House values to fall 30% more

I was reading from the RaboDirect site that David McWilliams estimate house prices to fall another 30% at least before bottom.

Does this mean I should be reducing my offers from 30% below current asking to 50% below current asking ?

Might seem silly - but I have myself confused if I am trying to offer what I think is its current market value (30%) or what I think its going to be worth in 2 years time ! :mrgreen:

LINK FOR THE LOVE OF GOD LINK!!! :imp:

In June

That’s my good deed for the weekend. God help the rest of you.

Remember the good ol’ days when you could buy a house and tell everyone who would listen that you made thousands since you bought it, and that it was definitely the right decision to buy when you did as the second phase was more expensive.

Typical conversation at the time with Boyracer, before he learned to only speak about property when spoken to at social gatherings.

Me: But this is a manic bubble, it’s gonna crash.

Them: You’re just jealous you didn’t get on the ladder in good time, besides look at you, you’re paying someone else’s mortgage and rent is dead money.

Me: Ah, but my rent is x amount less than your mortgage and the money I’m saving goes towards stocks that pay a healthy dividend, pension and other non property fund.

Them: You just want to stop me making money and making something of my life, you just want a crash so you can buy a house for nothing.

Me: Yeah, that’s the plan, buy a house mortgage free, I’m expecting falls of 50% and more in some places.

Them: I suppose a stopped clock is right twice a day, you’re going to be waiting a long time, no, there will be a soft landing, the banks and government won’t let a crash happen, they can’t.

Me: Nah, they will be powerless to do anything about it, always happens, housing bubbles last about 15/18 years and ours is getting long in the tooth.

Them: You’re just a doom-monger.

Me: Sure, we’ll have to agree to differ then, anyway how is Mary…{changes subject fast}

These days no-one mentions property any more…I suppose people never talk about losses. Boyracer learned the hard way about investing having had most of his gains wiped out in the dot com crash.

house will fall another 45.67% no more no less

Why do you think “house will fall”?
And why will the whole house not fall rather than 45.67%?
:nin

:smiley:

Ach, your posts used to be slightly amusing but not anymore.

Off to the Ignore list with ye. :arrow_right:

the fall in yeilds, as rents decline, ensures that the fall in property prices will fall greater than the 35% estimated by DMcW.

Prices will fall relative to the 7% yeild pertaing to the rents available at that time and not on current rents.

Giving that the governments current sponsering of the property renters lobby is unsustainable, the fall in property prices will probably fall far greater than 35% of current prices.

By the time that point is reached property, as an asset class in Ireland, will seem like a poor investment. Twhich will not help to support high property prices.

Long way to go down the slipperty slope yet chaps.

If ye want the opinion of a bewildered Economist…Well here it is …House prices need to fall about 35% from their 2004 levels.Any fall greater than this is an overshoot on the downside. Most prices tend to overshoot on the downside unless the Market recieves some sort of intervention i.e Government etc.You will also see some 30% of second hand properties that would have been sold,being withdrawn from the Market because of falling prices.This 30% will be offset by new builds,given Irelands oversupply due to construction boom and Emmigration.I would expect a 10/15% overshoot despite the Governments best efforts in Market intervention. Without labouring the point therefore house prices to fall by 50% from their 2004 levels. I could give all the Maths to back this up but I couldnt be arsed.If ye want to be mercenary just keep circling and Im sure youll find a distressed seller, they may even be close to where you want to buy.If ya find such a place keep it to yourself,anti glee policy on this forum and all that. 8) 8) 8)

Would that decline include the multiple thousands of empties lying idle across the country? or are they going to become Irelands great Pyramid to elugolize our great builders and the time of the Celtic Tiger?

If not, perhaps the government can develop some strategy by which they can put people to live in those house.

Sham might be the man to contact.

It would be great if you could post the maths. I would find it very interesting. I’m sure many others would too.

  1. Why do they “need” to fall? Just so you can buy one?
  2. Why pick 2004? Why not 2000? 2001? 2002? 2003? 2005? 2006? 2007? 2008? Why not 1842? What’s so special about 2004 other than is helps you with your sums/ability to buy at this level (-30% of course)?
  3. The rest is just crap as you are confusing stock market movements with property markets.

One final note which of course will be ignored and/or derided by all but I present it as a public service anyway: talking about “the property market” falling is ridiculous as there IS no property market other than one from a 50,000 foot viewpoint. Saying “the property market must fall 50%” (or whatever figure is pulled out of the air) is, at best, an extremely broad indicator of interest to economists and academics but not to the buyer when they go to look at a house.

Why? Because saying such nonsense imples that every house you expect to ask for a 50% reduction - and many people have posted to the PIN asking if this is actually possible. The reality of course, is that each property market is local. There’s the “Dublin” market for example, which is split into each area of Dublin because these are the prices people look at.

An example: someone buying a 2-bed terrace in Finglas for example, does not give a damn that some mansion in Blackrock fell 50%, from €2million to €1 million! Yet this type of nonsense is routinely plastered all over the PIN as evidence that “the propety market” is in freefall and is enthuastically backed up by those back-slappers who missed out on the boom the first time around. So our Finglas buyer may get 10% off or whatever, if anything at all (as demand for lower-priced homes will obviously be higher). Expecting a 50% all round falls place unrealistic expectations onto buyers.

To see the real state of the property market as a whole, will require a deep analysis of the sales in each area that can be reasonably grouped together. Perhaps the good men & women at daft can do this as they have the data. But talking about “the property market” as if it reflected absolutely the prices of the house “on the ground” is misleading at best.

In fairness I think we all know a prediction of a 30% drop means the average house price in Ireland is expected to fall by 30% from here not that every house in Ireland will drop by 30%.

In my opinion there are two ways he can arrive at his figures

  1. He can pull the number out of the air, probably pciking it for reason 1. that C&B suggests, it’s a number he can afford.

  2. He can do some proper anaylysis and come up with the overall figure of 30% based on weighted average falls around the country. But, if he has done it this way, has all his analysis on markets by size, location etc but doen’t have the wit to realise that the detailed info would be more suseful than the average, then I’d question their judgement and ability to do the analysis in the first place.

I do find it amusing on the Pin how Pinsters ridicule any article that suggest property prices may have bottomed and claim that it was written by a VI. However, any report, no matter how badly presented, that suggests prices have further to fall gets by unquestioned.

In any market, not just property there is a buyer and seller. In order for any market to function they must agree on a price. That price level will be dictated by the time preference of the buyer and seller, future expectations, and the funds available to both

Generally, When your wife/partner/future wife turns around and says we’re buying a house, that’s it, you’re buying a house, you can stall it for a while but you cannot put it off. An old person on their own in a large house or one that has become too expensive to maintain will also want to trade down or move to an old persons home or in with one of the children, again time plays a factor here.
A person in negative equity may not be willing to sell right now as then cannot get the funds to clear the mortgage by selling, but their circumstances may change as new opportunities arise, then may be more willing to take a loss on the price just to move on, again time preference dictates this.

https://www.youtube.com/watch?v=9Fjcib5rXYk

Because the developers and banks responded to incentives manipulated by the central banks (supply of credit, interest rates) and government (tax breaks) they overbuild, buyers with a high time preference also responded to these incentives and bought as well. The property bubble collapsed because peoples time preferences remain the same.
There is now an oversupply of property on the market that must find a clearing price, that price will mostly be determined by availability of funds (interest rates, credit, savings), future expectations of income (employment i.e. pay rises/falls, tax increases, return on investment i.e. rental yields)

The years selected are arbitrary, If you or the person making the point wanted to look at the price of property in real terms they could then actually consider 1842, but, there is not much data readily available to make the comparison in Ireland.

The Herengracht index illustrates the trend on property prices on a particular street over time. Why would Ireland be any different?

Saying a market must fall 50% without giving it context is ridiculous, and in the context of money supply deflation happening in Ireland right now, combined with the effects of high unemployment, emigration and higher taxation and the probable implosion within two years of central government if they fail to control spending and debt accumulation is in my opinion reasonable grounds for that expectation. Ask the Japanese what happens to land prices when you prop up failed banks and drop interest rates to zero, combined with a declining population.

It’s not as simple as that either, lots of lower priced homes in the ghost estates around the country with zero demand, the price could theoretically drop to 1€ and still have no buyers in some of these places. (buy for 1€ in order to pay €200 tax and maintenance costs). There is also a limited pool of buyers in the market who can get credit or have the savings needed to buy, even in Finglas, as the prices in Blackrock fall, they come within reach of the buyers who might have only been able to afford to buy in Finglas during the boom, so the price falls in one area will drag the others down.

I agree with you on this point.

My hat off to you sir! While I don’t agree with some of your points and we could argue them at length, it’s refreshing to see a thoughful rebuttal on the PIN for once.

I want to agree with you for once crash

It was an excellent analysis…

I’m surprised you think that there is anything new.

The same analysis is elsewhere in buckets on the pin and I’m sure has been posted in response to you before!!

Maybe you are slowly being converted.

O.K. Dont blame Me, ye asked for the Maths ,facts ,figures and all that good stuff.so here it is have fun .P.s. Maybe I hav’nt mentioned it before but I live in Perth,Australia.No ambitions to buy house in Ireland ,sorry. Follow the link below and download the zip. nuff.ox.ac.uk/Users/MurphyA/ … Prices.zip

Jeepers. Not only can you claim to have seen it coming…