Thinking of buying a house in Portmarnock

Hi, thinking of putting an offer in on this house in Portmarnock

daft.ie/searchsale.daft?id=449324

I have viewed the hose and I like it, it is a location I would be happy with (I know there is an issue if we get a second runway at the Airport) and although it is not fantastic, it is in reasonable condition and the owner seems to have cared for it (by the way the owner is selling it herself)

It was originally asking 750K (about 6 weeks ago) and was reduced last week to 680K. I am thinking of putting in an offer of 550K. I am a first time buyer with everything ready to go.

I think rental yield (monthly rent/purcahse price * 100) from the propoerty is around 3.5% (I reckon about 2K month is about the possible rent…although I have had to use surrounding areas to evaluate that figure). Also looking at Peak-to-Drop falls I think this house would have sold for approx 900K at the peak (hard to tell due to lack of real info…but I think not too far off the mark) so an offer of 550K would represent a 40% reduction from peak (I know a lot of people on here think there could be a bigger change).

I have been playing the waiting game since 2000 and it’s been a good strategy in the last few years especially, however, I don’t think we’ll (even on here) know the best time to buy until it has passed, and I think the time to buy will be somewhere between the asking prices bottoming and the maximum negative sentiment in the market (which occurs earlier) as this will enable the biggest deltas from asking to closing prices. My own opinion is that we are now in the window between maximum negative sentiment and asking prices bottoming.

Anyway, just wanted to post my thoughts and get some feedback on what others think.

Wait until the gross rental yield gets higher than 3.5%

Forget about the price and rent history, they’re both still on their way down (in my opinion).

I think 3.5% is easy enough to find in Dublin if you look around but i’d want about 6%… given that long term mortgage rates are around 5.5% .

Look at the recent AIB leaseback deal, from what i remember they sold their branches and leased them back at 6.5% ish… that should help convince you that 3.5% is too low.

Personally I feel that “nice” houses in middle-class areas will fall well below 500k… but nobody really knows.

Nice house nice road although the coast road has quite a lot of traffic nowadays

I would say there’s anothe 100 -200k drops in houses of that sort in portmarnock

Lovely looking house. You will get no where with €550k - don’t take advantage of the poor woman. €650k - €670k will get it for you I imagine (before someone else does).

How do you know? It’s not your money. Plenty of those types of houses,I’d risk losing out for the sake of over €100k

Offer what you think its worth and not one cent more

You mustn’t have heard about the current 200k oversupply in the Irish property market.

They won’t have to worry about taking advantage of “the poor woman” if someone else buys it.

The rule with property crashes is that total price decrees is a two phase process. Big drops in nominal price the first few years and then it pretty much flatlines for a long period when infalation takes care of the rest of the price fall. The flatline period only ends when another bubble cycle starts. The nominal price drop in a transparent property market is usually over in 24 months. As Ireland has a totally price opaque market it will probably take at least another 2 or 3 years for prices to reach nominal bottom.

Bottom line, no hurry. Even when the market does reach bottom its going to take a long time (if ever) before the flatline starts trending up again. I think that was Irelands first and last property bubble.

Thanks for the comments.

I don’t think there is much chance of taking advantage of the ‘poor’ woman, she seems well able to take care of herself.

Went for a 2nd viewing today and offered 550K. Apparently there is a standing offer of 620K from a cash buyer and she will go with that if nothing higher comes in.

Let’s see what happens, if it’s still for sale next month, might be worth contacting again…

Mr P. Hantom Esq always pays cash and has a bid in on every property in Ireland.

this is strange… all the usual people who come up with teensy valuations (TUG / TWG cant remember which) seem to be keeping their powder dry… maybe its a broken record at this stage :slight_smile:

I don’t value houses in Portmarnock. Not my game, chief! :wink:

So my valuation wasn’t far off then :laughing:

The psychology demostrated on this message board is absolutely fascinating! :slight_smile:

As shown in other posts, you get a mix of silly low quotations which are more reflective of the posters (unreachable) desires than reality, and the other posts which urge you to wait “until next year”. This is where “misery loves company” - they are too comfortable in their current situation to buy; it’s much easier to come up with reasons not too. However if people like you start buying, what hope for them? They will be forced to leave their childlike comforts and step into adulthood.

Dying to see how all this plays out :slight_smile: gets a bag of popcorn

Yes, there are certain users who have deep seated psychological problems alright.

Now get back on topic.

Good Jesus you´re right! Guys you better go buy something now, there´s thousands of people like the OP out there who are going to jump in any minute now and the party will be over for us! You go on and rush to buy, I tell ya!

:unamused:

Do posters here realise that the estate agents are reading the pin? I don’t understand how people think it’s good negotiation strategy to go discussing their bargaining position on a public forum.

As for this house? It looks like a fairly ordinary house in a fairly ordinary satellite town. A household would need to be pulling in EUR200,000 gross to afford this house at EUR600,000. This being based on prudent lending criteria from the banks.

Interest payments on EUR600,000 at 5% p.a. would work out at EUR2500 per month or EUR30000 per annum. The maximum level of affordability for housing is in my opinion 25% of net income. As such a household would need to be pulling in an absolute minimum of EUR120,000 net per annum to afford a house at EUR600,000.

What you have to ask yourself is, if you were in the privileged position of earning in excess of EUR200,000 gross or EUR120,000 net per annum after the current period of wage deflation, would you choose to live in this ordinary house in an ordinary satellite town?

In the case of the Portmarnock house there is no EA involved. The owner may read the PIN (probably does I would say) but what would she learn, she already has all the information that I have posted here

Your entitled to your opinion but I don’t think too many people would agree with you.

This is irrelevent, you are making the assumtion that the closing price is almost the same value as the mortgage, not true in my case and probably not realistic in general given current banking lending practices

It’s a general observation about posts on the forum regarding specific properties. Regardless of whether you’re disclosing further information to the vendor the fact that you’re posting here about the property is indicative of a specific interest in this property. You’ve made your own decisions about the wisdom of disclosing your interests on a public forum and I’ll respect that decision while I might not agree with it.

I’m highly cynical about what I believe to be irrational values placed on belonging to the Malahide set (most millionaires per square mile etc.). Perhaps I am in the minority.

Perhaps overly simplistic. The opportunity cost of employing the initial capital is also a consideration. Would this be the best employment of that capital?

It is an ordinary semi-d in an estate in Portmarnock.A sattelite town of a small norther European city with not much going for it. What would you pay for a semi-d on the outskirts of Sheffield? Nothing special about it at all.However if you WANT to pay over half a million quid for it,go right ahead.

Yes, but so is going for a second viewing or putting in an offer, at least one of which you got to do before agreeing on a price. Also maybe my ‘buying tactic’ is to post my offer on here in the hope that the vendor will read it and realise that my offer is genuine, considered and above what most other posters are saying the place is worth :angry:

Also, I think the lack of real information on what is going on out there is only of advantage to EA’s, the more of us that post the actual information on buying a house the better for the rest of us.

Agreed on irrational values, drivers for me are proximity to Airport/Town/Sea, good schools and quality of house, I am not interested in Malahide ‘effect’. I suspect you are in the minority, but most folks reading the PIN know that being in the minority does not mean being wrong.

Agreed, but if we forget about the boom bust cycle for a minute and accept that houses move up in price generally in line with inflation, then, in terms simply of opportunity cost, I don’t see a rational argument to buy a house ever. If I can buy soverign bonds (almost a risk free investment…OK, German government bonds) for even 1% above inflation then they are likely to out-perform property in the long term. If I am prepared to take on some risk (which is the reality in the property market) then I am sure I can expect to easily beat property/inflation with shares over the long term.

What’s interesting is, if I went to a bank and wanted a 100 E to invest in shares/bonds they might charge me say 7% interest, if I ask for 100E to invest in propoerty then they only want 4%, that means that the cost of capital for a house investment is significantly lower than that for other investments, I might be willing to take on a small opportunity cost if it means I can get a larger reduction on my cost of capital.