Dublin’s prime residential market plunges 17%

Yeah right, Frank Knight.

€5,700 per square metre for the “best properties in Dublin”.

Can anyone find me a 300 square metre house for €1.7m and we will see how it stacks up as one of the “best properties in Dublin”. :angry:

It is difficult, but here is a random find at €7,700 per square metre. One of the best properties in Dunlin, without a doubt.

Mayfair, Monaco, Goatstown.

myhome.ie/residential/search … EHJV371384

Jesus. I thought I couldn’t be shocked after reading this place for a year. Its a long way down to reality.

:laughing: :laughing:

Agreed. E5,700 p sq/m is not ‘Prime’ Dublin, its more like Stillorgan!. To buy a decent home in Ballsbridge (Wellington Rd say) would cost 2-3x that.

Having said that the article does make one good point. Dublin seems to be the only city where the Prime market is in freefall. Its mainly because the dynamics of the Prime areas in Dublin are very different to a Monaco. There are obviously alot of people who can buy a 2.5mln Redbrick with cash in Dublin, but there are also alot of people who had, say, 1mlnE in the bank and have borrowed another 1.5mln to buy that same 2.5mln trophy redbrick. Now that banks wont allow people borrow anywhere close to that (no matter what their salary is or how much equity they put in), coupled with the fact that people have woken up to the fact that its a pretty quick way to blow the original 1mE in savings if the property falls 30%, the market is imploding.

In Dublin of previous years, alot of people put everything they had into buying their trophy home and borrowed the rest. In Monaco, people pay for their homes with the interest they are earning on their current account. Thats the difference!

People are wising up to the fact that leveraging into a very expensive property can be a sure-fire way to lose many years savings in 6 months. You can go from millionaire to zero very quickly. They are also realising that 5 years from now, the guy who puts 1mln into a 2.5mln Dublin property is very likely to be worse off than the guy who also has 1mln and took advantage of the infinitely better risk/reward available in other asset classes etc.

Over the next 10years, one could turn that 1mln into very little or even lose it all by leveraging into the wrong home. Or one could turn it into 4-5mln by just extracting a 15% return a year eslewhere with minimal leverage. In any case, I really feel thats how alot of people in Ireland who would previously have fallen over each other to buy that home on Palmerstown Road are beginning to think. The Prime mkt in Dublin is broken :angry:

steady on boss - 1M at 15% compound interest for five years is €2011357.19 according to my calculator. Not to be sniffed at but it isn’t 4-5M either.

Not sure what assets are currently returning 15%.

Property investment was very attractive because it gave leveraged returns. In a falling market this makes it to the same extent unattractive.

However, I think people miss the fact that to some people with a house or two, property investment is in effect, forced saving, they pay off the mortgage every month and hopefully own it after 25 years. Hopefully inflation eats into the value of their loan too. Days of flipping houses in a couple of years is over. However in the same ways as profits on paper were just that, so are losses on paper. House worth 2.5m a year ago and now worth 1.5m. Irrelevant unless you plan to sell it or have to sell it.

I said over 10 yrs!
1mln * (1.15)^10 = 4.045m

not sure what you can invest in now that will guarantee 15% per annum over ten years

true.

At some stage in this recession property may return to being an investment of last resort for cash buyers to minimise losses. The old bricks and mortar truism… but not in Dublin for a long way down and not if you are leveraged.

Obviously nothing guarantees 15% without some sort of risk

But,

There are many many people in corporate Ireland who are doing it every day reinvesting in their own businesses
Well managed hedge funds have been doing it for well over a decade
Warren Buffet has been doing it his whole career
The Irish banks were doing it until they messed up by over exposing themselves to the property game

And yes, Irish Prime property would have retuned 15% pa easily over the past decade. But then again we all know the catalysts for the gains of past are no longer there for the future and are mostly blowing the other way now

I guess I am just trying to say that a redbrick in Ranelagh that rents for a 2% yield is a ‘dead’ asset in my opinion and is more likey to make you worse off relative to inflation over the next 10 years, especially considering the environment we are in and the lessons we have learnt about leveraging very low yielding assets

But there are always opportunities out there to get well above avg returns when well thought out. None of them are without any risk, but the risk/reward is alot better than residential property IMHO 8DD

my own view is that as always diversification is key to any investment, as is framing it and changing it according to your stage in life
for example I feel sorry for people who are about to retire who may not have converted pension funds to cash

however taking a ten year view, i think property, stock market will all be above where they are at now, whether that beats inflation is another thing

fundamental question is whether leveraged investment for a private joe soap is ever a good thing as if you lose your job you are in serious trouble
on other hand, people who retire early are not the ones who relied on their salary/income but the ones who stretched themselves and took a gamble
if you have a reasonably secure job is it worth the gamble