House prices still falling

[ibis]

The key is to shake the nvestors out of the market, alas, cant see how it'll happen without effecting the rest. 2 bed appts are going to suffer most...

Its not a big problem unless you are an investor, as long as you can afford the financial commitments you have tied yourself into.

First timer buyers home will get cheaper,
People, like me, who have a place but need to move to a bigger home will see the value or oour house shrink, but so too the price of the one we want to buy,

No, it doesn't work like that, because a fall in house prices from the level you bought at means you've lost money. If you don't make enough to pay the bank back everything they lent you to buy the house, plus the interest they've charged you on that, then you owe them the rest. You pay that out of the money you put into the house (your deposit), and if that still doesn't cover it, you end up with an outstanding debt.

If you buy a €700K house with a €500K mortgage, and the sale price in 3 years time is €500K, you only get back €58K of your deposit before stamp duty or fees (calculations on another thread). At the same terms as your original purchase, where you put in 30%, what you can now buy is a €203K house.

[Aindriu]

Hopefully this crash will happen in the next year then maybe my family and I can live in the city I was born and raised in! Houses in Dublin are still about 100k too expensive.

How about 1 million too much!

[flyer]

Buyers are waiting to see if house prices fall more and sellers are starting to rent the houses rather than sell them cheap. However I see signs that supply is starting to seriously tighten.

6 months ago there were probably 10 for sale signs in my estate. Today there are 2. A large number of builders who have simply completed their current projects and stopped building. The guy who built my estate is off for two years with his Polish crew to Croatia where he picked up a couple of fields with planning permission for next to nothing.

I know there is a theory that there are all these sellers desperate to unload their houses and who will sell at half the price they would have gotten a year ago. However in reality very few will be backed into a corner like that. Most of these sellers are trading up and they are also in the catch 22 of holding out to see if the house they have their eye on drops in price. Some investors may try to get out but as the market has dried up they are also having difficulty shifting their houses. At the same time rents are rocketing because people aren't moving from being renters to being first time buyers because George Lee has convinced them that if they wait they will pick up that nice 500K mansion down the road for around 120K in 6 months. Investors are looking at rents that now make a tidy profit above their mortgage payments. Most of them are smart enough to know that a bust this year will be rectified by boom next year. That's the economic cycle. So many houses that would have been sold this year are instead having new leases signed for another year.

The US sub prime market has put the frightners on many people but most of the market in Ireland isn't sub prime even if some of the doom sayers try to convince us of that. Most first time buyers have two incomes and house prices are not that far ahead of 5 times their salaries (other than in parts of Dublin).

As a huge bottleneck of first time buyers develops thanks to the wait and see advice of Lee and as builders stop the flow of new houses into the market and investors up the rent I think there is a real risk of house prices starting to rise steeply again before the end of the year. Sellers have had a tough 9 months but those that rode through the storm and didn't sell their property cheap or rent it out could be about to cash in.

If I was a buyer looking for an investment property for 1-2 years then I would hold out just in case. But if I was in the market for a family home I plan to live in for 10+ years where the risk of negative equity for a year or two isn't a problem then I would be getting itchy feet as prices are good right now and just as there are indications that the market may fall more there are growing signs that the market may take care of itself just as it did in 2000 and 2001 during the last "end of the world" and it could swing back to being a sellers market before the end of the year.

[cutehoor]

"Most first time buyers have two incomes and house prices are not that far ahead of 5 times their salaries (other than in parts of Dublin)."

Strangely flyer this does not give me much comfort.

[floatingvote]

Investors are looking at rents that now make a tidy profit above their mortgage payments.

Whilst I don't agree with any of your points Flyer, this one stood out in particular - whilst it's possible depending on when the property was purchased and of course depending on what portion of the property a mortgage was required for, I don't think there are many investors (certainly who purchased this decade) who are in a position wherein rents cover their mortgage.

[General_Hoche]

A guillotine in college green for all speculators/developers/investors/dinner party millionaires/and everybody else who help [past and present] to make housing an cut-throat industry and a means to get rich. Satan's little imps, the lot o' ye.

[flyer]

"Most first time buyers have two incomes and house prices are not that far ahead of 5 times their salaries (other than in parts of Dublin)."

Strangely flyer this does not give me much comfort.

Well what I meant but didn't say is with a small price correction (rather than the dooms day scenario Lee and co are preaching) plus salary increases and possibly tax cut to 40% and the house prices fall comfortably back inside the 5 times.

[flyer]

Investors are looking at rents that now make a tidy profit above their mortgage payments.

Whilst I don't agree with any of your points Flyer, this one stood out in particular - whilst it's possible depending on when the property was purchased and of course depending on what portion of the property a mortgage was required for, I don't think there are many investors (certainly who purchased this decade) who are in a position wherein rents cover their mortgage.

The only evidence I can give beyond hearsay in the office is right now houses in my 4 year old estate are renting per month for around 130% more than the my mortgage payment is.

[cutehoor]

"Most first time buyers have two incomes and house prices are not that far ahead of 5 times their salaries (other than in parts of Dublin)."

Strangely flyer this does not give me much comfort.

Well what I meant but didn't say is with a small price correction (rather than the dooms day scenario Lee and co are preaching) plus salary increases and possibly tax cut to 40% and the house prices fall comfortably back inside the 5 times.

The two incomes part is another concern of mine. Most FTB's who bought in the last few years at the top of the market will come under pressure as regards times when two incomes will not be coming in. There may be an issue when people wish to start families. This has been masked up to now by capital appreciation.

As you say you are 4 years in your house and are thankfully well insulated. There has for years been the devil take the hindmost attitude about rising house prices. Get on the ladder and pull it up behind you.

[erigena]

We can take it that the powers that be - Italians call them "i poteri forti" (strong powers) - knew all this was going to happen. We have 250k (conservative estimate) unoccupied houses in Ireland, with owners drowning in debt. There is no way that this is heading anywhere other than meltdown, with even the major commercial banks needing to be bailed out with taxpayers' money.

So then what is the real plan? Could it be to allow real visible suffering, IMF intervention with the usual massive privatisation, and then a modest proposal for the occupation of these vacant houses? Wal-mart manufacturing, co. leitrim, anyone?

Alternatively put, can it be that the immigration to date has just been a rehearsal for the real influx?