Buying a house

Started by Boolerhead Mel, January 06, 2009, 03:54:19 PM

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tyronefan

The average price in Tyrone is not 150k,

Fear ón Srath Bán

#106
Quote from: Cúig huaire on October 02, 2009, 11:43:44 AM
The bottom of the market has probably been reached in the UK, with NI now also showing signs of growth.

Double-dip recession!  :o

Explanation
Carlsberg don't do Gombeenocracies, but by jaysus if they did...

armaghniac

Some houses in the South have declined quite a bit, but are not yet at Tyrone prices!

....

A SANDYMOUNT house that had to be sold to repay the debts of its property investor owners fetched over €1.9 million yesterday after it was withdrawn from auction.

John Mara, and his partner Clare Murphy, have outstanding property debts with Irish Nationwide amounting to over €5.7 million. They were forced to sell the house, Chiang Mai, at Claremont Road, which they had bought and renovated as an investment in 2006.

The couple paid more than €2 million for the Victorian house, and spent an estimated €1 million in renovations. At the same time, they invested in a €2 million property in Croatia, which they have also pledged to sell, along with furniture worth €60,000 in a bid to reduce their debts.

John Mara, the son of former Fianna Fáil press officer PJ Mara, intended to sell Chiang Mai in 2007. When he put it on the market for €5.5 million, property prices plunged and, despite subsequent price cuts, no buyer could be found.
If at first you don't succeed, then goto Plan B

bailestil

Quote from: Cúig huaire on October 02, 2009, 11:52:03 AM
Have house prices in NI not returned to a more "normal" level?

whats Normal? the same prices as 2 years ago?

read this from David McWilliams.
http://www.davidmcwilliams.ie/2009/05/13/collapse-in-house-prices-will-be-good-for-economy

He says the value of a house can be calculated as its 14 times its annual rental return.
I could rent a 3 bed semi in Derry for £450pm. that values the house at £75,000.
the same house could be bought for £160,000

is this "normal" ?

Main Street

In a real world of values,  a house should be worth about 10 times its annual rental value.

Cúig huaire

Quote from: bailestil on October 02, 2009, 12:11:09 PM
He says the value of a house can be calculated as its 14 times its annual rental return.
I could rent a 3 bed semi in Derry for £450pm. that values the house at £75,000.
the same house could be bought for £160,000

is this "normal" ?

Normal in my eyes is pre-boom prices. The housing market will eventually return to normality. The average joe needs to see a house as a home and not an investment.
Donagh, the GAA Board`s Sinn Fein PSNI spokesperson.

bailestil

so we still have another 50% drop to go then.

blewuporstuffed

Quote from: Main Street on October 02, 2009, 11:32:48 AM
20% is not a ridiculous deposit.
What is ridiculous is what the 20% equates to in money terms in relation to salary.
thats a fair point 20% of 70-80k may not be ridiculous (although alot of money),
but 20%of 150-200k certainly is
I can only please one person per day. Today is not your day. Tomorrow doesn't look good either

Bensars

Quote from: tyronefan on October 02, 2009, 11:41:15 AM
The banks are still reluctant to lend and are requiring large deposits because they are not sure if the bottom of the market has been reached here yet and they are covering themselves in case of any further falls.

Mortgage lending has gone up 83% in the UK because it is believed that the bottom of the market has been reached there




Up 83% on what ?   The previous three months ? this time last year ?

thebigfella

Quote from: under the bar on October 02, 2009, 11:23:38 AM
QuoteThe reason this is a good thing is people will start buying again, developers will start building again and  employing trades men again, who will start to spend the money they are earning again.

However until banks start lending to the first time buyers without asking for ridiculous deposits of 20% and more none of the above can start happening.

Nothing ridiculous about it, there was no complaints in the 90's when this was the case. Might do away of this free money culture that seem to have developed during the so called good years where people borrowed flat out without worrying about how to pay back. It amazing how much more responsible people are when it's their own money they stand to lose as well  ;)

orangeman

Hold on lads - a house is worth what it costs to build plus what it cost in land value plus the cost of what is required to complete the planning, design and sale processes plus a profit/ overheads % for the builder / developer


So a 1050 sq ft house ( minimum ) would be as follows :


1050 x say £60sq ft =                             £63k
planning, building control,
bank charges, financing costs,
design costs, estate agents costs etc say   £ 5k

Land cost - say £250k/ acre /8 per acre = £ 31k

Add developers profit 15% on above - say £ 15k


total :                  £  114k for the average semi detached house.


Obviously detached houses are going to be bigger and site costs are going to be more. Better locations, better finishes etc will mean a higher price.



So 10 times or 14 times the annual rent doesn't make sense.

under the bar

QuoteHowever until banks start lending to the first time buyers without asking for ridiculous deposits of 20% and more none of the above can start happening.

Nothing ridiculous about it, there was no complaints in the 90's when this was the case. Might do away of this free money culture that seem to have developed during the so called good years where people borrowed flat out without worrying about how to pay back. It amazing how much more responsible people are when it's their own money they stand to lose as well   

Offering mortgages to first time buyers only if they can come up with a 25% deposit is just another way of saying we don't wish to lend to them.  The vast majority of first time buyers can't afford a 25% deposit.


Stall the Bailer

Quote from: orangeman on October 02, 2009, 02:03:09 PM
Hold on lads - a house is worth what it costs to build plus what it cost in land value plus the cost of what is required to complete the planning, design and sale processes plus a profit/ overheads % for the builder / developer


So a 1050 sq ft house ( minimum ) would be as follows :


1050 x say £60sq ft =                             £63k
planning, building control,
bank charges, financing costs,
design costs, estate agents costs etc say   £ 5k

Land cost - say £250k/ acre /8 per acre = £ 31k

Add developers profit 15% on above - say £ 15k


total :                  £  114k for the average semi detached house.


Obviously detached houses are going to be bigger and site costs are going to be more. Better locations, better finishes etc will mean a higher price.



So 10 times or 14 times the annual rent doesn't make sense.
Why 31K for a site? I live in Tyrone (like you) and less that 10 years ago you would have got sites at 10k or less. Why over a 200% increase in ten years?
31k per site is over priced, 15k would be more like it.
Also why a 15k add on for the developer profit? They are paid for a job, like the other cost you included. They should not get a profit for each house they build but the standard wage for the job they do. i.e covered in the £60 per sq. ft. Even this £60 probably should be reduced as most people in the construction industry were getting more than they were skill for. I'd say 80k would closer for the above.

orangeman

Quote from: Stall the Bailer on October 02, 2009, 02:16:13 PM
Quote from: orangeman on October 02, 2009, 02:03:09 PM
Hold on lads - a house is worth what it costs to build plus what it cost in land value plus the cost of what is required to complete the planning, design and sale processes plus a profit/ overheads % for the builder / developer


So a 1050 sq ft house ( minimum ) would be as follows :


1050 x say £60sq ft =                             £63k
planning, building control,
bank charges, financing costs,
design costs, estate agents costs etc say   £ 5k

Land cost - say £250k/ acre /8 per acre = £ 31k

Add developers profit 15% on above - say £ 15k


total :                  £  114k for the average semi detached house.


Obviously detached houses are going to be bigger and site costs are going to be more. Better locations, better finishes etc will mean a higher price.



So 10 times or 14 times the annual rent doesn't make sense.
Why 31K for a site? I live in Tyrone (like you) and less that 10 years ago you would have got sites at 10k or less. Why over a 200% increase in ten years?31k per site is over priced, 15k would be more like it.
Also why a 15k add on for the developer profit? They are paid for a job, like the other cost you included. They should not get a profit for each house they build but the standard wage for the job they do. i.e covered in the £60 per sq. ft. Even this £60 probably should be reduced as most people in the construction industry were getting more than they were skill for. I'd say 80k would closer for the above.


There aren't any sites available at 10k per site - 5/6 years ago they were 20 - 25k so I don't think 31k is unreasonable - this is the figure that the banks have factored in for site costs BTW.

Developers need a profit / overheads % added on to the bottom line - if there wasn't a profit, then nobody would be prepared to take the risk and build houses.

If you look at the only evidence that is avaialable, ie. house sales, there are plenty of houses being sold for £120k +. There aren't too many houses for sale at less than than figure and there are certainly no houses for sale at £80k. Anybody selling houses for less than £100k are probably selling them to meet bank demands to get cash in.

bailestil

Quote from: orangeman on October 02, 2009, 02:33:45 PM
Quote from: Stall the Bailer on October 02, 2009, 02:16:13 PM
Quote from: orangeman on October 02, 2009, 02:03:09 PM
Hold on lads - a house is worth what it costs to build plus what it cost in land value plus the cost of what is required to complete the planning, design and sale processes plus a profit/ overheads % for the builder / developer


So a 1050 sq ft house ( minimum ) would be as follows :


1050 x say £60sq ft =                             £63k
planning, building control,
bank charges, financing costs,
design costs, estate agents costs etc say   £ 5k

Land cost - say £250k/ acre /8 per acre = £ 31k

Add developers profit 15% on above - say £ 15k


total :                  £  114k for the average semi detached house.


Obviously detached houses are going to be bigger and site costs are going to be more. Better locations, better finishes etc will mean a higher price.



So 10 times or 14 times the annual rent doesn't make sense.
Why 31K for a site? I live in Tyrone (like you) and less that 10 years ago you would have got sites at 10k or less. Why over a 200% increase in ten years?31k per site is over priced, 15k would be more like it.
Also why a 15k add on for the developer profit? They are paid for a job, like the other cost you included. They should not get a profit for each house they build but the standard wage for the job they do. i.e covered in the £60 per sq. ft. Even this £60 probably should be reduced as most people in the construction industry were getting more than they were skill for. I'd say 80k would closer for the above.


There aren't any sites available at 10k per site - 5/6 years ago they were 20 - 25k so I don't think 31k is unreasonable - this is the figure that the banks have factored in for site costs BTW.

Developers need a profit / overheads % added on to the bottom line - if there wasn't a profit, then nobody would be prepared to take the risk and build houses.

If you look at the only evidence that is avaialable, ie. house sales, there are plenty of houses being sold for £120k +. There aren't too many houses for sale at less than than figure and there are certainly no houses for sale at £80k. Anybody selling houses for less than £100k are probably selling them to meet bank demands to get cash in.

If you bought a house for £120k now,  what sort of yield would you get? i would suggest very little considering rent prices these days.
Surely therefore the asset is over valued.