Property Prices

[taz8130]

I remember how crazy the property prices were when I moved to the island in 2006, and how estate agents making profits on inflated prices p'd me off.

Now that we've had the recent announcements regarding severe cuts, tax rises and rather sober times ahead, what's are peoples opinions of the house market ?

[GD4ELI]

I remember how crazy the property prices were when I moved to the island in 2006, and how estate agents making profits on inflated prices p'd me off.

Now that we've had the recent announcements regarding severe cuts, tax rises and rather sober times ahead, what's are peoples opinions of the house market ?

 

I wouldn't call the cuts severe; IMO house prices will sit still for a while before gently proceeding in an upwards direction. Taxes have hardly increased, the Island's private sector is in good shape.

 

As long as the UK is in a mess and the Island offers favourable tax rates there will be a demand from the UK (most of whom will then call Stu Peters at every opportunity to complain).

[Albert Tatlock]

I remember how crazy the property prices were when I moved to the island in 2006, and how estate agents making profits on inflated prices p'd me off.

Now that we've had the recent announcements regarding severe cuts, tax rises and rather sober times ahead, what's are peoples opinions of the house market ?

 

I wouldn't call the cuts severe; IMO house prices will sit still for a while before gently proceeding in an upwards direction. Taxes have hardly increased, the Island's private sector is in good shape.

 

As long as the UK is in a mess and the Island offers favourable tax rates there will be a demand from the UK (most of whom will then call Stu Peters at every opportunity to complain).

If my company suddenly lost 25% of its income GD4ELI, I think I'd call that a pretty severe cut.

 

However, houses/property are always a long term relatively safe bet, population increase and planning control sees to that.

 

Short term and medium term on the island - certainly over the next two budgets and next three years - things will change house price wise IMO - mainly because of uncertainty - and the house-price graph always reacts adversely to uncertainty. For example, what is going to happen regards corporation tax here, and the current/near future consultation? That for me is the real short/medium term decider, as is the much needed and as yet unaddressed reduction of our bloated government and civil service, and the response to diversification of the economy. The budget this year has only worked because of proposed cuts (obvious fat), digging into reserves, hiking up electrickery costs and increasing taxes (which is of course mainly on the finance sector as it is in that sector that most of our higher rate tax payers earn their living). Another uncertainty is which type of government gets in in the UK this year - just how long the UK stay relatively in the mire, and what additional pressures they put on us, especially if we 'bounce back' from the VAT punch and they 'hit' us again with another as yet unseen punch. But things have to change to raise income and make us more 'independent' of the UK financially. Enforced CT (UK/EU etc.) or even rumours of it will likely impact things here substantially in the short to medium term property wise, but that said, I have confidence that IF CT has to come in, Alan Bell will be capable of limiting that impact and not bringing in CT at anywhere near the extortionate levels in the UK - and selling any resultant regulatory CT to companies here. Once things have stabilised either way, after around 3 years I think we will get back to being confident; have stability; real growth; low unemployment; more construction.

 

Prices for those selling has dropped in my recent experience, so I expect most people to be simply staying where they are - it's different on the island anyhoo, it's generally a captive market (not like the major differentials across the UK) and having to be forced to change from one region to another on e.g. a job change - unless you are forced to leave. But there again, our prices have been so high, that selling here and buying in the UK (who are in the doo doo) means people generally won't lose out doing that.

 

The construction industry is suffering (representing 28% of unemployment at present), though don't forget the other 75% of those unemployed and what they represent in terms of current uncertainty either. 1000 less work permits have also been issued this year, which means that closer to 2000 jobs have dropped out of our economy in reality in the past year (4,000 work permits were issued and 5,000 renewed). But, lack of construction usually tends to result in price rises when the next 'boom' comes, re-enforcing that investment in property is always a good long term bet.

 

Uncertainty always impacts prices adversely - and there lies the risk - and you makes your choice. Personally, if I was a local looking to buy first time, for the long term, I'd be doing it between now and the end of the year - a) not looking to make a 'profit' but taking advantage of the uncertainty, which I think in a few years we will eventually get past - though some of it might be painful and b) simply because property is a good long term bet. Coming here to work, I'd be renting for now.

[pongo]

However, houses/property are always a long term relatively safe bet, population increase and planning control sees to that

 

Property prices would have a way to drop still to return to the historic trend line relative to inflation and in terms of personal earnings growth. Therefore housing looks like a very poor investment which would of itself be a downward pressure on prices relative to inflation. Especially if wages stagnate.

 

That isn't a prediction. I'm not taking bets

[ThankU]

Its not stopping Dandara who are building another 600+ houses over the next two years. And its not the construction costs that are making property expencive its land prices which are now costing more than the property built on them, example Small plot in Glen Vine £160k and the cost to build the house £118k

[manx viking]

I remember how crazy the property prices were when I moved to the island in 2006, and how estate agents making profits on inflated prices p'd me off.

Thinking like that, IMO it would now be a good time to sell up here and buy in the UK - where property values are more realistic (i.e.Hull) and are not as speculative as here in the Isle of Man.

 

Let's stop and think about this for one moment - Investors with spare money are pouring it into the IOM property market and yes it is the land values at the moment which is holding the sway. As a person once said 'invest in land as they are not making it any more'.

 

Oh, and no matter what, there is still the matter of paying for the estate agents fees where ever you go.

 

Bye bye, I'm off to where the sun (££££) shines brightly.

[Freggyragh]

We should have a 15 year moratorium on residential building, now that the infrastructure funding has dried up. This would also force developers to focus on regeneration rather than replicating UK style suburbs on greenfield sites, and ban the use of UK town planners and consultants who have in any way been involved in the desolation of North West England.

 

We should also be demanding a modern digital land registry, available for all to research at the click of a button, with information on who exactly owns what, where the public rights of way are, what options are held in connection with the land, what has been zoned for development, what planning permission has been granted, and what the DoT has planned.

 

Why shouldn't all information on land and property ownership (and other information necessary for conveyance searches) be available at the click of a button? I'd hate to think that it was because certain people need to obscure their leasing arrangements, or that it would explain the motivation for some of the stranger planning decisions, or why certain government departments are paying top-dollar rents in the middle of Douglas. We'd also be able to clear up the suspicion that certain well placed ladies and gentlemen are profiting hand over fist from the suburbanization of the island. (I realise that, with a digital registry, lawyers would struggle to justify their extortionate conveyance, and dispute, fees, but think of the potential for litigation. )

[pongo]

replicating UK style suburbs

 

Why do you describe that as a 'UK' style ? You see exactly equivalent styles all over Ireland and more or less everywhere else in Europe. The US, Russia, Australia and China definitely have their own versions of that too.

 

People want affordable warm properties built from modern materials. Much of the rather kitsch Victorian property which exists here was not particularly well built originally and is expensive to maintain these days. Are you proposing that it should be dropped.

 

We cannot all afford to live in architect designed one-offs or beautiful barn conversions. So what sort of property do you propose for us plebs ? What is your vision ?

[Freggyragh]

replicating UK style suburbs

 

Why do you describe that as a 'UK' style ? You see exactly equivalent styles all over Ireland and more or less everywhere else in Europe. The US, Russia, Australia and China definitely have their own versions of that too.

 

People want affordable warm properties built from modern materials. Much of the rather kitsch Victorian property which exists here was not particularly well built originally and is expensive to maintain these days. Are you proposing that it should be dropped.

 

We cannot all afford to live in architect designed one-offs or beautiful barn conversions. So what sort of property do you propose for us plebs ? What is your vision ?

 

I said 'UK style' but, yes, I could have said 'Irish style'. I accept your other points about older properties versus modern properties too. And, I'm not being elitist either. My point is, a barn conversion will not, for example, increase water run-off, or demand on the sewerage system, it just requires the owner to install a septic tank - a large modern estate, on the other hand, requires an upgrade of public infrastructure. If we want to put the brakes on capital expenditure we will have to put the brakes on the developers.

[manshimajin]

Forecasting the future of house prices is wonderful for the prophets amongst us.

 

What I would contribute is that you need to focus on selling price not asking price. You may also want to consider how long it is taking to sell property and the amount of new property still coming onto the market for sale. From talking to the estate agents in Castletown it is a buyer's market - even they are saying 10% off for offers is normal which probably means 15% in reality.

 

Quite a few of the more expensive properties (say £400k +) seem to be hanging around for a long time at present - I have seen some 'in the window' now for 18 months.

 

The other isue is where are buyers going to be coming from? There is only so much 'upgrading' that can happen in a domestic market of 32,000 families. Hopefully there will be some increase in UK economic refugees over the next 2-3 years fleeing the excessive tax regime there resulting from the UK government's Greek level borrowings and a (possibly) deteriorating social scene with continued high unemployment. The downsde to this market though is that these folk have to be able to sell their properties to escape! As our core incoming market seems to be northern England this may be easier said than done.

 

On the land front - I thoroughly agree with the comments about the need for sensible controls on outwards expansion of housing estates. Apart from the reasons put forward by others the more that 'urban sprawl' is allowed the more that new electricity cabling, sewers, telephones, road, shops, schools etc etc have to be provided - hopefully fully funded by developers but extra infrastructure has to be maintained in future. Better wherever possible to redevelop existing sites. I suspect rather than the 'UK model' it is more accurate to say the 'house on land model' versus 'the in-town apartment model' favoured in many European countries.

 

No doubt our land will continue to inflate in value but it is sobering to read today that the Bank of Ireland has just been in court in Ireland to enforce guarantees against developers over land acquisition loans - in one case land valued at €31,000,000 in 2006 is now valued at €600,000 and in the other land valued at its peak at €17,5000,000 is now valued at €4,500,000.

[VinnieK]

People want affordable warm properties built from modern materials. Much of the rather kitsch Victorian property which exists here was not particularly well built originally and is expensive to maintain these days. Are you proposing that it should be dropped.

 

We cannot all afford to live in architect designed one-offs or beautiful barn conversions. So what sort of property do you propose for us plebs ? What is your vision ?

 

To be honest, I probably would lose some of the Victorian property if it meant keeping greenfield sites and countryside. Some of the problems with poorly controlled expansion and development have already been mentioned, but I think it's worth saying that such sprawl also contributes to the creation of pockets of urban decay and further erodes what remains of a sense of community as people are dispersed across sprawling estates on the outskirts of town with no real communal centre or focus and less popular areas of housing are allowed to rot. I don't just think that the problem is aethetic either, but does have a certain, if difficult to quantify effect on society.

 

Also, it's not like the only options are new builds or Victoriana. There's plenty of suitable land occupied by Edwardian and 50's houses and particularly bungalows (and yes, it was only a matter of time before I brought them up! But still, they do take up a ridiculous amount of land for the accomodation offered) which could also be redeveloped, and developers could also move away from the current wasteful scheme of building an endless series of semis with disproportionately large gardens according to plan of stupid cul-de-sacs and lanes.

 

Of course, there's a massive problem in that most of these properties are still inhabited, putting a brake on redevelopment. That's why you should vote for me, I have no issues of conscience when it comes to forcing people out of their ugly, wasteful homes and accomodating them in transit camps whilst replacing their properties with something nicer. I wonder if using them as a cheap source of labour on the project would be going a bit far.

[Pragmatopian]

Updating my post from 2007 in light of subsequent events I'm now expecting either:

 

(1) a significant correction to house prices to bring the ratio with earnings back in line, or

(2) a long period of stagnation in the market until housing becomes more affordable for new entrants to the market

 

It seems at present we're looking at scenario (2), but I wouldn't bet against scenario (1) depending on how the Island's economy evolves over the next few years.

[manshimajin]

Updating my post from 2007 in light of subsequent events I'm now expecting either:

 

(1) a significant correction to house prices to bring the ratio with earnings back in line, or

(2) a long period of stagnation in the market until housing becomes more affordable for new entrants to the market

 

It seems at present we're looking at scenario (2), but I wouldn't bet against scenario (1) depending on how the Island's economy evolves over the next few years.

It is interesting to read that 2007 thread with the benefit of hindsight. Certainly the concerns you expressed came to pass in the UK and Ireland despite the doubters' optimism. It was about that time that Bertie Ahern recommended suicide for those who forecast Ireland was heading for an economic downturn.

 

The market here does seem to have performed differently (to my surprise) but I am not convinced that we are out of the woods yet. We may be saved by an influx of comeovers in their 60s but that assumes they are cash rich from the sale of their UK properties. Your Option (2) does appear to be the most likely scenario IMO. In the next period of time we can look forward to:

 

• increasing interest rates
  
• continuing limited availability of loan funds as banks seek both to strengthen their capital base and to divert profits to bonuses to retain 'irreplaceable' staff
  
• somewhat higher personal taxes - immediately - and probably further hikes over the next few years
  
• downward adjustment of mortgage relief
  
• increased job losses in the public sector - our main employer
  
• job losses in the finance sector over the next few years
  

[Tweek]

Updating my post from 2007 in light of subsequent events I'm now expecting either:

 

(1) a significant correction to house prices to bring the ratio with earnings back in line, or

(2) a long period of stagnation in the market until housing becomes more affordable for new entrants to the market

 

It seems at present we're looking at scenario (2), but I wouldn't bet against scenario (1) depending on how the Island's economy evolves over the next few years.

It is interesting to read that 2007 thread with the benefit of hindsight. Certainly the concerns you expressed came to pass in the UK and Ireland despite the doubters' optimism. It was about that time that Bertie Ahern recommended suicide for those who forecast Ireland was heading for an economic downturn.

Eeeeeeeeeeeeeeeeeeeek! That Albert Tatlock was pretty much spot on in 2007.

 

Got this weeks lottery numbers please albert?

[Albert Tatlock]

Got this weeks lottery numbers please albert?

No problem, here you go...

 

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...don't tell everyone