Do current property prices represent real value for money?

Do current property prices represent real value for money?

Do you think current property prices represent real value for money?According to the latest property report from asking prices continued to decline during the quarter. Nationally asking prices have now fallen 30% from the peak and by up to 40% in Dublin. The average asking price in Dublin now stands at €325K – while we know that actual sale prices around the country have fallen much further than this. The new reality is that properties are now half the price of what they were at the peak of the market in 2006.

With the large drop in property prices around the country, combined with the fall in mortgage interest rates over the last number of years one could deduce that housing has become significantly more affordable. However do current prices represent real value for money?

Have your say:

  • Do you think the current property prices represent real value for money?
There are 38 comments for this article
  1. Rationalist at 12:00 pm

    I agree with most comments above, but alot of comments are exaggerated. In some parts of the country house prices are not too far from value for money. House prices in South Dublin are still grossly overpriced. Think about it rationally most responsible newly we’d couples will probably have 50k deposit saved. Now the average price for this 3 bed semi-d in 400-450k. How can your normal worker Guard, Nurse, teacher & civil service afford to finance 400k at 6 per cent annum interest rate. That amounts to 24k in interest per year, equivalent to 2k per month free money!!!!. The fact is it cannot happen, mortgage interest rate relief will be completely abolished by 2017. Not if your civil servant or average professional worker cannot affords these houses? Oh, maybe doctors, barristers, solicitors or accountants, surely all they deserve is a 3 bed – 1 bath. house after 6 years of study and 5 yes of professional life and they will be then at the prime age if 30 to take out a 35 yr mortgage. Get a grip!! These houses must have to fall to at least 300k before they become realistic. Interest rates more than anything else will determine the futureofhouse prices and it is now acceptable to think that the average interest rate over the next decade will range between 5-7 per cent.

    I would be interested in any feedback on the above comments.

  2. Marks rent house france at 6:31 pm

    They are currently pretty good, but will start to rise soon as the economy stabilises.

  3. nick at 8:35 pm

    i think people are still fooling themselves.if they think things are bottoming out.
    House prices are still crazy and if they fell by another 50per cent we might then be re-entering the real world.

  4. francis at 4:15 pm

    Compared to other EC/EU economies, uk, spain, germany,
    france. Prices are still on the high side in ireland.

  5. tuburke at 4:04 pm

    I see that the vast majority of the replies are sensible. Prices are still in the bubble paarticularly in south dublin. That bubble will burst after the next two swingeing budgets and prices should be normal by 2013, but it could take until 2014 before house prices really normalise when we’re supposed to have corrected the €20bn deficit in public spending created by our financially illiterate Goverment over the past decade. If we fail to pass those financial hurdles successfully, and the EU and the IMF have to come in next year, look forward to another sharp property crash following that intervention, which is about 50/50 likely to happen.

  6. Proinsias at 7:36 am

    I think the market is still way over valued, many people have bought their homes in the 1990’s for much less then the so called asking price was in the 2000’s. A normal gain in property over the life time of a mortgage is about 20% but in ireland the prices have gone to over 600%, showing that even if the house prices drop 50% from the 2006 levels the housing market or property market is still over valued. So no one is getting value for money.

  7. david at 8:37 pm

    NO property prices are still away too dear around my area anyway. it will still pay you to buy a site and build rather than buy so why bother buying a house. down is the only way they are going for the next year or even 2 i would think. its all bad news very little people are able to get mortgages and the people that have will only spend it on a property if they get it for VERY CHEAP!!!

  8. Grainne at 7:44 pm

    I think houses here in Ireland are still overpriced when you think of the crap that is being sold for big bucks still. Go to another country such as e.g. Germany and look at a comparable city or town and then look at the great houses that you can buy that are way cheaper and better quality than the stuff still being offered as “priced to sell” here. Auctioneers and sellers in many parts of the country still havent clicked that what they are pushing was never worth the price in the first place. Just because a property was first offered for say 300.000 doesnt mean its a great buy now at 150.000. It was probably only worth 65.000 day one anyway if at all.

  9. Roisin at 4:04 pm

    NO! As noted by others the average price is still out of reach of the average worker’s salary. Add that to some pretty unregulated building practices, bedrooms you can’t swing a cat in, apartments the size of shoe boxes and in some cases ridiculous management charges… definitely NO.

    I do honestly feel sorry for people who are finding it difficult to pay for their houses/apartments that they bought at the hight of the madness, but honestly not that much. The rush to buy at any price admittedly fuelled and encouraged by banks was irresponsible.

    Housing prices became huge because banks would finance irresponsible loans. Greedy short sighted irresponsible people took out those loans. Housing prices are still far too expensive and out-with the reach of many working adults forced to live in un-regulated and insecure private rented accommodation which is also still way over priced for basic accommodation.

    Prices in both the private rented and for sale sectors have a long way to go before they are reasonable and in line with the reality of domestic economics ie: how much people can actually afford to pay. Never mind value for money!

  10. pete at 2:18 pm

    Well every few months the government keep coming out with scare stories and frightening the daylights out of ordinary people – leading to a stifling in the economy as we wait to see whats going to be next.
    Maybe my kids will be able to get a nama bargain when all the nama properties hit the market in the next few years.
    Prices are directly related to supply and demand – the first law of economics as learned in school when I was 15 – the financial regulator must have been out sick the day they covered that issue in class!!!

  11. James Gormley at 11:40 am

    Prices will cease to decline when the average house price is the equivelent of the average blue/white collar workers annual salary multiplied by three plus approx €50,000 (deposit). Unless, in the unlikely event, there is a sudden surge in our population which would tilt the supply and demand balance.

  12. Pippi von Lancoshire at 11:33 am

    Property is still ridiculously overpriced for a banana republic run by incomptent gangsters. The country is the laughing stock of the western world.

  13. Josephine at 9:41 am

    Lots of comments about prices set to fall still more but there is no one building at present and we will probably end up in a shortage situation in some areas in the next couple of years. I think it is a good time to buy if you can get the funds which isn’t easy these days. If u can’t then rent long term , it’s not a right to own your own home, 70% of Europeans don’t…..

  14. Colm at 11:07 pm

    As long as demand remains low, I can’t really see property prices bottoming out yet. The fact that our elected officials can’t instill any economic certainty only serves to dissuade people from spending their savings. So in short No, property do not currently represent value for money.
    On a related point, a lot of people are blaming banks for giving out all that money during the boom years and thus causing the unsustainable rise in property prices. However, the bank only went on an “Independent” property valuation given to them by guess who??? You got it Auctioneers. If anything needs to change then it should be that banks directly employ their own people to carry out valuations. When asking prices match these valuations then this is when house prices will represent value for money.

  15. cypherdj at 10:16 pm

    I think sellers have to be realistic. This is Dublin, not Paris, a city currently in recession, with over 10% unemployment. People currently employed don’t feel their job is secure enough to buy a property now. Now contrast that to the living conditions in London, Paris, or Berlin, cities with good healthcare, carefully planned transportation, and a vibrant cultural/artistic scene. Should people pay 300k for a property around Dublin? If it’s a 5-bedroom with a garden in Hoath or Dunlaoghaire maybe.

  16. Henning Duve at 7:21 pm

    The house prices have never been realistic for the past ten years or so. Acceptable prices have been in Ireland around the 90’s, when the ‘boom’ began. Accompanying the hype of the rising construction prices was a strong decay of quality – let’s say it in this way: 90% of the ‘modern’ Irish houses would be – if they had been constructed in this ‘quality’ in either France or Germany – INSTANTLY been demolished for safety reasons (Irish houses simply do do not comply with most basic safety regulations in France or Germany!). Comparing to 1990, we have now in Ireland thousands of ‘new’ houses with an 80% quality loss but with a 400% price rise.
    Sometimes it is better to go back to the past. Let’s go back to the construction quality of 1990, add modern day insulation and heating techniques, and 20 year old (relative) prices – and, here we go! We have affordable and livable houses again.

  17. james at 7:19 pm

    The biggest problem now is that crazy bank bailout last week! we have been in negotiations on a house in Wexford since August but we backed out when the government did that.. frightening.. WHY did they do it.. there are hundreds of other dodgy banks that need to be allowed to fail then normal people will regain a little confidence that their investment will at least hold it’s price.. .
    43 billion is the new bailout figure….. passport applications will rise..

  18. Damien at 7:13 pm

    Still very poor value for money. Why anyone would want to buy now unless they have to is beyond me. I bought a 2 bed mid terrace house on SCR in 1987 for 29k pounds – a realistic price. I sold it 12 years later for 74k and was very happy with that. Two years ago I saw it for sale again for an unbelievable Euros 425K. We can all see now that we were living in cloud cuckoo land then, and anyone who thinks we’ve reached the bottom of the market is still there. If we returned to realistic mortgages of say 80% of value repayable over 20 years (which is what I had) we would lay the foundations for a return to realistic house prices again. So many of us have taken pay cuts and still our jobs aren’t secure. We can’t afford huge mortgages and no bank will sanction them now. House prices are a long way from the bottom.

  19. AV Watt at 7:13 pm

    The only figure that counts is that a house price should not exceed 12 to 14 years rent. Irish house prices are currently too high; referring to house prices achieved during the 2006 market high is a sick property industry joke. These crazy prices pushed-up the cost of living and wages, damaged the Irish economy and caused the current recession. Go by the relationship to rent and a pokey 95M2 Dublin semi is worth around €150, but these houses are currently advertised for €350 to €450. If you are a dumb sucker ready to be conned again rush out and buy, if you have some brains, wait for the 100,000 plus houses in ghost estates to hit the market, the repossessions to begin in earnest, and ignore the prejudiced opinions of people who’s income is a percentage of the selling price of a house.

  20. Paddy Doyle at 5:19 pm

    As a wheelchair user I’m looking for a bungalow not too far from Dublin. No estate agent seems too interested in finding me a property. I’m ready to go and won’t hang around. Trouble is that all houses, be they bungalows or otherwise are overpriced and seem to take no account of the fact that people with disabilities do have spending power and do want to live in a house. Time for a rethink, me thinks.

    If you’ve the property at the right price, I can come up with the funds……..rapidly!

  21. Luis at 4:30 pm

    Real value for money. No!!! Only a fool would buy now knowing that the price will necessarily continue to fall. Houses in most areas are clearly still too expensive, 10% to 15% lower or 50 to 60% from peak will be unavoidable.

  22. Eugene at 4:15 pm

    Prices have still to fall. Simple economics of supply and demand. There’s still plenty in supply compared to the demand. Demand is slow due to lack of finance from banks and people stuck in negative equity who can’t move which is just about anyone who bought in the last 6 to 7 years, not to mention job security..?

  23. tom maguire at 4:13 pm

    no i think they have to drop more to match the ecomnic climate thts still adjusting. with a property tax looming this should happen.people with multiiple houses should take a hit as this form of investment does not generate any ecominic activity. regards tom.

  24. Christian Higgins at 3:56 pm

    Aside from the house price, the complete uncertainty regarding mortgage interest rates should deter most would be buyers. When thinking of the banks, think of the song, ” the only way is up”. Thats is where the interest rates are headed. Do a stress test before you buy on the implications of what will happen should your mortgage rate jump by several % points.
    If, after doing this stress test, you can still afford the worst scenario payments, think about proceeding. The property you are purchasing would want to be extremely good value for money before purchasing. If you couldn’t afford the mortgage and had to move out for any reason, would the rental income cover the mortgage?? this has caught most people “reverse yield gap”. Value for money does exist now in certain areas but more commonly sellers are living in the land of nod because they paid over the odds in the beginning for the properties they are now trying to off load, sorry, I mean sell.

  25. Bruno at 3:54 pm

    We’ve just sold our 3-bed semi in Dublin. It was on the market for about 3 months. A few other houses in the estate have also sold recently, and there was certainly a good level of buyers interested when ours came on the market, so there seems to be a bottoming out of prices in some pockets of the suburbs. The price which we got was more than 40% lower than the sale price of a house a few doors away which sold at the peak, but we got the money we expected so we were satisfied with that.
    Our story seems to reflect a lot of the property reports, i.e. over 40% drop in selling prices, 3 bed semis in popular areas getting their asking prices.

  26. Declan Clarke at 3:39 pm

    Bought an investment Property in 2002 in Dublin 12. It peaked at €340,000 . Currently on the market for €180,000 . Thats a 47% drop . 4 Months on the market not 1 offer . Its a buyers market if you can raise the finance .

  27. Micahel at 3:35 pm

    There is some value for money in the market however if you were to compare prices with those in 2002/2003 we are still way off the mark which i think is where this country is at the moment. With interest rates set to rise significantly and credit card defaults there is only one way the market is going and that is down. Until there is a return to below 10% unemployment it is unlikely there will be any growth in the property sector. GDP growth will not reflect the true state of the economy, the only real source of growth will be the reduction in unemployment.

  28. Frank at 3:29 pm

    Good value for money? Well if paying just 3 times too much for something that you might have paid 5 times too much for a few years ago, then yes, property represents great value for money now. In fact I would say there has never been a better time to buy a house. And in 12 months time when property prices have fallen another 20-30% then, then too will be a great time to buy and houses will represent even greater value for money.

  29. Simon at 3:11 pm

    I think they have bottomed out for most of the country at this stage, and any more declines will be very limited, I imagine by the end of 2011,2012 they might start creeping up again by single percentages.

  30. Herbie Mitchell at 3:11 pm

    No, house prices are still too high when compared to other countries. When one considers just how much it costs to build a house, it can be seen that scandalous profits were made during the so-called boom years. The prices were not driven by building costs but by how much money people could borrow. Because interest rates were low, people could borrow more, so prices went up. It was the same with the “First time buyers” grant. The prices just went up by the amount of the grant. Greedy builders just pocketed the money & the buyers were no better off.

  31. Riaz at 3:10 pm

    It depends on the location and the condition of the house for sale! By my own experience, some houses in reasonable location, good condition and potential are snapped up quickly quite close to the asking price!

  32. NjColl at 3:04 pm

    Take todays prices, half them and then I think we’re close to the truth.. Nama has us in this mess for the long term. It’s gonna get a lot worse before it can get better.

  33. Paul Browne at 3:01 pm

    Of course not!! At an average price in Dublin of €325,000 it is still out of the reach (by bank conditions) of most average workers…..they have a way to go down yet.or maybe the averge joe soap doesn’t desereve to ‘own’ property. Maybe we’re all deluded that ‘ownership’ is a right and not a prvilege. I’m glad i bought small…still a chance i may be able to sell. The term ‘property ladder’ is now a lie.

  34. Diarmuid at 2:58 pm

    The US has seen big falls in house prices in this cycle, with the Case-Schiller house price index declining by one third from its peak. This has taken a lot of air out of America’s housing bubble. Relative to rents and to incomes US house prices are now roughly in line with their long run average.

    However, I think by contrast the deflating of Europe’s housing bubble has hardly got underway.

    Compared to rents and to incomes house prices look expensive in Spain, Ireland, the Netherlands, Italy, France and the UK

  35. Sandyer at 2:55 pm

    It definitely depends on the area. Prices around Sandymount in Dublin for example are still totally unrealistic.

  36. Jamie at 2:46 pm

    Prices are at last begining to come back to reality. I think they should still go lower and will bottom out next year. I hope it never goes back to the celtic tigger boom as prices were totally ridiculous and we were bigger fools to put up with it.

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  38. Mark at 1:01 pm

    I think we will start going up in 2012.

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