts which translates to roughly 212k in Euros.

This means that house prices based on achievable rents must fall to 1997 prices.

Is this a fair assumption?

In my view yes, that is precisely what it's pointing too - that we're heading back to c.1998 prices or something, which probably means we undershoot on the way down wiping out the probably legitimate structural price rises of 1998 - 2001.

I find myself in total agreement with the headline conclusion of MB's report. Every single conceivable indicator you look at - apart from irrational seller sentiment - points to drops in the 40% ballpark.

And that is a GREAT thing for the Irish economy and Irish society.

[The_Big_Fellow]

In my view yes, that is precisely what it's pointing too - that we're heading back to c.1998 prices or something, which probably means we undershoot on the way down wiping out the probably legitimate structural price rises of 1998 - 2001.

I find myself in total agreement with the headline conclusion of MB's report. Every single conceivable indicator you look at - apart from irrational seller sentiment - points to drops in the 40% ballpark.

And that is a GREAT thing for the Irish economy and Irish society.

Morgan Kelly wrote last year that he expects house prices outside Dublin to fall to about 115 and in Dublin to about an average of 200k.

That will send a cold sweat down a lot of backs. Also given the collapse in the Euro value, the potential for inflation to be immported is now greater, will this lead to increases in ECB rates.

Long term it is necessary for a functioning economy to have reasonable priced houses. How many people have great start up ideas over the last decade but could not risk it because of wanting to buy a house or a crazy mortgage.

[MPB]

In my view yes, that is precisely what it's pointing too - that we're heading back to c.1998 prices or something, which probably means we undershoot on the way down wiping out the probably legitimate structural price rises of 1998 - 2001.

I find myself in total agreement with the headline conclusion of MB's report. Every single conceivable indicator you look at - apart from irrational seller sentiment - points to drops in the 40% ballpark.

And that is a GREAT thing for the Irish economy and Irish society.

It looks like the Banks got a great deal on NAMA so.

How come everytime the Banks and the Dept of Finance jump into bed together, we end up with the sore hole?

[seabhcan]

There must be twice the number of houses and flats that we had in 1997. Double supply for almost the same population and its no surprise that prices will fall.

[SideysGhost]

In my view yes, that is precisely what it's pointing too - that we're heading back to c.1998 prices or something, which probably means we undershoot on the way down wiping out the probably legitimate structural price rises of 1998 - 2001.

Ah, but....

back in 1998 we had a functioning economy based on exports and massively increased employment in traded goods and services. De fundamentals were indeed fairly sound, and some increase in house prices probably justified.

But how could the current economy - high-cost, high-wage, low skill, low efficiency, no reliable indiginous base, the reamining exports now overwhelmingly concentrated in pharma, chemicals and agriculture, massive unemployment - possibly still justify 1998 (inflation adjusted) prices?