From here in London the whole country looks wildly overpriced still. People are stretching themselves to buy dumps in South Dublin because there are cheaper that 2006 - that does not mean they represent value.
…and that is another thing. A couple in the uk earning £80 combined salary would struggle to mortgage anything beyond £300k. Which means there is a very active marking between £250k and £600k. Dublin is still in this loo laa tiger land where ordinary couples think €500k is a small mortgage.
I know this is a rant but were are the desperate sellers? Everyone I know is stretched but are still trying to keep up the Tiger pretense. I really do give up.
EDITED TO ADD: We are reaching the bottom quickly ourside Dublin where property between 150k and 300k is reaching value on a cost to build basis.
Then in SCD peoply think because they eary 20% more they can afford a mortgage of 5 times that of a Kildare house…and these are supposed to be smart professionals?
I was discussing build-cost with someone during the week. He was wondering whether an apt was reaching correct/minimal valuation because it was down around the build-price of the apartment. The idea has some attraction, but we came to the conclusion that:
(1) Nothing says things can’t/shouldn’t sell for less than they cost to build (business sense says you shouldn’t build things you can’t sell for more than they’ll cost you to build). They’ll sell for what people want to pay for them (and what sellers are prepared to accept).
(2) Building costs are not fixed. By the time the economy has returned to “reasonableness” build costs may well have dropped substantially.
Thinking a bit more on your points, and the general question of prices. Since many sellers are in NegEq they are being prevented from selling by the banks in one way or another (outright, or because they couldn’t afford to refinance the unsecured part of the loan outside of a mortgage). At the same time, the banks are not foreclosing en masse due to moratorium (if I understand correctly). The effect is to limit supply to the market (at higher discount levels). This will hold prices relatively high, although at very small transaction volumes.
I agree that the prices are still way over odds. I’d see a house purchase as (in part) a bet on the future success or failure of the country/society in which you buy. I don’t like the odds being offered on Ireland, and it’s not a bet I’d make.
I guess my point is that if prices were merely at a cost to build I would understand it (notwithstanding the view that they should be trading at a discount). The massive premium people are demanding is nuts.
For what its worth now that NAMA is out of the way the banks I believe they are winding up to take on defaulters. Ultimately the banks will need to start cashing out the 20c in the € to stay in business. No good keeping the heads in the sand.