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Boom buyers seethe as units now three for price of one

HOUSEHUNTERS in a busy commuter town can now get a two-bedroom apartment for just €110,000 -- a third of the original asking price.
It's a case of 'three for the price of one' at the exclusive Capella Court apartments in Newbridge, Co Kildare.
When the gated development first opened in 2007 -- buyers forked out prices starting at €322,000.
But now they will be seething at the prospect that newcomers can buy three apartments for the money they handed over at the height of the boom.
Residents at Capella Court who bought in 2007 will be paying three times the amount in monthly mortgage repayments of their new neighbours for apartments of the same size and specifications.
The attractive price tag comes as receivers have been appointed to re-launch the apartments.
Dwellings are finished inside and lighting, footpaths and landscaping are in place. The two-bedroom apartments are set to attract investors, with average rents in the capital's commuter belt at €733, according to the latest property survey by popular website Daft.

The Indo

One third of mortgage holders face negative equity by end 2010

Almost 200,000 households will be in negative equity by the end of next year, representing a third of all mortgages, according to new figures.

The estimates from the Economic and Social Research Institute (ESRI) will increase pressure on the government and the banks to introduce schemes to help those struggling to meet mortgage repayments due to unemployment or falling incomes.
The ESRI estimates that 116,000 households are already in negative equity, where the value of their outstanding mortgage is greater than the value of their property. These are mainly people who bought houses since 2003 with high loans compared with the value of the property.
ESRI economist David Duffy predicted that the total would rise to 196,000 by the end of next year, as house prices continued to fall. Duffy based his calculations on main mortgages and said that top-up mortgages and remortgages may mean the figure would be even higher.
More than half the borrowers in negative equity by the end of next year - more than 100,000 - will have loans which are more than 10 per cent higher than the value of their home, Duffy calculated. The majority of these will be first-time buyers.

Sunday Business Post

Receiver sells apartments in Bray

Prices have been cut to an average €225,000 for the apartments and to €295,000-€299,500 for the duplexes: a year-and-a-half ago prices started at €350,000 and that was after a 20 per cent price cut following a 2007 launch. Currently, the two-bed show unit costs €235,000 and the three-bed show unit €315,000. There is one smaller two-bedroom apartment for sale for €195,000.

The units are all a good size – the two-beds are 72.2sq m (783sq ft), the duplexes 86.3-104sq m (929-1,119sq ft) – and finished to a high standard.

Bathrooms have granite ledges behind sinks and have slate-coloured porcelain tiles on floors. Nolan’s walnut or cream gloss fitted kitchens – separate from the livingroom/diningroom area – come as standard. Bedrooms have good-sized fitted wardrobes; livingrooms are wired for surroundsound.

The Irish Times

Trapped in a negative equity nightmare

When I bought my new home in May 2008, I knew exactly what I wanted. A two-bed apartment designed for modern living with a roof garden and outdoor space with great views of the city for holding summer barbeques on balmy evenings. When I saw just this, it accelerated my impulse to buy immediately, even though the market was softening.

The two-bed showroom unit apartment on the fifth floor wasn't exactly affordable, considering I was buying alone, but with its sleek Scandinavian furniture and skyline views I was prepared to stretch my cash limits and fork out the €525,000 sum required.

Printed in bold on the pastel-coloured brochure at the launch of the complex was the slogan: "contemporary tailored apartment living that won't cost you the shirt on your back". Truth is, it's costing me that and a hell of a lot more.

I now see my apartment devalue massively on a daily basis. Hooke & MacDonald have said 40 per cent is the typical price drop for new houses and apartments in Dublin. Trapped by negative equity, if I did decide to move, I would stand to make a massive loss on my investment. It has been reported that "those who bought a house in 2007 will have to wait until 2030 before they move out of negative equity".

The Sindo

HINDSIGHT IS a wonderful thing. Looking back at the prices people paid for Irish property during the boom, it’s easy to see how unsustainable they were.

However at the time, despite warnings from everyone from the Central Bank to the Economist magazine that Ireland’s property market was a bubble which had to burst, banks and consumers ignored the advice and ploughed money into property, propping up prices until the inevitable collapse during 2008.

Now, latest estimates suggest that as many as 340,000 home owners, or one in five homes, are stuck in negative equity and prices are still sliding.

If this is the case, then people who purchased property as far back as 2003 with loan-to-values (LTVs) of more than 80 per cent, will discover that they owe more to the bank than what their house is worth.

For example, at the peak of the market two-bed apartments at Wyckham Point in Dundrum, Dublin were selling at €525,000.

Now however, prices have slid back by over a third to €339,000, which means that someone who bought during the boom on a 92 per cent mortgage is stuck in negative equity of about €144,000, or have a loan-to-value (LTV) of 142 per cent. If the property was financed with a loan of 65 per cent of the purchase price, then the owner is just about in the black.

And it looks like negative equity is here for some time. According to the Economic and Social Research Institute (ESRI), those who bought a house in 2003 will have to wait another four years before they move out of negative equity, while those who bought close to the peak in 2007 will have to wait until 2030.

The Irish Times

We’re splitting – but can’t sell apartment

Q We are splitting up and have to sell our apartment. It has been on the market for eight months with no interest. The estate agent says we must drop our price if we are to have any chance of selling but if we drop to the price he suggests we won’t cover the mortgage (shortfall of €20,000). Do lenders really come after people for this small amount? This has to be happening to other people so what do they do in this stalemate?

A The first thing is that while the agent has suggested a new asking price, that doesn’t in any way guarantee a sale or that you will even get that amount – so your shortfall could be greater than €20,000. At a new lower valuation, might one of you be able to buy the other out? Could you rent it out? What’s been happening in the eight months that your place has been for sale? Are you both still living there? Could one of you stay and get a tenant in to part-pay the mortgage? Or might it be time for you to cut your ties with this property and your ex and be prepared to sell at a lower price and take out a loan (or eat into your savings) and pay off the outstanding mortgage amount. And yes, if you don’t pay back a mortgage in full you can expect the lender to come looking for the outstanding balance no matter how relatively small it is. Not paying it will, at the least, ruin your credit rating for seven years, which could stop you moving on with your life in all sorts of ways.

The Irish Times