News from my apartment block

Two of the apartments in my block which have been for sale for the last half year and more have been taken off the market because the owner-occupier sellers have discovered that they can’t achieve the selling prices they require to trade up and out of them in to 3-bed semis. they’re staying put.

I can’t figure out what is going on here really. Prices of three-bed semis in the area are dropping too so they should be able to sell on at lower prices and move in to lower priced three bed semis.
I can only attribute it to the interest rates rising impacting affordability and possibly tightening lending criteria by banks.

That is two properties going off daftwatch which might leave people with the wrong impression that the market is healthier than it actually is.

Yes, this does not suprise me at all , I see this total denial/stubborn attitude all the time recently… facinating really!

"My apartment*** is ***worth more than €xxx that I was offered , sure if thats all i’m offered i’ll hold onto it "

the obvious question is WHY?
Do you think it will be worth more anytime soon?
Will you rent it out?
Will you be ABLE to rent it out with all the amateur investors trying to do the same thing?

Painful lessons to be learned.

2 types of vendors out there at the mo. the ones described above, and the ones who accept the new reality, drop prices and sell. Sadly the first crew vastly outnumbers the latter… :open_mouth:

MURRAYO (resident EA)

Simple answer really. Not only has the level of what you may borrow gone down due to interest rate rises but they may also not be able to sell at a price to pay off the mortgage. That would mean that they would have to carry forward the negative equity onto the new property thus decreasing further the amount that they could borrow. There is also transaction costs and lastly apartments fall in value more than houses. (in general)

Just curious. Do you ask your clients these questions?

But you are forgetting something. How much can they drop the price. 5,10,15,30%…In order for many to get a sale these days they are going to have to consider owing the bank more than the value of the property. And that is easier said that none. Dont forget that for many property owners they will have to consider asking the bank for a personal loan in order to clear off the mortgage. We have no bankruptcy laws in Ireland so this will be the only alternative. And i am not sure banks will be able to loan out values of 25, 50k etc in order for their clients to clear off the mortgage debt.

So whilst it is easy to say that they are disillusioned and that they should drop their prices…the reality is that it may be too late.

Excellent point - and one i forgot to mention on my previous rant!

Hi Iguana - yes i do ask these questions. admittedly with a softer tone and maybe in a less harsh manner! :astonished:

Hi Phoenix_n, we do have bankruptcy laws here but they are horrible…
irishstatutebook.ie/1988/en/ … index.html

Essentially they take all your assets including pension etc…

Yeah I even did a thread on bankruptcy

thepropertypin.com/forum/viewtopic.php?t=2119

Goddamnit, people dont read my threads :cry:

Interesting. I googled to see if i could get any ‘report’ on its working but couldn’t find anything. Has anyone declared bankruptcy in Ireland?

Not a good idea here, stigma stuff as much as anything else but there is no half way house like the UK where you can negotiate a scheme short of bankruptcy .

In the US is more socially acceptable so hop off there and declare :slight_smile:

How do most people take it?

This is the time that they fall in to one of the 2 catagories mentioned earlier -

the ones that ignore advice, put the house on at last years money and just sit there

OR

the ones who listen - and sell.

It Really is interesting stuff to watch on a daily basis (if you are a property geek like me ! :open_mouth: )

The apartment beside mine was placed on the market at 45K less than another in the block which was also for sale about a month and a half ago. It had previously been rented by a group of Chinese but obviously the owner was trying to cash in and was not afraid to go below what others had been selling for in order to get out asap. Both were on sale for a few weeks at the vastly differing prices. They have both now been taken off the market and the cheaper one is now on Daft available for rent at an inflated rate. It is still vacant. I can only presume that the more expensive apt was an owner occupier as it has not appeared on the rental lists. As stated above these would be classed as having come off the Daftwatch inventory when factored in and would therefore skew the stats. It also shows that while the nominal asking prices may be staying the same based on the denial process outlined by Murrayo, the reality is that in order to sell, its possible that vendors may have to come down anything up to €100 or more before anybody would entertain the possibility of buying. Therefore the real price of property has obviously fallen by a lot more than what is showing up on the stats. Its possible that until builders lower the asking prices on new builds that prices will not be seen to have dropped across the board as many people will just stay put indefinitely. Such a scenario would seem to back up the views of many on this board that the “correction” process may take years to play itself out. Of course, if sellers such as my next-door neighbour are unable to rent their properties, then they will be forced to slash their prices and accept the hit. We’re back then to examining how rental demand will hold up and whether for example, the slowdown in the construction industry or the wider economy will result in an exodus of renters.

…nope. the majority will not be able to slash the prices significantly enough as they will have insufficient funds to pay off the principal.

you see that is what happens in a property crash. its not called a crash for nothing.

Not necessarily - it would depend on when they bought - if they bought in the past year or three I would agree that they’re in trouble but many bought a good few years ago. For example I have a friend who bought an apartment in Dublin for roughly IR£100,000 (dont know when exactly but it would have been in the late 90s). The value to last Christmas would have been roughly half a million. His rent return has been double the mortgage in the inerim.A guy like that can afford to drop his price and take the hit and still emerge with a profit.
Of course I agree that investors who have bought in the last two or three years will be the ones who will fall into the category you have outlined and are in big trouble.
I suppose the question is which category the majority fall into.

The neg equity argument applies only to those who bought since 2005 and maybe 2004 in a few cases (not apartments in the big cities), at least for now.

The rest can get out with cash but not as much cash as they would have gotten last year, no sirree. They may not accept that before it drops below what they could get for it today .

Assuming they haven’t been keeping up with the Jones’s through equity release loans or course.

I guess then that you can narrow down the focus to new developments within the last 3 years. And that is where the first seams will fall apart. One development where i can see the first signs of the actual crash , where real prices fall to meet buyer expectations, is premier square on the northside. Poor location, over-priced, social problems etc…and built in the last 3 years.