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walktothewater

London Property, "long Term Prospects Look Good"

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Over here in LaLaland todays Irish Times property section is recommending London property citing "the long term prospects look good"

http://www.ireland.com/newspaper/property/...ESTMENT_29.html

anyone care to differ with Edel?

keep in mind this is level of critical analysis in Irelands flagship daily...

text:

Worth the investment

Edel Morgan

Address: Victoria Heights, Victoria Road, North Acton, London W3.

Agent: The Prestige Group.

Property type: two-bedroom apartment for €404,752 (£274,900).

What do you get? Victoria Heights is a development of 250 apartments in four blocks. The two-bedroom apartments are from 56sq m (607sq ft). The Prestige Group has purchased a block of 50 apartments. Buyers are guaranteed 6 per cent gross rental yield in the first year following completion.

In addition, they get 6 per cent interest on their deposit. The apartments come fitted out and have main bedroom en suites, as well as separate bathrooms. The earliest completion date will be October 2006.

There are car-parking spaces but buyers can rent a car space with nearby Carphone Warehouse for €1,467 (£1,000) a year.

There are also studio apartments at €273,581 (£186,400) and one-bedroom apartments at €324,971 (£221,400).

Where? Situated just off the A40 in west London in zone two of London's transport infrastructure and 50 yards from North Acton tube. Neighbouring areas include Chiswick, Shepherd's Bush, and Ealing and Park Royal.

How much for an investor to buy? With stamp duty at 3 per cent and legal fees at 0.5 per cent plus VAT, the acquisition cost comes to €418,151 (£284,810).

Assuming a strong purchaser, repayment on a Bank of Ireland 90 per cent annuity mortgage at 6 per cent variable over 20 years is €31,228 (£21,270). On an interest-only mortgage this is €21,793 (£14,845). With a projected annual rental income of €21,135 (£14,400), this would leave a shortfall of €10,083 (£6,870) per annum.

On an interest-only mortgage this would leave a surplus of €652 (£445).

On a 44 per cent mortgage at a 6 per cent variable rate over 20 years, the investor would break even on an annuity mortgage.

How much to buy? A residential buyer with a 60 per cent mortgage over 20 years at 5.75 per cent variable will have an annual repayment of €20,395 (£13,896). On an interest-only mortgage that would be €13,989 (£9,484).

On an 80 per cent annuity mortgage over a period of 20 years at an interest rate of 5.75 per cent, the annual repayments are €28,172 (£19,196), and on an interest-only mortgage option, they would be €19,227 (£13,101).

Potential: the development's proximity to central London, and Park Royal (an area undergoing regeneration and set to see its population double to 100,000 in the next five years) is promising. The projected rental return per month is €1,761 (£1,200) for a two-bedroom apartment.

Verdict: while only a cash-rich investor will be able to cover the mortgage repayments with the rental return, the long term prospects look good because there is currently little competition in the area in the way of residential development.

The area around Victoria Heights is predominantly commercial with companies, like NEC, and the European support centre for the Carphone Warehouse, in the vicinity. As a result, the prospects of being able to let the property are good.

Calculations by Simply Mortgages

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Surely the Irish are now the only people in the world that could be presuaded that London property is good value - since their bubble is bigger and closer to bursting than ours is.

That maybe so. But my point is that there is no critical analysis, dissenting opinion or even mildly alternative view in the mainstream media here. None. Open up any Irish paper, watch or listen to any current affairs or news programme and it's 'property is a good long-term investment', period, end of story. Negative news from abroad is confined to snippets here and there and discussed like it's all happening on another planet. It's surreal in the extreme here.

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Surely the Irish are now the only people in the world that could be presuaded that London property is good value - since their bubble is bigger and closer to bursting than ours is.

If they are determined to invest in property, it may be a good proposition. they might only lose 50% of what they pay, rather than 70% in Dublin.

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53 million an acre

Shareholders of Jury's Doyle Hotel Group Plc, owners of the 4.84-acre (1.96-hectare) site in Dublin's embassy row, yesterday accepted Dunne's offer of 260 million euros ($316.1 million). At 53.7 million euros an acre, it's close to double the price paid for any site in Ireland.

They’ll have to sell these flats at over $1,000,000 apiece to break even and build a massive tower to fit a break even number of units on the site.

``To me, these bids are classic top of the market stuff,'' said Chris Johns, an investment strategist at Collins Stewart Tullett Plc, who splits his time between London and Dublin. ``The Irish property market can't defy the laws of gravity forever. I'm trying to persuade my wife to sell our house now before prices fall.''

What awaits the Irish economy?, look no further than Thailand the Asian Tiger of the 90’s. Apparently the number of rusting unfinished speculative tower blocks has inspired some European Artists to undertake a photographic piece which is on tour at the moment, and that’s the bright side.

Bangkok

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Guest prudence

anyone can say that the long-term prospects for the property market are good. I am v ery bearish on prices but even I could say that. Just don't ask me what I mean by long...............

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That maybe so. But my point is that there is no critical analysis, dissenting opinion or even mildly alternative view in the mainstream media here. None. Open up any Irish paper, watch or listen to any current affairs or news programme and it's 'property is a good long-term investment', period, end of story. Negative news from abroad is confined to snippets here and there and discussed like it's all happening on another planet. It's surreal in the extreme here.

Interestingly enough, and internationally travelling exec chap in my immediate family who was looking at buying in the UK was saying the same thing about the UK market... that the only place you hear bad news is the overseas papers/news sources. I was surprised to know he was aware about rising bankruptcies (almost as suprised as he was that i'd found out somehow... thankyew, HPC)

Edited by IMD

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Shareholders of Jury's Doyle Hotel Group Plc, owners of the 4.84-acre (1.96-hectare) site in Dublin's embassy row, yesterday accepted Dunne's offer of 260 million euros ($316.1 million). At 53.7 million euros an acre, it's close to double the price paid for any site in Ireland.

Wow, that's getting to late 80's Tokyo bubble levels; a quick reminder in case anyone's forgotten what happened there-

JapanLandPrices.jpg

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Things are beginning to slow down slightly in Ireland in relation to New Builds but second hand Houses

as you can see from the graph attached are heading for the moon... (I hope you can see it as this is my first post)

I was back in Ireland last weekend and things are just insane - a friend of mine is about to buy an apartment to hopefully rent out but he said that he couldn`t even afford a 1% in interest rates with his current house. I didn`t open my mouth as there is no point anymore!

All the Housing Statistics used for the graph can be found in the following file:

http://www.environ.ie/DOEI/doeipub.nsf/0/d...20September.XLS

CurrentStats.JPG

post-3126-1127994683_thumb.jpg

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The joys of one size-fits-all Euroland. Ireland on one hand; Germany on the other.

A massive transfer of unearned wealth. It will end in tears.

Unfortunately I fear not. My view is that it will end with a slow stagnation of prices (in nominal terms) and a whole future cohort being economically cleansed. Anyway waiting for a sharp correction in Irish prices will be disappointed.

Let me explain in a nutshell: The housing market like so much of Irish economic life is not as free as one would suppose. Developers will act like cartels and will refuse to openly cut prices to move unsold newbuilds, estate agents will close ranks and marginalise retail buyers looking for discounts, the government will find ways to subsidise mortgage holders in distress, etc. Ireland is a small place, a '2-degree of separation' sort of environment, with much cartel-like, group behaviour. It is not an extensive, heterogenous market like UK. Enormous collective pressure can and will be brought to bear to shore up any downward pressure on house prices.

The result will be, just like the 50s and early 80s, a whole generation priced out of living in the homeland. In the past it was lack of jobs, in the future it may be unaffordable rents/prices. There is a long history of economic cleansing and human export on this island.

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Things are beginning to slow down slightly in Ireland in relation to New Builds but second hand Houses

as you can see from the graph attached are heading for the moon... (I hope you can see it as this is my first post)

I was back in Ireland last weekend and things are just insane - a friend of mine is about to buy an apartment to hopefully rent out but he said that he couldn`t even afford a 1% in interest rates with his current house. I didn`t open my mouth as there is no point anymore!

All the Housing Statistics used for the graph can be found in the following file:

http://www.environ.ie/DOEI/doeipub.nsf/0/d...20September.XLS

I'm sure it's something to with the Irish psyche. So much seems to be based on hearsay and gut feeling. What’s kept ROI’s property prices crashing for the last few years is a mystery. Its defiance of gravity is amazing.

Edited by The_Equalizer

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The result will be, just like the 50s and early 80s, a whole generation priced out of living in the homeland. In the past it was lack of jobs, in the future it may be unaffordable rents/prices. There is a long history of economic cleansing and human export on this island.

There are two particularly ridiculous/unbelievable aspects of the Irish property bubble:

1) Ireland has a lot of land in relation to the size of it's population (so land prices and hence house prices should be low). Even Ethiopia is more densely-populated than Ireland. However, I am given to understand that the transport network (ie roads, rail) is grossly inadequate, so it is not possible for people to buy cheap land miles away from where the jobs are (ie Dublin) and commute in.

2) As you point out, the Irish people have undergone a huge amount of privation and misery in the last 200 years, so it is even more surprising that they would choose to inflict such on their youth. At least they can blame the British for the Potato Famine; who will they blame for entering the euro and sending house prices sky-high?

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Any new build offering guaranteed 5% rental yield for example ......for a year is offering this amount of money in lieu of a price cut........................it doesn't mean the property will necessarily rent out for this much......................

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"the transport network (ie roads, rail) is grossly inadequate, so it is not possible for people to buy cheap land miles away from where the jobs are (ie Dublin) and commute in."

Irish people tend to complain about their roads and public transportations, when in fact, they are not that bad. The completion of full motorways crisscrossing the place and other major projects (Dublin port tunnel etc) between now and 2012 WILL put downward pressure on prices. The reason for 'scarce' land though is the land banking practices by developers and opaque (read: price supportive) planning/zoning rules.

"the Irish people have undergone a huge amount of privation and misery in the last 200 years, so it is even more surprising that they would choose to inflict such on their youth. "

But it's a question of WHO'S offspring we're talking about. If you're 'in' now, you're MEWing to gift a downpayment to your kids. It's the offspring of the those outside the 'property clan' that will be exported in the future. And the Property Clan is most people. In the 50s strong unions did kept access to jobs closed. Hence the Irish emigration to London. Similarly, future access to property will be closed off, starting about now.

I've been outside of Ireland for years, back now 2yrs. At first I though the idle pub talk of, "property prices will never drop" was just your typical hot air. But in reading between the lines, I now get what is being said. In Ireland it is different. There will be something akin to a civil war in this country before property is allowed to freely exchange at lower prices.

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What’s kept ROI’s property prices crashing for the last few years is a mystery. Its defiance of gravity is amazing.

Is it really that mysterious ?

1. Cheap Money (ECB Rates 2%)

2. Profligate Bank Lending

3. Sentiment massaged by the vested interests in the media

4. Government paralysed from acting for fear the economy gets derailed before the next election.

A fine recipe for a big ol' bubble in any country.

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  • 341 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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