As you may know I tried to catch a falling knife last year in that I bought a house for about 20 - 25% off its peak value, but an equivalent house in my estate is now down another 10% from that peak (raw figures of approx 390K, to 300K to 260K).
Out of curiosity I did a search in my general area to see how much prices were coming down. Amazingly one particular estate - Mount Oval in Rochestown - is seeing a savage collapse. Houses that routinely sold for 360K and more as low as 220K with 1-beds down below 200K.
One caught my eye because of the following, desperate, sales pitch:
"Last price reduction, this is a bargain not to be missed.The price is set for a quick sale and at this price, the gross cost before tax relief of a 92% mortgaqe of €207,000 over 35 years would be approximately €1,095.40 at a rate of 5.5% APR, allowing for tax relief for a couple, which is €232, the net cost before life assurance would be €863.40, which is about what you would pay to rent, the only difference is at the end of the day you would own the property."
Oh dear! A 35 year mortgage on a one-bed apartment is the same as renting it! That's a good thing!?!
In America, according to David McWilliams and some NY Times article I can't find right now, the long-term price of a house is equal to 14 times the annual rent the place can generate. If that was replicated for this example the apartment is, in fact, worth €145,000.
Or, to put it another way, bargain my hole.