House prices to fall 8pc next year: Goodbodys

[Edo]

How will this affect rents? Will the rents go up as people are getting less buck for their house and decide to go for long term investment?

Nope. There are tens of thousands of Properties that were bought for that very purpose, but because the high fliers with the readies to back up their investments are now buying whole swathes of former eastern-bloc countries, those clinging on at the moment are rank amateurs. They will be forced to either sell to recoup (which will exacerbate the housing crash) or rent to sustain their investment.

This will flood the rental market with property and of course in such circumstances rents drop. Its that ole supply and demand chestnut.

All well documented secondary and tertiary fall out consequences of a property crash. There is no hiding place. Otherwise the big boys would still be in the game.

excellent comment - just finished a leaflet drop around the part of the constituency this morning -

amazed at

A) the number of properties still for sale that were for sale in April and may - all are vacant - no furniture - nothing.

B) the number of just vacant properties - no electrics - no for sale signs - GE literature still on the ground from last may.

when all these properties come back on the rental market - supply and demand will have its effect - and this is D4 - D6 land.

[kerrynorth]

As capital growth has well and truly disappeared then all you have left is rental income. However, what happened is that investors are having to rent units that they hoped to flip at a profit but now cannot sell other than at a loss so they will let them out rather than take the hit. As this intensifies, and their a load of housing being build this year, rents will fall back. The losers are the amateur buy-to-let landlords who entered in the last 3 years, they will in effect be subsidising the rent of their tenants from their incomes as rents will not cover repayments and they will have capital losses around their necks waiting to mature.

[MarD]

There is an awful lot of wishful thinking on the part of many commentators to talk down the housing market.
It's misplaced schadenfreude to wish that house prices collapse because the only losers will be buyers in the last 5 years who will see their properties fall into negative equity. The builders are long gone with their fat profits from these developments. The banks aren't going to lose either.
The truth is, despite all the forecasts, nobody can be sure what will happen. It is beyond the control of any one player. The response of the construction industry by slashing house building will have an impact on supply next year which will soften the price fall, there will be unmet demand next year. Also the performance of the dollar, probably for the rest of the Bush presidency since he has no idea as to how to tackle the subprime problem, will put pressure on the ECB to retain low interest rates into next year.
For the original poster there is never a 'best' time to buy property it will only be evident in hindsight but if you're buying to live in it then just do it. Over the period of a mortgage property never loses. If you're buying to rent, wait for the shake out of excess rental properties next year. Although again the only rental property that is likely to be offloaded is recently acquired.
People are going to get sick and tired waiting for this storm in the housing market that isn't going to materialise as the doom merchants predict and more normal house buying activity will begin after this budget.

[theyshootPDsdontthey]

There is an awful lot of wishful thinking on the part of many commentators to talk down the housing market.
It's misplaced schadenfreude to wish that house prices collapse because the only losers will be buyers in the last 5 years who will see their properties fall into negative equity. The builders are long gone with their fat profits from these developments. The banks aren't going to lose either.
The truth is, despite all the forecasts, nobody can be sure what will happen. It is beyond the control of any one player. The response of the construction industry by slashing house building will have an impact on supply next year which will soften the price fall, there will be unmet demand next year. Also the performance of the dollar, probably for the rest of the Bush presidency since he has no idea as to how to tackle the subprime problem, will put pressure on the ECB to retain low interest rates into next year.
For the original poster there is never a 'best' time to buy property it will only be evident in hindsight but if you're buying to live in it then just do it. Over the period of a mortgage property never loses. If you're buying to rent, wait for the shake out of excess rental properties next year. Although again the only rental property that is likely to be offloaded is recently acquired.
People are going to get sick and tired waiting for this storm in the housing market that isn't going to materialise as the doom merchants predict and more normal house buying activity will begin after this budget.

The storm has arrived in style check this out http://www.property-vultures.com/

The builders are no way out of this. The normal building rule is that the first third pays for the land, the second third builds the houses and the last third is the profit. Problem is that builders got greedy and bid up the price of land way above what is should cost and have a fixed cost on every subsequent house that the build and can't sell as a result of this.

Whatever about Dublin there is massice over supply in the NW. In Ballymote a builder is having a draw where 12 buyers (is they are gubbible enough to buy before a certain date) are in with the chance to "win" the price of their apartment (priced at €175k with S.23 Relief). This equates to a real selling price of €160ish. Of course the builder is probably scared of putting a the real price on them cos he's afraid that bidders could go for the nuclear option and bid lower than the pschological barrier of €150k.

I drove through Carney village in N Sligo last Sunday night and there is a "development" getting the finishing touches and I counted 55 units mostly (over 45 houses) for sale. There is around 60 in it. My hunch is that they'll need to come with a Playboy model to sell.

Try searching for the number of houses for sale in Daft, check out Kinlough, Ballinamore.

The boom just got boomier.

[floatingvote]

People are going to get sick and tired waiting for this storm in the housing market that isn't going to materialise as the doom merchants predict and more normal house buying activity will begin after this budget.

but prior to that you said that:

The truth is, despite all the forecasts, nobody can be sure what will happen. It is beyond the control of any one player

hmmm.....

[sparkey321]

I wouldnt get over cocky yet.

Output has dropped and will will drop furhter next yeat. The demand for hosung will be higher then supply allowing all those houses that were bought by investors to be sold. Give it 2 years and building will pick up.


You cannot blame all the price hikes on the developers though. I was doing a bit of work on my own house and got prices direct from trades men.

Plasters looking for 4.5K for a weeks work (only 2 guys and I needed to supply materials) and cash only.
Guys looking for 5K to do the gound work and build it to subfloor. (I rented a mini digger and did it over 2 weekends)
Block layes looking for €1.35 a block
Tilers looking for €35 a square yard
All these guys are looking for 2K a week and most want it in cash. How cna they justify that kind of income. I ended up doing 99% of it myself and getting 2 polish guys to plaster it for me at just over half what the Irish guys wanted and give me a VAT receipt.

[Watcher]

but our last ten quarterly growths are up, so are rents, everyone in Europe envies us.. how can this be ?

What you are suggesting, is that somethin g which went up, is now coming down.. that breaks every law of the universe....E-V-E-R-Y L-A-W!!!!!!

Roc - regarding the what-goes-up rule... if they are destined to go down simply because they went up, do you think it is possible that they will drop to say £500 for a terraced house like it was a around half a century ago? And if, as I suspect, there is no basis for believing that this will happen - why do you believe that they are destined to hit any other point between the current price and £500? Basically - isn't the what goes up must, come down rule completely baseless?

Lets be a bit more realistic here, they wont fall to ridiculous amounts like that. What will happen is that wages and house prices will come more into line with long term and international trends. Atm the average house is about 10 times the average wage. Prior to the boom (and internationally) house prices are usually about 4 times the average wage.
So house prices will fall in real Euro terms for a while, and then will level off for a few years. In the mean time wage inflation will increase wages, and the ratio of wages to house prices will come back into line.

Look at Finland. They have about the same population as us, and have high wages like us. Back in the 80s they had a big housing boom, which then went bust. 45% falls in hosue prices etc... I saw a few weeks ago a 1 bedroom apartment (with sauna) for E30k, or a nice 3 bed on 1/2 a hectare for E100k. Houses are about 2/3 times the average wage.

Andrew, before the boom, the cost of servicing a mortgage was in the teens - as high as 12-14% or there abouts. This is why house prices were relatively much cheaper against wages.

[michael1965]

How will this affect rents? Will the rents go up as people are getting less buck for their house and decide to go for long term investment?

Anecdotal evidence seems to suggest rents may drop as more and more investors put their investment properties back on the rental market.

What do you think these people were doing with their investment properties prior to this? Apart from holiday homes, nobody buys a property to just leave it empty.

You've got to remember we have vast over-supply of properties in this country.

But not necessarily in the places where people need to live.

[Watcher]

There is an awful lot of wishful thinking on the part of many commentators to talk down the housing market.
It's misplaced schadenfreude to wish that house prices collapse because the only losers will be buyers in the last 5 years who will see their properties fall into negative equity. The builders are long gone with their fat profits from these developments. The banks aren't going to lose either.
The truth is, despite all the forecasts, nobody can be sure what will happen. It is beyond the control of any one player. The response of the construction industry by slashing house building will have an impact on supply next year which will soften the price fall, there will be unmet demand next year. Also the performance of the dollar, probably for the rest of the Bush presidency since he has no idea as to how to tackle the subprime problem, will put pressure on the ECB to retain low interest rates into next year.
For the original poster there is never a 'best' time to buy property it will only be evident in hindsight but if you're buying to live in it then just do it. Over the period of a mortgage property never loses. If you're buying to rent, wait for the shake out of excess rental properties next year. Although again the only rental property that is likely to be offloaded is recently acquired.
People are going to get sick and tired waiting for this storm in the housing market that isn't going to materialise as the doom merchants predict and more normal house buying activity will begin after this budget.

The storm has arrived in style check this out http://www.property-vultures.com/

The builders are no way out of this. The normal building rule is that the first third pays for the land, the second third builds the houses and the last third is the profit. Problem is that builders got greedy and bid up the price of land way above what is should cost and have a fixed cost on every subsequent house that the build and can't sell as a result of this.

Whatever about Dublin there is massice over supply in the NW. In Ballymote a builder is having a draw where 12 buyers (is they are gubbible enough to buy before a certain date) are in with the chance to "win" the price of their apartment (priced at €175k with S.23 Relief). This equates to a real selling price of €160ish. Of course the builder is probably scared of putting a the real price on them cos he's afraid that bidders could go for the nuclear option and bid lower than the pschological barrier of €150k.

I drove through Carney village in N Sligo last Sunday night and there is a "development" getting the finishing touches and I counted 55 units mostly (over 45 houses) for sale. There is around 60 in it. My hunch is that they'll need to come with a Playboy model to sell.

Try searching for the number of houses for sale in Daft, check out Kinlough, Ballinamore.

The boom just got boomier.

Who compiles those lists? Very good, and interesting. Those tax break properties are red herrings, only the builders get the tax breaks because the prices are inflated so much. Have a look at non tax break properties in the same areas. You will get a very rude awakening. They were "great" in the rising market as nobody saw through the bluster.

[andrew]

Andrew, before the boom, the cost of servicing a mortgage was in the teens - as high as 12-14% or there abouts. This is why house prices were relatively much cheaper against wages.

Ah right so using that logic all of the other Eurozone countries (which have the same exchange rate) have the same very high ratio of wages to house prices.
But they dont. Infact even though the wage levels in many of those countries are similar to here, and the interest rates are the same, and many have higher population densities, the house prices are much lower.