We are starting to view again (rented for the past few years). It’s striking how the EA patter is the same now in every place we see - “This is down 50% from peak” / “We are selling this at 2002 price” / “Viewings up and sales momentum improving, market levelling off”
Now, normally my “EA filter” gets switched on and I just hear noise but recently I’ve started to wonder how much further we have to go. Are we close to some sort of bottom or do pinsters still think we will drop significantly further from here? Ms. Neffa has itchy feet now and I’m wondering if now is the time to start bidding.
BTW - so much for “can’t disclose selling prices” - every agent seems to know what every house sold for!
No they won’t, perhaps temporarily but then the best they’ll achieve is to completely stagnate an already struggling market.
Prices will come all the way back to long term income multiples. And wages will continue to deflate because there’s no alternative, dragging prices lower and lower…and, interestingly, putting the largest property fund in the world (NAMA) into severe negative equity.
When the market was down 40%, I predicted another 40% drop from those levels.
I still have no reason to doubt this. In fact, at this stage I would say it is probably going to fall a lot more.
As an investment, the property yield still does not make sense.
75%-80% from the peak is looking very realistic.
People who laughed at such drops pointed to the ‘fact’ that when people stop buying, they rent.
Consequently, rents should increase, pushing up the yield, thus supporting property prices.
They failed to realise the quantity of empties.
I think another thing people who scoffed failed to realise is that renters who view their situation as temporary ae willing to accept a lot less - a bedroom and a bathroom less at least. Probably a terrace over a semi-d. Maybe a commuter location over a purchase location.
Cost is, I think, a much bigger driver for rentals than space and location if you think of yourself as ‘between houses’.
Anecdotal example- I’ve been letting out a 1 bed apartment of my parents. The rent it got last year was €850 - I had to drop it to €600 to let it (though I think if I waited longer and put up with lots and lots of viewings I might have got €650). In 1995 it got €490/month - £90/wk. I can also see it drop further.
I’ve given up speculating, I originally said prices would fall back to 2001 + inflation, I think we are nearly back to 2001 without inflation and shows no signs of slowing down. I’m not planning to buy until prices have risen for 2 quarters in a row. won’t get the cheapest house, but wont’ be stung by any false bottoms!
+1. I rent a 3bed 1bath terraced house and when I get round to buying again my minimum requirement is 4beds & 2 baths. And I want a garden, which I dont have now. Not willing to pay the extra rent every month that it would cost to get that kind of house- would rather save it & put it towards buying a better gaff next year/2011. Or maybe I’m just a tightwad too
Prices will turn the corner when everyone is negative.
When all the cannies are chanting in unison ‘sure you’d be mad to buy property now’ - that is the time to buy. I don’t think we’re quite there yet. However while they could drop 80% from peak I personally don’t think they will drop that far. Once you are reading articles in property supplements about predictions of prices dropping 80% from peak, you’ll know it is time to buy because the mainstream opinion is almost always wrong.
Consider the obverse case of what Anthony Bolton said below.
Don’t forget, in the early days of the Pin in 2006/2007, we held the minority view. Not any more, however. The turning point may come quicker than we expect - that said, the empties are the elephant in the room.
I don’t think the market has dropped by anywhere near 50% yet. Certain properties may have but it is not across the board. The average price nationally at the February 2007 peak was €311,078 according to an ESRI report on Finfacts. A 50% drop would suggest an average price today of €155,500, which I don’t believe is the case. The ESRI figures, for what they are worth, record a 23% drop to July 2009.
Any EA who tells you the market is down 50% is trying to give you the mindset that there is not much downside left. I think we have a fair ways to go to even get to 50% and then its anyone’s guess to what happens afterward.
Sorry - disagree here. We know of several houses now where the actual sale price (not asking price) has been 50% below peak for comparable property in that area and approaching 2002 levels or lower (auction results are public, so we can make the comparison for once) . It’s not just EA patter. As far as I can see, ESRI index is nonsense - many months behind actual market activity.