# House price inflation continues to slow....



## liquid (26 May 2005)

http://www.irishlifepermanent.ie/ipm/media/pressreleases/permtsb/ptsb2005/2005-05-25/


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## ClubMan (26 May 2005)

Please note the .


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## liquid (26 May 2005)

Hi Clubman,

The link was not intended to be inflammatory,  just an article of interest (from the ESRI) to readers of the group. Its sometimes useful when members point out interesting articles relevant to the subject.

Apologies,

liquid


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## zardebt (26 May 2005)

liquid said:
			
		

> http://www.irishlifepermanent.ie/ipm/media/pressreleases/permtsb/ptsb2005/2005-05-25/




and we haven't even had an interest rate hike jet ....

hmmmm.....


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## Gabriel (26 May 2005)

liquid said:
			
		

> http://www.irishlifepermanent.ie/ipm/media/pressreleases/permtsb/ptsb2005/2005-05-25/



Isn't this already covered here...?


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## CoffeeBrew (26 May 2005)

Gabriel said:
			
		

> Isn't this already covered here...?


 
No Gabriel not really. My link over there was to some pre-release news whereas Liquid's link is to the report itself which is more important and has just been released.

It's interesting that Yahoo UK saw this news as important enough to warrant its own article and some people here don't even want it to appear in a thread !


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## walk2dewater (26 May 2005)

I genuinely feel sorry for young people piling up the debt to buy at current prices...

why oh why does this have to happen?


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## Gabriel (26 May 2005)

CoffeeBrew said:
			
		

> No Gabriel not really. My link over there was to some pre-release news whereas Liquid's link is to the report itself which is more important and has just been released.



I see, so you were discussing the report in that thread, but think it's okay to start a new one when it comes out?

I really think this whole section is getting out of control. 

We've got Global Property market threads...but people seem to feel the need to open up a new one on China!!


And now we get the same comments from the same people. Count up the number of threads which relate to property where the same posters post the exact same comments. 

I've no problem if people want to discuss property, but we don't need the same topic discussed over and over in multiple threads.


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## walk2dewater (26 May 2005)

Oh and meanwhile the Irish Time Property Propaganda section today...[broken link removed]

Edel Morgan believes that,
"One can only surmise what the average millionaire will be able to buy in Dublin in another nine years.

A pokey one-bed apartment in the outer suburbs? Or maybe a townhouse on a new development bought under the local authority's affordable housing scheme? Will the semi-d become the preserve of the multimillionaire while only the super rich will afford the luxury of living detached?"

yeah right Edel. How long will this madness go on?


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## ClubMan (26 May 2005)

liquid said:
			
		

> Hi Clubman,
> 
> The link was not intended to be inflammatory, just an article of interest (from the ESRI) to readers of the group. Its sometimes useful when members point out interesting articles relevant to the subject.
> 
> ...



No problem. I just wanted to point out the guideline but seeing that you are a newly registered contributor I did suspect that you might not be aware of it.


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## zardebt (26 May 2005)

Who ultimately is responsible for the inflated house prices ?

- Estate agents are doing what good estate agent do up -taking up the market..
"last few remaining" ... "don't miss out"

- Banks with the  sad adds  ...... oh the frustration of living at home ...
now you have to buy a house just in case you get lucky on a Friday night ...!!

- Ha the good old gov ...

Introducing section  51 21 ..... and now reducing stamp duty for FTB ........


-ECB ?

- Does the central bank of each country need some control over its lending rate


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## ClubMan (26 May 2005)

What about the buyers who ultimately pay the allegedly inflated price thereby deeming that they believe that the property purchased is worth that price to them? Supply and demand are the main factors that determine the price in any market, especially a liquid/efficient one.


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## CoffeeBrew (26 May 2005)

walk2dewater said:
			
		

> Oh and meanwhile the Irish Time Property Propaganda section today...[broken link removed]
> 
> Edel Morgan believes that,
> "One can only surmise what the average millionaire will be able to buy in Dublin in another nine years.
> ...


 
That's a hoot alright ? Is this guy an part-time estate agent or something - he certainly spins like one


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## CoffeeBrew (26 May 2005)

p.s how come my winkies, smilies etc always show up as links ?????

Perhaps this issue is important enough to start a new thread ;-)


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## larakennedy (8 Dec 2005)

Hi, re Edel Morgan's article. If you've read her weekly column you'll know it's often tongue in cheek and critical of the property market. I doubt she was applauding the fact that even small houses are going to cost a million houses - or already do in some parts - it's more likely she was pointing out how ridiculously high prices have risen.


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## CoffeeBrew (9 Dec 2005)

Oh, he is a she ? oops. (That was 6 months ago, looks like you've been brushing off the dust on some of the older threads  )

I'm sure you've seen estate agents making similiar claims about future house prices so it was natural enough to think here we have another journalist falling in line with that and unwilling or unable to challenge the assumptions in the claims.

Can you post any links/quotes from Edel where she tells it "like it is" with the property market without the ambiguity ?


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## larakennedy (16 Dec 2005)

This is just one I found when I googled but there's lots of examples


Telling it like it is - and isn't

 [broken link removed]   [broken link removed]    *CityLiving:* Do estate agents really have to stick to a code that hides the truth, wonders *Edel Morgan*.
There aren't many estate agents who will call a spade a spade - or an inhabitable dump an inhabitable dump. Deciphering estate-agent speak is all about cracking the code that glosses over the unpleasant, unpalatable truth.
Househunters who have waded through a ton of property brochures and ads will know the codeword "charming" roughly translated means "poky and dilapidated". For "keenly priced" read "owners desperate to get out" and for "awaits fresh thinking" substitute "only fit to demolish and rebuild".
Would great property empires collapse if estate agents were to dispense with "the code" and say it like it is? One estate agent who did, managed to maintain a business for decades until his death in 1971


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## derryman (17 Feb 2006)

does anyone ever get the feeling that the whole SSIA scheme was an elaborate ploy by Fianna Fail to increase the financial base of lending institutions within Ireland so that they could lend out ever increasing amounts to borrowers and thus keep the whole house equity / building party rolling in Ireland (each institution must maintain a minimum % of deposit reserves against it securitised loan book - think it is 5-10% of loan book in deposits)

The interesting bit is when the deposits are re-released and suddenly the institution loan books look vulnerable - 40% affordability - you must be kidding sir - now where's our legal team to go after those delinquent loans


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## gearoidmm (17 Feb 2006)

Loan books aren't vulnerable when the institutions are selling a significant proportion of the debt to foreign investors. Spreading the risk around like that has made them much less worried about who they lend money to, hence affordability of 40% disposable income - something which they would have run a mile from only a few years ago


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## ClubMan (17 Feb 2006)

derryman said:
			
		

> does anyone ever get the feeling that the whole SSIA scheme was an elaborate ploy by Fianna Fail to increase the financial base of lending institutions within Ireland so that they could lend out ever increasing amounts to borrowers and thus keep the whole house equity / building party rolling in Ireland (each institution must maintain a minimum % of deposit reserves against it securitised loan book - think it is 5-10% of loan book in deposits)


No.


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## derryman (17 Feb 2006)

Loan securitisation is the selling of loan assets to domestic / foreign investors - by way of cashflow (your mortgage replayments) against a book of pooled assets (over valued property - based on income multiples)

So how does that work out again for these investors when the asset (your house) value dumps / or slows (reverses) down against inflation and the cashflow dries up (because joe bloggs can't make his mortgage repayments) - just curious - do we just keep printing FIAT money like the US does?


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## Glenbhoy (17 Feb 2006)

> So how does that work out again for these investors when the asset (your house) value dumps / or slows (reverses) down against inflation and the cashflow dries up (because joe bloggs can't make his mortgage repayments) - just curious - do we just keep printing FIAT money like the US does?


 
That's all a bit irrelevant, securitisation is not a problem unless (like Leeds Utd) the cashflow required to meet obligations dries up and the assets fall below their booked value.  Essentially you're talking about a housing crash brought on by a shock to the domestic economy causing massive job losses.
As for the SSIA's themselves and the sense behind them, it's quite obvious to anyone what that was - I mean why not give handouts to everyone pre-election, it's not as though our schools, hospitals and general transport infrastructure are a disgrace


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## gearoidmm (17 Feb 2006)

> That's all a bit irrelevant, securitisation is not a problem unless (like Leeds Utd) the cashflow required to meet obligations dries up and the assets fall below their booked value. Essentially you're talking about a housing crash brought on by a shock to the domestic economy causing massive job losses.


 
Would I be right in saying that even if this does happen, because the banks have sold the debt, they will not be particularly exposed to the effect of the bad debts?  Do the banks even care anymore if people can repay loans? I'm not really sure if I understand all this properly.


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## Duplex (17 Feb 2006)

This page has some stories on banks pulling out of new developments in the US as the Housing market slows.  Freddie May and Freddie Mac are subject to federal investigation for accounting irregularities and many sub prime lenders are finding it difficult to find punters.

You have to wonder what might cause a credit crunch in the US, but defaults and resultant foreclosures would come pretty high on the list.


http://thehousingbubbleblog.com/


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## Loki (22 Feb 2006)

Do you really think in the year SSIAs house prices will not rise? I must say I think that it is extremely unlikely that there is not an upsurge.  ANy survey I have seen suggests that at least a 1/3 arte planing on buying houses with it. 

I still don't get peoples' obsesion with the US property market indicating the Irish market. Different banking ssytem and lack of control on Irelands part  put us in extremely different situation. Ireland also has the highest home ownership  in the world with a Italy a far second  and that has a decreasing population.


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## ClubMan (22 Feb 2006)

An _SSIA _funded to the max will yield c. €20K plus interest/growth less 23% maturity tax on the latter. Many commentators consider this amount of money to be negligible at an individual (or couple) level in terms of its impact on house prices. €20K isn't even the deposit on many houses these days.


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## Loki (22 Feb 2006)

ClubMan said:
			
		

> An _SSIA _funded to the max will yield c. €20K plus interest/growth less 23% maturity tax on the latter. Many commentators consider this amount of money to be negligible at an individual (or couple) level in terms of its impact on house prices. €20K isn't even the deposit on many houses these days.



So you are telling me a young couple with both people having SSIAs coming to €40k and parents giving their SSIA money to the kids isn't going to have an effect? An extra €20K along with the money people were saving anyway would have an impact as far as I can see. As infalation isn't an individual level I think a third of the ssia money going into one market will have a cumilative effect pushing prices up. To ignore as a commentator I think is a bad idea and lazy


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## ClubMan (22 Feb 2006)

Not necessarily *no *effect but most likely less of an effect than some people assume. Especially since some people will plan to spend some or all of their _SSIA _on discretionary luxury purchases or roll them over into a longer term investment. What specific survey says 1/3rd of the _SSIA _money will go into the housing market?


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## Loki (22 Feb 2006)

It was in some paper I can't remember which one but it was 1?3 on buying a house and about 10% on home improvements but cars and holidays were after buying which I was shocked at.  I think it will have a massive effect based on that and personal observation. Everyone I know who has an SSIA and no house plans to use it to buy. Many people underate the extra €255 an individual  will suddenly have, couples have more and I think that walone would effect house prices and upgrading let alone the lump some. 
As a married couple we will have an extra €500 euro to spend on or mortgage if we so wanted. That is a lot of house or investment in a 2nd house. I think to say it will have little effect is really a massive underrating.


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## ClubMan (22 Feb 2006)

Loki said:
			
		

> It was in some paper I can't remember which one


Hardly an authoritative source so?


> I think to say it will have little effect is really a massive underrating.


On what basis? Just anecdotal evidence and hunches?


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## gearoidmm (22 Feb 2006)

There is a suggestion that the effect of the SSIAs has already been priced into the market.  So many people expected that there would be a rise in house prices when the SSIAs came in that it may have been partially responsible for the rise seen at the end of last year.

In this market, fundamentals don't matter, it's all about expectations.  Most economists do agree, however, that the further impact of the SSIAs on house prices will be limited.


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## Loki (22 Feb 2006)

ClubMan said:
			
		

> Hardly an authoritative source so?


I am not claiming to be an expert but how do you know it is not going into property? If you need absolute facts then provide one where an expert says it won't have a n effect


			
				ClubMan said:
			
		

> On what basis? Just anecdotal evidence and hunches?


#
On what basis are the experts saying this or you? I saw a survey saying a third of the people with  ssia money will go into property. I have friends saying so. From my position  it seems to be pretty straight forward.

As has been said  there is the view that the SSIAs have already had an effect and many have said the 100% mortgages were directly created to deal with people avoiding a sudden rise in the years of SSIAs. 

Why don't you try and be critical of your own stuff before complaining about a different view to yours based on different information  to the stuff you seem to think is right.  It is all speculation


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## bearishbull (22 Feb 2006)

Loki said:
			
		

> I am not claiming to be an expert but how do you know it is not going into property? If you need absolute facts then provide one where an expert says it won't have a n effect
> #
> On what basis are the experts saying this or you? I saw a survey saying a third of the people with ssia money will go into property. I have friends saying so. From my position it seems to be pretty straight forward.
> 
> ...


 
the reports you are talking about were produced by companies who are going to benefit like banks stockbrokers Diy  chains etc so i wouldnt beleive them unless its an independent market research company,also just becuase your friends are going to do something is no reason to extrapolate to the rest of the population.
clubman is right ,many people ahev already bought things with their ssia money even though they havent physically got the cash yet.


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## Loki (22 Feb 2006)

bearishbull said:
			
		

> the reports you are talking about were produced by companies who are going to benefit like banks stockbrokers Diy chains etc so i wouldnt beleive them unless its an independent market research company,also just becuase your friends are going to do something is no reason to extrapolate to the rest of the population.
> clubman is right ,many people ahev already bought things with their ssia money even though they havent physically got the cash yet.



As I didn't name the source you don't know that.  I worked in market research and know a fair bit about it. I would have noticed a bias source and remebered it more but you wouldn't know that but you also couldn't assume any knowledge on what my info is based on. 
It is your opinion based on nothing  where I am a least just stating a logical reason why I think differnt you are just oppsoing. I  thought there would be more logic here that bias opinion but I guess I am wrong. 

I am in the property market as has my family for over 40 years. For over 15 years experts have got house prices wrong on a grand scale. They will eventually be right but it doesn't make them good at their job.


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## kane3000 (22 Feb 2006)

Hi Loki,

Did the report you are referring to say that SSIA money will be used for property in general or specifically for purchasing property?

Because most people I have talked to will put their SSIA money into property alright- but in the form of new kitchens, extensions, sun-rooms etc. etc.

I cannot see how having €40,000 will suddenly provoke lending institutions to approve people for large mortgages that they couldn't already get - ok €40,000 may be enough for a deposit but the real driver for mortgage approval is salary and that will not change.


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## bearishbull (22 Feb 2006)

Loki said:
			
		

> As I didn't name the source you don't know that. I worked in market research and know a fair bit about it. I would have noticed a bias source and remebered it more but you wouldn't know that but you also couldn't assume any knowledge on what my info is based on.
> It is your opinion based on nothing where I am a least just stating a logical reason why I think differnt you are just oppsoing. I thought there would be more logic here that bias opinion but I guess I am wrong.
> 
> I am in the property market as has my family for over 40 years. For over 15 years experts have got house prices wrong on a grand scale. They will eventually be right but it doesn't make them good at their job.


 
and by the same logic just because prices are high it doesnt mean that the prices are right.
we now know that you are a vested interest and dont want to consider the possibility that your property business will be affected,im sure you/your family have made significant capital gains and most good investors will tell you you must know when to take profits.


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## bearishbull (22 Feb 2006)

Loki said:
			
		

> As I didn't name the source you don't know that. I worked in market research and know a fair bit about it. I would have noticed a bias source and remebered it more but you wouldn't know that but you also couldn't assume any knowledge on what my info is based on.
> It is your opinion based on nothing where I am a least just stating a logical reason why I think differnt you are just oppsoing. I thought there would be more logic here that bias opinion but I guess I am wrong.
> 
> I am in the property market as has my family for over 40 years. For over 15 years experts have got house prices wrong on a grand scale. They will eventually be right but it doesn't make them good at their job.


i have read /heard commentary on all the ssia reports and not one was from an independent market research firm,maybe i missed the one your talking about but i doubt it,why dont you do a googgle search and find any independent research on the intentions of people upon receiving ssia's.


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## Loki (22 Feb 2006)

bearishbull said:
			
		

> and by the same logic just because prices are high it doesnt mean that the prices are right.
> we now know that you are a vested interest and dont want to consider the possibility that your property business will be affected,im sure you/your family have made significant capital gains and most good investors will tell you you must know when to take profits.



That is not logic. Logic tells you something is worth what people will pay for it. Basic economics starts with supply and demand all else is based on that.In other words prices are what people pay no right or wrong which seems to be the bit many people don't understand. 
Being in property is not all about speculation which seems to be what many people get wrong too. I bought property for income not speculation the rent is profit. If I was in any other business that gave me a profit not many people would suggest selling the whole business. I take my profits and have an asset that will proabbaly never really devalue in the long term. Not all property people are speculators which is what many people assume.

To claim you have gotten all SSIA data  is a little rich.  Assume I made it  and just explain how and what experts have done to work out the impact,  even if small, of SSIAs on the property.  Why people here are so aggresive about an opposing view and all superior about their knowledge without any show of it is beyond me. 

In general I would say there have been no signs of a reduction in demand but there is a lot of speculation about there being a crash. This speculation has been going on as long a the rises. 

*Kane *The survey I remember was specifically people saying buying property and home improvements were seperate.


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## bearishbull (22 Feb 2006)

Loki said:
			
		

> That is not logic. Logic tells you something is worth what people will pay for it. Basic economics starts with supply and demand all else is based on that.In other words prices are what people pay no right or wrong which seems to be the bit many people don't understand.
> Being in property is not all about speculation which seems to be what many people get wrong too. I bought property for income not speculation the rent is profit. If I was in any other business that gave me a profit not many people would suggest selling the whole business. I take my profits and have an asset that will proabbaly never really devalue in the long term. Not all property people are speculators which is what many people assume.
> 
> To claim you have gotten all SSIA data is a little rich. Assume I made it and just explain how and what experts have done to work out the impact, even if small, of SSIAs on the property. Why people here are so aggresive about an opposing view and all superior about their knowledge without any show of it is beyond me.
> ...


 
you say- "They will eventually be right but it doesn't make them good at their job" which suggests that their statments werent of any value or valid because house prices have continued to rise.i say by same logic just because house prices are rising to very high levels doesnt mean they are fundamentally good value but that will not be clear untill after any possible crash,in another words im saying house price increases like statements by doom merchants may not be valid in light of future events.

why would these informed people stake their reputations on predicting a crash if there wasnt significant validity to their analysis* AT THAT TIME ?*
no one can predict timing of a crash by its very nature,does this make prior statments invalid? one would be very naive to assume so.

yes its supply and demand but when the demand is driven by a herd mentality and speculaitve investors the price isnt right in fundamental economic terms,obviously to many people a house is more than an investment but there is a large part of the market that is invesment and speculation driven so economics matter here.plus if there was such a shortage of supply why arent rents rising in line with prices?? and no matter how much irish people love owning their own home salaries only increase by low amounts so prices have limited upside from here.


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## Duplex (22 Feb 2006)

> Do you really think in the year SSIAs house prices will not rise? I must say I think that it is extremely unlikely that there is not an upsurge. ANy survey I have seen suggests that at least a 1/3 arte planing on buying houses with it.
> 
> I still don't get peoples' obsesion with the US property market indicating the Irish market. Different banking ssytem and lack of control on Irelands part put us in extremely different situation. Ireland also has the highest home ownership in the world with a Italy a far second and that has a decreasing population


.


Loki 


*L*ast year America spent 57 percent more than it earned on world markets. That is, American imports were 57 percent greater than exports.

Last year the personal savings rate fell below zero for the first time since 1933. 
 


The American Treasury Department website is openly stating that as of January 24, 2006 American national debt stood at $8,185.3 billion and on January 26th at $8,190.5 billion."
 

U.S. consumers who once saved an average of 8% of their take-home pay ten years ago  now spend about 1% more than they earn. 

US manufacturing has lost lost 2.9 million jobs, almost 17% of the manufacturing work force in the last decade and productivity has fallen.

Consumer now account for two thirds of American economic output.

30 year Treasury Bonds are yielding less than two year bonds.
 
But these facts are, as you say, irrelevant as far as the Irish housing market is concerned and I agree that house prices will rise by 10% plus this year.  The reason for the likely steep rise in prices is not however the result of some mass rationalisation of the current global economic situation by home buyers in Ireland, the rise in prices is as result of a bubble; 

   "...if the reason that the (housing) price is high today is _only_ that the price will be high tomorrow - when "fundamental" factors do not seem to justify the price - then a bubble exists."  (Stiglitz, Joseph_ - Syposium on Bubbles_ 1990, 13)


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## Glenbhoy (22 Feb 2006)

*Question for Loki*

Loki,

since you are in the property trade and have some long term experience of it can you tell us, what you expect to happen over say the next 10yrs and why. As you've probably noticed the vast majority on here (certainly these housing threads) are just a little pessimistic about the future, so I would like to hear the perspective from inside the trade.

Cheers,
Glenbhoy


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## Neffa (22 Feb 2006)

*Re: Question for Loki*



			
				Glenbhoy said:
			
		

> Loki,
> 
> since you are in the property trade and have some long term experience of it can you tell us, what you expect to happen over say the next 10yrs and why. As you've probably noticed the vast majority on here (certainly these housing threads) are just a little pessimistic about the future, so I would like to here the perspective from inside the trade.
> 
> ...


 
Loki,

To echo Glenbhoy's question, I'd also like to hear why you think the growth in house prices can continue to outstrip people's salary increases.


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## Loki (23 Feb 2006)

*Re: Question for Loki*



			
				Glenbhoy said:
			
		

> Loki,
> 
> since you are in the property trade and have some long term experience of it can you tell us, what you expect to happen over say the next 10yrs and why. As you've probably noticed the vast majority on here (certainly these housing threads) are just a little pessimistic about the future, so I would like to hear the perspective from inside the trade.
> 
> ...



I think current housing stock will be changed especially close to the cities. 3 bed semis close to the city will be changed into two seperate places. The main driver behind that will be the changing demographic of Irish families  and/or lack of. More development within old housing estates, currently it is just corner gardens. The space between houses and where two garages meet will be built on for further housing. Big houses in areas will have appartment blocks built on them. Property prices will go up but people will be buying  smaller places. It has happened before just look at all the old big houses around the city and how many of them are single households? 
THe people living in these various differnt single dwelings will be single people,imigrants, divorcees and crash pads for people during the week. Traffic problems will get worse so being near public transport will be vital and housese far from transport will probably stagnate or drop in the outer areas. The children raised in cars will not want to speand the time commuting  like theri parents do now. Cars will be more expensive to run which also plays a factor. Owning a house too far away from work will mean you have to be paid very well restricting prices further or leave many people trapped. THe outter suburbs will have many social problems due to lack of emmenities for children that will have become teenagers. The outter suburbs will be seen as a bad place to be well maybe not all but a high percentage and more likely some very troublsome ones scttered through most of the housing range. 
I am actually pretty pessimistic about the social structure we are creating. My family bought a  fair bit of property in the 70s and 80s. We bought on the basis of rental income in years and potential for capital gain. We based this on convenience after future development which would probably happen under normal conditions. Never had probalem getting tenants and the areas rose. We looked at social trends of our tenants and historical use of properties. Houses last about 3 generations easily and over that time they are changed to social  standards. Not many people need servant quarters now and in the future not as many people will need or want a 3 bed semi. Developers will generate their work by changing these houses. 
Don't forget it is *all *speculation.


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