My advice/predictions for those wondering "What's it worth?"

The Irish Property Bubble (2006) Sell, Buy or Rent?
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Based upon reading the 'pin for a while and collating the various opinions re “value”, and researching the price per sq ft situation. I have decided to offer to you the various things I now take into consideration when deciding what something is worth. This does not mean what the market thinks it is worth now, but where I believe it has to get to for the reasons outlined below. If you insist on buying now, I believe you will be doing yourself a disservice, rent and wait.

When trying to gauge what a particular property is worth, we should really have a think about what people’s financial situation has become and where it is heading.

We are already seeing loads of people losing jobs or having their income reduced, we will see more and more single income families, and even those with 2 jobs will be earning less and at least one job could be precarious.

People’s savings and equity have and are being decimated, so less ability to have a sizeable deposit, so price of house they can buy will be dictated more by the size of the mortgage they can get.

Many on here are valuing places on the size of mortgage possible. And some of these are saying it will go back to about 2.5 times (for a single person) to 3.5 times (for a couple) the annual salary. The latter makes sense, as a) this is the way it was before things went crazy and b) it takes into consideration the fact that one may lose their job. (Credit to Whizzbang whom I have paraphrased here)

People are not going to have the funds to immediately extend to make the house suitable, nor refurbish the whole house in one go, with maximum bells and whistles. Price per sq ft will become more important as people will at least want to make sure they have sufficient space, immediately. We will go back to the way it used to be, so any necessary structural work like new roof/re-wiring etc comes first, and then do up one room at a time. Many rooms getting just a lick of paint.

Even those with the funds, will no longer be prepared to pay the vendor in the price, the amount they will still have to add for the refurb/extension. In short, they will not be paying hundreds of thousands extra for “potential”.

With properties above 1,500 sq ft, one must consider the expense of running the house, and how that would impact the affordability of mortgage repayments. So the price will not increase exponentially the larger the house.

Think about the style and size of house and what sort of people would expect themselves to live in this house, then approximate their salary (if that person is you, then easier to guess :smiley: ) Then work out the size of mortgage based on the above multiples. Then subtract the amount you reckon would be required/desired to get the place up to standard.

My prediction is…

Bottom of the market, shoebox of 800 sq ft (or less :unamused: ), in a not particularly sought after area: €50 per sq ft

Ranging to, top of the range, large house in a prestigious area: €300 per sq ft

Try it :smiley:

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On that basis, this one is worth 540K. (300 x 1800)
Can’t see it going for this over next few years.

myhome.ie/search/property.asp?id=PURAG392945.

I think you are going a bit low at 40 per sq ft and 300 per sq ft.
I raise you 40%.

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1800 sq ft semi – why shouldn’t it go for 540k? More than half a million for the privilege of a shared wall and a converted attic?

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Actually, as I had said, top of the range would be €300 per sq ft, this while very nice, would not be at the very top. I would put this at €250 per sq ft or €450k.

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Interesting post Jellybelly. I’ve wanted to ask you how to interpret your “price per square foot” calculations. I don’t think any one metric will capture a property’s value, but the more we have the better we can estimate. One you don’t mention above is the multiple of achievable rent, although that possibly applies better to investment property.

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JB I think you need to add some caveats : are your calcs for Dublin Postcodes, or are you including outside it as well ?

450 on the QT at the bottom for that ? perhaps a little less ~390 , and then we’re at the bottom.

Maybe a little more = very close to LUAS and a very quiet area , tons of schools v.close

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This is rubbish. You cannot build a house for 50 per sq. ft. or anything like it.

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I bet some of the owners of the ghost estates would bite your hand off for 50/sq foot to get some cashflow

wstt, it’s not a new-build comparison, it’s what it’ll sell for.

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we don’t need to build any new houses
until build costs come down
we won’t

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Didn’t someone on here recently say it costs about 80-100 euros/sq ft? to build a new house?

Any quantity surveyors out there?

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I believed this house was once quoting €2m! It’s now dropped to €995,000. When I rang to enquire, I was immediately told there is an offer of €950,000. If there is, and it’s a genuine one, why dont they close the deal befor the buyer pulls out but holding out to ASK for another €45,000 in a falling market??? Personally I think the rooms are small and I’d expect an ensuite for the master room st this price…

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Hi neiliusmaximus,
Thanks for your comments. Yeah, I don’t use the multiples of rent, 'cause as you say that’s more useful when looking at property as an investment. Also, as rents are falling, and we are not sure how much by, it is difficult to make an accurate assessment, particularly as rents were a bit bananas too for a long time. I agree, that no one way of calculating value will be right, but if you take in to consideration multiple factors as I have listed above, it’s possible to get a more realistic idea. And there are more, such as peak oil by 2020 at the latest, meaning higher running costs, necessity to factor in setting up to use renewables when refurbing house etc, I believe these will all have a bearing in how much people are prepared and able to pay for their homes.

Duisigh,
I am actually calling it for all of Dublin county and will be similar for rest of country, just a higher proportion of houses in Dublin at the higher end of the price range. I believe we will see less disparity between postcodes. Obviously well serviced areas that are safe will always be more desirable, but I think once the pain really starts, people will care less about having a prestigious address and more about having a comfortable, efficient and safe home, with sufficient space (particularly as we will all be spending more time at home with less money to go out).

Who shot the Tiger,
We have been paying people to build houses for huge money because of the boom. I don’t see any reason why it would not be possible to build those paper thin shoeboxes for less than €50 per sq ft. There has been a premium stuck into every pricing, to ensure that whoever is at the top, is making ridiculous profits on whatever the product is. The real cost of building is probably far, far less than what we’ve been led to believe. The cost of building supplies along with everything else is going to drop dramatically in the coming years.
Have a quick look at properties in Leitrim, really nice, large nicely fitted out, nicely designed and fairly solid looking houses are asking less than €150 per sq ft. And their prices even in the boom were incredibly low in comparison, because poor Leitrim has such bad press in regards to living there. I know their overheads are lower in regards to many things, but I’m sure they weren’t able to get their construction supplies and equipment at third world prices, just because they’re building in Leitrim. What I have noticed is that overall, there appears to be much nicer looking, good sized housing built in Leitrim for the past few years, because they couldn’t get away with building shit.

We have all been so conditioned into thinking it is perfectly normal to pay hundreds of thousands for a basic home, and because we all wanted our piece of the pie, it’s very hard to change our thinking on this.

I was speaking to a couple in their late 50’s today. They bought their 2 bed house mid 90’s as market was starting to take off, for IR€40k, and that was hugely expensive then for them. I remember uproar in the media when the market got so mad that a derelict 2 room cottage on the Old Coast Road out to Dun Laoghaire sold for IR£200k. Absolute madness, everyone said. They were right IMO.

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scs.ie/digital_publications/ … ublication

Might need some revising for new figures… I wonder what construction deflation figures people are factoring in for the future… Price adjustments by CPI, will these suddenly go negative? I wonder… :blush:

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Let em riot, construction workers are just one more sectional interest that need a reality check.

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WSTT, thanks for the figures.

we aren’t talking about newbuild though, JB’s point was that the absolute bottom-out shed loads of empties, no cash anywhere etc etc ] price for already-built housing would be a certain figure per sq foot

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Well, strictly speaking I was just referring to current stock and not new builds. However, as I stated above, I don’t feel there is any reason why the costs of building cannot go down massively too. Maybe not as low as €50 per sq ft but definitely much lower than in the past while. And I don’t see that it has to be about the tradesmen’s wages having to decrease to riot inducing levels either, although I’m sure they will have to come down somewhat, just shouldn’t be the first and only way to bring the cost down. It’s more about the size of the profit being decreased substantially. There is no reason why developers should be making as much money as they have while the people they’re making it off are signing their lives away to live in substandard housing.

Good sized houses in Detroit are selling for a less than a grand these days, that’s a darn sight less than €50 per sq ft.

Current being the operative word here. What do you mean by “pure build”? At the very least I’m sure that includes price of construction materials. And while I’m sure the developers get a huge discount because of the large quantities I’m also sure that their suppliers were not going to miss out on the gravy train, and so probably still had profits in there that were unnecessarily high. I don’t have a problem with people making profit, I do have a problem with people profiteering.

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Actually, one one the principal drivers of our decline in productivity is that fact that unit labout costs in construction almost doubled between 2000 and 2007. Manufacturing on the other hand, barely increased. Expect massive construction wage deflation.

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If you want to live in the slums in Detroit at $1,000 - good luck!
Pure build means total “on-site” building costs (labour and materials).
And we still live in a capitalist society, where people work and take risk for profit. If you want to be a socialist go live in Cuba.

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My cousin has been involved in building over 100 houses, mostly one offs, has had a few gangs on the road doing this for 15 years .
Was talking to him yesterday , he says currently you could build a very nice 1500 sq ft house for under 100k , which in some ways translates to a basic minimal 800 sq ft for 40-50k.
I assume those ancillary offsite charges and costs your talking of would include fees for say a quantity surveyor.
The figures people are quoting are not rubbish and you havent proven otherwise . The costs your included into the debate (land, profit etc) have nothing todo with the original premise, cost to BUILD a house, not BUY land and not BUILD a house for PROFIT… its a home .

Your the quantity surveyor… give us some numbers ,
how much to construct 800 sq ft of liveable space, block or timber, insulate, wire, plumb, plaster, second fix, fit out and decorate all to a basic lets getthe cheapest doors windows, bulk magnolia paint, do a bit yourself, direct labor … i reckon 40k isnt too far off the mark nowadays .