Every time I mention to friends/colleagues/clients that we are thinking of re entering the market and bidding -20% on the asking price of a prticular house they all say “Oh, wait until after August- then the developers will be in trouble”
Can someone explain the significane of August/September in relation to Banks’ demands of developers?
Thats very intersting to hear. Cat is well out of the bag now, Janey mack…
I’m not sure if this is why but in August the builders holiday begin which saw many builders shedding staff, this began the drip drip of job losses in the construction sector, it was built up a bit too much by the media and a few of us on the pin (pun-a-licious) but this years holiday may prove more devisive.
So what you might get is a lot of devloeprs trying to limit cashflow outflows and really trying to get some cashflow back in, by very loud super discounting. The gloves are off now it can only become more competative.
I’d say they base their views on the fact nothing at all will sell after the summer till the following six months and developers will feel the squeeze from the banks. Sounds like sound advice really.
Can I ask you if you are under 27. I find that that denial stage is age related and occurs mainly in the 30-40 age bracket.
I was always of the opinion that the sh!t would really hit the fan when a reasonable sized household name developer went under. however i’m sure any banker knows this also so may be giving more leeway than desired by their risk management department.
I’m under 27 (24) and I find alot of my friends don’t think house prices can drop much more. I partly think it’s because most people my age have never seen prices any lower than they are now. I didn’t really start to look at house prices until I was 19/20, when they were starting to rocket, and even now asking prices advertised are still a bit ridiculous. People my age have been geared towards a 35-40 year mortgage in excess of €1500 a month by all the relevant soucres of info (with the obvious exception of the pin!). I only hear about mortgages of 3-4 times single income through my parents age group!! And my mother still complains that I haven’t got ‘on the ladder yet’!!!
That’s a fact. My girlfriend was telling me about some woman who had her place up for sale, and she didn’t get one viewing in several months. “That’s because it’s too expensive”, I said. “It’s not!”, she yelped. “It’s 260k”. “And? If the price wasn’t too high then someone would have bought it, or at least viewed it”.
Many Irish people just can’t fathom house prices below a certain level, because they’ve never seen them at a sensible price.
Thanks Django, your info frightens me a bit really that we’ve made a generational change to the country during the bubble where people now accept it as the norm to pay for a gaff for 40 years. God bless the credit crunch and tightening conditions.
If anyone gives you any grief about buying just point out the monthly drops, don’t bother arguing over value for money as it’s a lost cause.
Hanging around the Pin it sems to take ages for people to cop on. But it will happen, it just takes time.
In the end, current prices just can not be afforded unless you get estremely low nominal and low or zero real interest rates. The former to facilitate cash flow, the latter to effectively make the loan “free” by only compensating the lender for inflation.
We on longer have that and it is unlikely to occur again for a little while. So ever so slowly more and more people (mainly those looking to finance a stupid price) will simply be faced with the reality - it is just too expensive to afford.
In the beginning when I first had a look at house prices, my common sense told they were way over priced. It seemed pretty obvious to me and i couldn’t believe the way people were busting a gut, lying about income, hiding credit union loans, getting 100% loans to buy places!!
Thank f**k for the pin!!! The only person i know with a similar view point to me is my dad!! My mam is the complete opposite, told her i might rent for a while…got the whole rent is dead money crap. It’s very frustrating to listen to everyone telling me get on the ladder blah blah blah. I’m fighting against the tide big time! Most of my friends are college graduates, clever people (except when it comes to property). Purely because they grew up in the boom times and know no different.
Have a wager with a friend of mine…that a 2 bed apartment in swords will be under 200k within 12 months…quite likely i think but he wouldn’t have any of it…current asking prics are 260k. Safe money I think!
One other thing - my manager in work lived in England during their crash so he knows exactly what we’re in for! Don’t mean to vent but I’ve been banging my head against a brick wall for the last 4 years
Django, here are some rough figure to give your Mum next time.
Historically house prices might have been 3-4 times annual salary (at the time of your purchase). At that type of level a 25 year old would effectively spend 13-18% of all their future net income on housing.
House prices in Ireland got to 8 - 9 time average earnings. At those sort of prices the same 25 year old will need to commit 35-39% of their entire future net income to pay for their housing. Over a third, before you even buy a bed, turn on a lightbulb or put some food in your fridge.
Tell your mum you have better plans for that extra 20% of the fruits of your lifetimes efforts you need to pay at present.
Just say no. Be strong. She’ll hate you for a couple of days. But then it’s over.
“Wouldn’t a place of our own be so lovely though?” “It’d be so nice to have our own place. I’m sick of renting”
“You’ve only been renting for 2 years! I refuse to put my deposit into a rapidly depreciating asset, just so we can ‘have our own place’”
“You’re so selfish. This is a joint decision and you just block it on your own”
See, while you’re giving her numbers and figures, she’s not listening. She just thinks you’re being a big (cheap) meanie that wants to scupper her chances of having a lovely little place of her own. A nice apartment or if you’re lucky, who knows, maybe even a nice little 2 bed townhouse.
Be strong. You’re 24. This is another ridiculous consequence of the bubble. People buying gaffs when they should be living. At least wait until you’re 27-28. She might turn out to be a horror yet. Then where would you be?
My mother was like your mother a year ago when I moved back home, but I have worn her down with daily facts about the crash…
I think here initial desire for me to “get on the ladder” was because when she got together with other mothers, all they were talking about for 5 years was how so-and-so was on the ladder and so happy, and someone else’s son/daughter had made a million doing up a place and selling it and all the other celtic tiger winner’s aneccdotes…
As other posters have commented on the Pin before, I think this mentality will gradually be replaced with a “stay off the ladder” attitude for many years to come, regardless of how the market or economy fares. Expect mothers to swap anecdotes about how so-and-so was in negative equity, had their house repossessed, can’t raise kids in the apartment, or lost a fortune after buying at the peak. It seems that Dublin taxi drivers are leading the charge in this respect - any I have met recently seem to be incessant doom-mongers
Not sure if it is directly related to your friends position, but certainly the banks are expected to turn vicious in the UK into the second half of year if things don’t improve significantly, so watch for them doing the “banker looking for his umbrella back when it rains” thing.