# House Market Weakening?



## whathome

Has anyone noticed marked increased supply and a slower market in recent weeks?  

We have been very active in looking for our next house since February. We are sale-agreed on our current house, we had been getting worried about rising prices and lack of supply during our search for somewhere to move to.  In the last four weeks however, things seem to have turned slightly, certainly in the areas we're focused on in north east Dublin.   Could it be concern about the interest rate rise next week?

In the past few weeks, we've noticed:
- Properties staying on the market longer
- Some price reductions
- Fewer people at viewings
- Less aggressive bidding wars
- Properties coming back on the market having been sale-agreed
- Far more houses for sale in general
- Increased withdrawals at auction
- Higher proportion of ex-rental investment houses on the market

Has anyone else noticed this recent trend?  We are getting quite concerned about committing to a larger mortgage should this be early indication that the market has turned.


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## fatmanknows

Heard from a senior Director of the top two estate agents this week that the numbers of people attending views and auctions is down considerably since March. Conceeded that they were absolutely baffled at  prices that some foolish people were prepared to chase very average properties to.


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## daveirl

House next to me has been on Sale for about 6 months now, Frankfield in Cork. Now I think it's overvalued but I'm still surprised it's not gone yet.


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## sonar

We went sale agreed on a south Dublin house several weeks ago but for various reasons haven't signed yet.

This can't happen very often but the house a couple of doors away came on the market (different EA) during this time and it is identical in almost every respect. 

There's very little interest in it and the best bid to date on this one is nearly E45,000 below what we went sale agreed on !

Handbrake ON !!


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## gearoidmm

Have noticed an abundance of for sale signs around Dublin.  Although admittedly there are a lot of sale agreed signs also.

A whole lot of signage I suppose


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## Murt10

sonar said:
			
		

> We went sale agreed on a south Dublin house several weeks ago but for various reasons haven't signed yet.
> 
> This can't happen very often but the house a couple of doors away came on the market (different EA) during this time and it is identical in almost every respect.
> 
> There's very little interest in it and the best bid to date on this one is nearly E45,000 below what we went sale agreed on !
> 
> Handbrake ON !!





Gazunder them -  not very nice I know, but most sellers wouldn't mind doing it to you, and in your case you are not talking about a small amount of money.You have agreed to pay way over the odds for your new house, and are now coming to your senses, before it's too late. 

If you don't gazunder them, imagine the picture in 6 months time when you meet the new neighbours and they ask you what you paid for yours before they insisting on telling you what they paid for theirs. (probably already knew what you paid).

How long is it going to take you to earn take home pay of E45k (plus the stamp duty on that amount) and worse, you are going to have to pay interest on that money for the next 30 years or whatever lenght your mortgage lasts.


Murt


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## colc1

whathome said:
			
		

> Has anyone noticed marked increased supply and a slower market in recent weeks?
> 
> We have been very active in looking for our next house since February. We are sale-agreed on our current house, we had been getting worried about rising prices and lack of supply during our search for somewhere to move to. In the last four weeks however, things seem to have turned slightly, certainly in the areas we're focused on in north east Dublin. Could it be concern about the interest rate rise next week?
> 
> In the past few weeks, we've noticed:
> - Properties staying on the market longer
> - Some price reductions
> - Fewer people at viewings
> - Less aggressive bidding wars
> - Properties coming back on the market having been sale-agreed
> - Far more houses for sale in general
> - Increased withdrawals at auction
> - Higher proportion of ex-rental investment houses on the market
> 
> Has anyone else noticed this recent trend? We are getting quite concerned about committing to a larger mortgage should this be early indication that the market has turned.


 
Thats economics for you they can only build so many houses before people get sick of accummulating houses (i.e. its more trouble than its worth/too risky) and supply exceeds demand, etc.


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## Neffa

Virtually all the property we've looked at has ended up being withdrawn from auction and sold afterwards or still for sale as private treaty. I still cannot reconcile this with the constant "prices are rising" stuff from the agencies e.g. ESRI/PTSB a few days back. 

Official estate agent explanation is that there is too much on the market at the same time this year which means auctions are less intense. Hmmmm. Could just be that fewer buyers can meet the price. 

The UK bubble started to pop in 89 when buyers simply couldn't meet the prices any more - even with IO loans, parental help, first year discounts etc. etc. Then interest rates rose and there was an 8 year slump.

Mind you, if the market starts to top out here in the middle of the SSIA windfalls, it could get very, very ugly indeed in late 2007 when the money stops.


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## ClubMan

Neffa said:
			
		

> The UK bubble started to pop in 89 when buyers simply couldn't meet the prices any more - even with IO loans, parental help, first year discounts etc. etc. Then interest rates rose and there was an 8 year slump.


And look what happened since then. Markets fluctuate. Big deal.


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## PMI

Is there any quick way to find out what your house is worth without asking an auctioneer to value it.


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## whizzbang

ClubMan said:
			
		

> And look what happened since then. Markets fluctuate. Big deal.


I'm waiting for the slump, then I'm going to buy two, and sell one at the next high 

J


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## Neffa

ClubMan said:
			
		

> And look what happened since then. Markets fluctuate. Big deal.


 
It was a pretty big deal if your house was re-possessed or if you were stuck (like many were) in a "starter" home which you could not move out of due to negative equity. And it was a pretty big deal for many people who lost jobs in recession which followed. 

Still, hey, "in the long run", it will all be ok.......


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## Duplex

Is this the top?

What happens in a speculative market driven by capital appreciation when a top arrives?  Well in the US of late, supply grew rapidly as speculators became aware that the market had turned .   In the Spanish Costa's a similar supply surge has accompanied the realisation that the market had stopped soaring.   Given the high participation rate by speculators in the Irish market.  I'd expect a high degree of volatility if a change in sentiment takes place, as a rush to the exit, becomes a stampede.


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## beattie

Is there any opinions about the market in Waterford? A relation of mine has a property (unlet of course!) and he is wondering whether this is the time to let it go. I can't see the point in him holding it as he will get at least 3% net off Northern Rock (before any impending interest rate rises) so I think on that alone he should sell. This property will always struggle to get tenants as there is an explosion of new units which have come/are coming on stream down there now. The rental market is very weak generally down there from what I can see.


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## Glenbhoy

RE: Waterford:


> The rental market is very weak generally down there from what I can see.


Surely not, I was watching househunters last night, where the lady was advising a couple who'd sold up in clondalkin and had bought down in Carlow somewhere, they were hell bent on getting the rest of their money into an investment property.  Anyway, they were taken to Waterford where the adviser was quoting 850per month for a student 3 bed semi, 700 per month to families (longer than term time), massive rental demand from students, professionals and best of all, capital appreciation of 10% or 15%.  So she pointed out to them that if they paid 200k, it'd be worth maybe 230K next year!!  
They were also taken to Carlow, where apparently 1 bedroom apartments are in massive demand, cost 170K, rent approx 600pm  (shortfall not a problem cos they were putting 100K surplus from dublin house into the house anyway).
Anyway, the program finished with the couple looking at a place in Rathdowney (excellent rental potential due to the local mart every second Tuesday).


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## kane3000

Beattie, I don't know much about Waterford in particular, but If the place is unlet and tenants are difficult to find I cannot see the point in holding on to an asset that is costing money and will 'probably' not appreciate all that much over the next few years. 
I would advise on cashing in - lock in the profits - and move the cash to another class (as you have suggested 2.76% Net at NR).

There is no point in trying to time the top of this market.

I have recently offloaded two properties in areas outside Dublin and have made a good profit. I know that if in two years I look back and think "I could have made another X,000 by holding on to them for that bit longer" I dont really mind - it is better than thinking "Jaysus, if I had just let them go earlier I would have been able to sell them easier and at a higher price."

It is free money whatever way you look at it - I did no work to accumulate lots of money apart from buy some property at the right time.
I often think what kind of economy is this where so many people can make so much *free* money from doing absolutely sweet F.A. 

I mean I have earned more from buying and selling property (that any eejit can do) than I did over the same period from my job - which I had to train for very many years to be able to do....it is a bit ridiculous.


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## snuffle

HI Beattie, I am a renter in Waterford, and from what I have been observing for the past few months there is a slowdown in both lettings and sales.We;ve decided to remain renting after doing the math (to buy the house we currently rent at 700 a month would have cost 1200 a month over 35 years to buy, and this was before the hike in interest rates). Rents, especially for houses as opposed to the new apartment schemes, have fallen dramatically in the past few years, we are now paying far less to rent the same house than we did 5 years ago. 

The abundance of brand new apartments in the city centre means many rental accomodation units are being left empty as tenants can pick and choose from so many. Rented houses in the private estate I live in have bene empty for up to 8 months now, even after the owners have renovated in the hopes of attracting new tenants.  Many of the new apartment schemes, even the more prestigious ones, have a good number of unoccupied units also.

 I also continue to keep an eye on the property market (in the vain hope that a house will come on the market that would make financial sense for us to buy!) and smaller townhouses that were on at say 200k are now creeping back down towards 170k. Houses that were last year attracting 275k are now back down to around 260k. My husband would be dealing with estate agents on a day to day basis, and there does seem to be a slowdown in the number of houses they are managing to go sale agreed on. 

I;m not sure if this is just a slow time in the market, a jump in the number of new builds coming on stream meaning people are not all rushing to bid on a small number of properties, or if it has reached a point where average wages in the area are just not enough anymore to get a large enough mortgage on to purchase a decent house. From personal experience, though, ourselves and many of our friends are observing the same trends - one example - friends of ours bought their first house recently, a small townhouse for 205k. 4 months after they moved in, a house in the same road (all houses on this road are identical) went for 215k and they were happy to know their own house was rising in value, or so it seemed. this month, houses on that road are on at 195k. Cue unhappy faces, understandably enough.

 I am no financial whizz, but have been observing what is going on via friends who are getting on the ladder, others like ourselves who continue to rent, and possibly the most interesting development of all - local papers have always carried ads for mortgage providers, first time buyer seminars, etc, but in the past 2 weeks alone the ads have gone from a quarter-page in size to half or full-page adverts with more sensationalised language used in the text, possibly indicating that banks and brokers are getting a little more antsy about getting the customers back in the door and applying for mortgages. 

If your relation is in a position to sell, and he is not attracting tenants who will help generate revenue for him, the property and rental markets - from my observations - seems to be at least on a plateau, if not on a slightly downward trend.


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## Guest107

March and April always see insane prices. It ALWAYS goes soggy in June relative to March. 

Is it down relative to last year though ????


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## whizzbang

Glenbhoy said:
			
		

> RE: Waterford:
> massive rental demand from students,



Why was ther demand from Students, in May? maybe this was an old show?


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## snuffle

Glenbhoy said:
			
		

> RE: Waterford:
> 
> massive rental demand from students



There have been a large number of apartment schemes built in recent times geared specifically towards student demands (on the cork road, in poleberry, and opposite ursuline court, for example), and coupled with the many new apartment schemes in general, there is now an abundance of accomodation for students, leading to a fall-off in demand for student houses, and even houseowners who have been offering digs-style accomodation for students are not getting the students in for the past 2 years. My SIL who has been offering digs for the past 10 years is not going to be doing so anymore once her current students finish up this summer, as there are not enough students looking for this type of accomodation anymore. She was lucky for the past 3, as the same students returned to her each year, but whereas in previous years she was inundated with requests for accomodation, often having to turn away up to 15 requests, she has not had any interest for the past 2, although she has been lucky that her current students decided to return to her. She;s not alone in this either, many of the homeowners who offer digs are experiencing similar difficulties. 

I wouldn;t BTL in Waterford with students specifically in mind, as they seem to be plumping for the new apartment schemes which are centrally located, and have numerous extras on offer (free broadband and cable being one example).


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## Duplex

Glenbhoy said:
			
		

> RE: Waterford:
> 
> Surely not, I was watching househunters last night, where the lady was advising a couple who'd sold up in clondalkin and had bought down in Carlow somewhere, they were hell bent on getting the rest of their money into an investment property. Anyway, they were taken to Waterford where the adviser was quoting 850per month for a student 3 bed semi, 700 per month to families (longer than term time), massive rental demand from students, professionals and best of all, capital appreciation of 10% or 15%. So she pointed out to them that if they paid 200k, it'd be worth maybe 230K next year!!
> They were also taken to Carlow, where apparently 1 bedroom apartments are in massive demand, cost 170K, rent approx 600pm (shortfall not a problem cos they were putting 100K surplus from dublin house into the house anyway).
> Anyway, the program finished with the couple looking at a place in Rathdowney (excellent rental potential due to the local mart every second Tuesday).


 
That bint on Househunters gets right on my tuppeny bits. The braying asinine delivery, the superficial analysis. Hint for any participant in this shoddy property porn, when that silly woman makes a sweeping statement about future house prices, get her to sign a warranty backed by a cash bond to be paid in the event that her ludicrous Tarot card style forecast doesn't come to pass.


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## Sherman

> I often think what kind of economy is this where so many people can make so much *free* money from doing absolutely sweet F.A.


 
Its called capitalism. Simply put, the market values your assets more highly than it values your labour.

Also, it is not free money. It is the reward or economic rent earned by your money (which is a factor of production, same as your labour) - money which you would have invested somewhere else had the returns not been so attractive.

You and your money were providing a service - providing rentable accommodation to those who couldn't afford to buy, or didn't want to, or wanted a short-term housing solution etc. So to say it is free money and that you did nothing for it is wrong.


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## Guest107

Duplex said:
			
		

> this shoddy property porn



Love that description  . I so do ... so I do !!!!!!


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## kane3000

Sherman, do you think that is the way most people in the country view their decision to buy a second property. A sound, geared economic investment, with returns of x% over a period of x years, due to the high risk being taken and service they are providing to the community - or do they simply take a punt ? - that's the view I took when I bought - I was young and didn't really understand much about investing (still don't).

The properties I bought were empty most of the time and I was paying the mortgage on both when they were empty.(Was a strain but I didnt care because they were increasing in capital value)....do you think I would have done this if, in my simplistic view, I was not going to get loads of apparantly free money at the end when I sold up ?
It was not the yield that I was in it for - it was the unreal capital growth.

I have a friend who is a female garda in a rural part of the country.
She bought five properties between 1994 and 1998. She has recently sold the last of them and is now worth well over a million Euros due to capital appreciation of said assets. 

She considers this to be *free* money - just like winning the lotto.....

EDIT - You are technically right Sherman, just to be clear.


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## Glenbhoy

> Why was ther demand from Students, in May? maybe this was an old show?


Yeah, very few of these programs tend to be live broadcasts.


> when that silly woman makes a sweeping statement about future house prices, get her to sign a warranty backed by a cash bond to be paid in the event that her ludicrous Tarot card style forecast doesn't come to pass.


I was thinking myself that there may be a potential legal comeback if her predictions don't come to pass.   I mean there's plenty of evidence of her assertions in front of the nation (or at least the saddo's who don't get out on wednesday).


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## ElGourdo

I am living in Galway. There is panic buying going on at the moment. First Time buyers are prepared to pay crazy prices for small properties up to 10 miles from the city centre.

All City Centre properties are going for Auction now and fetching mad prices.

My impression is that the shrewd investors are cashing in most of their chips as they forecast that a slump is coming.

At the moment it would be crazy to buy anything, the only winners are going to be the Banks and the Taxman.

When the SSIA mania is over watch prices tumble.


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## beattie

snuffle said:
			
		

> HI Beattie, I am a renter in Waterford, and from what I have been observing for the past few months there is a slowdown in both lettings and sales.We;ve decided to remain renting after doing the math (to buy the house we currently rent at 700 a month would have cost 1200 a month over 35 years to buy, and this was before the hike in interest rates). Rents, especially for houses as opposed to the new apartment schemes, have fallen dramatically in the past few years, we are now paying far less to rent the same house than we did 5 years ago.
> 
> The abundance of brand new apartments in the city centre means many rental accomodation units are being left empty as tenants can pick and choose from so many. Rented houses in the private estate I live in have bene empty for up to 8 months now, even after the owners have renovated in the hopes of attracting new tenants. Many of the new apartment schemes, even the more prestigious ones, have a good number of unoccupied units also.
> 
> I also continue to keep an eye on the property market (in the vain hope that a house will come on the market that would make financial sense for us to buy!) and smaller townhouses that were on at say 200k are now creeping back down towards 170k. Houses that were last year attracting 275k are now back down to around 260k. My husband would be dealing with estate agents on a day to day basis, and there does seem to be a slowdown in the number of houses they are managing to go sale agreed on.
> 
> I;m not sure if this is just a slow time in the market, a jump in the number of new builds coming on stream meaning people are not all rushing to bid on a small number of properties, or if it has reached a point where average wages in the area are just not enough anymore to get a large enough mortgage on to purchase a decent house. From personal experience, though, ourselves and many of our friends are observing the same trends - one example - friends of ours bought their first house recently, a small townhouse for 205k. 4 months after they moved in, a house in the same road (all houses on this road are identical) went for 215k and they were happy to know their own house was rising in value, or so it seemed. this month, houses on that road are on at 195k. Cue unhappy faces, understandably enough.
> 
> I am no financial whizz, but have been observing what is going on via friends who are getting on the ladder, others like ourselves who continue to rent, and possibly the most interesting development of all - local papers have always carried ads for mortgage providers, first time buyer seminars, etc, but in the past 2 weeks alone the ads have gone from a quarter-page in size to half or full-page adverts with more sensationalised language used in the text, possibly indicating that banks and brokers are getting a little more antsy about getting the customers back in the door and applying for mortgages.
> 
> If your relation is in a position to sell, and he is not attracting tenants who will help generate revenue for him, the property and rental markets - from my observations - seems to be at least on a plateau, if not on a slightly downward trend.


 
Thanks Snuffle, it is good to hear what it is like on the ground, I only get to see it every 6 weeks or so when I am down. I suspected that the student market was going to be murdered by the S50's springing up down there. I would only think there will be a further fall off in rental prices in the next 6-12 months. I have heard of apartments being offered for rent if the bills are paid but I didn't know what to make of those reports.


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## snuffle

agreed, Beattie! have seen apartments being offered with lots of extra incentives to tenants such as free broadband and cable, free parking spaces, integrated wireless entertainment systems, first 2 months rent-free, all bills inc. refuse collection paid for, and lots of high-spec furnishings like layzee-boys, plasma widescreens, etc etc. many landlords are having to go all out to attract tenants it seems, and some are trying to get out now while prices are still so high. Most of the houses for sale in the estate I live in are former rented houses whos owners are finding it impossible to service a mortgage with no tenants to subsidise it. Depressing for the BTL investors, but good news for renters like myself as rents continue to be quite low in general in comparison to previous years.


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## Remix

This Terenure (D6W) apartment complex is quite near me and it's very rare for them to come to market.
As a regular peruser of daft.ie, there are always vacancies in this complex so I always assumed there
are some investors holding on for capital appreciation if not for regular income.
Now in the space of a few weeks, 4 have come to market. I've never seen that before !!

[broken link removed]= 

[broken link removed]= 

[broken link removed]=

[broken link removed]=


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## redo

whathome said:
			
		

> Has anyone noticed marked increased supply and a slower market in recent weeks?
> 
> We have been very active in looking for our next house since February. We are sale-agreed on our current house, we had been getting worried about rising prices and lack of supply during our search for somewhere to move to.  In the last four weeks however, things seem to have turned slightly, certainly in the areas we're focused on in north east Dublin.   Could it be concern about the interest rate rise next week?
> 
> In the past few weeks, we've noticed:
> - Properties staying on the market longer
> - Some price reductions
> - Fewer people at viewings
> - Less aggressive bidding wars
> - Properties coming back on the market having been sale-agreed
> - Far more houses for sale in general
> - Increased withdrawals at auction
> - Higher proportion of ex-rental investment houses on the market
> 
> Has anyone else noticed this recent trend?  We are getting quite concerned about committing to a larger mortgage should this be early indication that the market has turned.


Myself and the Wife were house hunting around that time in the Killester/Clontarf area.  Serious bidding wars went on a got very dishartened.  Although, these areas were always expensive and it was peak selling season at the time, Jan-March.  We settled for Malahide instead, close to families and babysitters.

On the property market in general,  FTB, like me, who bought over 5 years ago, who have recently married and had children, now wish to move/settle in a more desirable location with good facilities and school places.  Such places as Lucan/Clonee which have seen massive increase in popluation with no match in infrastructure where the typical areas FTB of 5 years ago gravatated towards due to price.  Now these people (lets call them STB), who wish to trade up, are competing against each other in their native/preferred locations and pushing the price upwards (As seen on the northside in the first quater of the year with prices rising around 25%).  

If the FTB smell blood and detect that the property prices are plateauing or even falling slightly, they make take that once in a life time trip to Oz instead, adopt the wait and see approach or may even conclude, finally, that they have finally missed the boat.  This will place futher downward pressure on prices and have a cyclical effect where more FTB will wait even longer and wait "'till there boat comes in".  

Investors with vacant properties will be forced to sell if the anticipated capital appreciation does not materialise, further increasing supply, adding further downward pressure to properties in this sector.  It will be like throwing water on a chip pan (but in a macro economic sense ).  People will wonder why could they not see it happening


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## bearishbull

Remix said:
			
		

> This Terenure (D6W) apartment complex is quite near me and it's very rare for them to come to market.
> As a regular peruser of daft.ie, there are always vacancies in this complex so I always assumed there
> are some investors holding on for capital appreciation if not for regular income.
> Now in the space of a few weeks, 4 have come to market. I've never seen that before !!
> 
> [broken link removed]=
> 
> [broken link removed]=
> 
> [broken link removed]=
> 
> [broken link removed]


 
the savy investor gets out early!


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## bearishbull

dont see any signs of market slowing here in glasnevin,a 3 bed terraced house nearby just sold for 45%more than an identical one sold for 18months ago! owner told me she had 25 bids,house sold by private treaty for 15% more than asking price.


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## Guest109

i think the graph may be a fair bit out on my own experience bought in 90 for 40k sold this year for 172k,and im quite sure dublin prices have outstripped my gain if you could call it that


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## Guest107

Remix said:
			
		

> This Terenure (D6W) apartment complex is quite near me



That complex was built 10 years ago or more. The investors would be quite  experienced.


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## Remix

2Pack said:
			
		

> That complex was built 10 years ago or more. The investors would be quite experienced.


 
What kind of "investor" would be interested in them at the current price? You can see the rents they fetch on daft. 

With expenses, stamp, vacancy etc. you'd likely be looking at a 1% - 2% yield. 

It would be a timing the market gamble on future capital appeciation at the time when interest rates are heading up up up !


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## kane3000

One argument I always hear/read in the media against the possibility of a house price crash is the fact that we only built 80,000 houses this year and we need to build 85,000 next year. If there are so many houses on the market and for rent presently can someone explain the need for more builds to me?


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## redo

kane3000 said:
			
		

> One argument I always hear/read in the media against the possibility of a house price crash is the fact that we only built 80,000 houses this year and we need to build 85,000 next year. If there are so many houses on the market and for rent presently can someone explain the need for more builds to me?



To satisfy the demand of the investors (30% of new builds)


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## kane3000

Thats fine Redo, but that only explains 25,000 to 35,000 new builds.


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## bearishbull

kane3000 said:
			
		

> Thats fine Redo, but that only explains 25,000 to 35,000 new builds.


 actually its 40% invetment (dont know whether this figure takes account of people moving and keeping old house as investment) and its more than enough to keep prices rising.funnily there is a strong demand for properties from people to actually live in ! many of these people have entered the market earlier than they may have as they are afraid of being priced out if they wait untill they had earlier planned to,so many are buying at 26 instead of 30 for example. if investor purchases were half of what they are now prices i bet would not be rising and would be lower and rents may be a bit higher.i wonder how many properties are stitting empty in cities?


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## Neffa

I assume the supply/demand issue must be resolved pretty soon. If we are building 80,000 units p.a. and the net population growth is in the order of 100,000 p.a. then we are adding sufficient housing to cope with 150-160,000 people per year. Even if we were "under-housed", the explosion in building must be heading to an equilibrium point.


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## beattie

I think we are going to hit 90K this year under some figures I saw in the press a while back, can't remember when exactly. We seem to be building many of them in areas outside of Dublin where there is not the demand but still in Dublin there is still a huge amount of immigration from the new EU states which is the only thing from stopping the rental market going belly up like it is outside the Pale


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## Guest107

Neffa said:
			
		

> I assume the supply/demand issue must be resolved pretty soon. If we are building 80,000 units p.a. and the net population growth is in the order of 100,000 p.a. then we are adding sufficient housing to cope with 150-160,000 people per year. Even if we were "under-housed", the explosion in building must be heading to an equilibrium point.



But the population increase of 100,000 is largely made up of Polish Builders who came here to build houses . Once you stop building houses they will leave to go to recently booming Germany  and then you are losing a years worth of tenants as well as not building a years worth of houses.

Equilibrium That !!!!!


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## tyoung

*The market knows*

On the original question, the stockmarket will be the tell. The prices of the  banks, the builders and the building material companies with heavy exposure to the Irish market will have turned sharply down long before any weakness in the property market hits the news media.


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## Neffa

*Re: The market knows*



			
				tyoung said:
			
		

> On the original question, the stockmarket will be the tell. The prices of the banks, the builders and the building material companies with heavy exposure to the Irish market will have turned sharply down long before any weakness in the property market hits the news media.


 
Except they already have to some extent. The market is discounting the shares of the Irish finance sector relative to their UK/Continental counterparts precisely for this reason. Both of our largest banks have recently come out with upbeat trading assessments which the market promptly ignored, due to the property risk.


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## Neffa

whathome said:
			
		

> - Increased withdrawals at auction


 
I know it is not really scientific, but a glance at the auction results page in the Times today showed an overwhelming majority of properties being withdrawn - over 70% in South Co. Dublin. Very high indeed.


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## redo

Neffa said:
			
		

> I assume the supply/demand issue must be resolved pretty soon. If we are building 80,000 units p.a. and the net population growth is in the order of 100,000 p.a. then we are adding sufficient housing to cope with 150-160,000 people per year. Even if we were "under-housed", the explosion in building must be heading to an equilibrium point.



The trouble with people (not you Neffa, Bertie, EA etcl) saying that the fundamentals are good, there is plenty of demand out there to pevent a collapse, are ignoring that nearly half of the demand would stop over night if house prices started to fall.


----------



## Canonball

Neffa, re your supposition that there will be an over supply at current production rates (i.e. based on production of circa 80,000 units per annum) you may be right - but you have to remember that a large proportion of the units built in the past 3 or 4 years were actually holiday homes (a lot of which are unoccupied for the best part of the year). These should be stripped out of calculations when trying to figure out where we are re supply/demand position.


----------



## Neffa

Just back on this again. I note that only one house in South Co. Dublin sold at auction in this weeks Times results. The other 9 were withdrawn, one sold later leaving 8 unsold. 

It will be interesting to monitor this trend, especially given today's hike in rates.


----------



## sonar

There has been some pretty obvious "GET ME OUT!!" selling of Irish financial stocks with heavy property dependencies.

Although markets are down globally, we're often told that the Irish property market is different, special, safe etc

That particular mantra doesn't appear to be accepted by the markets.


----------



## walk2dewater

redo said:
			
		

> The trouble with people (not you Neffa, Bertie, EA etcl) saying that the fundamentals are good, there is plenty of demand out there to pevent a collapse, are ignoring that nearly half of the demand would stop over night if house prices started to fall.


 
Bang on.  I've always said take away the EXPECTATION of future price gains and 2 things will happen.  Buyers will dry up and sellers will question why they're subsidizing tenants


----------



## Neffa

Other factoid of note from yesterday's Times is that there are 104,000 vacant/unrented properties in the country at present  . Doesn't really point to a huge unmet demand, imho, even though we have 80,000 units coming on stream this year.


----------



## whizzbang

Neffa said:
			
		

> Other factoid of note from yesterday's Times is that there are 104,000 vacant/unrented properties in the country at present  . Doesn't really point to a huge unmet demand, imho, even though we have 80,000 units coming on stream this year.



Do you have a link to this? sounds ike a great fact to pull out during th erecurring "property can't fail" debates!


----------



## Neffa

In here:

[broken link removed]

Quote:

"There are currently 104,000 investment properties sitting vacant around the country, and these are not holiday homes . . . at the same time, we still have huge waiting lists of people who just want somewhere to live."


----------



## redo

The cyclical nature Irish property market, there are two things that are always nearly true;

Property is either unafforable, or when it is affordable, it's overpriced.


----------



## whizzbang

Neffa said:
			
		

> In here:
> 
> [broken link removed]
> 
> Quote:
> 
> "There are currently 104,000 investment properties sitting vacant around the country, and these are not holiday homes . . . at the same time, we still have huge waiting lists of people who just want somewhere to live."



quality! thanks!


----------



## ninsaga

Well I can tell you that as far as I can see the property market in Cork is still going strong.... we can expect the seasonal slow up for the summer.... which has traditionally not impacted house price growth to my recollection....

ninsaga


----------



## TallSpoon

*muppet* _n_ _slang_ *1* a buyer of property paying an amount equivalent to between 40 and 50 times its annual rental value. Usually found in Ireland. *2* a property owner asserting that "rent is dead money" when they already pay a monthly mortgage interest charge greater than the equivalent monthly rent on the property. *3* a  buyer of property in overseas markets who has never visited the country or researched local property law. *4* a group of puppets and costume characters created by Jim Henson and the company he created. *muppetry* _n_


----------



## sonar

Affordability will soon be hitting a wall. 

sbpost:


> A couple earning €76,000 a year which qualified for a mortgage of €430,000 last week would only qualify for a mortgage of €327,462 early next year, if rates continue to rise as expected.


 
Now the banks could keep things moving up by unleashing even more "creative" debt products but they probably realise this will be self-destructive as investors continue to dump their shares over sustainability and interest rate worries. 

Gosh, who could have seen this coming


----------



## whizzbang

sonar said:
			
		

> Now the banks could keep things moving up by unleashing even more "creative" debt products but they probably realise this will be self-destructive as investors continue to dump their shares over sustainability and interest rate worries.
> 
> Gosh, who could have seen this coming



Clearly the banks should buy more property! it can't lose!


----------



## Neffa

Another (possible) indication of a weakening market - the Indo reported on Friday that the vast majority of Dublin properties auctioned on Thursday were withdrawn and one house attracted no bids at all.


----------



## Solutions

Probably making too much out of the last week.... the weather may be significant as who likes to view property when the sun is out for one of its rare occasions?


----------



## whizzbang

Solutions said:
			
		

> Probably making too much out of the last week.... the weather may be significant as who likes to view property when the sun is out for one of its rare occasions?


I would have thought Estate Agents would have been pushing to get people to view! houses tend to look much better in the sun! Especially if they have a garden.

Or maybe they have forgotten how to push a property as opposed to just waiting for offers?


----------



## micheller

Interesting article in the SBP yesterday:
[broken link removed]

Also, another article regarding inflation and the risks to the economy. More fuel to the slowdown or nothing that will bash the irish confidence in property?


----------



## whizzbang

micheller said:
			
		

> Interesting article in the SBP yesterday:
> [broken link removed]
> 
> Also, another article regarding inflation and the risks to the economy. More fuel to the slowdown or nothing that will bash the irish confidence in property?



Very interesting article alright. This could definitly be the pin that bursts the bubble. I don't think FTB will be able to cover a shortfall of €100,000 with loans from parents and credit unions etc.


----------



## micheller

Yeah, 100K is a lot to make up. I just can't see it being pratical. 
I can't see how there's too many people in a position to gift/loan their kids 100K. Maybe when the deposits started rising with the house prices- helping out with 10-20K, but 100K?


----------



## bearishbull

yeah but people will still buy but just go for an apartment rather than a house and meath rather than dublin.


----------



## whizzbang

bearishbull said:
			
		

> yeah but people will still buy but just go for an apartment rather than a house and meath rather than dublin.


 so how will Dublin people upgrade if no-one will buy their house?


----------



## whizzbang

micheller said:
			
		

> Yeah, 100K is a lot to make up. I just can't see it being pratical.
> I can't see how there's too many people in a position to gift/loan their kids 100K. Maybe when the deposits started rising with the house prices- helping out with 10-20K, but 100K?


unless parents start releasing equity to fund it, yuk, what a horrid house of cards that would be. Things go belly up, everyone is out on the street.


----------



## Duplex

What we see unfolding in the Irish housing market mirrors what happened in the US market last summer.  Falling clearance rates at auctions are an early indicator that the supply of greater fools may be drying up. Given the levels of consumer debt and the probability that the cost of borrowing will rise through the remainder of the year a slowdown in the market is likely to be seen in the autumn. Rising inventories and builders offering incentives will be signs that the top has arrived.  I think that by this time next year the housing market will be on the turn.


----------



## beattie

Duplex said:
			
		

> What we see unfolding in the Irish housing market mirrors what happened in the US market last summer. Falling clearance rates at auctions are an early indicator that the supply of greater fools may be drying up. Given the levels of consumer debt and the probability that the cost of borrowing will rise through the remainder of the year a slowdown in the market is likely to be seen in the autumn. Rising inventories and builders offering incentives will be signs that the top has arrived. I think that by this time next year the housing market will be on the turn.


 
I still think the ECB will have to be at 3.5% before it turns, there is still too much hype for it to turn as the sentiment is still there that prices will continue rising IMO.


----------



## Guest107

Duplex said:
			
		

> Falling clearance rates at auctions are an early indicator that the supply of greater fools may be drying up.


and in Australia this time 2 years back. 

http://www.smh.com.au/articles/2004/06/16/1087244951826.html?from=moreStories



> Rising inventories and builders offering incentives will be signs that the top has arrived.  I think that by this time next year the housing market will be on the turn.



Correct, keep an evil eye on _allowances_. If a €300k flat has €10k of allowances today and €20k next month and €30k the following  month then you know they cannot shift them and must grease the pot to move them  .

An increase of allowances of 20k on a 300k flat is a nominal discount of 6.5% and a hard discount (allowances are crap value so why not just ask for the cash upfront instead  ) of 4% or so .


----------



## Neffa

beattie said:
			
		

> I still think the ECB will have to be at 3.5% before it turns, there is still too much hype for it to turn as the sentiment is still there that prices will continue rising IMO.


 
It looks like that is where the ECB rates will be next summer (certainly they will be at least at 3.25%), so I think I agree with Duplex's scenario. The other issue is that the SSIA money will have flushed through the economy by then so it won't be able to act as a support any longer.


----------



## miju

according to this http://www.boards.ie/vbulletin/showpost.php?p=51532092 

the ECB president said during a webchat that the ECB intended to normalise rates at 4.5% by end of next yearish

does that sound about right to anyone here?

btw: before anyone asks the guy who posted that is looking for the link to the transcript of the webchat


----------



## Remix

Also keep an eye on the continued thrashing of Irish financial shares.

Might be plenty of credit and willing borrowers to keep house prices moving upwards for a bit longer but watching how investors view these shares is instructive. Investors do not appear to be believing the hype regarding our "unstoppable" housing market.

This board does not permit discussion of individual shares, but the four big institutions with heavy property interests are
down:
-9%
-13%
-12%
-18%

from their march highs. These are quite severe corrections.

Interesting to note that the bank with the least severe fall has been a little more prudent with regards to property. It does not engage in 100% mortgages and has been selling property rather than buying.


----------



## MugsGame

Yes, it's also the bank that commonly asks for guarantors when other banks don't. Though their main competitor is selling property now too.


----------



## MugsGame

> the ECB president said during a webchat that the ECB intended to normalise rates at 4.5% by end of next yearish


 
Rubbish. He wouldn't say this, even if it was his intent.


----------



## miju

indeed thought it would be a bit strange for him to say something like that alright


----------



## bearishbull

these auctions are at top end of the market which are usually bought by richer more financially savvy people,i dont see any slowdown in the below 2million part of market but maybe they should follow the example of the richer more savy "investors"


----------



## darex

bearishbull said:
			
		

> these auctions are at top end of the market which are usually bought by richer more financially savvy people,i dont see any slowdown in the below 2million part of market but maybe they should follow the example of the richer more savy "investors"



Studies have shown that when property markets turn the top end of the market falls first.


----------



## Glenbhoy

> Studies have shown that when property markets turn the top end of the market falls first.


I know someone who bought at auction in the past month, the guide was 850K, withdrawn at 970K, the vendor said they were'nt prepared to let it go below 1.1m, after a an hour they sold for 985k.
With regards to the top end of the market going first, I remember a bank manager telling me 3 years ago that the top end was very sluggish and that prices were at best static.  I would have thought it would be the bottom of the market where the market would fall first, this the next level up to be starved of buyers and so on.....


----------



## bearishbull

a builder has built a few fancy high design new builds close to my home (look like boxes to me)funny thing is he is auctioning them off one by one ,i've never heard of small new build being auctioned off before ,if a builder doesnt know how much his houses will sell for then things are defo crazy. on saturday there were crowds of people queueing to view this shoebox with an AMV of 650k for 2bed with no front garden and small back garden ,the three propertie have been built in the back of a neighbours back garden which handily backs onto a road.


----------



## Guest127

hopefully someday sanity will return. We all know that Dublin prices have been in silly season for far too many years. Galway maybe too and lately Meath/Wicklow/Kildare. unfortunately its like a spreading disease and has now reached even darkest Dundalk. It's now reached the stage around here that if you see a house you like/want but would like a day or two to think it over- forget it. it will be gone. regardless of price. new estates starting in town with prices starting at €300,000+ for basic two bed apartments up to €400,000 for 4 beds and over €500,000 for five beds. small gardens, small bedrooms, timber frame etc. Sold out off plan as soon as the first sods are turned. M1 probably partially to blame. Dublin/Drogheda prices partially to blame. frenzy to get in early definitely a factor in crazy prices.


----------



## whizzbang

yikes, that looks like 4 mobile homes stacked together!


----------



## walk2dewater

cuchulainn said:
			
		

> regardless of price.


 
I rest my case.


----------



## darex

Glenbhoy said:
			
		

> I know someone who bought at auction in the past month, the guide was 850K, withdrawn at 970K, the vendor said they were'nt prepared to let it go below 1.1m, after a an hour they sold for 985k.
> With regards to the top end of the market going first, I remember a bank manager telling me 3 years ago that the top end was very sluggish and that prices were at best static.  I would have thought it would be the bottom of the market where the market would fall first, this the next level up to be starved of buyers and so on.....



A couple of things: 1) 985K is probably mid-market these days. However if what you have described is typical of the top end it would indicate to me that the market isn't turning yet.
2) Who is going to know first that the market is turning (and hence react first) - the wealthy builder buying his 10m residence in ballbridge or the FTB buying his 400K property from that builder.
3) 3-4 years ago the market probably was in the process of turning and then got some new boosts.
4) While the behavour of the top turning first may be the typical behavour at the end of a property boom - I couldn't say that that is what always happens. It may vary depending on the particular dynamics of a given market. (I don't have the study to hand). Prehaps if the whole country is in a state of denial then it will be the FTB who quits the market first purely from lack of finance.


----------



## yygaurav

if it can happen in US it will surely happen here. 

http://www.businessweek.com/ap/financialnews/D8I6RL4O0.htm?sub=apn_home_down&chan=db


----------



## redo

I must remind myself what the US property market was like again, I going to get out "Glengary Glenross" and watch it again.


----------



## beattie

yygaurav said:
			
		

> if it can happen in US it will surely happen here.
> 
> http://www.businessweek.com/ap/financialnews/D8I6RL4O0.htm?sub=apn_home_down&chan=db


 
Listening to the reporter from the SBP on Newstalk this morning it seemed that there was finally someone in the media who was able to offer a sanguine look at the property market. The point made by him that after the next 25bp rise (speculation of 31 Aug) a couple on 76,000 would only qualify for €100k less of a mortage than in the corresponding period last year was very pertinent.

I am sure that there will be some property bull who will be able to show us that everything is rosy in the garden pretty soon.......


----------



## beattie

redo said:
			
		

> I must remind myself what the US property market was like again, I going to get out "Glengary Glenross" and watch it again.


 
Yes that it a very good idea though I can't see anyone over here being as slick as Pacino. I would buy an apartment in Dublin from him


----------



## redo

beattie said:
			
		

> Yes that it a very good idea though I can't see anyone over here being as slick as Pacino. I would buy an apartment in Dublin from him


Even in up and comming Jobstown (Quote from I'm an adult, get me out of here)


----------



## Remix

To me rising house prices indicate nothing but easy credit. There's a wonderful interaction between estate agents and banks. Estate agents can continue to raise asking prices in the safe knowledge that banks are accelerating debt into the economy. On it goes year after year as Irish house price growth challenges world records as does the driving growth in debt.

On the other hand, look at shares of financial institutions on the ISEQ. They are undergoing a severe correction (a crash even by some
definitions). 

This dose of reality is an indication of what domestic and international investors think of the hollow game of accelerating-debt/accelerating-houseprices
in the face of rising interest rates.

If the Irish housing market were truly different in terms of growth potential, demographics, shortages etc. etc. you would see the Irish financial sector surge while others falter. Instead it's plunging - this is not consistent with the belief in a robust and unstoppable housing market.

(p.s The ISEQ weights each listed company and the 4 big financials comprise about 45% of the value of the ISEQ)


----------



## conor_mc

A vote of confidence in the Irish property market from Savills, or HOK directors cashing in their chips....

http://www.rte.ie/business/2006/0613/hok.html

I'm leaning towards the latter, especially in light of AIB's and BOI's recent sale-and-leasebacks. Be interested to hear some other points of view....


----------



## whizzbang

conor_mc said:
			
		

> I'm leaning towards the latter, especially in light of AIB's and BOI's recent sale-and-leasebacks. Be interested to hear some other points of view....


don't forget myhome.ie going on sale as well!


----------



## whizzbang

madisona said:
			
		

> Does anybody have any idea where this figure has come from?


The guy quoted in teh article got back to me, it is from John Fitzgerald, "The Irish Housing Stock : Growth in Number of Vacant Dwellings" in Quarterly Economic Commentary, ESRI, Dublin, Spring 2005.


you can download it


----------



## miju

so it's a very credibly source then ???? he didn't happen to mention how they actually compiled those figues by any chance?


----------



## whizzbang

miju said:
			
		

> so it's a very credibly source then ???? he didn't happen to mention how they actually compiled those figues by any chance?


yep, the report he took it from tells.

"The data used in this article include unpublished data from the 
1991, 1996 and the 2002 Census on the stock of dwellings, the 
Department of the Environment data on housing completions,  and 
ESB data on the number of household electricity connections."

you can read the whole thing in the report, its a free download.


----------



## gearoidmm

Those data are very out of date - it comes from 2002-2003 and there have been 200,000 homes built since then with approx 30-40% bought by investors.  How many of these are empty?


----------



## Guest107

shall we say 160k empty units, not counting holiday homes  or a full 2 years output  . Call it an educated  guess based on extrapolating the figures .


----------



## miju

if i'm not mistaken from reading the figures in that report , it only works out at approx 37,000 vacant homes (when holiday homes / temp vacted homes) are stripped out

still a serious overhang , but would be interesting to see if this figure for unoccupancy has risen or fallen (i'm guessing risen drastically)


----------



## Guest107

Its 170k empty (in 2002 ) - Holiday Homes and - Temps = 104 k properties empty not counting Holiday Homes and Temps.

I'll wager the same firgure today is 2 years worth of building lying idle and not used as holiday homes or temporarily empty. eg 170k not 104k . Thats a big overhang if  there is a panic in the market and the investors dump out.


----------



## miju

seems i mis read the figures , my bad , thanks for clearing that up 2pack


----------



## Remix

beattie said:
			
		

> Yes that it a very good idea though I can't see anyone over here being as slick as Pacino. I would buy an apartment in Dublin from him


 

There's a Pacino line that comes to mind from "Carlito's Way". Seems apt in view of what appears to be unfolding.
It's the point in the movie where he's trapped in the jax. He's about to make his escape and shouts: "Here come' the pain"


----------



## Guest107

Remix said:
			
		

> "Here come' the pain"


I see another rat lepped overboard and started   swimming for the shore today  , metaphorically speaking


----------



## Duplex

Everyone out of the pool!!!


----------



## micheller

Would anyone wager a bet as to when this will reach the masses?


----------



## ivuernis

Duplex said:
			
		

> Everyone out of the pool!!!


 
Duplex, have u been reading iTulip.com?


----------



## whizzbang

Duplex said:
			
		

> Everyone out of the pool!!!



don't be paddy last!


----------



## Glenbhoy

> Colliers Jackson Stopps MD commented
> 'The current partners have retained a 40% share in the business because we are very excited by the opportunity which exists to further grow this company,'


Wonder why they let the other 60% slip through their fingers?  I'm not much of a mathematician, but surely 100% of the company would generate more growth and profit than 40%??


----------



## whizzbang

Glenbhoy said:
			
		

> Wonder why they let the other 60% slip through their fingers?  I'm not much of a mathematician, but surely 100% of the company would generate more growth and profit than 40%??


owning over 51% of the share of a company means you run the whoe thing. No real point in buying the other 40%, it probably works better as incentive for the remaining staff who own the 40% to stay on.


----------



## Neffa

micheller said:
			
		

> Would anyone wager a bet as to when this will reach the masses?


 
Spring 2007.

Why? That's when ECB interest rates are expected to reach 3.25% and general mortgage rates will head towards 4.5%. I think that will start to trigger the switch in investor sentiment as they try to consolidate capital gains. 

Take an investor's IO mortgage for €350K

Look at the monthly repayments:

1. Dec 2005 - €962pcm
2. Jun 2006 - €1150pcm
3. Jan 2007 - €1300pcm (assumes ECB at 3.25%) 

So they are looking at a rise of almost 40% in repayments when rents are growing at 5% max, if at all. Many investors I know are already subsidising their tenants rent to cover monthly outgoings (ah sure it is only €150 a month - I hardly notice it) , but if this gap starts to ratchet up *and *if they see some lack of certainty in capital appreciation, they are very likely to decide to sell. 

This will mean less investor money propping up the bottom end of the market and in turn should lead to falls (or in EA/Developer speak - "Better incentives"  ) for FTBs looking at new builds.

Still, expect price rises in the interim. And watch for truly terrifying borrowing statistics up until that point to fuel the rises. We are - after all - the most indebtted nation in Europe on a per capita basis.

We'll see how it plays out.


----------



## walk2dewater

Neffa said:
			
		

> *and *if they see some lack of certainty in capital appreciation, they are very likely to decide to sell. .


 
Take away the expectation of capital appreciation and the Irish market will fall apart.  How many buyers will there be when everyone knows prices have stopped going up?  How many sellers?  Gruesome.


----------



## Dipole

I hope that it crashes before the election so that FF/PDs don't get re-elected. the reason being FF/PD will not acknowledge the problem was of their making and won't take the steps to fix it. 
If the opposition get in after crash they have a mandate, no vested interests and no bruised pride preventing them from taking steps to bring the economy back to sanity and put it on a sound footing.
Last thing we need is bigger stamp duty breaks or FTB grants to try to sustain a bubble that needs to burst


----------



## ivuernis

walk2dewater said:
			
		

> Take away the expectation of capital appreciation and the Irish market will fall apart. How many buyers will there be when everyone knows prices have stopped going up? How many sellers? Gruesome.


 
Totally agree. This is where it starts to get really interesting. Media commentary is becoming much more bearish. Increasing inflation and interest rates over the next 12 months can only continue to add to this sentiment. The psychology of greed will eventually give way to a psychology of fear. Those most exposed will be in for a rough time.


----------



## ivuernis

Dipole said:
			
		

> I hope that it crashes before the election so that FF/PDs don't get re-elected. the reason being FF/PD will not acknowledge the problem was of their making and won't take the steps to fix it.
> If the opposition get in after crash they have a mandate, no vested interests and no bruised pride preventing them from taking steps to bring the economy back to sanity and put it on a sound footing.
> Last thing we need is bigger stamp duty breaks or FTB grants to try to sustain a bubble that needs to burst


 
I don't think it will. Expect a favourable budget in this regards in an attempt to offset rising inflation and interest rates. The last thing FF want to is for this to blow before the next election. Cowen has cash to spend and spend it he will. More fuel for the fire!


----------



## Duplex

ivuernis said:
			
		

> Duplex, have u been reading iTulip.com?




Yes


----------



## Dipole

ivuernis said:
			
		

> I don't think it will. Expect a favourable budget in this regards in an attempt to offset rising inflation and interest rates. The last thing FF want to is for this to blow before the next election. Cowen has cash to spend and spend it he will. More fuel for the fire!


 
I know and I think Bertie will even bring the election forward specifically to avoid the downturn that everyone sees - ssia, giveaway budget, no stealth taxes and then let the punters enjoy the extra money that is in their pockets(briefly) before the hard times come in.


----------



## ivuernis

Duplex said:
			
		

> Yes


 
I thought so from your last comment becasue I had just read their latest article when I saw your post.  

For anyone else who maybe hasn't come across iTulip.com they predicted and then chronicled the dot-com bust and returned this March to tackle the current asset bubbles.


----------



## thewatcher

> I hope that it crashes before the election so that FF/PDs don't get re-elected. the reason being FF/PD will not acknowledge the problem was of their making and won't take the steps to fix it.
> If the opposition get in after crash they have a mandate, no vested interests and no bruised pride preventing them from taking steps to bring the economy back to sanity and put it on a sound footing.
> Last thing we need is bigger stamp duty breaks or FTB grants to try to sustain a bubble that needs to burst


 
What was it "a lot done,more to do" by the time these boys are finished the irish economy will be in ruins.To think i actually voted them in,i don't know who the bigger fools are.Me or them ?


----------



## darex

thewatcher said:
			
		

> What was it "a lot done,more to do" by the time these boys are finished the irish economy will be in ruins.To think i actually voted them in,i don't know who the bigger fools are.Me or them ?



Hate to say it but I think you are - they knew what they were doing (short termism, populism, helping their builder mates), You obviously didn't know what you were doing when you voted for them - Oh Well.


----------



## thewatcher

darex said:
			
		

> Hate to say it but I think you are - they knew what they were doing (short termism, populism, helping their builder mates), You obviously didn't know what you were doing when you voted for them - Oh Well.


 
Didn't have the internet back in dem days,it's amazing what u learn when you go outside the mainstream media in ireland.Won't be making the same mistake twice,probably too late now anyway.Batton down the hatches i say,stormy sea's ahead.


----------



## room305

thewatcher said:
			
		

> What was it "a lot done,more to do" by the time these boys are finished the irish economy will be in ruins.To think i actually voted them in,i don't know who the bigger fools are.Me or them ?



You definitely, democracy assures you of the government you deserve. However, the FF/PD policy of taking credit for everything good and blaming anyone else when things go bad (blamestorming) will continue. When a decline in the housing market tanks the economy, the ECB interest rate raises and a global slowdown (felt acutely by our open economy) will be blamed. What will be ignored is that these factors will only have exasperated a situation that was going to occur anyway. The rate of house price increases cannot outstrip the growth rate of wages forever without some form of correction.


----------



## Guest107

ivuernis said:
			
		

> Expect a favourable budget in this regards in an attempt to offset rising inflation and interest rates. The last thing FF want to is for this to blow before the next election. Cowen has cash to spend and spend it he will. More fuel for the fire!



I would expect a band increase to around €390k for the FTB in the budget and maybe some rounding up to € values form £ values in €

Thats all though .


----------



## Glenbhoy

> democracy assures you of the government you deserve


That it does not - it assures the majority (possibly, but not necessarily - see gerrymandering) of the government they deserve.


----------



## whizzbang

Interesting article on iTulip.com about how a housing bubble bursts, I'll be looking out for these signs.


----------



## darex

whizzbang said:
			
		

> Interesting article on iTulip.com about how a housing bubble bursts, I'll be looking out for these signs.



Talking of ituilip has anyone read the following article - very dramatic stuff - though probably without direct parallels to here:


----------



## sandymount

In the article it states that buyers and sellers disappear from the market. In Ireland we will have plenty of new stock coming on stream. FTB's could have it good in the future if they hold their nerve for another 12-18 months


----------



## bearishbull

all the vested interest economists from banks say price rises are underpinned by growing economy etc but wages(per capita) are growing by around inflation and theres massive uncertainty ahead here and in wider global economy,consumer sentiment surveys are showing large drops here in consumer confidence and this is despite ssia hype etc.


----------



## room305

Glenbhoy said:
			
		

> That it does not - it assures the majority (possibly, but not necessarily - see gerrymandering) of the government they deserve.



Apologies - I meant that in more of a collective sense ...


----------



## Leedee

As with any market there are up's and down's, however the trend is your friend, and in this case the trend is definitely upwards and IMHO is destined to remained that way for some time. Ireland has the demographics to support the current housing stock boom and when the rest of Europe's economy gets its act together this can only be of benefit. but to say that the end is neigh by listing some random outlier examples (and possibly seasonal factors i.e. summer) is irresponsible to readers of posts on this site, causing distress and in a lot of cases financial expense.


----------



## Amygdala

> demographics to support the current housing stock


 
It seems we here in Ireland have developed the first economic *Perpetual motion machine. *


----------



## whizzbang

Leedee said:
			
		

> Ireland has the demographics to support the current housing stock boom



Please supply demographic information that shows this. All graphs I've seen show there are way less 15 year old that 25 year olds, in 10 years who is going to buy all the starter homes?


----------



## beattie

Leedee said:
			
		

> in a lot of cases financial expense.


 
What do you mean by this? who is causing the financial expense on this site?


----------



## redo

Must have just bought/put deposit down on a 1 bed apt?


----------



## conor_mc

Leedee said:
			
		

> As with any market there are up's and down's, however the trend is your friend, and in this case the trend is definitely upwards and IMHO is destined to remained that way for some time. Ireland has the demographics to support the current housing stock boom and when the rest of Europe's economy gets its act together this can only be of benefit. but to say that the end is neigh by listing some random outlier examples (and possibly seasonal factors i.e. summer) is irresponsible to readers of posts on this site, causing distress and in a lot of cases financial expense.


 
In fairness, alot of posters in this thread are only posting the anecdotal evidence of what they have believed to be inevitable for some time.

Anybody who sells/buys a home on the basis of this thread, therefore suffering financial expense, needs their head examined. Even taking a look at two or three other threads in this forum would give a much greater insight into _why_ the regular bears here believe that the property market will eventually crash/bust/decline - their opinions and analysis have been well-voiced. See figures on current un-let rental stock of 104k units, widespread rental yields of < 2%, etc, which indicate investors holding out for capital gain. If the expectation of capital gain disappears (which is the difficult bit to anticipate), investors/speculators will flood the market with this held-back housing stock, that much is almost certain.


----------



## walk2dewater

Leedee said:
			
		

> As with any market there are up's and down's,


 
yeap, roll on the down part.


----------



## room305

conor_mc said:
			
		

> If the expectation of capital gain disappears (which is the difficult bit to anticipate), investors/speculators will flood the market with this held-back housing stock, that much is almost certain.


I wonder will anyone buy this flood of property when it does hit the market? I think this is where some buyers will get badly burned, convinced by REA's that this is a mere short-term correction before a resumption of capital appreciation rather than the beginning of a long and nasty downturn for property prices.

*@leedee *I think if anything, rather than causing financial hardship for people, this site will have saved people from the "gotta get on the ladder" mantra of the hordes.

Incidentally, the sales of the new apartments at Ringsend appear to be sluggish. The price and the small size of the apartments are being blamed but does anyone think this would have been an issue last year?


----------



## redo

Is suppose the real litmus test would be to find out how many developers are in the planning stages for a new apt schemes, considering the lead time it takes with planning, design etc.


----------



## conor_mc

Leedee said:
			
		

> Ireland has the demographics to support the current housing stock boom and when the rest of Europe's economy gets its act together this can only be of benefit.


 
Just another point, if the German economy gets into gear anytime in the next 3-5 years, where do you think the thousands of Eastern European immigrants would rather be - stuck on an island with an ever-rising cost of living or just hopping across the border into Germany for work?

Imho, it's nothing short of blind optimism to expect the current immigration trends to continue to prop up over-inflated property prices once the citizens of the accession states are granted the right to work in any EU country of their choosing.


----------



## Remix

conor_mc said:
			
		

> If the expectation of capital gain disappears (which is the difficult bit to anticipate), investors/speculators will flood the market with this held-back housing stock, that much is almost certain.


 

I'd be willing to bet that the leaders of our great lending institutions have also reasoned this one out. That's why despite all the talk on the
desirability of a soft landing they never actually act to bring it about. 

Rather than slowly close the flood gates of debt, they open it more year after year. Quite Possibly they've realised a soft landing is unlikely so the machinery is geared on full to try keeps things expanding.

I think the best hope for resolution to this madness comes from abroad.

1. The ECB brings rates back to normal levels
2. International investors dump bank shares (as in behave yourselves or we're out !)

Both solutions underway...


----------



## bearishbull

conor_mc said:
			
		

> Just another point, if the German economy gets into gear anytime in the next 3-5 years, where do you think the thousands of Eastern European immigrants would rather be - stuck on an island with an ever-rising cost of living or just hopping across the border into Germany for work?
> 
> Imho, it's nothing short of blind optimism to expect the current immigration trends to continue to prop up over-inflated property prices once the citizens of the accession states are granted the right to work in any EU country of their choosing.


 Plus When the euro economy gets going again interest rates will be more like uk/usa at 4.5-6% and mortage holders will be paying a lot more.


----------



## room305

conor_mc said:
			
		

> Imho, it's nothing short of blind optimism to expect the current immigration trends to continue to prop up over-inflated property prices once the citizens of the accession states are granted the right to work in any EU country of their choosing.



Too true. In fact, who knows, we may even start emigrating ourselves in a few years ...


----------



## whizzbang

redo said:
			
		

> Is suppose the real litmus test would be to find out how many developers are in the planning stages for a new apt schemes, considering the lead time it takes with planning, design etc.


My brother is an architect and he says it is well accepted in the property developers that some of them are going to get seriously stung. They seem content to keep building hopeing not to be caught out. So I'm not sure looking for a slowdown in developer plans will help predict anything.

That being said hasn't the rate of increase in house completions slowed down?
[edit]whoa...[/edit]
[broken link removed]

I think the figure for 2006 will be around 86,000 or something.


----------



## bearishbull

many people could sell up here and take the equity in their homes and live a very comfortable life in rest of europe and visit here a few times a year but people dont beleive anything negative lies ahead


----------



## Remix

whizzbang said:
			
		

> They seem content to keep building hopeing not to be caught out. So I'm not sure looking for a slowdown in developer plans will help predict anything.


 
That's true. Wasn't there a photographic exhibition once of the billions of dollars of unfinished apartment and office block shells after the crash of the asian tigers ? The construction dial was turned to '11' right to the bitter end.


----------



## darex

whizzbang said:
			
		

> My brother is an architect and he says it is well accepted in the property developers that some of them are going to get seriously stung. They seem content to keep building hopeing not to be caught out. So I'm not sure looking for a slowdown in developer plans will help predict anything.



I have often wondered about this. The only logic to this is that they beleive that they are no more able to time the market that anyone else and that it is more profitable to keep building like crazy until the bust and take the hit at that point.


----------



## Amygdala

How significant would the [broken link removed]with respect to [broken link removed] + second hand market, be as an indicator of demand and supply coming into equilibrum? ( I have not been able to find any figures for 2nd hand houses.)


----------



## whizzbang

Interestingly a discussion on property prices has broken out on the "After hours" forum [edit]on boards.ie[/edit]. Is this an early sign of bearishness coming into the general population? Rather than just us cranks on the property boards?


----------



## thewatcher

Leedee said:
			
		

> As with any market there are up's and down's, however the trend is your friend, and in this case the trend is definitely upwards and IMHO is destined to remained that way for some time. Ireland has the demographics to support the current housing stock boom and when the rest of Europe's economy gets its act together this can only be of benefit. but to say that the end is neigh by listing some random outlier examples (and possibly seasonal factors i.e. summer) is irresponsible to readers of posts on this site, causing distress and in a lot of cases financial expense.


 
Is that you brian ? .Don't be blaming the messenger now !

"We should not be blinded by the inordinately positive gloss that the residential housing market is putting on most of our economic statistics. 
Things are not quite as strong as first appearances might suggest. In the course of economic debate, *it is amazing how unwilling many people are to countenance any degree of caution or negativity about the Irish economy. *
*The comments from the Taoiseach in last weekend's media would appear to suggest that it is national sabotage to question any aspect of the economy in a critical way. *
*We do not live in a command economy or a command society, and it should be in all of our better long-term interests to have the issues put on the table and discussed in a critical way, rather than shooting the messenger, which is something that there is a tendency to do. *
Critical analysis should be encouraged, as should the 'vision thing'. Too many of our policies are now being set by focus groups rather than strategic thinking."
Jim Power is chief economist at Friends First 

http://www.unison.ie/irish_independent/stories.php3?ca=184&si=1633493&issue_id=14207


----------



## soma

whizzbang said:
			
		

> Interestingly a discussion on property prices has broken out on the "After hours" forum. Is this an early sign of bearishness coming into the general population? Rather than just us cranks on the property board?


*lol* I think whizzbang forgot which community he was posting on


----------



## whizzbang

soma said:
			
		

> *lol* I think whizzbang forgot which community he was posting on


bah! stung! 

still, the point stands!


----------



## Leedee

conor_mc said:
			
		

> Just another point, if the German economy gets into gear anytime in the next 3-5 years, where do you think the thousands of Eastern European immigrants would rather be - stuck on an island with an ever-rising cost of living or just hopping across the border into Germany for work?
> 
> Imho, it's nothing short of blind optimism to expect the current immigration trends to continue to prop up over-inflated property prices once the citizens of the accession states are granted the right to work in any EU country of their choosing.


 
And who exactly do you think is going to start buying all our exports when Europe picks up, its a two way street, they grow and so do we. Never seen so much negativity on a site, and I trust that all the contributors advocating a fall in prices have either sold or are in the process of selling their houses and putting the equity in a deposit account or are emigrating. And just maybe, the people who have moved to Ireland recently may actually like living here and decide to stay as it is not so easy to just "hop across the border" and put down roots all over again.


----------



## walk2dewater

Leedee said:
			
		

> I trust that all the contributors advocating a fall in prices have either sold or are in the process of selling their houses and putting the equity in a deposit account or are emigrating.


 
or maybe they're waiting to buy a home at a sane price.... roll on the great Irish property sale!!


----------



## Leedee

walk2dewater said:
			
		

> or maybe they're waiting to buy a home at a sane price.... roll on the great Irish property sale!!


 
Good luck, some people have been advocating that strategy since pre-1999!


----------



## whizzbang

Leedee said:
			
		

> Good luck, some people have been advocating that strategy since pre-1999!



its gonna come true sometime 

and I think with rates going up and personal debt at all time highs.. that'll be sometime soon.


----------



## walk2dewater

Leedee said:
			
		

> Good luck, some people have been advocating that strategy since pre-1999!


 
and it's 2006 now, the aul boom gettin a bit long in the tooth...


----------



## Leedee

whizzbang said:
			
		

> its gonna come true sometime
> 
> and I think with rates going up and personal debt at all time highs.. that'll be sometime soon.


 
good for you, and if that strategy doesn't work, drop me a line and I will put you in touch with some people who will be able to put you up!


----------



## Leedee

walk2dewater said:
			
		

> and it's 2006 now, the aul boom gettin a bit long in the tooth...


 
...and so is all this negativity.


----------



## whizzbang

Leedee said:
			
		

> good for you, and if that strategy doesn't work, drop me a line and I will put you in touch with some people who will be able to put you up!



thanks! free rent means I can save more for after the crash


----------



## whizzbang

Leedee said:
			
		

> ...and so is all this negativity.



There will always be positivity and negativity, its just depends on which one is getting the headline. At the monent it is still mostly positive, someday it will be mostly negative.


----------



## Leedee

whizzbang said:
			
		

> thanks! free rent means I can save more for after the crash


 
No bother, Sally Army will be delighted to see you!


----------



## whizzbang

Leedee said:
			
		

> No bother, Sally Army will be delighted to see you!



hehe, not buying a house doesn't mean you are going to be homeless! Unless you are expecting a big increase in unemployment which doesn't effect house prices?!


----------



## southsideboy

Re the possible cool off in the market and the lack of sales at auctions recently - I don't really think the market is cooling off at all. I think that definitely the time of the year has a major factor in the lack of sales. And with many auctions scheduled for the last week of June and the first week of July I wouldn't be surprised if that continues.

But another thing which I have definitely noticed is that agents are becoming very ambitious with the AMVs. If u look at the average 4 bed  terrace red brick in somewhere like Ranelagh AMVs are now running at around €1.6-1.9m while just a few months ago they were in and around €1.3-1.5m. It seems that a lot of agents and vendors don't mind withdrawls as houses seem to be selling fairly quickly after auction and sometimes in excess of the after auction asking price. For example my parents were recently looking at at house for investment that had an AMV of €850,000. It got no bids at auction but agents set an asking price of €950,000 after auction but when my parents offered €950k it wasn't accepted and ended up going north of €1m. So I don't really think auction withdrawls are the best indicator of a slowdown in the market. If we see a lot of houses sticking on the market over the summer then I would get worried but that doesn't seem to be happening. Also as usual a lot of vendors are not accepting bids well in excess of AMVs. such as a house in Rathmines that had an AMV of €2.4m, was withdrawn at €2.7m and is now quoting €3m. - Ironically AFAIK this property belongs to a well known tv personality in the property business.


----------



## tiger

southsideboy said:
			
		

> Re the possible cool off in the market and the lack of sales at auctions recently - I don't really think the market is cooling off at all. I think that definitely the time of the year has a major factor in the lack of sales. And with many auctions scheduled for the last week of June and the first week of July I wouldn't be surprised if that continues.



I would agree.  I think in a booming market, auctions are a way of maximising the selling price.  At the moment alot of "ordinary" houses are being sold by auction.  If/when things cool, they'll be sold by private treaty instead.

Interestingly development sites seem to be going for "best bids" these days. (e.g. the CRH site on east wall road)


----------



## sonar

Ah yes, the Irish housing market..

Our elites have found a way to become super rich by doing sweet f-_beep_ all but indebting the rest of us like never before in history.

As stated above and it's sad but true, we need foreign help to end this mess. 

Monsieur Trichet! .. plus haut! plus haut!


----------



## room305

sonar said:
			
		

> Our elites have found a way to become super rich by doing sweet f-_beep_ all but indebting the rest of us like never before in history.



To be fair people are indebting themselves. Nobody forced them to buy a house and most of the people leveraging themselves so heavily wouldn't have been homeless had they not bought.


----------



## southsideboy

room305 said:
			
		

> To be fair people are indebting themselves. Nobody forced them to buy a house and most of the people leveraging themselves so heavily wouldn't have been homeless had they not bought.


 
Yeah I agree. Nobody is being forced and a lot of people seem to be obsessed with buying investment properties despite not really being in a position to buy one. I can never understand what possesses people who are heavily mortgaged on their 3 bedroom semi feeling the need to go out and buy a 2 bed apartment which again would require a massive mortgage that would not be covered by rental returns.

Also you have to rememeber that a lot of ordinary men and women who bought before before the late 1990s have found themselves well-off as a result of the property boom. These aren't 'elites'. 

And I don't agree with the idea constantly being put forward by the left in this country that property prices need to fall. Tell that to somebody who has a 100% mortgage on their 3 bed semi in Lucan or wherever and would find themselves faced with negativity equity if house prices fell. Or tell that the people like my parents who have opted to invest in property rather than pension. The markets are driven by demand and supply and despite some propaganda in the media there still are loads of first time buyers entering the market everyday.


----------



## whizzbang

southsideboy said:
			
		

> And I don't agree with the idea constantly being put forward by the left in this country that property prices need to fall. Tell that to somebody who has a 100% mortgage on their 3 bed semi in Lucan or wherever and would find themselves faced with negativity equity if house prices fell. Or tell that the people like my parents who have opted to invest in property rather than pension. The markets are driven by demand and supply and despite some propaganda in the media there still are loads of first time buyers entering the market everyday.



These people are the very reason it needs to fall, so people stop putting themselves at such risk! If prices keep going up like this more and more people will overstretch themselves to a dangerous degree. 

In reality I don't think many people are saying they _need _to fall, I think most are just saying they are going to fall, no matter what anybody does. We are just not in a sustainable enviroment, and the sooner that changes the better it will be for the country. It would have been better if it happened years ago but the it didn't and the longer it goes on the worse the situation will get when a turn does come.


----------



## southsideboy

whizzbang said:
			
		

> These people are the very reason it needs to fall, so people stop putting themselves at such risk! If prices keep going up like this more and more people will overstretch themselves to a dangerous degree.
> 
> In reality I don't think many people are saying they _need _to fall, I think most are just saying they are going to fall, no matter what anybody does. We are just not in a sustainable enviroment, and the sooner that changes the better it will be for the country. It would have been better if it happened years ago but the it didn't and the longer it goes on the worse the situation will get when a turn does come.


 
I don't really buy the argument that house prices are going to fall, in the near future anyway. Obviously eventually the market will slowdown but the housing market is dependent on the overall economy. If unemployment stays low, immigration remains high and interests rates don't rise too much, the supply and demand situation shouldn't change much. Some people seem to view the Irish property market as if prices are being kept artificially high by property developers. But this isn't the case. As long as the overall economy booms and a similar supply/demand ratio remains in place so should house prices. And also in comparison to other countries our prices aren't astronomical. Prices in Dublin seem cheap compared to a lot of London of New York or other major cities. I think that it is easy to look at house prices as being extremely high because they rose so fast from such a low base. But in reality high house prices have just been a consequence of economic success.  Since the start of the property boom people have been predicting the bubble bursting but this has never materialised.


----------



## walk2dewater

southsideboy said:
			
		

> I don't really buy the argument that house prices are going to fall, in the near future anyway. Obviously eventually the market will slowdown but the housing market is dependent on the overall economy. If unemployment stays low, immigration remains high and interests rates don't rise too much, the supply and demand situation shouldn't change much. Some people seem to view the Irish property market as if prices are being kept artificially high by property developers. But this isn't the case. As long as the overall economy booms and a similar supply/demand ratio remains in place so should house prices. And also in comparison to other countries our prices aren't astronomical. Prices in Dublin seem cheap compared to a lot of London of New York or other major cities. I think that it is easy to look at house prices as being extremely high because they rose so fast from such a low base. But in reality high house prices have just been a consequence of economic success. Since the start of the property boom people have been predicting the bubble bursting but this has never materialised.


 
Demand to buy property in Ireland in 2006, that is buying with little or no money down, or leveraged against existing "equity", is driven by the expectation of future capital gains.  It's a psychological, sentiment driven demand.  Little or no downside risk is recognised; "money for old rope" "prices might fall, but by 20% at most" "favourable demographics" etc.  Price doesn't dictate the decision to buy.  Price is irrelevant.  All that matters is the ability to obtain the loan and meet the monthly payment.  It's a bubble market plain and simple.  Bubbles don't plateau or soft land.  They burst in a fear induced panic.


----------



## kirian

southsideboy said:
			
		

> And also in comparison to other countries our prices aren't astronomical. Prices in Dublin seem cheap compared to a lot of London of New York or other major cities.



Is this true? I'm not sure that the avarage price of housing is higher in either of those 2 cities compared to Dublin.


----------



## Duplex

Southside I’m a bear but a bear with no political ideology.  To compare Dublin with London and New York is frankly beyond preposterous.  Foreign investors are heavily involved in these markets, (many being Irish incidentally), conversely there is no foreign based investment market in Dublin, that tells me something.    Rental yields continue to fall in Dublin as the cost of borrowing starts to rise, Irish export growth is starting to slow as the growth in imports starts to pick up, incomes growth in the US is static, as the pace of incomes growth in Ireland (officially sanctioned by our government) continues to rise, the property bubble is starting to burst in the US as our bubble continues to expand.  Productivity in Asian countries is starting to increase as productivity in Ireland is falling.  Manufacturing employment in Ireland continues to fall and indebtedness soar, our major cities won’t be connected by a motorway network this decade, 80% of our exports are reliant on footloose multinationals.  
There is no evidence that the economic migrants currently living in Ireland intend to remain here, more EU countries are opening their borders to migrants from the accession states.

The situation where average Dublin house prices are higher than in a frantically bubbly London market is absurd beyond words.   The only reason I labour the point about the existence of a bubble now, at this late stage; is to prove to posterity that not every single Irish person was consumed by the mania.


----------



## kirian

I did a bit of googleing on average prices in Dublin, New York and London and found the following

Dublin average - EUR388,466 http://www.irishlifepermanent.ie/ipm/media/pressreleases/permtsb/ptsb2006/2006-05-30/

New York average - US[FONT=Arial, Helvetica, sans-serif]$296,000 ([/FONT]EUR234,047)
http://www.mc-mncppc.org/research/data_library/real_estate_development/housing/hc23.shtm

London average - UK£250,137 (EUR366,374)




So it seems Dublin is the most expensive of the lot.

But to get back to the main topic, is the house market weakening? I'm not sure. I think there is strong demand due to the Irish mentality of having to own your own place but we are nearing the limit of affordability and I don't see much room left for allowing the Irish borrower to borrow more than they all ready can. I will say that IMHO there has been an increasing tone of bearishness to the commentry in the media recently.


----------



## whizzbang

kirian said:
			
		

> I did a bit of googleing on average prices in Dublin, New York and London and found ...



And this doesn't even take  into account the higher salaries in these cities!


----------



## southsideboy

- OK I'm sure there are many different sources giving a wide variety of prices but this would put average price in London at around €440,000, making property more affordable in Dublin than London.

Duplex, I agree that of course IF unemployment rises and immigration falls then house prices will probably fall but I don't agree that this will happen any time soon. A declining manafacturing industry is not necessarily a bad thing. It can be the sign of a progressive economy and as long as jobs are being created in other sectors and the government encourages investment I wouldn't be worried.

Of course there is no guarantee that migrant workers are going to stay here but I don't think there are any strong arguments that they are not. I've failed to see any predictions based on strong arguments that would suggest that we won't continue to have high immigration. As long as the jobs are there and Ireland seems an attractive place to work, immigrants will keep coming. Ok, other countries may be opening up borders but a lot of these places have high levels of unemployment and therefore won't be that attractive.

Also the lack of foreign investment in the Irish property market was evident 10 years ago. But yet house prices have soared since then. In major cities like London or New York foreign investment will always be high, just because they are major cities.

Also as has already been said, there is an Irish obsession with owning property and this has inevitably driven prices up and up during the good times. The high level of debt is definitely worrying and a lot of this borrowing took place at interest rate levels that were far below what the natural rates would have been if we had control over our own rates. This is without a doubt one of the biggest threats to the housing market.

Duplex, you can say that you weren't consumed by the mania but when exactly is this bubble going to burst? Anybody can predict a crash in the housing market. Its bound to happen eventually. Thats how markets work. People said five years ago the bubble would burst and it never happened. Saying that there will be a crash is like predicting an earthquake in Califiornia. Yes its bound to happen but the question is when? All I'm saying is that I really don't buy the argument that the Irish housing market is going to defy basic economics by prices falling when demand remains higher than supply and the economy continues to boom.


----------



## Duplex

Southside, all I'll say is that trees don't grow to the sky.   


I can cite many examples of property manias that have ended in busts, I have yet to find an example where this hasn’t transpired.   I’m pretty philosophical about what I see as inevitable now, the damage is done, Warning someone about the cliffs edge as they tumble headlong is rather pointless, but it keeps me off the streets.

My I refer you to; The Irish Property Bubble Blog which comes highly recommended and has some links worth a butchers. 

http://irish-property-bubble.blogspot.com/


----------



## whizzbang

Duplex said:
			
		

> S
> My I refer you to; The Irish Property Bubble Blog which comes highly recommended and has some links worth a butchers.
> 
> http://irish-property-bubble.blogspot.com/



Congratulations on your new found fame!


----------



## Duplex

whizzbang said:
			
		

> Congratulations on your new found fame!


 
Thanks Whizzbang, I wont let it go to my head. 


P.S.
Anyone interested in securing my services for , public appearances, barmitzvers, after dinner speaking etc. please contact my agent.  I am currently working on my biography which I can confirm will be serialised in Ireland's Own.


----------



## bearishbull

Southside boy i think your wrong on london.Theres several factors that mean london prices are so high(i still think they are highly overvalued as do all on www.housepricecrash.co.uk).
These reasons include 
-average salaries in london are around 45keuro and many more have large amounts of assets as it is a global centre for wealth and such "super cities " always claim a premium. theres lots of super rich non english people buy in london as it has tax advantages and is one of the major world cities(for many industries like entertainment finance art engineering etc) like new york tokyo and paris and their high end purchases can distort market averages.
-infrastructure in london is excellent so a house miles out in suburbs can access london city very easily on tube etc,this pushes up house prices for all areas with such infrastructure.
even If you take the london average of 440k eur its around ten time average salary , here in dublin average prices are around 11/12 times average wage,its london that should cost a premium not us !!


----------



## Neffa

southsideboy said:
			
		

> I don't really buy the argument that house prices are going to fall, in the near future anyway. Obviously eventually the market will slowdown but the housing market is dependent on the overall economy. If unemployment stays low, immigration remains high and interests rates don't rise too much, the supply and demand situation shouldn't change much. Some people seem to view the Irish property market as if prices are being kept artificially high by property developers. But this isn't the case. As long as the overall economy booms and a similar supply/demand ratio remains in place so should house prices. And also in comparison to other countries our prices aren't astronomical. Prices in Dublin seem cheap compared to a lot of London of New York or other major cities. I think that it is easy to look at house prices as being extremely high because they rose so fast from such a low base. But in reality high house prices have just been a consequence of economic success. Since the start of the property boom people have been predicting the bubble bursting but this has never materialised.


 
Dublin isn't cheap compared to London - far from it. We had a long set of posts about this on another AAM thread which you can search. I moved to Dublin from London last year - Dublin is 30% higher on a like-for-like basis in the better areas. You can buy a 1300sq ft 4-bed period house with a reasonable garden near the tube the smart parts of West London (e.g. Fulham or Chiswick) for about 600K Stg (i.e. 875K Euro) in London - try doing that in Ranelagh or Dun Laoghaire!

In any case, why is London the reference point? Surely it should be Helsinki, Oslo, Stockholm or Copenhagen - mid-sized European capitals of small-ish countries. Dublin prices are very much higher than what you'd find there. And the Finnish economy is going gangbusters with local industry and no "specials" to get FDI rates up.


----------



## purplealien

Why is everybody saying the market is going to crash? It might just level off. Im sure if all first time buyers were to take a stand and not buy any property for the next six months, the market would have no alternative but to settle down


----------



## southsideboy

I don't really think a reference point is needed at all. Irish people have an obsession with home ownership that isn't evident in a lot of other European countries. In fact most of the international studies which have suggested that Ireland is in line for a crash seem to have an obsession with comparing us to other countries which I don't think is helpful. I merely had suggested that Dublin isn't as expensive as people make out in terms of affordability and i stand by that. Despite the constant reports in the media that FTB are priced out of the market, they still make up a very significant percentange of home purchasers. But London has a far better stock of period housing than Dublin and I'm not sure comparing like for like is useful in that regard anyway. I have yet to see any credible arguments in this thread which would suggest any good reasons for a crash given the state of the economy *at the moment*. Thats not to say that a crash won't occur but I think that in order to predict a crash, you would need to predict a serious downturn in the economy or some sort of major increase on the supply side or major decrease on the demand side. As long as interest rates don't rise too much I don't think that a crash is likely. In fact I think it is extremely unlikely.

As for first time buyers not buying property for the next six months - this seems like a ridiculous idea that practically could never work and once again I fail to understand why people would want to interfere with the market in this way. It is likely that prices will begin to level off anyway as interest rates rise. A lot of investors in particular will be put off at the idea of higher interest rates especially when they can't even cover their mortgages with rental income. But I still think this time next year and the year after etc. we will still be hearing predictions of the 'bubble bursting' without it ever materialising. I know people that didn't buy in around 2001/2002 because they believed the arguments that the bubble was going to burst and now they have ended up buying far inferior properties than what they could have afforded back then. Anyway I'm still buying now and not waiting around for a crash that IMO ain't gonna happen.


----------



## room305

southsideboy said:
			
		

> I have yet to see any credible arguments in this thread which would suggest any good reasons for a crash given the state of the economy *at the moment*.


Here's a few:

- Interest rates will continue to rise here, probably to bring us into line with the US (5.25% base rate at the end of this month)
- Any slowdown of US economy will have a huge effect on the world economy
- Possible banking collapse in China
- Bank of Japan raising overnight interest rates

You seem to base most of your argument on the soundness of the Irish economy. Yet our exports are decreasing and our imports are increasing and the economy is increasingly being driven by the unsustainable bubble that is the Irish housing market.


----------



## Guest107

More news.

Yesterdays sunday trib carried reports that the criteria for interest only mortgages....the ones where you never pay anything off for 35 years  ...... have been further relaxed in recent times.

So the financial sector , having used up all the repayment over 20 years customers and the repayment over 35 year customers, find that all thats left to lend to is the interest only for 35 years type of person.

They will have been used up....by october I'd say. Expect the interest only 40 year product to appear for christmas .


----------



## Neffa

..and the OECD warns again on Ireland if interest rates rise further, along with other Eurozone countries:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/06/19/cnhouse19.xml&menuId=242&sSheet=/money/2006/06/19/ixcitytop.html


----------



## Remix

Indo reporting this morning the the most recent census may have uncovered as many as 245,000 dwellings considered unoccupied...


----------



## Glenbhoy

southsideboy said:
			
		

> I have yet to see any credible arguments in this thread which would suggest any good reasons for a crash given the state of the economy *at the moment*.


104,000 empty investment properties.  Interest rates have increased by  37.5% in six months, that will be 62.5% in a year come December 2006.


----------



## Duplex

2Pack said:
			
		

> More news.
> 
> Yesterdays sunday trib carried reports that the criteria for interest only mortgages....the ones where you never pay anything off for 35 years  ...... have been further relaxed in recent times.
> 
> So the financial sector , having used up all the repayment over 20 years customers and the repayment over 35 year customers, find that all thats left to lend to is the interest only for 35 years type of person.
> 
> They will have been used up....by october I'd say. Expect the interest only 40 year product to appear for christmas .


 
I read yesterday that the Banks are now relaxing their criteria when it comes to lending to migrants.   Ireland is a couple of years behind the US in the lax lending policy stakes.  So if you want a crystal ball type view of what lies in store read about Mocking Bird Lane in Denver, Colorado.      


http://www.denverpost.com/news/ci_3950960


I can’t see the government doing anything about this trend towards increasingly lax lending, any action now would cause the market to stall and crash.   So it’s to be the ‘Tokyo Resolution’ an insane speculative bubble collapsing under its own weight, followed by much hand wringing and gnashing of teeth.


----------



## Duplex

Remix said:
			
		

> Indo reporting this morning the the most recent census may have uncovered as many as 245,000 dwellings considered unoccupied...


----------



## walk2dewater

I've suspected that the only outcome is the "going Japanese" scenario... a massive spike in prices... multi-million euro ex-council houses etc.  This is truly grim.  In 2006 the belief that we can get ever richer by building and trading houses to each other is now firmly embedded in the irish psyche.  Are we intent on a property supernova?  If so, so be it.  The upside for people like me (professionals on contract renting their home) is a few more years of ever higher contract salaries and negotiating lower rents before my forced departure.  

[Disclosure before Im labelled a begrudger etc:  I do own property, not in Ireland, and I could comfortably "afford" a jumbo irish mortgage.]


----------



## soma

Remix said:
			
		

> Indo reporting this morning the the most recent census may have uncovered as many as 245,000 dwellings considered unoccupied...


It's actually worse than that Remix, you subtracted the wrong number!

The article says 275,000 were actually identified as being vacant. Another 30,000 (so 305k in total) were just assumed to be vacant because when the census takers "called on various occasions" - no one was home. It's likely alot of those 30,000 were holiday homes, unfit for habitation or just people were actually on holidays for a month etc.

But that still leaves the 275,000 - that is *shocking*.


----------



## beattie

soma said:
			
		

> It's actually worse than that Remix, you subtracted the wrong number!
> 
> The article says 275,000 were actually identified as being vacant. Another 30,000 (so 305k in total) were just assumed to be vacant because when the census takers "called on various occasions" - no one was home. It's likely alot of those 30,000 were holiday homes, unfit for habitation or just people were actually on holidays for a month etc.
> 
> But that still leaves the 275,000 - that is *shocking*.


 
And yet we are going to churn out another 90k units this year, we better hope Turkey gain entry into the EU as we wouldn't want these investors not being able to rent them out.........


----------



## polaris

From the Denver Post article:

"Her variable interest rate started at 10.4 percent and could have surpassed 16 percent. "

Why are these rates so high in what I would have thought is an ultra-competitive home-loan market in the States?


----------



## soma

polaris said:
			
		

> From the Denver Post article:
> 
> "Her variable interest rate started at 10.4 percent and could have surpassed 16 percent. "
> 
> Why are these rates so high in what I would have thought is an ultra-competitive home-loan market in the States?


I havent read the article you're referring to, but I'm guessing this individual borrowed from a 'sub-prime' lender. They've been making head-way in Ireland too AFAIK.


----------



## Guest107

Our sub primes such as start or ge do not charge what some of the american ones charge  .

The worst _spread _here is about 6% over base , ie 8.75% when the base rate is 2.75% . Watch to see if that spread increases though ! Very very few mortgage holders in Ireland are paying more than 3% over base , even the dodgyish ones.

Yer wan in Denver was paying 16% in 2004 when the US base rate was about 2% (but rising) . That kind of spread is usury surely .


----------



## bearishbull

its pointless buying with such high rates when your on a low income/sub prime status,i actually saw a documentary where these sub prime lenders prey on vunerable financially illiterate poor people(particularly african american) to make massive margins and they know they can foreclose and seize the property if the borrower cant repay,then they take what they can get  at auction even if it isnt true market value once they get the amount owed on mortgage.


----------



## whizzbang

soma said:
			
		

> The article says 275,000 were actually identified as being vacant.


the article in question
http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1636317&issue_id=14226http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1636317&issue_id=14226


----------



## Guest107

whizzbang said:
			
		

> the article in question
> http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1636317&issue_id=14226


  whats that then ????? 15% or so .

In the UK its a smidge over 3% . The worst areas in England are not even 5%  although I Think Wales is over 5% . See the halifax survey here .

[broken link removed]

The definition of Long Term Empty is over 6 months and where council tax discount is claimed (which it isn't always) so the empties could be and probably are higher in some cases but not by that much , certainly not double. Percentage figures below linked to sources . 

*E**mpty Homes by region (April 2004 England and 2001 Scotland)*​ *
England  **689,675** = [broken link removed]* 
*
Scotland 60,000 = [broken link removed]

In ALL OF LONDON Only 36,000 homes are empty long term and only some [broken link removed]   or [broken link removed]  (March 2006 see fig 2 ) 

* This is an enormous overhang. When the last bust happened in England in the early 1990s the empty rate was around 5% , more in London. 

 *YOIKES!!!!!!*


----------



## whizzbang

2Pack said:
			
		

> This is an enormous overhang. When the last bust happened in England in the early 1990s the empty rate was around 7% IIRC
> 
> *YOIKES!!!!!!*



Let the propertyvalanche begin! (its a word...really it is. )


----------



## Duplex

The disturbing possibility exists that there isn’t a rental market for many of these empty homes.  It’s hard to believe that the owners of these properties would forego rental income if it were out there.  The vacancy rate has been falling in the UK over the past few years; I believe that the vacancy rate has risen in the US to about 9%, the highest in decades.  

The Irish figures for empty homes and the continuing boom in the face of rising interest rates, seems to heave the market doctrine of supply and demand out the window.  Further evidence that Ireland is experiencing something quite unique,  mania.


----------



## bearishbull

is it likely to be the case that people are making losses on unrented properties(using interest only mortgages )which they can offset against profits elsewhere? anyone know how many properties per thousand population we have now then? would love to see one of the newspapers/media outlets do an investigation into exact levels of unoccupancy etc but they seem reluctant to do bad news stories on property market which they make so much money from through advertising etc.


----------



## whizzbang

bearishbull said:
			
		

> anyone know how many properties per thousand population we have now then?



I looked into this a while back when the papers were telling us that there were 391 properties per 1000 people which is well below the European average of 425 or something like that. What the papers neglected to mention was that on average Irish houses were much bigger than the european counter parts and we had a much higher "Rooms per 1000 population" than the rest of Europe. I think we has 1890 rooms per thousand people and europe had on average 1400 per thousand. Something around that.

Unfortunatly I can't find the damn stats I used to look into this the last time! If anyone can find the site that gives the "houses per thousand" stats for Europe please let me know!


----------



## ivuernis

whizzbang said:
			
		

> I looked into this a while back when the papers were telling us that there were 391 properties per 1000 people which is well below the European average of 425 or something like that. What the papers neglected to mention was that on average Irish houses were much bigger than the european counter parts and we had a much higher "Rooms per 1000 population" than the rest of Europe. I think we has 1890 rooms per thousand people and europe had on average 1400 per thousand. Something around that.
> 
> Unfortunatly I can't find the damn stats I used to look into this the last time! If anyone can find the site that gives the "houses per thousand" stats for Europe please let me know!


 
If we're building circa 80,000 units per year then that's an increase of 20 units per 1000 people every year so surely we've caught up by now, or are in the process of doing so in the very near future.


----------



## Guest107

1.8m units (census forms given out) for 4m population is 450 units per 1000 . We are above the European Average. Even if our population were 4.1m it would correspond  to 439 units per 1000  persons or so.

We are well housed so we are and have more houses than the average european .


----------



## Chamar

I think the most likely reason for so many census forms not filled in was not empty houses but people (like me) who don't answer the door for these things.


----------



## SidTheDweeb

Chamar said:
			
		

> I think the most likely reason for so many census forms not filled in was not empty houses but people (like me) who don't answer the door for *these things*.


A laudable attitude. These things occur so often they're a real nuisance at this stage. 

One point though, are you suggesting that Ireland trumps other countries in breeding _substantially _more apathetic census-filler-in'ers?


----------



## Glenbhoy

> I think the most likely reason for so many census forms not filled in was not empty houses but people (like me) who don't answer the door for these things.


And then we complain about the lack of schools/poor infrastructure........


----------



## Chamar

SidTheDweeb said:
			
		

> A laudable attitude. These things occur so often they're a real nuisance at this stage.
> 
> One point though, are you suggesting that Ireland trumps other countries in breeding _substantially _more apathetic census-filler-in'ers?



No, not a nuisance, just the government wasting money as usual. As for your second point I don't have the international figures to hand for comparison, but as we do it every 5 years I'd say we are more apathetic yes.


----------



## sonar

Chamar said:
			
		

> I think the most likely reason for so many census forms not filled in was not empty houses but people (like me) who don't answer the door for these things.


 
Did'ya read the article ?



> Following inquiries among neighbours, postmen and women and apartment block management companies, the vast majority of those dwellings - some 275,000 - were identified as being vacant.
> 
> In a further 30,000 cases, there was nobody at home when census officials called on various occasions.


----------



## Pavlik

Chamar said:
			
		

> No, not a nuisance, just the government wasting money as usual.



Absolutely. If they *have* to have a census, why don't they just contract out to the private sector via TalkTalk cold-callers and Polish portrait-sellers? Or just use the phone book??


----------



## Duplex

madisona said:
			
		

> I doubt that this is the case. There is a demand for rental properties. even allowing for the fact that some of these 280,000 are tax designated properties in the middle of nowhere. There is a strong rental market in all the cities. Bear in mind as well that low paid workers in Ireland unlike in many other countries are often unable to afford to rent a place on their own, leading to the irish phenemonmen of shared houses and flats i.e sharing a property with several more or less strangers in the same situation.
> 
> Which leads to the question. If speculators are choosing to leave properties vacant is this part of the governments strategy of keeping rent levels high ( relative to working class wages. e.g a minimun wage worker in dublin on €1200 a month would probably have to pay close to 100% of his wages if he wanted to rent a one bed place of his own (with the luxury of bathroom and living area) )
> 
> Are there tax benefits available for a speculator who is paying an interest only morgage and chooses to leave the property vacant, even when there is demand for the property which would cover say 50% of his repayments? i.e is the government encouraging speculators to leave properties vacant?


 
You have a point; many thousands of these properties may be Section 23 etc. tax ghost towns. But still, we have enough empty property in this country to accommodate 800,000 souls.  Beyond bizarre.


----------



## Guest107

Duplex said:
			
		

> You have a point; many thousands of these properties may be Section 23 etc. tax ghost towns.


These are localised to the north shannon and seaside resorts and are at most in the 10s of thousands not the 100s of thousands. The argument only applies to places like Carrick on Shannon or Ballymote or Enniscrone and not really to the large towns or the cities.

I know of estates in Doughiska in Galway city which are not tax designated at all but where the investors have sat on empties for years because they 'made more' on capital appreciation and could not be bothered renting them out.

Thats where the overhang is, in Carrick they wont dump because they will lose their tax writeoff. In Galway they will. The number of EXCESS planning applications (not all were granted and some were for more than one house) (page 4 of link > > )  [broken link removed]and over 5 years . This indicates maybe  20,000 EXCESS units built in Sligo/Roscommon/Leitrim . 

God help the property market there when the tax break runs out in a few years time


----------



## miju

did anyone hear the report on Newstalk this morning that the ECB are potentially planning a .25% rise next month followed by another .25% August and if they do follow this route they will possibly opt for a .50% rise in August instead as they're having trouble controlling inflation

what would peoples thoughts be on the possibility / plausibility of this?


----------



## whizzbang

miju said:
			
		

> what would peoples thoughts be on the possibility / plausibility of this?



I thought the general concensus from the last rate increase meeting was that they would not raise rates in July?  Some people try and judge the next hike based on the language used by the board in their statement.

Here is a newspaper article on the suspected July increase though.

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1636569&issue_id=14227


----------



## beattie

Would seem very early to go again, I thought after reading it that it was the germans letting off some steam as there wasn't a 50bp rise earlier this month. Either way pain is coming down the tracks sooner than many would have thought a year ago.

I expect some commentary from bulls quite soon to assuage any fears that the property buying public may have..........


----------



## room305

miju said:
			
		

> did anyone hear the report on Newstalk this morning that the ECB are potentially planning a .25% rise next month followed by another .25% August and if they do follow this route they will possibly opt for a .50% rise in August instead as they're having trouble controlling inflation
> 
> what would peoples thoughts be on the possibility / plausibility of this?



Sounds unlikely to me. Trichet's language seemed to suggest a continuation of the 0.25% rises, rather than the shock of a 0.5% rise. Though, admittedly it's open to interpretation. If I had to put money down, I'd bet on the base rate being 3.25% by January of next year at the latest.

If there is a 0.25% rise next month it is extremely unlikely that it would be followed by 0.5% rise the following month, that level of extremity could easily tank the eurozone economy, sparking a recession. Trichet has already warned that he expects overall growth to slow from 2% to 1.8% as a result of the rises.


----------



## whizzbang

room305 said:
			
		

> Sounds unlikely to me. Trichet's language seemed to suggest a continuation of the 0.25% rises, rather than the shock of a 0.5% rise. Though, admittedly it's open to interpretation.



Has anything significantly changed in the Euro zone since the last rise? I know Germany is upping its VAT rate 3% (largest increasae since the war). Is there anything else to signify inflation is a fear? any new figures released?

Maybe they were not expecting to rise in July when they rose in June but some new data has come to light that has made them change their mind?


----------



## Remix

Very aggressive tones on interest rates in the last day or two from all around our inflated globe.

Statements from the ECB in particular indicating a possible .25% hike sooner than expected in July and this resulted in about a billion euro being wiped off the bank-heavy ISEQ in the opening minutes today.


----------



## gearoidmm

whizzbang said:
			
		

> Has anything significantly changed in the Euro zone since the last rise? I know Germany is upping its VAT rate 3% (largest increasae since the war). Is there anything else to signify inflation is a fear? any new figures released?
> 
> Maybe they were not expecting to rise in July when they rose in June but some new data has come to light that has made them change their mind?


 
Data from Germany shows that producer prices were up 6.2% yoy in May - the most since 1982.  This has been accelerating for the last few months.

http://www.finfacts.com/irelandbusinessnews/publish/article_10006274.shtml


----------



## OilKing

More signs that sentiment in the media is beginning to go bearish. The Irish Independent website [broken link removed] has a poll entitled "Do you think homeowners are being put under too much pressure" You can also post your comments on this topic.


----------



## JohnBoy

relative to to the 1970s and 1980s European inflation does appear to be well contained. But the ECB looks at more than the headline inflation rate in determining the appropiate level of interest rates. The ECB is also reportedly concerned at the rate of money growth in the eurozone - money growth is running at 8% on an annualized basis (anD probably substantially more in Ireland). Thus whilst the headline rate of inflation is beginning to creep up the world's central banks are beginning to reign in the excess liquidity that has been responsible for amongst other things the surge in property values all over the developed world.

Remember that at 2.75% the ECB rate is still highly stimulative (with inflation adjusted interest rates barely 0.5%) and the goal will be to move interest rates to a more neutral rate - thought to be 3.5%/4% in Europe.

Monetary authorities have to look forward to the expected inflation rate, not at the trailing headline rate that is already several months out of date.


----------



## Remix

OilKing said:
			
		

> More signs that sentiment in the media is beginning to go bearish..


 

Are they bearish enough to get the message across though?

For example in last 24 hours we have had some very hawkish statements from ECB council members which could be interpreted as warning that interest rates may rise quicker than anticipated.

Also some very hawkish news coming from Japan and this could have ramifications around the globe.

The market digesting this info has caused the banks on the ISEQ to plummet today.

And yet the main story over on RTE.ie/business at the moment is on the spectacular gains made in property in the past 10 years !! 

I suppose you could take the RTE story as a veiled warning suggesting that things have risen too much too fast but why not unveil the beast
and show it like it is - warts and all !


----------



## beattie

Remix said:
			
		

> Are they bearish enough to get the message across though?
> 
> For example in last 24 hours we have had some very hawkish statements from ECB council members which could be interpreted as warning that interest rates may rise quicker than anticipated.
> 
> Also some very hawkish news coming from Japan and this could have ramifications around the globe.
> 
> The market digesting this info has caused the banks on the ISEQ to plummet today.
> 
> And yet the main story over on RTE.ie/business at the moment is on the spectacular gains made in property in the past 10 years !!
> 
> I suppose you could take the RTE story as a veiled warning suggesting that things have risen too much too fast but why not unveil the beast
> and show it like it is - warts and all !


 
The Indo seems to be giving a more balanced view than the IT at least, it was interesting to see that they had some bloke on today saying his repayments had sky rocketed recently though it had something to do with his type of loan. This type of reporting is to be more welcomed than what the IT trots out on a continous basis.


----------



## Guest107

beattie said:
			
		

> though it had something to do with his type of loan.


 many modern Dublin mortgages are interest only so they 'skyrocket' as he puts it. Many investors also have interest only mortgages rather than repayment ones.

Here is a typical scenario  Interest Only 400k mortgage over 35 years .

Started a year back at 3.0% now 3.75% , 1% over base  at all times. 

€1540 @ 3% 
€1722 @ 3.75%
€1771 @ 4.0%

later this year

€1832 @ 4.25%

and next year 

€2019 @ 5%

and possibly by 2008

€2281 @ 6%


----------



## Remix

2Pack said:
			
		

> Here is a typical scenario Interest Only 400k mortgage over 35 years .
> 
> Started a year back at 3.0% now 3.75% , 1% over base at all times.
> 
> €1540 @ 3%
> €1722 @ 3.75%
> €1771 @ 4.0%
> 
> .
> .
> .
> and possibly by 2008
> 
> €2281 @ 6%


 
Could be a double whammy there as it's likely that the skyrocketing payments will not happen in isolation.

In adjusting to the new interest rate environment there is a real possibility that payments will be skyrocketing on an asset that is falling
in price.


----------



## Neffa

2Pack said:
			
		

> many modern Dublin mortgages are interest only so they 'skyrocket' as he puts it. Many investors also have interest only mortgages rather than repayment ones.
> 
> Here is a typical scenario Interest Only 400k mortgage over 35 years .
> 
> Started a year back at 3.0% now 3.75% , 1% over base at all times.
> 
> €1540 @ 3%
> €1722 @ 3.75%
> €1771 @ 4.0%
> 
> later this year
> 
> €1832 @ 4.25%
> 
> and next year
> 
> €2019 @ 5%
> 
> and possibly by 2008
> 
> €2281 @ 6%


 
For an IO mortage, the increase is more severe than you've listed:

400K @ 3% = 400000*0.03/12=1000pcm
400K @ 6% = 400000*0.06/12=2000pcm

Payments should increase linearly with the interest rate so if we go from 3% to 6%, it doubles. 

Meanwhile, rents rise at inflation (at best).

Hmmmmmm  !


----------



## Guest107

Neffa said:
			
		

> Payments should increase linearly with the interest rate so if we go from 3% to 6%, it doubles.


You are absolutely right but thats what Karls Mortgage calculator gave me ....dUHHHH  me that is. 

The height of lunacy I heard of so far is an accountant who bought a 1 bed in Dublin Docklands a year back, interest only , for €520k and him on a €50k salary.  That would have been about (520 *0.03)/12 or €1300 a month initially where his take home is about €3k a month  + or - €100. Comfortable enough i hear some say and I agree with that. 

It will be €1733 a month shortly, 4% Mortgage rate .

It will be €2167 a month by next year , 5% 

and

It will peak at the top of this rate cycle at around 6% (base rate 5%) by 2008 or so .  Thats €2600 a month. No room to let and thats most of his salary gone on the mortgage.


----------



## gearoidmm

Don't forget management fees of probably 150/month on top of that


----------



## Duplex

2Pack said:
			
		

> You are absolutely right but that's what Karls Mortgage calculator gave me ....dUHHHH  me that is.
> 
> The height of lunacy I heard of so far is an accountant who bought a 1 bed in Dublin Docklands a year back, interest only , for €520k and him on a €50k salary. That would have been about (520 *0.03)/12 or €1300 a month initially where his take home is about €3k a month + or - €100. Comfortable enough i hear some say and I agree with that.
> 
> It will be €1733 a month shortly, 4% Mortgage rate .
> 
> It will be €2167 a month by next year , 5%
> 
> and
> 
> It will peak at the top of this rate cycle at around 6% (base rate 5%) by 2008 or so . That's €2600 a month. No room to let and that's most of his salary gone on the mortgage.


 
That's before service charges and utilities, you wouldn't want to be a big eater.


----------



## Duplex

gearoidmm said:
			
		

> Don't forget management fees of probably 150/month on top of that


 
Beat me to it.


----------



## beattie

I would have thought an accountant would have no known better  

Unfortunately there are going to be many in that boat in the next year or so IMO. When rates go to 4% what investor in his right mind would buy that one bed off him. There could be a shortage of buyers for those type of properties.


----------



## TheSphinx

I was talking to a guy in one of the development I was looking at last week, I was having difficulty to decide whether I should go for a property in the Development. He kinda made my mind up...

He is currently renting one of the properties in the development - his house where he pays his mortgage is in Wales where his wife resides. He said, if you don't intend to have children, then there is no necessity for you to buy a house, (I don't intend to have children). There is no point in some single person living, in some village having to commute hours to work, away form friends and civilisation, should one not decide where to live where they will be happy and not where they can afford, especially in the current climate...


----------



## gearoidmm

Does one feel proud of oneself, looking around your tiny one bed apartment, having spent 1/2 million on it.  I moved into one last year with my better half - in a really nice area, in an 'exclusive' development.  We moved out after 2 months.  the claustrophobia was killing us (and our relationship) and this was in summer when we at least could go outside in the evenings and escape the place.  We gladly gave up our deposit

Never, ever again.  I wouldn't live in one again if it was given to me for free.  I'd rather rent for the rest of my life.  And this one was ~450 sq feet with a big balcony!  It was bigger than average - I just can't imagine what it must be like in the smaller ones.

What is going to happen to these people when this mindless mania ends?


----------



## room305

soma said:
			
		

> The article says 275,000 were actually identified as being vacant.



I know an enumerator in Kilkenny city who was absolutely shocked by the number of vacant dwellings there. Before performing the census he was of the opinion that house prices were being driven so high by a housing supply shortage. However, since discovering that about one in ten houses in the city were lying vacant he has become very sceptical of the sustainability of this boom. He genuinely believes that the official census figures on the number of vacant buildings will give people pause for thought.

I don't personally. I'm waiting for some convoluted stories from the bulls about people making their homes look vacant to avoid the census officials etc.


----------



## whizzbang

room305 said:
			
		

> I don't personally. I'm waiting for some convoluted stories from the bulls about people making their homes look vacant to avoid the census officials etc.



I'm betting on "We were all on holiday"


----------



## Glenbhoy

2Pack said:
			
		

> It will peak at the top of this rate cycle at around 6% (base rate 5%) by 2008 or so . Thats €2600 a month. No room to let and thats most of his salary gone on the mortgage.


Firstly,  where does the 6% come from - you know  what they say about people trying to predict interest rates don't you.
Secondly, accountants salaries are racing ahead at massive rates at the moment, so he should still have a fair bit of disposable income left over.  
Thirdly, from my knowledge of city centre apartment prices, that price normally indicates some sort of tax incentive (possibly not, but 18 months ago it would).
Fourthly, I'd rather have that property than the two bdrooom apartment in Blanch/Adamstown/Celbridge......


----------



## Guest107

gearoidmm said:
			
		

> And this one was ~450 sq feet with a big balcony!  It was bigger than average - I just can't imagine what it must be like in the smaller ones.


450 sq ft is a shoebox . There will be no proper storage bar one wardrobe and a kitchenette + diner+ sittingroom . Could not live in that place either. Its what was called a _tenement _really. 



			
				glenbhoy said:
			
		

> Firstly,  where does the 6% come from - you know  what they say about people trying to predict interest rates don't you.
> Secondly, accountants salaries are racing ahead at massive rates at the moment, so he should still have a fair bit of disposable income left over.
> Thirdly, from my knowledge of city centre apartment prices, that price normally indicates some sort of tax incentive (possibly not, but 18 months ago it would).
> Fourthly, I'd rather have that property than the two bdrooom apartment in Blanch/Adamstown/Celbridge......


1. NORMAL GERMAN Interest Rates, not emergency rates as in post 9/11 . I would expect base rate 5% which equals 6% Mortgage rate and by 2008. I am not predicting higher in this strenghtening cycle. 
2. Accountants salaries will not double before his mortgage payments do. The guy will have to pass a few exams and hand in a logbook before he goes much higher. 
3. It was out around Googleland somewhere. 
4. I'd rather my 3000 sq ft in the country myself, thanks. It did not cost me anywhere like €500k either


----------



## Glenbhoy

2Pack said:
			
		

> I'd rather my 3000 sq ft in the country myself, thanks. It did not cost me anywhere like €500k either


That's a different matter entirely - would'nt we all, unfortunately, many of us have to stay where the work is!!
He could sell now and make a tidy packet of course, but overall, it's better to buy there imo than somehwere bigger in the outlying regions.  Rent, transport etc being the key factors.


----------



## lff12

2Pack said:
			
		

> 450 sq ft is a shoebox . There will be no proper storage bar one wardrobe and a kitchenette + diner+ sittingroom . Could not live in that place either. Its what was called a _tenement _really.


 
Actually tenements were basically houses broken up into bedsits (basically) and then let out to families.  My Dad grew up in one.  They had a family of 6 plus 3 cousins living in about 2 rooms!

Would guess though, that this scenario is likely to return with a vengence if the current levels of social welfare private tenants keeps increasing.


----------



## SidTheDweeb

[FONT=Verdana, Arial]


> Niall O'Grady, *Head of Marketing *with Permanent TSB, believes rising interest rates will force the market to cool, but not decline.
> And despite growth of 4pc in the market in just the first quarter of 2006, he believes first time buyers (FTB) *should buy now rather than later*.
> "A number of years ago people were sitting on their hands and waiting for negative equity to happen," he said. _"It didn't happen and they had to struggle to get onto the property ladder. _
> _   "We wouldn't be advising FTBs to ever hold off buying."_
> He pointed out that all of the "*fundamental drivers"* behind the property market - low interest rates, economic growth, strong employment and inward migration - are still present in Ireland.
> He also pointed out that *affordability remains around the same*. Although prices have risen, interest rates and income tax levels have fallen.


That's from todays Indo, the article about a soft landing. What absolute nonsense, of course it will be swallowed up by everyone...

[/FONT]


----------



## Raskolnikov

Some more property madness for you all. One of my cousins, a receptionist in an office and single mother of one (no child support from Daddy) has recently been talking up her recent bargain purchase. Apartment was second hand and about a 25 minute walk from Cork City centre and cost €260K, she herself is only on €32K with very little chance of career progression or a wage increase beyond inflation. Has a lodger at the moment bringing her in €320 a month so that leaves her with a €850 or so mortgage to cover. If the screws get turned on interest rates, then she's going to be in serious trouble. Of course though, she doesn't see that as a risk. In the eventuality of that happening she's going to sell and still come out with the €20K that the property has appreciated since she bought it


----------



## Guest107

260k is over 8x gross salary but she has a spare bedroom . 

If she is on €850 repayments that is probably an interest only €260k mortgage at 4% interest or is she paying €850+€320 =€1170  which indicates repayment.

If she does not need a car but has one anyway then that could go if necessary .


----------



## Raskolnikov

2Pack said:
			
		

> 260k is over 8x gross salary but she has a spare bedroom .
> 
> If she is on €850 repayments that is probably an interest only €260k mortgage at 4% interest or is she paying €850+€320 =€1170 which indicates repayment.
> 
> If she does not need a car but has one anyway then that could go if necessary .


Yes, it's an interest only mortgage and those figures quoted are about right. She does drive (a very nice sporty Renault Megané may I add) which required a motor loan when she bought it two years ago. That's €3-4K sunk into the car every year. Even if she could live without it, she said in no uncertain terms that she could never lower herself to take a bus. You also have to remember that raising a three year old kiddie doesn't come cheap either, probably another (€3-4K after benefits). Remember, she's just a glorified secretary, her salary won't be going up anytime soon.

Am I the only one that thinks that this girl has gotten herself into a very precarious situation?


----------



## Remix

Wonder if we should have a new thread tracking the movement towards the exits ?

We've had had AIB and BOI disposing of significant property portfolios.
We've had HOK selling out to Savills, UK.
We've had HARRINGTON Bannon selling out to Atisreal.

Further to this in today's Indo:



> We are beginning to see early signs that ultra high-net worth clients in Ireland and, to a lesser extent, high-net worth
> clients are beginning to move away from real estate, diversify and reallocate assets.
> 
> The smart money is beginning to reduce its allocation to real estate


----------



## Guest107

Raskolnikov said:
			
		

> Am I the only one that thinks that this girl has gotten herself into a very precarious situation?


No you are not and Is she the ONLY one in Ireland who won't listen to advice, why  NO  !

Her payments will go up another 50% to around €1300 over the next few years. ( I said I EXPECT 6% mortgage rates by c.2008 or 5% base rates )  Her salary and her rental income will not go up 50% . 

Then again her childcare costs will drop soon as sprog goes to school but she loses the €1000 childcare allowance she will soon get.

I assume she needed to run _a megane _for some reason and not the oul 1995 Micra  but seeing as new meganes depreciate as all renaults do she is probably in negative equity on the yoke already  and may as well keep the feckin thing


----------



## whizzbang

Raskolnikov said:
			
		

> Am I the only one that thinks that this girl has gotten herself into a very precarious situation?



It definitely looks like she is highly exposed! A creche alone will cost her a small fortune! I'm not sure I follow her logic on the house going up €20k. She is paying €14k a year on the interest only mortgage, unless she is making more than that a year in appreciation she is still losing money!


----------



## Duplex

Looks like the Banks, are looking for bag-holders while the smart money exits stage left.  If they are so confident in their predictions they will no doubt be happy to give a guarantee that they will indemnify anyone who gets into negative equity.  If they are unwilling to back up their forecasts with hard cash (their stock in trade) they are willfully lying.


----------



## micheller

Sorry if this is a stupid question Duplex, but is it likely they would indemnify against negative equity and if so how would they do this?

I agree about the comment about the bank looking for bag holders while the high net worth groups exit stage left


----------



## Mrs Mac

micheller said:
			
		

> Sorry if this is a stupid question Duplex, but is it likely they would indemnify against negative equity and if so how would they do this?
> 
> I agree about the comment about the bank looking for bag holders while the high net worth groups exit stage left


 
Not a chance


----------



## Mrs Mac

micheller said:
			
		

> Sorry if this is a stupid question Duplex, but is it likely they would indemnify against negative equity and if so how would they do this?
> 
> I agree about the comment about the bank looking for bag holders while the high net worth groups exit stage left


 
Not a cat's chance in hell


----------



## micheller

I said sorry if it was a silly question!


----------



## Duplex

micheller said:
			
		

> Sorry if this is a stupid question Duplex, but is it likely they would indemnify against negative equity and if so how would they do this?
> 
> I agree about the comment about the bank looking for bag holders while the high net worth groups exit stage left


 

Micheller, as the banks are offering advice such as  


*“**We wouldn't be advising FTBs to ever hold off buying." *

(To quote Niall O’Grady *Head of Marketing*with Permanent TSB.)

 I think it would not seem unreasonable for any FTB to request a guarantee from PTSB; that in the highly unlikely event that the property market crashes, that the bank will pay the difference between the original purchase price and the ahhh…… new lower price if the FTB’er sells.   

It may be my cynical disposition, but I have difficulty in believing the utterances of banks, much less the honeyed words of heads of marketing.    Mr O’ Grady seems happy to make unsubstantiated statements that will influence the course of people’s lives, surely it would not be asking much if he or his bank backed up their words with cash. 

Money talks, bulls**t walks, so to speak.


----------



## gearoidmm

2Pack said:
			
		

> NORMAL GERMAN Interest Rates, not emergency rates as in post 9/11 . I would expect base rate 5% which equals 6% Mortgage rate and by 2008. I am not predicting higher in this strenghtening cycle.


2Pack

I'm not so sure about your analysis of where interest rates are going to go in the next couple of years.  I agree that the current interest rate is too low and that we are likely to see rises but I think it is far too pessimistic to assume that they are going to reach 5% (you can remind me of this if it happens).

Looking at the recent experience of the UK, it only took a rise of 1.25% to take the wind out of the housing market there and slow the economy enough that the central bank started to drop rates again and, although there is a suggestion that rates may rise again soon there, it will not be by much.  That in a an economy with almost full employment and rapid economic growth over the last few years.

Contrast that to the European economy where growth is sluggish at best and the unemployment rate is ~9%.  There is still no sign of any large inflationary pressures apart from energy prices and little scope for wage demands given the competition from abroad.  Add to that the strengthening euro and the 3% increase in VAT rates in Germany next year and these are the equivalent of adding a certain amount to the interest rate without any move by the ECB.  Taking all this into consideration I think that the chance of rates rising as far as 5% is very low.

I don't think that a rate rise to this degree will be enough to cause a collapse in the housing market.  A lot has been said on this site about the fact that people will start panic-selling their properties as soon as they stop going up in value.  From talking to 'investors' who have bought properties in the past few years - including those who are losing money on the rental income - even if prices drop, they will not sell up as they believe in property as a way to 'secure the future' and that it will always eventually go up in value.  It will take a major external shock for the property market to collapse in Ireland.  That's not to say it will not happen but there are too many vested interests out there keeping the whole thing afloat to let it fall (including the 85% of Irish households that own their own home).  

The reported 300,000 properties lying vacant around the state attest to the fact that Irish people don't look at property in the traditional sense in terms of returns and yields but as some kind of cash cow for future retirement or to give to the kids.

I'm starting to believe that the likely outcome of all this will be a slow decrease in ther rate of HPI to a rate below inflation which will feel like a nice soft landing to everyone but no crash.

That said, I've no intention of buying myself in the near future so what does that mean?


----------



## micheller

Did anyone else hear Berie getting v. hot under the collar when questioned by Joe higgins today. He sounded like a very upset man at the housing market being criticised!


----------



## Guest107

gearoidmm said:
			
		

> 2Pack
> 
> I'm not so sure about your analysis of where interest rates are going to go in the next couple of years.  I agree that the current interest rate is too low and that we are likely to see rises but I think it is far too pessimistic to assume that they are going to reach 5% (you can remind me of this if it happens).


I won't remind you you know. 



> Looking at the recent experience of the UK, it only took a rise of 1.25% to take the wind out of the housing market there and slow the economy enough that the central bank started to drop rates again and, although there is a suggestion that rates may rise again soon there, it will not be by much.  That in a an economy with almost full employment and rapid economic growth over the last few years.


 Good point that. I had factored it in slightly.  I would say the UK Central bank made LOTS of dire threats and SOME rate rises thrown in. The combination of BOTH eased the market _in case_ they went further. The ECB is afraid to threaten and must be judged on action alone. To get the same effect they will overshoot the rise cycle . Well played the UK !


> Contrast that to the European economy where growth is sluggish at best and the unemployment rate is ~9%.  There is still no sign of any large inflationary pressures apart from energy prices and little scope for wage demands given the competition from abroad.  Add to that the strengthening euro and the 3% increase in VAT rates in Germany next year and these are the equivalent of adding a certain amount to the interest rate without any move by the ECB.  Taking all this into consideration I think that the chance of rates rising as far as 5% is very low.


 I feel the base rate will NOT need to go above 5% but would feel that stress testing to around that level is prudent. Base rate 5% = Mortgage rate 6% of course. 

The problem in Europe is that if the ECB is seen as NOT serious about inflation the Euro could drop on sentiment which will then import inflation. Then they are in a "react to external pressure mode "and could have to tighten alarmingly to get taken "seriously" again. As fuel prices rose so did the Euro so we did not get the full oil price shock unlike the US. If sentiment turns against the Euro they could overtake 5% base to get taken seriously. Remember the euro was a basket case currency before 911 and Duisenbergs ECB was a joke, they will not willingly go there again .   

 I feel they must keep the euro where it is now as a consequence. 


> I don't think that a rate rise to this degree will be enough to cause a collapse in the housing market.  A lot has been said on this site about the fact that people will start panic-selling their properties as soon as they stop going up in value.


 I do feel that the new (post .com) investor who piled in post 2001 emergency rates and stamp duty lift will exit. I feel older investors (pre 2000) will not pile out.  Some area on the peripheries like Kilbeggan or Carlow or Gorey will suffer most and the downswing will be asymettrical not universal. 


> From talking to 'investors' who have bought properties in the past few years - including those who are losing money on the rental income - even if prices drop, they will not sell up as they believe in property as a way to 'secure the future' and that it will always eventually go up in value.


 Well they are wrong if they can remember 1980-1987 at all and if not they should find out about it.  


> It will take a major external shock for the property market to collapse in Ireland.  That's not to say it will not happen but there are too many vested interests out there keeping the whole thing afloat to let it fall (including the 85% of Irish households that own their own home).


 I take issue with this bit only, are you saying that 85% of Irish homes have no outstanding loans secured on them....at all ????


> The reported 300,000 properties lying vacant around the state attest to the fact that Irish people don't look at property in the traditional sense in terms of returns and yields but as some kind of cash cow for future retirement or to give to the kids.


 Now yes, I also believe that sentiment turns and new realities become accepted ....and sometimes very quickly.

Its not that we disagree or that we agree GM but that we see things somewhat differently my friend and model our economic scenarios differently as a consequence. I give 'sentiment' and turns in 'sentiment' a weighting in my models but you see I was in England in 1988 and also in 1991 and 1993  .


----------



## conor_mc

gearoidmm said:
			
		

> A lot has been said on this site about the fact that people will start panic-selling their properties as soon as they stop going up in value. From talking to 'investors' who have bought properties in the past few years - including those who are losing money on the rental income - even if prices drop, they will not sell up as they believe in property as a way to 'secure the future' and that it will always eventually go up in value.


 
It's all well and good saying that now when prices are motoring ahead, but if prices start falling then why stay in it? Why not sell up, bank a profit and buy back in at the bottom of the cycle again?

It's easy to "believe" in any investment when everythings running sweet. I'm sure there were plenty of believers in the "new paradigm" of tech stocks pre-2000.

Cold harsh reality has a nasty habit of challenging peoples beliefs.


----------



## Raskolnikov

Excuse my ignorance, but when people say a house price crash, what exactly constitutes a crash? Negative equity on homes? An actual fall in valuation of a property in real terms?


----------



## walk2dewater

A "crash" in a market, any market, is when there's a sudden change in sentiment, usually following some period of speculative boom where prices were bid ever higher and higher in a sellers market where buyers had little or no power to wrangle a discount. The price crash happens when something triggers the herd to suddenly all move the other direction, this time the market is characterised by a rush of sellers piling up to exit the market, with not a buyer in sight. Buyers will grudgingly bite, but will only accept a much bigger discount off the last transaction, hoping that their transaction marks the bottom. In a crash, sellers are only glad to oblige a discount and off load their product for fear of further losses. As the bust accelerates and fear takes over, ever greater and greater discounts are sought and achieved by buyers. Crashes have the further attribute of seeming to appear overnight.

Does that explain it?


----------



## Duplex

walk2dewater said:
			
		

> A "crash" in a market, any market, is when there's a sudden change in sentiment, usually following some period of speculative boom where prices were bid ever higher and higher in a sellers market where buyers had little or no power to wrangle a discount. The price crash happens when something triggers the herd to suddenly all move the other direction, this time the market is characterised by a rush of sellers piling up to exit the market, with not a buyer in sight. Buyers will grudgingly bite, but will only accept a much bigger discount off the last transaction, hoping that their transaction marks the bottom. In a crash, sellers are only glad to oblige a discount and off load their product for fear of further losses. As the bust accelerates and fear takes over, ever greater and greater discounts are sought and achieved by buyers. Crashes have the further attribute of seeming to appear overnight.
> 
> Does that explain it?



Now I know


----------



## room305

walk2dewater said:
			
		

> A "crash" in a market, any market, is when there's a sudden change in sentiment, usually following some period of speculative boom where prices were bid ever higher and higher in a sellers market where buyers had little or no power to wrangle a discount. The price crash happens when something triggers the herd to suddenly all move the other direction, this time the market is characterised by a rush of sellers piling up to exit the market, with not a buyer in sight. Buyers will grudgingly bite, but will only accept a much bigger discount off the last transaction, hoping that their transaction marks the bottom. In a crash, sellers are only glad to oblige a discount and off load their product for fear of further losses. As the bust accelerates and fear takes over, ever greater and greater discounts are sought and achieved by buyers. Crashes have the further attribute of seeming to appear overnight.
> 
> Does that explain it?



Does this kind of thing happen in property though? It's not a very liquid market. When sentiment changes are 300,000 people all going to rush at once to their real estate agent and demand that they sell their property immediately? 

Even if they do, where will the buyers come from? Sensing a change in sentiment why would you be in a hurry to buy a house? More likely potential buyers will be happy to wait hoping to force the sellers ever lower as more and more properties are put up for sale. Sellers themselves may be reluctant to book a loss on their "investment" and insist on holding out for a higher price rather than selling at below the market price.

I think it will be months if not years before the full reality of a crash becomes apparent.


----------



## Duplex

It's happened/happening in Hong Kong, Bangkok, Finland, Spain, Cyprus and Japan. Bubbles burst or they're not bubbles. The US is on the brink with many areas already starting to see falls. How can property prices fall by 70% in Japan, a country which is more densely populated than Ireland and where during much of the crash, interest rates were lower than the current Euro base rate? 

http://www.bangkokrecorder.com/?p=redakt.artikel_detail&ID=24&ArtikelID=100

The market value is set by the latest transaction evidence, if someone wants to believe that their property is worth more than what the market will pay, well they'll have to wait until the market agrees with them.


----------



## walk2dewater

A few points about the property market:

*Those prices that you see in real estate agent windows are suggestions, from someone who is familiar with the current market, for what sellers and buyers are likely to agree on in the immediate future

*The price of your property is based on the price that occurred in the last several transactions (but mostly the very last) for a property v similar to yours

*Real estate agents will suggest to the seller a reduction in the price if there's no buyers, increase the price if there's a steady stream of buyers.  They make a living shifting property, not advertising it

* Real estate agents in fact go t1ts up if they don't sell any real estate

*In the UK for e.g. <10% of property is traded per annum, it is these transactions that set the market price for the other 90%

A bit of a think of about these points together with the latest news from Trichet et al, recent census info on the scale of vacant "investment" property in Ireland, the microscopic yields on residential property in general, the level of debt in ireland, and the behaviour of BoI/AIB in relation to their commercial property portfolio, combining all this with a tiny dash of skeptisim in relation to whats passed as honest-to-goodness-we-have-nothing-to-ramp-up-or-spin reporting in the Irish meeja, and VOILA!! there we have it ........yes, the Great Irish Property Sale coming eventually if not sooner or later....


----------



## ivuernis

madisona said:
			
		

> Now for the curious part. If you go to the Examiners online site there is no sign of this article.


 
I think you're reading too much into it.... the Examiner's website is crap!


----------



## whizzbang

Here is a good article on how housing bubbles pop.


----------



## beattie

Looks like the Europeans are attempting to get the government to get our house, I doubt it will be listened to............ 

[broken link removed]


----------



## Duplex

[QUOTE*]"There is a need to issue prudential warnings and messages* that, combined with decisions taken at EU level, are incorporated into the economic cycles of EU member states," he said in response to a question from Fianna Fáil MEP Eoin Ryan. *"The Irish authorities are aware of their capacity and influence in this respect and we are counting on them."*[/QUOTE]

Can anyone imagine Bertie issuing prudential warnings, given his hissy fit yesterday when pressed on the dangers to the country of the property bubble?


----------



## beattie

Duplex said:
			
		

> Can anyone imagine Bertie issuing prudential warnings, given his hissy fit yesterday when pressed on the dangers to the country of the property bubble?


 
What what his hissy fit? Didn't hear about that one


----------



## Duplex

About 6 minutes into this RTE News bulletin, Beattie.



[broken link removed]


----------



## polaris

whizzbang said:
			
		

> Here is a good article on how housing bubbles pop.


 

So housing bubbles don't really go pop but instead the air slowly, but irreversibly, leaks out of them over a 10 year time period?


----------



## room305

polaris said:
			
		

> So housing bubbles don't really go pop but instead the air slowly, but irreversibly, leaks out of them over a 10 year time period?



This makes sense to me. I can especially visualise the first two years where people pump money into home improvements in order to try and aid the sale, or hold their property hoping that it is merely a short term correction before the resumption of rising prices. During this period I would expect many bullish articles promoting "bargains" for FTBs and much insistence from the real estate and construction sectors (indeed possibly the government) that in no way was a housing crash underway.

How do other see it playing out - stampede or slow decline in prices?


----------



## beattie

room305 said:
			
		

> How do other see it playing out - stampede or slow decline in prices?


 
Difficult to say IMO, I can see both sides of the argument, it all depends on how quickly the ECB increase their rates, the affordability calculations which have been given in the SBP recently are very striking and could focus minds in a way which hasn't happened over the past few years. I think that there could be an increase in the number of investment properties coming on stream as investors will be unable to sit with empty units/under performing lettings when price rises peter out coupled with rising rates


----------



## Afuera

room305 said:
			
		

> How do other see it playing out - stampede or slow decline in prices?



I think that it could happen quite quickly in the Irish market. Variable rate mortgages make us a lot more susceptible to changes in interest rates and less able to weather rises as they can in the States. We also have a huge dependancy on the property market to keep people employed in various areas of the economy (construction, estate agents, banks, solicitors, advertising agencies, etc). This over-dependancy means that a slowdown in house building or selling would probably bite hard within the first year or two.


----------



## walk2dewater

room305 said:
			
		

> This makes sense to me. I can especially visualise the first two years where people pump money into home improvements in order to try and aid the sale, or hold their property hoping that it is merely a short term correction before the resumption of rising prices. During this period I would expect many bullish articles promoting "bargains" for FTBs and much insistence from the real estate and construction sectors (indeed possibly the government) that in no way was a housing crash underway.
> 
> How do other see it playing out - stampede or slow decline in prices?


 
It depends on what you define a "stampede" or "slow" to be.  Agreed that property market is illiquid and prices are much more sticky than say copper futures. The most recent and nearest property price crash was UK circa 1991-1995.  It didn't become fashionable to buy property again until about 1997-98 (someone correct my dates here?)  Personally I reckon a few nasty years, followed by a longer slow, bottoming out process.  This boom is absolutely enormous and the psychology so overwhelmingly bullish vis a vis previous booms, so who knows?  Mild or severe that the price crash will be, I cant see how an outright recession can be avoided in Ireland


----------



## Guest107

How about Brian Cowans Hissy Fit Yesterday . Reported in The Times 

[broken link removed]



> In response, Minister for Finance Brian Cowen said the Government would have to be careful in implementing any measures aimed at calming the housing market.
> "The gradual phasing out of the tax-relief scheme is designed to avoid any sudden shock to the construction sector generally, having regard to the important contribution of this sector to Irish economic growth at present," Mr Cowen said.


In biffo speak that would be 

 "feck off , we won't touch it because it will blow itself up and if we leave it alone it will blow itselt up anyway and then we won't lose the next election for deliberately blowing it up and we won't lose our party funding  because the builders blame us and you surely don't expect ME OF ALL PEOPLE to back that ECB up what with the Galway Races coming up in a month ....now do ya ??? "


----------



## Duplex

2Pack said:
			
		

> How about Brian Cowans Hissy Fit Yesterday . Reported in The Times
> 
> [broken link removed]
> 
> 
> 
> In biffo speak that would be
> 
> 
> 
> "feck off , we won't touch it because it will blow itself up and if we leave it alone it will blow itselft up anyway and then we won't lose the next election for deliberately blowing it up and we won't lose our party funding because the builders blame us and you surely don't expect MED to back that ECB up what with the Galway Races coming up in a month do ya ??? "


 
Thanks for the translation


----------



## redo

This COULD be aided with a new tax on investment properties in the next budget.  

Bertie has said (today, I think), that the governments' response to house prices will come from the supply side.  This will only benefit his cosey developer friends.  Instead, they (Gov) should release that supply is not causing price rises, it is the demand side.  Many people are buying houses in the expectation of futhur prices rises.  People are buying younger and younger and in areas that they do not wish to settle in.  They simply see it as their little property SSIA, which will come in handy when they need a desposit for a house that they want.

Simply put, (it is the concurring theme in this thread), IMO, around 50% of the potential purchasers (including 'canny' and 'savvy' investors) would not buy if they knew the market had peaked and prices 'can only fall'.

There could also be a foreign property crash in a couple of years when the 3/5 Guarenteed Rental Schemes expire.  It is common knowledge that the Irish pay over the odd's when buying foreign property.    All these foreign property investors, will want to cash in their chips at the same time as they will find management companys charge too much to get tennants or they can't seem to find anyone willing to pay rent to an over priced property.


----------



## redo

redo said:
			
		

> This COULD be aided with a new tax on investment properties in the next budget.



Read: Then next budget AFTER the NEXT election.


----------



## room305

redo said:
			
		

> Bertie has said (today, I think), that the governments' response to house prices will come from the supply side.



This is certainly disappointing to hear. His brother Noel made similar comments before. I would like a reporter to ask them to explain why they are incentivising the supply-side when clearly there is no shortage of supply. There is in fact a massive overhang of about 15% of housing stock which is positively scary. 

Far from preventing a crash or encouraging the much vaunted "soft landing", encouraging an ever greater supply of properties onto the market at this stage vastly increases the severity of a crash because the discrepancy between the volume of houses needed and the number of houses built grows ever wider.

I'm with walk2dewater on this one, I'm actively preparing for a recession.


----------



## Duplex

I’m convinced that the bubble will burst of it’s own accord. Government intervention now would only precipitate the inevitable. Its worth remembering, that even the concept of an asset price bubble is unknown to 80% of the population an anathema to another 15%. Given the importance of  house building to the economy and the national finances it may be naive to expect Bertie to take action, especially as the time for action is long past.


----------



## cjh

[QUOTE*]"There is a need to issue prudential warnings and messages* that, combined with decisions taken at EU level, are incorporated into the economic cycles of EU member states," he said in response to a question from Fianna Fáil MEP Eoin Ryan. *"The Irish authorities are aware of their capacity and influence in this respect and we are counting on them."*[/quote]


- Does anyone know what question Eoin Ryan asked?


----------



## Guest107

*Next up is the Management Company Furoré 2006 -2008  *.

Over 40% of all apartments in Dublin have a dysfunctional management company many of which are useless at collecting money and are recklessly trading. Half of these, 20% of all apartments, are grossly dysfunctional. 

These 20-40% of Dublin apartments will become unsellable or completely unsellable as the liabilities behind them are unquantifiable in_ some _cases . 

These properties will tank big time unlike developments with 

1. Functioning Management Companies 
2. Audited Accounts
3. Sink Funds
4. Good collection practises  , not allowing arrears build up.  

If you own one of the 40% then I would get out while you can or make it functional . 

Houses are usually freehold so its not an issue there . 

Noel Ahern, Minister for housing, has this report quantifying the figure as 40% of all Co. Dublin apartments but heck he won't release it will he


----------



## Calina

See this is why I don't want to buy an apartment. When you ask the estate agent a question about management fees and the management set up of the apartment and they fumble it, you know it's time to go. Unfortunately, there's always someone else lined up to risk it.


----------



## beattie

2Pack said:
			
		

> Noel Ahern, Minister for housing, has this report quantifying the figure as 40% of all Co. Dublin apartments but heck he won't release it will he


 
Would a FOI request force him to publish it?


----------



## Guest107

a combination FOI and a well phrased question in the Dáil is what is required.

The FOI should request all reports in their possession and collated thus. 

1. Has the Minister for Housing or any other official of the Department of Housing or of the Department of the Environment commissioned a survey of multiple ownership blocks in the state with a view to determining the ongoing functionality of their Mananagement Entity . 
2. Does the Dept contract this out and to whom.
3. Does the Dept require that reports be submiitted by any agency on a periodic bases , if so whom. 
4. In the absence of 2 or 3 does the Dept produce internal estimates of functional or ofdysfunctional Management companies.
5. How are the statistics formulated.
6. Who checks them 


The Dept of Housing had better start to get the finger out anyway. They assume these things take care of themselves when they obviously do not.

An _Apartment Dwelling Citizenship Course _should be mandatory for all owners of an apartment with a shared Management Company. If it ran for 2 years (about 4 evenings worth) and you got a cert to show you finished it  then you should be given a  full tax break on the course  and maybe a few quid on top for the hassle . Of course once you have the cert you have no excuse either  

We are becoming a nation of urbanised apartment dwellers and its high time we accepted the consequences of that.   

If Noel Ahern was any good he would have the course running in EVERY IT and in EVERY PLC college in the country by September. He is afraid to touch the issue in case it blows up on him before the election. 

Look at the stats , between 1 in 3 and 1 in 4 permissions nowadays are for apartments .


----------



## owenm

To be objective, Biffo is quite correct. The phasing out of tax reliefs is gradual and if he responds to the baying crowd (posters here and the ECB) with more measures the may have a cumulative effect and precipitate a crash. That said I think we are in for a crash anyway and then stagnation stretching for decades as demographics play against the market.


----------



## Neffa

Guys

I'm really puzzled by this 15% vacant number. If it really is true, there would be swathes of empty apartments all over the country which frankly I don't really see. I live in an area of Dublin with older houses and I think all of them in our street and the immediate area are occupied. 

So the vacancies must be in new builds. Does anyone live in a new build block with lots of empty units? Do you believe this 15% number?


----------



## snuffle

I can quite easily belive this figure, neffa. I live on a private housing estate, built about 15 years ago, and there are a multitude of houses empty, mostly ones that are owned by BTL investors. also, there have been huge developments of apartment blocks in the centre of the city I live in, and from visiting friends who live there, I am reliably informed (and can see for myself, obviously) that anywhere from 2 or 3 apartments to over 50% of the entire development are vacant.
Some new developments of estates were built up to 5 years ago in my locality, and the builders - yes, thats right, the original builders, not owners who have decided to sell up and move on - are still trying to offload some houses that never sold.


----------



## beattie

Those stories are quite incredible, obviously these investors have incredible cashflows (or had allowing them to make the original purchase). Some of these people will never sell up I believe but many of them will when rises cool off and the ECB return to normal rates. Then if prices start to drop will the 'never sell' brigade then start to ponder the wisdom of having an investment which is burning cash? I suspect not but we will have to see.

Also all these vacant houses makes a bit of a mockery of our 50k+ waiting list for housing IMO


----------



## hmmm

It's instructive to walk around Smithfield in the late evening - many (if not most) of the massive new apartment construction in that area has now been finished, but you will notice that the place is dead. There aren't all that many lights on in the complexes. Fresh (the new supermarket) is mostly empty. It's only anecdotal evidence I agree, but it strikes me that most of the place is lying empty.


----------



## gearoidmm

I've been keeping an eye on daft for the past 6 months or so.  Back in January, when I started looking first, there were around 3000 properties available for rent in the Dublin area.  In the last month, that has increased to more than 4000.  Admittedly there is a seasonal element to this but this still represents a big increase.  

It will be interesting to see if this is maintained over the summer months


----------



## whizzbang

gearoidmm said:
			
		

> It will be interesting to see if this is maintained over the summer months



Coul this be explained by students leaving rented accomodation for the summer?


----------



## beattie

whizzbang said:
			
		

> Coul this be explained by students leaving rented accomodation for the summer?


 
Could be, but more and more students are starting to reside on campus (this will only increase in future years with the plans that DIT have and UCD are throwing up lots more units as we speak). I have been keeping an eye on a particular complex at the moment which I pass every so often, namely Trimbleston in Goatstown. 2 beds are now being offered from 1350 a month and they are coming up every day in daft. When they first came on the market some were looking for 1700-1800 for a 2 bed. There is going to be an avalanche of apartments in the general Sandyford/Stillorgan area coming on stream in the next 1-3 years so I can't see there being a decrease in the amount of vacant properties anytime soon.


----------



## Guest107

Doughiska in Galway City is raddled with empties owned by the post punitive   stamp duty 2002 BTL types.

Many were never let and are totally unfurnished and left there a few years or (very oddly) semi-furnished as if they were thinking of letting them but never bothered with it .


----------



## gearoidmm

This apartment near me was listed for sale 2-3 months ago for 1.2 million.  Now on the market for just 995,000.  Possibly that they priced it way too high to start but interesting all the same

[broken link removed]


----------



## beattie

Yes I would have thought that it could have been a bit of a 'test the water' asking price originally though I think one would still be mad to purchase at this price. I have heard anecdotally that penthouses are not making as big as gains as the general market (I know this is probably linked to mmgt fees etc).

It will be interesting to see if a property like this stays on the market in one of Dublin's most desirable locations


----------



## redo

beattie said:
			
		

> Yes I would have thought that it could have been a bit of a 'test the water' asking price originally though I think one would still be mad to purchase at this price. I have heard anecdotally that penthouses are not making as big as gains as the general market (I know this is probably linked to mmgt fees etc).
> 
> It will be interesting to see if a property like this stays on the market in one of Dublin's most desirable locations


I think we are starting to see the gap starting to widen between apts and semi-d houses (with gardens) as the baby boom generation of the early-mid 70's start to nest.  IMO, the coming months, we may see semi-d market explode.

EDIT: Or implode.


----------



## Remix

Some of the rewards of Ireland's accelerating debt and house prices



> The Irish Examiner reports that Bank of Ireland chief executive Brian Goggin has seen his pay packet jump by nearly a third to €2.5 million.
> The bank’s annual report, for the year to end March 2006, reveals that Mr Goggin was paid a performance bonus of €1.28m, more than his e1m basic salary and €77,000 in benefit in kind and other remuneration.
> The bank added €168,000 to Mr Goggin’s pension plan during the year, bringing his total accrued pension at the end of March to €606,000.
> According to the report, Mr Goggin will pocket a minimum of €507,000 in bonuses in June 2007 as part of an incentive scheme for executive managers if the bank meets certain financial targets. The bonus payments under this scheme are dated from his time as chief executive of Bank of Ireland’s Asset Management Services Division.
> He will also be eligible for other bonus payments as part of the executive management team.
> All of the bank’s non-executive directors received an increase in their salaries and fees.


 
Better keep those house prices moving upwards, otherwise elite pay packets might suffer


----------



## derryman

That "penthouse" looks like a "madams boudoir" AKA brothel to me - I continue to be amazed at the "value" a million euro gets in Ireland today


----------



## gearoidmm

Contrast that with three 1-bed apartments available for sale in Mount St Annes - average size 520 sq feet, priced at 500-525,000.

That's completely crazy, but someone will probably pay that much


----------



## room305

Remix said:
			
		

> Some of the rewards of Ireland's accelerating debt and house prices



Presumably when the market collapses Goggin's salarly will be docked in the same manner ... ahem.


----------



## Remix

room305 said:
			
		

> Presumably when the market collapses Goggin's salarly will be docked in the same manner ... ahem.


 
For Ireland's banking and property elites, my crystal ball foresees a timely exit and involvement with Bermuda, beaches, boats, banks and bikinis.


----------



## Duplex

Always interesting to read an outsiders view of the Irish Economy, The Jerusalem Post thinks that we are having an unsustainable binge.

_



The Irish are flush with the cheap and easy money that the single currency has provided them, thanks mainly to German frugality, and they seem intent on blowing it

Click to expand...

_ 
http://irish-property-bubble.blogspot.com/


----------



## Remix

Duplex said:
			
		

> Always interesting to read an outsiders view of the Irish Economy, The Jerusalem Post thinks that we are having an unsustainable binge.
> 
> 
> 
> http://irish-property-bubble.blogspot.com/


 

I'm sure the Israelis must be having a good ol' laugh at the Irish with our runaway house prices and debt because at one point, way back in the celtic tiger years, we may have been seen as a competing small nation in attracting and developing high technology.

But now, Israel has 71 companies on the NASDAQ Stock Exchange; Ireland has 7 (with only 2 of them still considered "stars" and neither of them in technology)


----------



## bearishbull

beattie said:
			
		

> Yes I would have thought that it could have been a bit of a 'test the water' asking price originally though I think one would still be mad to purchase at this price. I have heard anecdotally that penthouses are not making as big as gains as the general market (I know this is probably linked to mmgt fees etc).
> 
> It will be interesting to see if a property like this stays on the market in one of Dublin's most desirable locations


[broken link removed]
this one near me is rather pricey,900k for a 1000sq.ft apartment close to north inner city in drumcondra,close to st.pats for renting to trainee teachers!,maybe bertie will buy it as he thinks theres not a risk in irish property! i'd say his house is worth well over a million at this stage,its one of the smaller ones in the estate.


----------



## soma

Remix said:
			
		

> I'm sure the Israelis must be having a good ol' laugh at the Irish with our runaway house prices and debt because at one point, way back in the celtic tiger years, we may have been seen as a competing small nation in attracting and developing high technology.


Interesting point alright. Years ago my 1st job out of college (1999) was for a well-funded startup with alot of international connections. I remember them telling me that they only narrowly decided on Ireland over Israel when choosing location. I wonder what decision they'd have made in 2006..


----------



## bearishbull

Just thinking,when people say "im buying for my pension" etc and "i'll hold long term", do they not do some basic arithmetic in their head and say we're building 80k properties a year and if as they are hoping the market doenst crash then after 30 years we'll have nearly a house for every man woman and child in the country!where will demand be if theres so many houses in excess of the demand? if the market does keep strong as the bulls suggest the massive building of 80k units a year will within a decade or so saturate the market and prices will have to fall regardless of interest rates economy etc! so a booming market now inticing developers to build more and more is actually a bad thing for medium to long term investors!as the developer ray grehan said on the rte programme "boom" recently,it cant continue or we'll all have several houses! there may be a few more years of price growth but as more and more housing stock is created the market will in next few years or within the next decade face large oversupply.
an another note ,we have been talking about properties sitting vacant,a council in the uk is bringing in regulations to seize properties which are being let or lived in and forcing them to be rented. imagine if irish councils did this!


----------



## Duplex

It seems that everyone from Trichet to the Jerusalem Post can see what’s happening in Ireland.  What amazes me is the apparent denial in government and Bertie in particular.  But is it denial or a more sinister cynicism?.  I can’t make myself  believe that any government could peruse a policy that is so self evidently damaging to Irelands future, so I’m comforting myself by deciding that denial is the problem, or maybe I’m in denial?


----------



## walk2dewater

...it's not just a river in Egypt...


----------



## Guest107

walk2dewater said:
			
		

> ...it's not just a river in Egypt...


Its a paper in Israel even



IRISH BINGE 



> In addition to flashy spending of the usual sort - *the rate of ownership of BMWs and Mercedes in Ireland is higher than in Germany* - *they are hooked on a crazed binge of property buying.* This encompasses both their own real estate - so that derelict barns in remote country villages fetch six-figure euro prices - and others' too, especially in the developing East European countries, from Poland down to Bulgaria.


This lad should write for one of our Property Supplements  . He goes on a bit further about us and he is more or less  correct in everything he says .

Ah Well, chin chin.


----------



## Neffa

bearishbull said:
			
		

> Just thinking,when people say "im buying for my pension" etc and "i'll hold long term", do they not do some basic arithmetic in their head


 
I think you know the answer and it is no. 

In the Indo today, there is a report that Paddy Power is offering odds on house price rises for this year and next. What struck me was the only odds reported were for rises. 

You see, Irish houses only ever go up!


----------



## SidTheDweeb

> Fine houses, fancy cars no roads. That's short-termism run amok, a feel-good formula leading nowhere. The Swiss may not know much about feel-good fixes and they may be unfriendly and cold, but they are the world experts on protecting and enhancing the wealth they steadily accrue. As ever, they are much the safer bet.



That's funny.


----------



## beattie

Neffa said:
			
		

> I think you know the answer and it is no.
> 
> In the Indo today, there is a report that Paddy Power is offering odds on house price rises for this year and next. What struck me was the only odds reported were for rises.
> 
> You see, Irish houses only ever go up!


 
I am sure PP are happy to suck up the 'gains' accruing from property here so they have a vested interest in the party continuing or maybe they are being clever knowing that if it drops they clean up!


----------



## bearishbull

beattie said:
			
		

> I am sure PP are happy to suck up the 'gains' accruing from property here so they have a vested interest in the party continuing or maybe they are being clever knowing that if it drops they clean up!


i wonder are people who compile the ptsb house price index allowed to bet as they may have access to insider info before the market.


----------



## SidTheDweeb

About Paddy Power's odds...

Singles Only.** Settled in accordance with official house price index figures obtained from Permanent TSB.                                                                                                                                                                                                                                                                                    Under 10 percent  4 - 1  
10.000 - 11.000percent  8 - 1
11.001 - 12.000percent  6 - 1  
12.001 - 13.000percent 7 - 2  
13.001 - 14.000percent 5 - 2  
14.001 - 15.000percent 4 - 1
15.001 - 16.000percent 8 - 1
16.001 - 17.000percent 10 - 1
Over 17percent 14 - 1    

What % will the value of National House prices rise by for *2006*?

They've already risen 5-6% up til now have they not?


----------



## TheSphinx

I viewed a property about a month ago in Monaghan, the asking price was 200k, the vendor was hoping for €220K. The Estate Agent rang me yesterday to say that the deal will be closed by next Tuesday, there is only 201K currently on the house. 

2 things....

It has been a long time ago since estate agents have been ringing around looking for bids 

also

houses aren't going for as much as people expect....

Alarm Bells!!!!


----------



## beattie

madisona said:
			
		

> I'm still very puzzled by this phenemonem. Why would BTL investors leave apartments empty rather than rent them. There may not be a market there for these properties at €1000 a month but why would they not rent them at say €500 a month. Even if they are holding mainly for capital appreciation I can't see the logic of deciding not to rent and to therefore forego that income.


 
A number of people I think don't fully realise the difficulties with regard to looking for tenants and choose to let it sit idle while the price appreciates. Maybe the government could bring in some sort of ownership tax (per year) for investors which would force them to look for tenants which would drive rental prices down, which would mean people would look for less pay rises, which would mean we would be more competitive as an  economy.......


----------



## gearoidmm

beattie said:
			
		

> A number of people I think don't fully realise the difficulties with regard to looking for tenants and choose to let it sit idle while the price appreciates. Maybe the government could bring in some sort of ownership tax (per year) for investors which would force them to look for tenants which would drive rental prices down, which would mean people would look for less pay rises, which would mean we would be more competitive as an  economy.......


Any measures that the government introduces at this stage of the game to reduce investor demand in the housing market would probably have the effect of causing a significant fall in the market for which they would be blamed.  There is no way that they will bring in any such measures in the next budget - it would be political suicide in the run-up to the election


----------



## gearoidmm

If your house is appreciating in value by 20-40,000 each year and you could only get 10-12,000 rent on it (for which you'd have to register, pay tax, furnish it, find tenants etc) you can see why people aren't going to bother going to all the hassle involved in renting out the place.


----------



## gearoidmm

madisona said:
			
		

> nope. still don't see it. note as well that there are a lot of people in hotels, restaurants, factories and call centres for who €10K - €12K is close to a years income.


A regular poster here admitted recently on another thread that he sold a house in Galway that he bought 2 years ago and never rented it out because it wasn't worth the hassle.

I'm not saying that I agree with it but just that it's happening all over the place


----------



## JumpShot

SidTheDweeb said:
			
		

> About Paddy Power's odds...
> 
> Singles Only.** Settled in accordance with official house price index figures obtained from Permanent TSB. Under 10 percent 4 - 1
> 10.000 - 11.000percent 8 - 1
> 11.001 - 12.000percent 6 - 1
> 12.001 - 13.000percent 7 - 2
> 13.001 - 14.000percent 5 - 2
> 14.001 - 15.000percent 4 - 1
> 15.001 - 16.000percent 8 - 1
> 16.001 - 17.000percent 10 - 1
> Over 17percent 14 - 1
> 
> What % will the value of National House prices rise by for *2006*?
> 
> They've already risen 5-6% up til now have they not?


----------



## Guest107

madisona said:
			
		

> I'm still very puzzled by this phenemonem. Why would BTL investors leave apartments empty rather than rent them.



Easy. 

Its 2003,  buy €250k apartment in central dublin and leave empty. It rises 10% a year in each of past 3 years and now well over 300k 

Rise year one €25k or €2k a month rent €1k
Rise year two €28k or €2.3k a month rent still €1k
Rise year three €31k or €2.6k a month and rent still €1k



> There may not be a market there for these properties at €1000 a month but why would they not rent them at say €500 a month.


Thats beer money compared to over €2k a month appreciation . The marginal cost of doing _something_ , or _anything_ is €0.5k a month to €1k a month when doing *NOTHING* is €2.5k a month profit so thats a lot of effort for a marginal 20% or 40% extra and all the hassle and tax and stuff. 


> Even if they are holding mainly for capital appreciation I can't see the logic of deciding not to rent and to therefore forego that income.


Hassle Hassle and they must evict tenants and repaint before they sell. That could take months.  At least this way they are ready to exit fast.....or so some of them think.  Once they are all ready to exit fast the bubble is over anyway and they will not be exiting but dumping.

In the late 1990s boom rent DID track capital appreciation so €1k rent for a €200k flat linearly became €1.5k rent for a €300k flat as both rose broadly in tandem. In the post 2002 boom prices rose because money was cheap and .coms were uncool.  Rents were static more or less which should have told the fools that the supply was greater than the demand. 

Now in 2006 you cannot let anywhere without a dishwasher and washing machine , in 1990 a washing machine was a luxury never mind a dishwasher. 



HTH


----------



## JumpShot

Under 10% in 2006 was 5-1 this morning, now gone in to 5/2.
See the crash is happening already!

(Max bet is only €40, so the article in indo on paddy power today and this type of bet is just another one of there novelty bets to catch punters interest)


----------



## gearoidmm

madisona said:
			
		

> so is property to an extent moving beyond its old function as a place to live and from which income can be derived  and has it become to an extent merely a commodity to be traded without having another use. i.e Is property becoming tulips.



It looks like it


----------



## hmmm

madisona said:
			
		

> so is property to an extent moving beyond its old function as a place to live and from which income can be derived  and has it become to an extent merely a commodity to be traded without having another use. i.e Is property becoming tulips.


 I think it has for many people. You have to remember for many (most?) Irish, they believe property is a one way bet, so that influences many of their decisions. A small example - I am aware of a number of friends & family from &quot;down da countrah&quot; who have purchased property in Dublin which they intend to house their sons and daughters when they visit university. Because property prices can only go up as far as they're concerned, they feel that this will save on paying rent and is a no brainer investment. I know that some of these are lying empty at the moment.   I really think it has all the signs of a pyramid scheme at this stage.


----------



## beattie

madisona said:
			
		

> so why are the builders and Bertie saying that we need to build more housing to meet demand. surely they are not being disingenous
> 
> 
> http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1628510&issue_id=14173
> 
> [FONT=Arial, Verdana, Arial]*Capital's housing supply falling way below demand, builders say*[/FONT]
> 
> DUBLIN is rapidly running out of new houses to satisfy the huge demand......... the Irish Home Builder's Association (IHBA) warned.
> It said yesterday that in order to meet the current demand the availability of zoned and serviced lands must be examined.
> .....the supply of homes over the next two to three years is significantly below the requirement,"


 
There is no way that one could accuse Bertie of being disingenous with regard to property..... 

In a way I can't blame him but when you put all your eggs in one basket......


----------



## bearishbull

people might be content to sit on empty properties for 
-tax reasons,register a tax loss on unrented property  and offset against profits elsewhere
-they may have busy full time jobs and dont want hassle 
-they are very wealthy and a few hundred a month is too little for work involved
-they may be cash rich ,time poor
-they might want flexibility with regard to selling,if they rent it they might not get tenant out quick enough when they wanna sell
-they may wanna avoid alerting authorities to the fact they own property/assets

?????


----------



## Duplex

Some (maybe a lot) of the empty stock may be on the market and vacant don’t forget.


----------



## JohnBoy

i have been following this thread for quite some time and it makes for entertaining reading on a quiet Friday. 

It is obvious that the property market in Ireland is seriously distorted and that the eventual unwinding of this excess will cause an inordinate amount of economic and financial pain, but the pro-property mindset has now become so deeply rooted in the national psyche that that it is seen as the only route to wealth.

a good friend of mine came was recently head-hunted back to Ireland after a highly successful career overseas. He had often joked to me about the Irish property mania and we both had talked about buying property back home once the bubble had well and truly burst. Now that he is back in Ireland and a proud owner of a period house in a desirable Dublin suburb he fully subscribes to the soft-landing / market-will-plateau philosophy.


----------



## Chamar

I think another good example of our obsession with property are these tv shows like "househunters". When I watch, I have zero interest in the houses but I am always amazed by the people. They walk into these "rising damp" type-houses with faces like kids in a candy store as the pushy presenters nasally say "yes, and at €700,000 asking price you really are getting good value here".


----------



## room305

gearoidmm said:
			
		

> I'm not saying that I agree with it but just that it's happening all over the place



My father owns several rental properties and he does the whole landlord bit (I spend my time convincing him to not buy anymore properties and wish he would sell some of them). However, some of his friends own properties and do not let them. One guy owns three houses and they have been idle for between one and two years. 

His excuses range from the sublime to the ridiculous and frequently change (currently it's the fact that he would be taxed on the rental income ... I know, I know). Basically I think he's not bothered. The massive capital appreciation gains (which people would do well to remember they haven't actually realised yet) has bred widespread complacency in a competitive rental market. That's my opinion anyway.

Btw, is anyone else putting money on the Paddy Power betting prices on the TSB housing index? I think 8-1 on less than 10% appreciation in 2007 is a stunning offer. I can only imagine the odds on depreciation next year!


----------



## ivuernis

room305 said:
			
		

> Btw, is anyone else putting money on the Paddy Power betting prices on the TSB housing index? I think 8-1 on less than 10% appreciation in 2007 is a stunning offer. I can only imagine the odds on depreciation next year!


 
My eye was caught by those 8-1 odds but having looked at the webiste now it's 8-1 on a 15%+ rise in 2007 and 5-2 on it being less than 10%.


----------



## whizzbang

madisona said:
			
		

> http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1628510&issue_id=14173
> 
> [FONT=Arial, Verdana, Arial]*Capital's housing supply falling way below demand, builders say*[/FONT]



I think this demand includes a huge number of people who want to buy just to leave empty and wait for appreciation. This demand does not mean there are lots of people with nowhere to live. It means there are lots of people with a ton of cheap credit.

Demand = people who WANT to buy houses, not people who NEED to buy houses.


----------



## bearishbull

whizzbang said:
			
		

> I think this demand includes a huge number of people who want to buy just to leave empty and wait for appreciation. This demand does not mean there are lots of people with nowhere to live. It means there are lots of people with a ton of cheap credit.
> 
> Demand = people who WANT to buy houses, not people who NEED to buy houses.


obviously
ive been saying specualtive "demand" driven by cheap credit has been driving the market forward and enticing more to speculate,speculative booms are to a large extent self perpetuating untill they grind to a halt and enter reverse mode.my aunt who has a few properties (all rented and probably debt free) and bought them ages ago now is considering buying more as they are going up so much and "only go up",she is being enticed into the boom late by potential  speculative gains,if it starts falling she wont buy anymore and might sell as her belief that they can only go up is shattered.


----------



## whizzbang

bearishbull said:
			
		

> if it starts falling she wont buy anymore and might sell as her belief that they can only go up is shattered.



It will be an interesting few months when the market goes from thinking "It can only go up" to "it can only go down". If the new "down" belief is half as strong as the old "up" belief the market could stay down for a long time.


----------



## Purple

whizzbang said:
			
		

> It will be an interesting few months when the market goes from thinking "It can only go up" to "it can only go down". If the new "down" belief is half as strong as the old "up" belief the market could stay down for a long time.


 I agree completely. The boom is not rational or well informed so why will the downturn be any different?
I don't see a soft landing...I am currently selling most of by property portfolio. This has been triggered as much by a new business interest and quality of life issues as a belief that the sky will fall in any day now but just as with stocks I don't believe in trying to time the market that much. I have made about €3'000 a week on paper over the last 4 years. Now I think I'd like to see it in the bank.


----------



## whizzbang

Purple said:
			
		

> I have made about €3'000 a week on paper over the last 4 years. Now I think I'd like to see it in the bank.



congratulations! thats quite a horde!  Please don't take it personally if I harbour a deep seated resent for your success.


----------



## Purple

whizzbang said:
			
		

> congratulations!


Thansk  


			
				whizzbang said:
			
		

> Please don't take it personally if I harbour a deep seated resent for your success.


None taken. It was a combination of blind luck and seeing the blindingly obvious. Now it's time to leave something in it for th next guy (maybe)


----------



## Guest107

Nobody ever lost money taking a profit <cough>


----------



## room305

ivuernis said:
			
		

> My eye was caught by those 8-1 odds but having looked at the webiste now it's 8-1 on a 15%+ rise in 2007 and 5-2 on it being less than 10%.



So would it be fair to say that the majority of the betting public are not as optimistic about house price increases next year as Paddy Power?


----------



## sandymount

Where on the Paddypower site are these odds? Can't seem to find them.


----------



## conor_mc

room305 said:
			
		

> So would it be fair to say that the majority of the betting public are not as optimistic about house price increases next year as Paddy Power?


 
Probably more realistic to say the betting public have already bet the house on those price rises!!!!


----------



## Howitzer

sandymount said:
			
		

> Where on the Paddypower site are these odds? Can't seem to find them.


 
That market seems to have been pulled. It was probably only ever a publicity stunt, but they may have taken a lot of bets on one particular market and didn't want any more exposure. (5/2 on anything less than 10% in 2007 caught my eye, and my wallet).

For a bit of perspective on how expensive Dublin has become. Orange County in California now has a median price of E500,000 ($635,000) which is only about 10% higher than Dublin. Anyone who's ever been to California or even just watched TV will know that the OC is the preserve of multi millionaires.

[broken link removed]

Slightly odd that it's comparable to a semi-D in Finglas.


----------



## Guest107

Howitzer said:
			
		

> Slightly odd that it's comparable to a semi-D in Finglas.


DO NOT confuse Median and Average, please . There could be s[broken link removed] in valleys to keep the median low in OC


----------



## Howitzer

2Pack said:
			
		

> DO NOT confuse Median and Average, please . There could be s[broken link removed] in valleys to keep the median low in OC


 
Well that is why I clearly stated median and posted the link.


----------



## cjh

*Getting out - Banks, Estate Agents, now builders?*


----------



## Guest107

yeah but you cannot buy a cheap trailer in Fingliss so the median calculation starts with the cheapest house. The average in Finglas would be lower though as there are no beachfront palaces in Fingliss at the top end .

Anyway the builders are jumping ship. The number of HOUSE STARTS has dropped sharply , not COMPLETIONS which are some 6 months behind starts.  

Our 80,000per annum  figure refers to completions not starts. 

see

[broken link removed]

While it will not affect 2006 output at 80,000 units it will sharply correct the 2007 output unless the building industry starts building like billyo before the Galway Races next month  

The builders will not start that phase two and phase three and phase unless they already have lads , heck they may leave the place in a sea of mud instead .


----------



## Dipole

So the builders will kick off the recession by laying off workers.  The poles return home and even more houses lie empty.


----------



## Guest107

But not until about October this year.  Poles go home and the rental demand disappears with them Dipole, I agrees totally.


----------



## soma

2Pack said:
			
		

> Anyway the builders are jumping ship. The number of HOUSE STARTS has dropped sharply , not COMPLETIONS which are some 6 months behind starts.


Hmm.. could this actually help the "soft landing" scenario, as we may not end up with the massive inventories that they are seeing in the USA..?


----------



## Guest107

Assuming that 

1. The average house build uses 4 labour units 
2. Takes a year . 
3. Cost of labour about €140k  reasonably. 
4. 80,000 units completed = 320,000 labour units 

Then 160,000 foreign labour units will feck off home when the 
building boom slows to 40,000 units a year. 

I was told elsewhere the sharp fall mentioned was = 40,000 units a year annualised ...the blurb is non specific .... but that March was awful cold ....which it was so that traditional springtime March starts may be pushed back to April for 2006 .  

These foreign labour units tend to live 4 to a house , higher than the Irish average . 160,000 leaving will equal 40,000 empty properties . Half of a years supply. A full years supply in 2007 ON TOP of the years supply. 

Not all foreign labour units are builders but the builders track the work just as we Paddies did  so they will go to London for olympic work and to Berlin  and to Barcelona as did Paddy in the early 1990s .


----------



## ubiquitous

It hardly takes 4 men working for 52 weeks to build a single house????


----------



## walk2dewater

soma said:
			
		

> Hmm.. could this actually help the "soft landing" scenario, as we may not end up with the massive inventories that they are seeing in the USA..?


 
Why would anyone buy at these prices if everyone was to believe prices won't go up? This is the massive contradiction at the heart of the soft landing story.


----------



## Glenbhoy

Perhaps these figures on construction starts are designed to give demand a further push - after all dublin is under-supplied and fast running out of homes, so with even less completions due in years to come, all prices will rocket and even Sean Dunne will be able to make a profit on his Ballsbridge purchases.


----------



## walk2dewater

Further to my point about soft landings.  if you believed that prices never ever fall in real terms, and that an inflation-matching soft landing is awaiting us at the end of this run-up, then it's rational to borrow as much as possible and buy as much property as you could, and to continue doing so as your equity base grows exponentially.  To not do so would be sheer stupidity on your part.



Oh but wait a second...........


----------



## SidTheDweeb

*Re: Getting out - Banks, Estate Agents, now builders?*

Well that's not good news for anyone!
Would be interested in seeing the actual figures...


----------



## cjh

*Re: Getting out - Banks, Estate Agents, now builders?*

If you have access to The Irish Times website they have a slightly more informative article in Breaking News....


----------



## bearishbull

I wonder what the stats are for Dublin and other cities?? I doubt there is a slowdown in Dublin yet. Maybe builders looking at the 80k+ units a year and rental yields being terrible and interest rates rising dont wanna be left holding the baby.


----------



## Guest107

the smart builders will not be left with any unsold inventory in a slump. The dumb ones will. The LEAD indicator of the slump on the sales side is that Allowances go up and up while the price of the property remains static.


----------



## owenm

walk2dewater said:
			
		

> Why would anyone buy at these prices if everyone was to believe prices won't go up? This is the massive contradiction at the heart of the soft landing story.



Because they might want to live in it? i.e utility value, what houses are actually for....


----------



## room305

owenm said:
			
		

> Because they might want to live in it? i.e utility value, what houses are actually for....



The amount of people buying houses to live in is a large section of the demand. However, 40% of the people buying houses are buying them as an investment. This figure doesn't include people buying a new house to live in (trading up) but hanging on to their old house.

Furthermore, of the 60% buying homes to live in, how many are doing this earlier than they really wish to? Among my friends and acquaintances, number many de facto speculators. Buying a house to live in despite wanting to travel, or with intentions to move again in a short space of time, because they think the prices will only rise. I know several couples who have decided to co-habit and rather than renting for a year to see how it works out (sensible option) decide to burden themselves with a house because "rent is dead money".

If house prices remain flat in nominal terms, many of these buyers will not feel the same intense pressure to buy, lowering the overall demand.


----------



## dam099

2Pack said:
			
		

> Assuming that
> 
> 1. The average house build uses 4 labour units
> 2. Takes a year .
> 3. Cost of labour about €140k reasonably.
> 4. 80,000 units completed = 320,000 labour units


 
According to the [broken link removed] of the labour force about 250,000 people are employed in construction. Not all of these would be dedicated to building new houses there are other forms of construction so there is nowhere near 320,000 people working on new houses.


----------



## gearoidmm

dam099 said:
			
		

> According to the [broken link removed] of the labour force about 250,000 people are employed in construction. Not all of these would be dedicated to building new houses there are other forms of construction so there is nowhere near 320,000 people working on new houses.


 
True, but this significantly underestimates the numbers employed as a result of the construction boom, in related jobs.


----------



## walk2dewater

owenm said:
			
		

> Because they might want to live in it? i.e utility value, what houses are actually for....


 
I must be trespassing then, cos I live in a very nice townhouse but I don't own it....

lets say if my rent is a shade over €1,000/mth and the property goes for €800,000 and it's not getting any more expensive for the foreseeable future, i.e. the soft landing, then what sense would it be to buy it?  Every month I would be saving myself a fortune by renting rather than paying off a €800k loan, my deposit gets bigger and the place stays the EXACT SAME price...

Furthermore, who do you think has the leverage in the relationship?  Me with my pile cash, or my landlord who's subsidizing my lifestyle?


----------



## Guest107

gearoidmm said:
			
		

> True, but this significantly underestimates the numbers employed as a result of the construction boom, in related jobs.



Joinery, Builders Merchants, Kitchen Fitters etc . 

Furniture Shops sell more to new houses than elsewhere as do White Goods shops. 

And not all the building industry is declared and counted , there are lots of cash in hand merchants in the system . 

I still reckon its around 4 persons per house or 320k workers. If the thruput falls as it evidently threatens to in and from  October 2006 we suddenly have 160k surplus workers in the construction sector . 

Lovely


----------



## Remix

walk2dewater said:
			
		

> Furthermore, who do you think has the leverage in the relationship? Me with my pile cash, or my landlord who's subsidizing my lifestyle?


 
Perhaps landlords should be considered philantropists rather than investors  

No yield in many cases, capital appreciation possible but not guaranteed - capital depreciation also possible in the years ahead.

And as mentioned they often subsidise the costs of renters who want to live in prime areas close to work, amenities, best schools etc.


----------



## walk2dewater

Remix said:
			
		

> Perhaps landlords should be considered philantropists rather than investors
> 
> No yield in many cases, capital appreciation possible but not guaranteed - capital depreciation also possible in the years ahead.
> 
> And as mentioned they often subsidise the costs of renters who want to live in prime areas close to work, amenities, best schools etc.


 
true, but personally though, the entertainment value of pointing out the obvious is almost at zero now, I've even started saying the demographics-dead-money-booming-this-that-the-other, mantra just to avoid the topic entirely, I've also admitted to "owning" my home a couple of times, to particular females if u understand...  J


----------



## Guest107

walk2dewater said:
			
		

> I've also admitted to "owning" my home a couple of times, to particular females if u understand...  J


Thats works a bit better than the rather postmoderne 'would you like to share bread  and bed and a mortgage with me for 35 years ?? '  .  The dopier ones never understood the difference between a homeowner and a mortgage owner anyway  . The ultra dopey ones think a big and a long mortgage is more impressive than a small one.


----------



## ninsaga

2Pack said:
			
		

> ......The ultra dopey ones think a big and a long mortgage is more impressive than a small one.



..... you mean to say that if I don't have a 90% mortgage for €400k over 40 years means that I'm not doing well in life ?


----------



## bearishbull

from todays indo
_"Executive" rents in the Irish capital were lower than in many major cities. The monthly cost of renting a luxury two-bedroom unfurnished apartment was found to be just over €1,200 in Dublin, compared to €3,400 in Tokyo, €2,500 in London, €2,200 in Beijing and €1,900 in Paris._
_"The cost of day-to-day living in Dublin might be higher than in some European cities, but good quality accommodation isn't as expensive," Mr Duncan said._

When you can rent a 3bed home in D4 (supposedly one of Irelands most exclusive areas) for 1700euro a month why spend a million plus on the same property? Rents are so cheap because so many people are buying/have bought as investors and are keeping artifically low the rental of properties in the more exclusive areas,eventually things have to give.How can the likes of Sean Dunne expect to make money on apartments in D4 if rents are so poor there? if there truly was a shortage of housing in Dublin then rents would be much higher(like in london and paris etc) and not just property prices.


----------



## tiger

bearishbull said:
			
		

> When you can rent a 3bed home in D4 (supposedly one of Irelands most exclusive areas) for 1700euro a month why spend a million plus on the same property?



Yikeees!!

Had a search myself, Ballsbridge has 152 properties to rent.

Double Yikeees!!


----------



## walk2dewater

... and since half of all new immigrants to Ireland are female this means that the fundamentals supporting todays healthy property market are robust and there's no issue at all at all, in fact buy now or be priced out, so go on now with yourself etc etc... excellent!


----------



## MugsGame

madisona said:
			
		

> Is there perhaps a correlation between the cost of housing and people wanting to get laid. I'm sure you have seen the BOI morgage ad where the couple are in the back of a taxi and it looks like its not going to happen because neither of them owns a property. There's also a permenant TSB ad where the mafia guy interrupts a couple in bed and advises them of the advantages of having their own place. Don't underestimate the importance of fufiling the old hunter/gatherer role.



Yes, I hear a deluxe ironing-board is a must-have pulling accessory.
(If only irishbusinesswomen.com could see how enlightened we've become!).


----------



## Guest107

bearishbull said:
			
		

> If there truly was a shortage of housing in Dublin then rents would be much higher(like in london and paris etc) and not just property prices.


 And thats what makes we Irish special so it is. 

The other thing that makes us special is that we think that there is a fundamental and large undersupply of habitable property in Dublin , especially Dublin .

Did anyone hear the Threshold person on RTE radio this evening ?


----------



## Superman

2pack:
No - what did he say?


----------



## Guest107

She !

Some of her point was that the gubbirnment will ultimately have to stop paying th'oul 'dead money' to landlords. 40% of all rental units are paid for by the state . The state will eventually have to consider owning some of these units. 

My 2c on this !!!!

In a recession that will climb over 50% and the government gets massive pricing power on rent levels everywhere. 

So if the state were seen to 'socialise' certain apartment complexes in a soggy market by buying a few flats then the prices will drop further as they are seen as quasi 'social housing' and not 'pure' private sector units. This if only the state is 'buying' and the private sector is not buying. 

Then again the government could beef up housing associations like in the UK, its high time and they are better landlords who run places properly unlike the corpos.

The government will only 'enter' the market to shore it up but will actually tank it to some extent instead. Section 5 is a bad joke.


----------



## Calina

But if 40% of all rental is already paid by the government, they already have clout in the rental market - they just don't apply it because it costs more to fight down rent to the market level (which around where I am is between 150-300 below what the State pays depending on the property type) than it does just to pay the damn thing. Quite a few private landlords like that situation. At the moment, I would say that the fact that the government pays so much of the rent in the Dublin area is actually shoring up the rental market, not depressing it. 

There are, as far as I remember, mixed views on whether housing associations are better landlords than local authorities in the UK, incidentally.


----------



## Peadar

Landlords aren't exactly jumping into the  Rental Accomadation Scheme because it means that they will have no say over the tenants that the council puts in their property. I don't think there has been a big take up for it.

It is also a reduced rent the council will be offering not a market rent.


----------



## Superman

As Peadar said - my parents have a few properties.  They and some friends were approached by City Council and noone took up the offer.

They do take some hassle away for the landlord as its quite a long contract, but what you'll get back is probably going to be in poor condition and the Council will only give you a reduced rate as they are "saving you the hassle of looking for tenants".

Presumably people who are sufficiently time poor would take up their offer.


----------



## Guest107

Who insures it if it burns down ????? , as they do   . I know that if I had corpo tenants in  a gaff of mine the insurance would crease me.


----------



## z107

I suspect that only slumlords would take them up on this offer. The council will probably use this scheme to house the tenants no one else wants. One can only imagine the condition of the property after four years.


----------



## beattie

Still no let up in sight.



http://www.rte.ie/business/2006/0628/houses.html

On another note there was an interesting discussion on the Dunphy show this morning between Jill Kerby, Austin Hughes and another guy from Trinity who I can't remember the name of (he was Russian so it isn't too easy to remember). Basically the argument came down to whether the gain in your house value is real or not. No prizes for guessing which side the banker took.....


----------



## Guest107

beattie said:
			
		

> Austin Hughes


Austin and that Dan fella from some bank who is equally media unshy and  equally reluctant to countenance that any of their lending decisions are stupid  are a double act that pisses me off. RTE allows them on to soundbite but because they advertise on RTE (unlike estate agents) they seem to be never questioned properly by anone , not George Lee live on air. 

My name for the Dan and Austin media Double Act

_" The Up and Up "_


----------



## room305

It's pretty real if you sell your house and pocket some wads of lovely cash! 

However, if you don't sell then it is merely an aspirational figure based on a realistic assumption of what the market will currently bear. Until then only the debt you owe the bank is real.

Anyone else having trouble explaining such concepts to people? I'm trying to convince a friend to sell an investment apartment he owns. It's costing him nearly €600 a month on top of what he earns from rent, this figure will get worse over the next few months because he has an interest-only mortgage on it. Worse again, he has a number of debts and a hefty revenue bill to pay. If he sold, the capital gain could clear all his debts and put a few bob in the bank. Instead he labours on under this mountain of debt, convinced it is all worth it because his investment apartment is 'earning' him at least an extra €30k a year.

Symptomatic of the madness gripping the country, in his large circle of friends and acquaintances, I am the only one advising him to sell his property. Everyone else, including his parents, think he would be mad to do it.


----------



## conor_mc

2Pack said:
			
		

> that Dan fella from some bank


 
Dan McLaughlin?


----------



## Duplex

room305 said:
			
		

> It's pretty real if you sell your house and pocket some wads of lovely cash!
> 
> However, if you don't sell then it is merely an aspirational figure based on a realistic assumption of what the market will currently bear. Until then only the debt you owe the bank is real.
> 
> Anyone else having trouble explaining such concepts to people? I'm trying to convince a friend to sell an investment apartment he owns. It's costing him nearly €600 a month on top of what he earns from rent, this figure will get worse over the next few months because he has an interest-only mortgage on it. Worse again, he has a number of debts and a hefty revenue bill to pay. If he sold, the capital gain could clear all his debts and put a few bob in the bank. Instead he labours on under this mountain of debt, convinced it is all worth it because his investment apartment is 'earning' him at least an extra €30k a year.
> 
> Symptomatic of the madness gripping the country, in his large circle of friends and acquaintances, I am the only one advising him to sell his property. Everyone else, including his parents, think he would be mad to do it.


 
Well your friend is right, given current house price inflation he is making a (nominal) return of €30k a year.  He will no doubt reconsider his position once inflation eases, as will thousands of other 'investors' who will then seek to limit their exposure to the market.  This is how a bubble works its speculative, not driven by fundamentals such as yields, or housing demand.  Once the herd stops stampeding in one direction, its off stampeding in another (sometimes totally opposite) direction.


----------



## gearoidmm

So much for the house market weakening - house price inflation is accelerating!  Time to close the thread?

http://www.finfacts.com/irelandbusinessnews/publish/article_10006381.shtml


----------



## ivuernis

beattie said:
			
		

> another guy from Trinity who I can't remember the name of (he was Russian so it isn't too easy to remember).


 
Constantin Gurdgiev [broken link removed]

Was that NewsTalk 106? Is the audio archived for those of us living outside the pale? Looking forward to when NewsTalk goes nationwide.


----------



## Remix

gearoidmm said:
			
		

> So much for the house market weakening - house price inflation is accelerating! Time to close the thread?
> 
> http://www.finfacts.com/irelandbusinessnews/publish/article_10006381.shtml


 
House prices accelerating again in 2006 ?

I've been looking in the newspapers for the announcement that SAP and BMW are moving all operations to Ireland from Germany or Boeing is moving it's aircraft design and manufacture to Dublin or that we are becoming an export powerhouse or the new economy is taking off...

Couldn't find anything of the sort so guess it must just be the ol' reckless lending/ reckless borrowing thing again !


----------



## walk2dewater

Remix said:
			
		

> House prices accelerating again in 2006 ?
> 
> I've been looking in the newspapers for the announcement that SAP and BMW are moving all operations to Ireland from Germany or Boeing is moving it's aircraft design and manufacture to Dublin or that we are becoming an export powerhouse or the new economy is taking off...
> 
> Couldn't find anything of the sort so guess it must just be the ol' reckless lending/ reckless borrowing thing again !


 
... i think i turning Japanense, turning Japanese, I really think so...


----------



## redo

With the increase in price of second hand property, the net tax take should be WAY above any gov. estimates.   I think we are beginning to see the traditional 5-7 year time by frame of yesta-years' baby boomers begining to trade up.  This could increase properties in the FTB price bracket (if there is one) thus increasing supply of these starter homes.  Which, in turn, could dampen peoples' ability to trade up.


----------



## gearoidmm

There has already been a significant reduction in the number of FTBs applying for single morgages in the Dublin market with a matched increase in the number applying for mortgages in the commuter counties.  This suggests that FTBs are now being priced out of the market in Dublin. (sorry, can't find the link).


----------



## room305

Duplex said:
			
		

> Well your friend is right, given current house price inflation he is making a (nominal) return of €30k a year.  He will no doubt reconsider his position once inflation eases, as will thousands of other 'investors' who will then seek to limit their exposure to the market.  This is how a bubble works its speculative, not driven by fundamentals such as yields, or housing demand.  Once the herd stops stampeding in one direction, its off stampeding in another (sometimes totally opposite) direction.



Yes, while his nominal return is currently better than the cost of servicing all that debt it is not much more so. Also, while the price of his apartment may be increasing so is the cost of his debt. Selling the apartment and clearing his debt would give him a large risk-free return. The impossibility of predicting when the market will turn belies the confidence people seem to have in foreseeing any downturn. By the time someone finally shouts "quick, out of the pool!" it could already be too late. His gains on the apartment will have disappeared but his debt will still be there. 

I've personally given up on convincing him otherwise and have resorted to simply hoping he doesn't get too badly burned.


----------



## walk2dewater

room305 said:
			
		

> Yes, while his nominal return is currently better than the cost of servicing all that debt it is not much more so. Also, while the price of his apartment may be increasing so is the cost of his debt. Selling the apartment and clearing his debt would give him a large risk-free return. The impossibility of predicting when the market will turn belies the confidence people seem to have in foreseeing any downturn. By the time someone finally shouts "quick, out of the pool!" it could already be too late. His gains on the apartment will have disappeared but his debt will still be there.
> 
> I've personally given up on convincing him otherwise and have resorted to simply hoping he doesn't get too badly burned.


 
"No warning can save a people determined to grow suddenly rich"


----------



## askalot

room305 said:
			
		

> If he sold, the capital gain could clear all his debts and put a few bob in the bank. Instead he labours on under this mountain of debt, convinced it is all worth it because his investment apartment is 'earning' him at least an extra €30k a year.
> 
> Symptomatic of the madness gripping the country, in his large circle of friends and acquaintances, I am the only one advising him to sell his property. Everyone else, including his parents, think he would be mad to do it.


Maybe your friend is unaware of how quickly markets can turn.

A friend of mine is back home on holidays from California where he's lived for twenty years. He is selling his house there and moving to Austin, Texas. They've had a rising house market for a few years now. Three months ago he put his house on the market for 799,000 dollars. Since then the market has tanked and he'd dropped the price to 740,000 and spent 20,000 on new decking, kitchen etc. Still no offers. In three months it went from a bull sellers market to a buyers market; if you can find a buyer! His in-laws sold a smaller house right at the peak for 645,000 (just sheer luck) and now three months later similar properties are looking for around 520,000!

Of course he is stunned at the prices back here in Ireland. His new place in Austin is six bed, 3,000 sq. ft, with four communial pools and play areas. It cost him 250,000 dollars; that's about 199,000 euro.


----------



## ivuernis

It beggars belief the faith that some people have in the long-term health of the property market especially when many have little or no grasp of local or worldwide economic trends and potential pitfalls. I know of FTBs who are currently buying at very high prices and taking out variable rate mortgages at a time when rates are rising. Some were unable to tell me (a) the projected market outlook for ECB rates in the next 12 months or (b) how much their monthly repayments would rise given a further 1% rise in rates. Given the financial outlay for a FTB I find this lack of knowledge amazing in otherwise intelligent and successful people. 

Maybe I'm worrying too much but when I read about economic developments both here and abroad it seems obvious to me that there is certainly potential for tougher times ahead in the coming years and I find it astounding how some people can brush these concerns aside when they are put to them for the first time especially vis a vis the future health of the Irish economy and property market. 

Am I being overly pessimistic? Should I just go-with-the-flow and hope for the best as everyone else is? My head tells me no, but every now and again going against the prevailing thinking raises such doubts in my mind.


----------



## ninsaga

So the ESRI have stated today (news interview on Today FM), that even though the house prices have increased 7% for the 1st 5 months of this year....they are still expecting it to increase for the rest of the year..albeit at a lower level of increase ....to run at about 10% for the entire year.

ninsaga


----------



## Neffa

ivuernis said:
			
		

> It beggars belief the faith that some people have in the long-term health of the property market especially when many have little or no grasp of local or worldwide economic trends and potential pitfalls. I know of FTBs who are currently buying at very high prices and taking out variable rate mortgages at a time when rates are rising. Some were unable to tell me (a) the projected market outlook for ECB rates in the next 12 months or (b) how much their monthly repayments would rise given a further 1% rise in rates. Given the financial outlay for a FTB I find this lack of knowledge amazing in otherwise intelligent and successful people.
> 
> Maybe I'm worrying too much but when I read about economic developments both here and abroad it seems obvious to me that there is certainly potential for tougher times ahead in the coming years and I find it astounding how some people can brush these concerns aside when they are put to them for the first time especially vis a vis the future health of the Irish economy and property market.
> 
> Am I being overly pessimistic? Should I just go-with-the-flow and hope for the best as everyone else is? My head tells me no, but every now and again going against the prevailing thinking raises such doubts in my mind.


 
I think the same thing periodically. Here is how I see the bear vs. bull arguments stack up:

Reasons why the property market is overvalued and likely to fall (Bear arguments)

1. Interest rates are rising so people's ability to fund increasing prices is diminishing rapidly and could go into reverse
2. Rent levels relative to purchase price (rents at 50% or less of purchase costs)
3. Irish price/income ratio for houses at the highest level in Europe (you can argue about this, but it is around 8-10x in Ireland when the long-run average is 3-5x)
4. Exotic loans becoming commonplace (IO, 35-year terms etc.)
5. 200,000+ empty properties (census figures)
6. Prices rising faster than incomes, gap financed by huge debt increase (Central Bank reporting almost 30% increase in debt levels annually)
7. Irish property now very expensive relative to international norms
8. Irish estate agents employ economists on their staff - this is astonishing - it would be laughed at in most other countries. 

Reasons why it is undervalued and you should buy now (Bull arguments)

1. Celtic Tiger continuing to grow and we are getting richer (not really true as output growth is tracking population growth so the net wealth generated in the economy through productivity improvements is close to zero, and also we are starting to lose FDI jobs to Eastern Europe)
2. We've never had a crash in living memory (hard to disagree with this)
3. Demographics and immigration (but most immigration is to do property-related work, so it is linked)
4. Errrr...rent is dead money  

So I think that the rational economic arguments point to some structural problems but the belief and mindset of the public at large is that it is a one-way bet and you should get in before it is too late. Most people shun the bearish view on the basis that "they've been saying this for years". So I expect prices to increase further in 2006. 

However, when some of the rational economic effects take effect (and they will, very soon - some "investors" will not be able to fund IO mortgages on rental property doubling if the rent is static), you'll see some softening in the market. I think that will still take another 6-9 months to kick in and then we will see some interesting times ahead. 

There's a good piece on the UK Motley Fool site on this - and they are concerned when the price/income ratio is at about 6 !!

[broken link removed]

Personally, I think Ireland will need a lot of pain to really understand that property is a not a one-way bet. It left a nasty mark in the UK and Japan - more of the same is coming here, I think.


----------



## Guest107

Good summmary neffa 



			
				Neffa said:
			
		

> 3. Irish price/income ratio for houses at the highest level in Europe (you can argue about this, but it is around 8-10x in Ireland when the long-run average is 3-5x)


 The Irish long run average would also have been when mortgage interest rates were not atypically 10-15% . The current rate is about 3.75% . 

As well as that the income tax grab was much higher so our take home is also higher. Thats why I never quote these long term averages because the euro and the governments solvency has changed these fundamentals in my opinion.

What the euro has not changed is the long term ratio  betwen average house prices and average rents but I cannot find those figures...probably a state secret.




> 2. We've never had a crash in living memory (hard to disagree with this)


The period 1981-1987 was a crash in stagflationary form. House prices totally froze while the inflation rate hit 20% at one stage .  It was a drop in prices of 30% in real terms ...maybe more.

I lived then and I can remember it


----------



## bearishbull

Good post neffa, i think in the bearish arguments more points about the macroeconomic unsustainability of the irish economy should be made.
-Becoming uncompetitive, all manufacturing to leave here  in next decade ot two
-overreliance on construction and foreign multinationals
-lack of a strong indigenous export sector
-tiny investment in r&d etc,poor innovation
-debt accelerating at 30% which means it more than doubles every 3 years!
-inflation erroding competitivness
-etc
-etc


----------



## bearishbull

2Pack said:
			
		

> Good summmary neffa
> 
> The Irish long run average would also have been when mortgage interest rates were not atypically 10-15% . The current rate is about 3.75% .
> 
> As well as that the income tax grab was much higher so our take home is also higher. Thats why I never quote these long term averages because the euro and the governments solvency has changed these fundamentals in my opinion.
> 
> What the euro has not changed is the long term ratio betwen average house prices and average rents but I cannot find those figures...probably a state secret.
> 
> 
> 
> The period 1981-1987 was a crash in stagflationary form. House prices totally froze while the inflation rate hit 20% at one stage . It was a drop in prices of 30% in real terms ...maybe more.
> 
> I lived then and I can remember it


 
yeah but when interest rates rose at 15% inflation was more so the real interest rate was negative! the inflation would eat away the mortgage in no time,theres no such levels of inflation to help todays ftb's! look at america where average prices are 5/6 times average earnings for a single person,in dublin the average wage is only 40k while average house is 400k ,ten times in dublin.


----------



## whathome

Am I right in thinking that the TSB/ESRI report for a particular month actually represents market activity (sale agreed prices) from a few months previous?  If the figures are compiled from TSB data, it could relate to the mortgage drawdown date rather than deal strike prices for that month.  So the reported growth for May represent deals done in Feb or March that are closing in May when the mortgage is drawn down.


----------



## Neffa

2Pack said:
			
		

> The Irish long run average would also have been when mortgage interest rates were not atypically 10-15% . The current rate is about 3.75% .
> 
> What the euro has not changed is the long term ratio betwen average house prices and average rents but I cannot find those figures...probably a state secret.


 
The multiple is actually for the UK & US, including periods of IR's in double figures. I don't know what the Irish long run average is/was. I think the point is that if you are looking at a 25 year commitment then you should think about what these fundamental ratios have done over time.

There is an OECD paper on your second point which shows Ireland off the chart in comparison to other countries. I think the link must be on AAM somewhere. I'll see if I can find it.


----------



## conor_mc

Just another little anecdote from the Indo about the Eircom Auperannuation Fund "rebalancing its portfolio" by flogging off the Pavillions in Swords....



Interesting how they talk about rental yields of 3-4%. Am I right in thinking that yields on commercial property has historically been higher than residential yields i.e. in the region of 5-7%?


----------



## Guest107

Neffa said:
			
		

> The multiple is actually for the UK & US, including periods of IR's in double figures. I don't know what the Irish long run average is/was. I think the point is that if you are looking at a 25 year commitment then you should think about what these fundamental ratios have done over time.


 I seem to remember a long term 4x ratio in the UK but will concede a 6x here going forward  to reflect our semi permanent low interest rates. 10x is obviously off the wall  . 



> There is an OECD paper on your second point which shows Ireland off the chart in comparison to other countries. I think the link must be on AAM somewhere. I'll see if I can find it.


Look forward to that. Rent is a fundamental and fast changing 'real measure of worth' for the property  and I think that there is also  a  long term ratio between annual average rents and annual average home values somewhere. That  is even less flattering than the values/income rations above I'll wager . [broken link removed] avers to it but it is strikingly absent from discussion  as a statistic in Ireland .......maybe we dont rent or maybe its an inconvenient statistic

Note that page 3 of same pdf shows some fascinating top of boom spikes and what happens afterwards to the key ratios (income-house prices) (house price-rent) and (mortgage payment - incomes)

Its interesting that the house prices to rent ratio is NEVER discussed in Ireland ....really.


----------



## bearishbull

*Investment banks begining to call property slump*

*Morgan Stanley predicts global property slump amid rising interest rates


*SINGAPORE (XFN-ASIA) - Rising global inflation and interest rates will
likely trigger a global property slump following the boom in recent years,
Morgan Stanley said.
The recent property boom was triggered by a prolonged period of low interest
rates globally, but this trend is reversing, with rates on the uptrend, it said.
*"As inflation picks up simultaneously around the world, interest rates are
rising everywhere, and the property boom is turning into a bust," Morgan Stanley
economist Andy Xie said in a note.*
"As the global economy is likely to experience rising inflation and cooling
demand, *all assets are likely to depreciate*," he said.
"Bonds began to decline first. Property, equity and commodities are
following.
"A soft landing for global property is possible but not assured. When
property in China and the US -- the growth engines of the global economy -- turn
down together, the *global economy could experience a recession*," Xie said.
Xie said property booms rarely have a soft landing, but that there is
confidence in the market that central banks will help achieve a soft landing.
"The seemingly soft landing in Australia and the US in the past two years
has lulled investors into believing that other markets will follow the same
pattern," Xie said.
"The difference is: these markets began to soften in a strong global
economy. The global economy has peaked out and could provide little support for
growth engines like China and the US when their property markets turn down," he
said.​


----------



## Remix

Trichet said the other day that at their last hiking meeting a major consideration in the decision to raise rates was because house prices are rising way beyond comfort levels.

I've just sent a note off to the ECB (info@ecb.int) referring to the latest reports on accelerating house prices in Ireland and asked if Mr. Trichet is being kept aware of the alarming situation here.

For what it's worth  !


----------



## bearishbull

Remix said:
			
		

> Trichet said the other day that at their last hiking meeting a major consideration in the decision to raise rates was because house prices are rising way beyond comfort levels.
> 
> I've just sent a note off to the ECB (info@ecb.int) referring to the latest reports on accelerating house prices in Ireland and asked if Mr. Trichet is being kept aware of the alarming situation here.
> 
> For what it's worth  !


LOL


----------



## walk2dewater

whathome said:
			
		

> Am I right in thinking that the TSB/ESRI report for a particular month actually represents market activity (sale agreed prices) from a few months previous? If the figures are compiled from TSB data, it could relate to the mortgage drawdown date rather than deal strike prices for that month. So the reported growth for May represent deals done in Feb or March that are closing in May when the mortgage is drawn down.


 
Is the TSB index measuring actual prices paid, or asking prices, or mortgage amount paid out?


----------



## RugbyBoy

Concerns in the UK!

[broken link removed]


----------



## Chamar

Remix said:
			
		

> Trichet said the other day that at their last hiking meeting a major consideration in the decision to raise rates was because house prices are rising way beyond comfort levels.
> 
> I've just sent a note off to the ECB (info@ecb.int) referring to the latest reports on accelerating house prices in Ireland and asked if Mr. Trichet is being kept aware of the alarming situation here.
> 
> For what it's worth  !



That's too funny! I'm not sneering, but like Trichet and friends even consider Ireland for a SECOND when they set interest rates. And who can blame them when Ireland barely accounts for 1% of the EU economy.


----------



## gearoidmm

walk2dewater said:
			
		

> Is the TSB index measuring actual prices paid, or asking prices, or mortgage amount paid out?



[broken link removed]

This paper from 1999 describes in excruciating detail the methodology used


----------



## whizzbang

RugbyBoy said:
			
		

> Concerns in the UK!



One step down from "Anarchy in the UK!" ?


----------



## Remix

Chamar said:
			
		

> That's too funny! I'm not sneering, but like Trichet and friends even consider Ireland for a SECOND when they set interest rates. And who can blame them when Ireland barely accounts for 1% of the EU economy.


 
Oh agreed on that! and will that ever become more obvious if interest rates accelerate upwards for the sake of greater europe.

But note that he has expressed concern about house prices and money supply and today's numbers for M3 money supply in the eurozone are still too high.

So perhaps Ireland, Dublin in particular, although small and insignificant, can be viewed as a leading indicator, a warning if you like, of what could be in store for more significant parts of the zone if interest rates stay too low for too long.


----------



## Guest107

Remix said:
			
		

> Oh agreed on that! and will that ever become more obvious if interest rates accelerate upwards for the sake of greater europe.


And they will. The last time M3 growth was  around the 10% mark in Germany the Bundesbank as it then was ran a rate of around 4.5% for a long time .

See Here About 1994. Many of the macro indicators are the same as today . 

[broken link removed]

4.5% base implies a typical mortgage rate of around 5.5-5.7% meaning that  the 6% outer envelope for the mortgage rates is not that daft an assumption .

In 1993 (which is not comparable to today as Germany was BOOMING then ) the base rate was up around 8% implying an eye watering Mortgage rate of about 9%


[broken link removed]


----------



## room305

Worth remembering also that the prospect or even the event of a crash here won't register much with the ECB. In the UK, they lowered the rate by 25bps to ward off a possible crash. However, that won't be forecoming here no matter how much pain people are feeling.

EBS are selling George's Dock ... the list of top property assets being sold is staggering. Coupled with information from Merrill Lynch that their wealthy clients are getting out of property this should serve as a real warning.

http://www.unison.ie/irish_independent/stories.php3?ca=302&si=1641854&issue_id=14265


----------



## Guest107

room305 said:
			
		

> Worth remembering also that the prospect or even the event of a crash here won't register much with the ECB.


They will relish it. We did not control our banks and stop the foolish lending and bubble economy is their attitude.   Spain is in the same boat.

Look to Germany c.1994 for parallels I would say.


----------



## Calina

Remix said:
			
		

> So perhaps Ireland, Dublin in particular, although small and insignificant, can be viewed as a leading indicator, a warning if you like, of what could be in store for more significant parts of the zone if interest rates stay too low for too long.



Ireland, Dublin as canary in the mine, you mean?


----------



## walk2dewater

Calina said:
			
		

> Ireland, Dublin as canary in the mine, you mean?


 
I see the point, i.e. ECB announces to rest of Eurozone and new EU states, "look at Ireland, see what can happen unless you carefully manage how ECB rates affect your particular economy"..."there are benefits AND responsibilities to being in the Eurozone" ... "you must use domestic mechanisms to prevent local asset bubbles" etc etc

in future, ECB could even propose penalties for countries that 'threaten the stability of the euro' through reckless domestic policies.

But all this is possible only if the _perceived_ blame is on Irish govt. and not big bad Trichet and his henchmen in Frankfurt.

On other hand, the very credibility of a one-size fits all interest rate and the € itself would be threatened if the perception is that it was the ECB/EU that messed up to Ireland Inc.

Interesting times ahead methinks.


----------



## Guest107

walk2dewater said:
			
		

> in future, ECB could even propose penalties for countries that 'threaten the stability of the euro' through reckless domestic policies.



nahhhhhhh , look at the growth and stability farce where Italy and France run whatever deficit they want and damn the treaties. 



> But all this is possible only if the _perceived_ blame is on Irish govt. and not big bad Trichet and his henchmen in Frankfurt.


Irish central nbank and IFSRA regulate lending policies. 


> On other hand, the very credibility of a one-size fits all interest rate and the € itself would be threatened if the perception is that it was the ECB/EU that messed up to Ireland Inc.



They did warn us but the mania is truly homegrown. If you ever mention a _"Property Ladder" _to a German they simply buy you some drugs and recommend a strong dosage to stop you gibbering at them


----------



## thewatcher

walk2dewater said:
			
		

> I see the point, i.e. ECB announces to rest of Eurozone and new EU states, "look at Ireland, see what can happen unless you carefully manage how ECB rates affect your particular economy"..."there are benefits AND responsibilities to being in the Eurozone" ... "you must use domestic mechanisms to prevent local asset bubbles" etc etc
> 
> in future, ECB could even propose penalties for countries that 'threaten the stability of the euro' through reckless domestic policies.
> 
> But all this is possible only if the _perceived_ blame is on Irish govt. and not big bad Trichet and his henchmen in Frankfurt.
> 
> On other hand, the very credibility of a one-size fits all interest rate and the € itself would be threatened if the perception is that it was the ECB/EU that messed up to Ireland Inc.
> 
> Interesting times ahead methinks.


 
How the Irish media spin it compared to the european media may be at either end of the spectrum,but as long as the ECB get the message to the countries that count,i don't think they'll really care what the irish media have to say about them.


----------



## Duplex

The Irish blaming the ECB for the upcoming frightfulness is a bit rich. The issue of divergent economies in the Euro area was supposed to be addressed by national fiscal policy, e.g. using tax to dampen any speculative asset bubbles. The fact that the government has not acknowledged that a bubble exists in the property market, suggests that they will not take any action. The Koreans, Chinese and Spanish have recently announced drastic policies to dampen speculative demand in their respective markets, the Irish government it seems are happy to allow a market solution to the mania. So our government is either staggeringly apathetic, or stunningly incompetent. I favour the latter; to be fair to them.


----------



## walk2dewater

Duplex said:
			
		

> The Irish blaming the ECB for the upcoming frightfulness is a bit rich. The issue of divergent economies in the Euro area was supposed to be addressed by national fiscal policy, e.g. using tax to dampen any speculative asset bubbles. The fact that the government has not acknowledged that a bubble exists in the property market, suggests that they will not take any action. The Koreans, Chinese and Spanish have recently announced drastic policies to dampen speculative demand in their respective markets, the Irish government it seems are happy to allow a market solution to the mania. So our government is either staggeringly apathetic, or stunningly incompetent. I favour the latter; to be fair to them.


 
As an avid reader of the free morning dailys, I've noticed a few back and forths in the letter section recently.  Basically on one side it's A telling B to stop moaning about property prices and "enjoy" the "current boom" and if ya keep going on so negatively sure ya'll cos a recession bejazus.  On the other side, B is telling A how him and the missus need to work 25hrs a day to save up a deposit, but by the time they've got the deposit the price has gone up etc etc...

Mr A clearly has the upperhand... which leads me to think that bertie and co. are just living in Realpolitik...


----------



## Calina

walk2dewater said:
			
		

> But all this is possible only if the _perceived_ blame is on Irish govt. and not big bad Trichet and his henchmen in Frankfurt.
> 
> On other hand, the very credibility of a one-size fits all interest rate and the € itself would be threatened if the perception is that it was the ECB/EU that messed up to Ireland Inc.



My betting is that  only in Ireland would it be believed that the ECB/EU were at fault.


----------



## whizzbang

Calina said:
			
		

> My betting is that  only in Ireland would it be believed that the ECB/EU were at fault.



"How dare you let me get into debt!"


----------



## room305

Duplex said:
			
		

> So our government is either staggeringly apathetic, or stunningly incompetent.



I would say a combination of both. What our government says about spiralling house prices is staggering, attempting to attribute it to a strong economy, ignoring the fact that quite rapidly it is becoming our economy.

On past behaviour I'm inclined to believe the whole mess will be blamed on the ECB. It is pretty common for weak governments to wait until their hand is forced before taking any action and to then blame everything on the bureaucrats in Brussels.


----------



## ubiquitous

If the Irish government is to blame for the Irish house price boom of the past decade, how then are the parallel booms in the US, UK, Spain and several other countries explained?


----------



## room305

whizzbang said:
			
		

> "How dare you let me get into debt!"



Are you telling me there won't be hoards of people ringing Joe Duffy voicing exactly this complaint?

"Nobody told me the prices could go down Joe. Nobody. What I want to know, is why, if the banks and the gubbermint knew that the prices could go down, they didn't tell ordinary working people like myself ..."

Repeat ad nauseum.


----------



## room305

ubiquitous said:
			
		

> If the Irish government is to blame for the Irish house price boom of the past decade, how then are the parallel booms in the US, UK, Spain and several other countries explained?



Same as here. Cheap credit and excess liquidity in the system. 

I'm not blaming the government for causing the speculative boom, I just thought it should be a cause for alarm not celebration.

I do however blame them for pouring petrol on the fire rather than attempting to douse it by pleading with people for some kind of sanity.


----------



## whizzbang

room305 said:
			
		

> Are you telling me there won't be hoards of people ringing Joe Duffy voicing exactly this complaint?



I'm saying this is exactly what they'll say! maybe a little more subtly.

"The goverment should have stopped the banks loaning so much"
"The bank didn't tell me the rates could go up to x%"
"The bank said interest only was the perfect option for someone like me"

etc...

We are not a great people for accepting our personal responsibility for our own well being, just look at the compo culture.


----------



## Howitzer

whizzbang said:
			
		

> I'm saying this is exactly what they'll say! maybe a little more subtly.
> 
> "The goverment should have stopped the banks loaning so much"
> "The bank didn't tell me the rates could go up to x%"
> "The bank said interest only was the perfect option for someone like me"
> 
> etc...
> 
> We are not a great people for accepting our personal responsibility for our own well being, just look at the compo culture.


 
Our own Brendan also advocates interest only mortgages in certain circumstances, so proportioning blame in a downturn would be a pretty nasty game.

http://www.askaboutmoney.com/showthread.php?t=28492


----------



## Glenbhoy

Re all this talk about how the government failed us, is anyone else worried by what they might do in the next budget?  Given it'll have to be a give-away of massive proportions if they're to have a chance of retaining power, and given that house prices seem to be dominating everything at present, I think they'll try something.  I imagine it'll be stamp duty related, probably an ease in limits for ftb's/possibly owner occupiers too - either  way, imo it would be disastrous for them to start trying to manipulate the market at this late stage.


----------



## room305

I agree completely Glenbhoy. I am absolutely petrified about what they will try to do. I imagine a further extension of the thresholds possibly even something as dramatic as scrapping of stamp duty for PPRs.

Either way, as you say, anything they do at this late stage could be disastrous. Through sheer luck I purchased my house just before the stamp duty thresholds moved two years ago but prices on the same street jumped almost immediately after.


----------



## Calina

room305 said:
			
		

> I agree completely Glenbhoy. I am absolutely petrified about what they will try to do. I imagine a further extension of the thresholds possibly even something as dramatic as scrapping of stamp duty for PPRs.



Removing the bands would probably have less of an impact than moving them upwards, I think. They're seen as targets for a lot of people. With the bands gone, there's a chance people will look at the reality of what they can afford. 

That being said I believe they should move them down, and well down at that. But that medicine could be a bit on the bitter side.


----------



## joe sod

I wonder what the Fianna Fail backbench committee just formed have up their sleave. They are obviously feeling alot of heat on the door steps. I wonder will the 2007 election be seen in the future as being like the 1977 election. Bertie Ahern has many similarities to Jack Lynch in that he is reluctant to take tough decisions and likes being popular.


----------



## badabing

Contrary to popular opinion the government here does not promote property investment here as much as many other countries do, such as allowing depreciating the property cost as they do in the US or australia, or zero capital gains tax like New Zealand, or much lower rates of stamp duty as in England.


----------



## Glenbhoy

> Contrary to popular opinion the government here does not promote property investment here as much as many other countries do, such as allowing depreciating the property cost as they do in the US or australia, or zero capital gains tax like New Zealand, or much lower rates of stamp duty as in England.


Has someone forgotten about our tax incentive schemes?  
CGT is at top rate of income tax in the UK as opposed to 20%.
As for the depreciating assets - over what time scale - probably 2% p.a? Hardly a factor given that people's investment time scale here is measured in months.
Can't comment much on the other countries mentioned save to point out they are all anglo-saxon with a history of property bubbles (or in NZ, about to have).


----------



## Guest107

Glenbhoy said:
			
		

> Has someone forgotten about our tax incentive schemes?
> CGT is at top rate of income tax in the UK as opposed to 20%.
> As for the depreciating assets - over what time scale - probably 2% p.a?



quite, we tax entry into the market (stamp duty and vat and stuff ) and the UK taxes the exit (CGT)


----------



## room305

badabing said:
			
		

> Contrary to popular opinion the government here does not promote property investment here as much as many other countries do, such as allowing depreciating the property cost as they do in the US or australia, or zero capital gains tax like New Zealand, or much lower rates of stamp duty as in England.



Well actually, the government here actively promotes property investment. I don't know of any other country where the leader of the country urges people to buy into an overheated market and rubbishes warnings from economists and groups like the OECD.



> Everybody said we're going to see a huge downturn in 2005 linking into 2006 - they were entirely wrong. Really we should have an examination into why so many people got it so wrong. My view is there's not a great problem. Really, the bad advice of last year given by so many has maybe made some people make mistakes, that they should have bought last year.



-- Bertie Ahern, speaking after the IMI conference this year.


----------



## conor_mc

room305 said:
			
		

> Well actually, the government here actively promotes property investment.


 
In fairness, I think you're taking that out of context slightly. Bertie was not promoting property investment per se. I think it's symptomatic of the great property mania here that even we, the property bears, forget that people sometimes actually buy houses to live in themselves....

Anyway, the only part of that quote which I'd have a problem with is "My view is there's not a great problem". Other than that, he's actually 100% correct. People did predict a crash, it never materialised, and some people who didn't buy at the time are now facing much higher prices.

But he should have acknowledged that there could very well be a big problem and that the govt are keeping an eye on it. Instead, he stuck his head in the sand.


----------



## Glenbhoy

> Instead, he stuck his head in the sand.


Well, he does like to keep his ear close to the ground to hear what the people want


----------



## room305

conor_mc said:
			
		

> Other than that, he's actually 100% correct. People did predict a crash, it never materialised, and some people who didn't buy at the time are now facing much higher prices.



Timing the market works both ways. However, judging by how rapidly prices have risen in the past year I very much doubt there was a significant number of people who needed to buy a house and could comfortably afford to do so but held off because some economists warned of an imminent crash. He only says this to discredit economists in the public mind and set in stone the idea that "Ireland is different".

In the aftermath of a crash will we hear a speech about how wrong the real estate agents were? How people who listened to them a year previously and believed their hype about never-ending capital appreciation far in excess of wage growth lost out massively by purchasing? Perhaps advising those still thinking of purchasing that the market may have further to fall?


----------



## lff12

*Meanwhile, back at the ranch*

For the person who is seeing a slow market in North East Dublin, apparently the latest rental "craze" back home in Swords is rent allowance tenants. After years of turning them away apparently loads of rental properties are now being taken on - apparently 8 houses in one estate in Rivervalley at the same time. Since families on rent allowance can theoretically get quite a high rent in Dublin, I am guessing that private tenants are simply not willing to pay the asking price, and agents are falling back on the subsidised tenants as a last resort.

The main problem I see is that rents are not really rising. I've just moved out of a rented property in East Cork and you can get a 3 bed house there for as little as 700 euros a month. The rents on 1 bed apartments in the city have only gone up by about 100 euros a month in 4 years (from about 600 to 700 - less than inflation). The double problem is that where rents are eking their way upwards its at a fraction of the house price inflation.

Secondly I think its getting very hard for people on average salaries to buy without significant savings and parental support.

Which means its becoming difficult to make a profit on a buy to let property unless you have significant equity and small mortgage. From what I can see, the profitability of the sector is no longer there. Having said that with the boom in property investment over the last 10 years expect to see a continuous increase in the percentage of ex-rental properties on the market. Unfortunately many will be hard to sell due to the horrific condition to a lot of them and lack of investment.


----------



## conor_mc

room305 said:
			
		

> Timing the market works both ways. However, judging by how rapidly prices have risen in the past year I very much doubt there was a significant number of people who needed to buy a house and could comfortably afford to do so but held off because some economists warned of an imminent crash. He only says this to discredit economists in the public mind and set in stone the idea that "Ireland is different".
> 
> In the aftermath of a crash will we hear a speech about how wrong the real estate agents were? How people who listened to them a year previously and believed their hype about never-ending capital appreciation far in excess of wage growth lost out massively by purchasing? Perhaps advising those still thinking of purchasing that the market may have further to fall?


 
See, now you've stumbled across a little-known truth.... Bertie's always right.....


----------



## Calina

*Re: Meanwhile, back at the ranch*



			
				lff12 said:
			
		

> For the person who is seeing a slow market in North East Dublin, apparently the latest rental "craze" back home in Swords is rent allowance tenants. After years of turning them away apparently loads of rental properties are now being taken on - apparently 8 houses in one estate in Rivervalley at the same time. Since families on rent allowance can theoretically get quite a high rent in Dublin, I am guessing that private tenants are simply not willing to pay the asking price, and agents are falling back on the subsidised tenants as a last resort.



I think this is probably true in a lot of cases.


----------



## Duplex

After attempting to sell her property through agents for a year this lady in Boston tried to sell at auction, now she is attempting to sell the property herself.  Phyllis seems to be of the opinion that the reason her property has not sold is due to ineffectual marketing, as opposed to the state of the market.    I wonder if Phyllis will chase the market downwards, employing increasingly ‘innovative’ marketing methods in her struggle to get the market to accept that its wrong and she’s right? 







> After having her home on the market for nearly a year -- with about 30 showings, multiple price drops, and only one not-so-tempting offer -- Phyllis Troia decided to try something different. Very different. She and her husband put her Dutch colonial in Plymouth up for auction, to be sold to the highest bidder.
> 
> To kick-start the bidding war, Phyllis Troia welcomed 60-some-odd people into the home over Father's Day weekend. Her mother served fresh-baked cookies, her husband chatted up the guests in the living room, and her father escorted people around the property, nestled in a cozy Plymouth neighborhood just minutes from the beach.
> 
> After the weekend, there were nine bidders -- a very promising development. But in the end, she was not satisfied with the final two bids, and exercised her right to close the bidding. She's now moved on to a for-sale-by-owner model.
> 
> Troia, however, is happy she is taking the go-it-alone route to get what she thinks her house is worth. ``This is a great house," she said over and over, as people meandered through during her recent open house.
> 
> ``We'll see what happens," she said. *``I have too much invested to walk away with a minimal amount of money."*


----------



## Guest107

todays Irish Times. The permo fully 'securitised' €2Bn of its mortgages and thats €2Bn now available to lend out for more mortgages. 

The merry go round is still in operation .


----------



## room305

Duplex said:
			
		

> After attempting to sell her property through agents for a year this lady in Boston tried to sell at auction, now she is attempting to sell the property herself.  Phyllis seems to be of the opinion that the reason her property has not sold is due to ineffectual marketing, as opposed to the state of the market.    I wonder if Phyllis will chase the market downwards, employing increasingly ‘innovative’ marketing methods in her struggle to get the market to accept that its wrong and she’s right?



Seem to be hearing lots of stories like this from the American market. Sellers are frequently withdrawing houses from the market, annoyed that buyers won't offer what (they feel) the house is worth. Forgetting of course, that it is the market that dictates the price - not the seller.

I think the first two years of the crash will be a bonanza time to be involved in the home improvements trade. Many will withdraw their house from the market and pour money into decking, kitchen refurbishments, bathroom redecorating etc. Convinced that if they put in enough work people will then pay what they believe is an equitable price (or what an equivalent house sold for a few months hence).

When the realisation hits that prices aren't returning to their peak anytime soon, that is when you will see some significant price drops ...


----------



## Duplex

room305 said:
			
		

> Seem to be hearing lots of stories like this from the American market. Sellers are frequently withdrawing houses from the market, annoyed that buyers won't offer what (they feel) the house is worth. Forgetting of course, that it is the market that dictates the price - not the seller.
> 
> I think the first two years of the crash will be a bonanza time to be involved in the home improvements trade. Many will withdraw their house from the market and pour money into decking, kitchen refurbishments, bathroom redecorating etc. Convinced that if they put in enough work people will then pay what they believe is an equitable price (or what an equivalent house sold for a few months hence).
> 
> When the realisation hits that prices aren't returning to their peak anytime soon, that is when you will see some significant price drops ...


 

I came across this point by point explanation of the psychology of bubble markets, makes for interesting reading. 

*BUBBLE PREREQUISITES*

*FINANCIAL FUNDAMENTALS:
*Low supply. Examples include:
The scarcity of homes in certain regions of the coasts 
Stricter development regulations

Little or vague financial information available:
It is difficult to gauge market price changes
Realtors have an incentive to hide a softening market.

Excess liquidity in the pockets of buyers.
Low interest rates (and then interest-only loan payments)

Large capital gains have already been reaped by the "first-movers", and they're looking for new opportunities.

*PSYCHOLOGICAL FUNDAMENTALS*

*Vividness of the concept* 
"I've got to have a roof over my head"
"I like real estate because you can see what you own"

*Limited supply (Perception of scarcity)*
"No more houses can be built on the coasts due to development restrictions"

*Water-cooler or media frenzy: Groupthink and herding.*
"You know, everybody's buying a house. Are you still a renter?"

*Anticipatory emotions and impulsivity*
Excitement about "getting rich" and fear of missing out.

*Magnitude of potential payoff*
"My friend made $300,000 after owning her house only one year."

*Certainty of payoff*
"Real estate has always gone up over any 5 year period. I'll just hold a few years if I have to."

*Urgency*
"You've got to get in now, since you don't know how long you'll be able to afford property around here"

*Pursuit of gain (chasing)*
Seminars on "How to get rich in real estate". 
"It's proven, the surest way to wealth is real estate"

*Now how do we know when the end is near?
*
Any stagnation or reversal in previously positive financial fundamentals paired with:

1) Historically high volume of turnover.
2) Positive expectations are disappointed in some investors.
3) Sellers begin dropping prices or relisting with other brokers.
4) Intense media focus - but ironically, this is usually favorable coverage of the bubble.


----------



## walk2dewater

room305 said:
			
		

> Many will withdraw their house from the market and pour money into decking, kitchen refurbishments, bathroom redecorating etc. Convinced that if they put in enough work people will then pay what they believe is an equitable price (or what an equivalent house sold for a few months hence).
> 
> When the realisation hits that prices aren't returning to their peak anytime soon, that is when you will see some significant price drops ...


 
Exactly. We’re still not quite at the tipping point. Anyone expecting a stock market style correction in house prices any time soon will be disappointed. Property prices are sticky downwards due to the psychological re-enforcement by TV/papers/neighbours/EAs etc that your house is “worth” XYZ, an illiquid market with high transactions cost, and peculiar to today’s scenario, debt obligations. Debt obligations will put another psychological floor under what is deemed an acceptable sell price (“I cant sell for X, my debt is X+Y”).

In Ireland jobs, incomes and interest rates will all stay ‘good’ for the majority of would-be sellers for a while longer. The majority of potential sellers (jumbo mortgage owners) will be able to frustrate buyers seeking discounts. Rather than ratcheting down prices, would be sellers will withdraw, and adopt various coping strategies to muddle through weakening macro conditions.

Fortunately I reckon this will not be a long lasting situation, and I believe we’e just entered this period now in Ireland. Eventually, the relentless sucking up of liquidity by the ECB will force change to the market dynamics. Shifting power from sellers to buyers. Many jumbo mortgage holders who want to exit will eventually have cover debts and accept lower prices. By the time they realise this it will be too late and the market will have tipped in favour of buyers.

Watch whats happening in the UK. Jobs, incomes and rates have stayed ‘good’ for owners of large mortgages—so far. I sense this is changing though, and we might see a significant and undeniable slide in prices when BoE is _forced_ to raise rates. I think the first real possibility of undeniable, irrefutable slide in the UK market is this Autumn.


----------



## SidTheDweeb

Surely the first wave of people to jump ship will be the IO mortgages, as they're purely purchased for capital appreciation. Sentiment suggesting zero appreciation will surely lead to a sell-off. 

I just wonder how many homes in Ireland purcahsed over the last 5years are IO?


----------



## soma

SidTheDweeb said:
			
		

> I just wonder how many homes in Ireland purcahsed over the last 5years are IO?


Personally I wouldnt have thought there were *that* many, until about 1-2 months ago when an agent with one of the large EA firms said he "couldn't remember the last time a 1-million plus mortgage wasn't interest only".


----------



## Glenbhoy

SidTheDweeb said:
			
		

> Surely the first wave of people to jump ship will be the IO mortgages, as they're purely purchased for capital appreciation. Sentiment suggesting zero appreciation will surely lead to a sell-off.
> 
> I just wonder how many homes in Ireland purcahsed over the last 5years are IO?


According to the head man from one of the mortgage brokerages (IMC possibly?), he does'nt remember the last non-IO mortgage they arranged for a home in excess of 1M, this was in one of the papers a few weeks ago.
Re sticky downwards, WTDW, will increased rates not make it more diffcult to cope - and as Sid says, surely many of the new IO investors may not have a choice, considering that the initial capital possibly came from released equity on the family home.


----------



## walk2dewater

SidTheDweeb said:
			
		

> Surely the first wave of people to jump ship will be the IO mortgages, as they're purely purchased for capital appreciation. Sentiment suggesting zero appreciation will surely lead to a sell-off.
> 
> I just wonder how many homes in Ireland purcahsed over the last 5years are IO?


 
Truth is no ones exactly what's about to happen, what exact combination and timing of events awaits, except the outcome.  That being much cheaper property and a nasty recession.  It's like pushing a huge, heavy boulder toward a cliff edge.  Slow going until that moment when the edge is reached and >51% of the rocks weight is hanging off the edge....


----------



## redo

walk2dewater said:
			
		

> Slow going until that moment when the edge is reached and >51% of the rocks weight is hanging off the edge....



Surely you mean > 50%


----------



## walk2dewater

redo said:
			
		

> Surely you mean > 50%


 
eemm, yeah 
had a beer at lunch


----------



## Neffa

walk2dewater said:
			
		

> Truth is no ones exactly what's about to happen, what exact combination and timing of events awaits, except the outcome. That being much cheaper property and a nasty recession. It's like pushing a huge, heavy boulder toward a cliff edge. Slow going until that moment when the edge is reached and >51% of the rocks weight is hanging off the edge....


 
Well the rock moved another inch forward last month:

[broken link removed]

Borrowing up 29.5% while salaries (the thing you use to pay the mortgage) are up circa 5%.

Meanwhile house prices are growing at roughly 10-15%.

So, friends, is this house price growth driven by (a) Celtic Tiger fundamentals or (b) Cheap credit. I think we know the answer


----------



## micheller

Do I remember someone mentioning before that before the end of the bubble prices may surge even more? 
What would that look like to us- same double digit growth we're seeing now or even more (is that possible given the current situation?)


----------



## Remix

> So, friends, is this house price growth driven by (a) Celtic Tiger fundamentals or (b) Cheap credit. I think we know the answer


 
I thought it was more widely acknowledged now that the celtic tiger was the brief period between the mid 90's and 2001 ?

What we've had since is entirely different. The 'celtic' part is fine but perhaps time to consider another entry from the bestial world ? There's goats, monkeys, alligators, blood-sucking insects, poisonous snakes etc...

Maybe event the celtic pig - considering the amount of property hogging going on


----------



## room305

micheller said:
			
		

> Do I remember someone mentioning before that before the end of the bubble prices may surge even more?



Yup, this is the point where finally even the most hardened skeptic accepts that this is indeed truly only a one-way bet and that they were foolish not to get involved earlier. They rush out to buy at any price at which point there are no "greater fools" left to climb onboard and the tipping point has been reached.

If the "soft landing" theory is to believed, in the face of worsening macroeconomic conditions we should be seeing moderation in growth, not acceleration. Of course the fundamentals that started this boom are no longer relevant (if indeed they ever were).


----------



## Glenbhoy

room305 said:
			
		

> Yup, this is the point where finally even the most hardened skeptic accepts that this is indeed truly only a one-way bet and that they were foolish not to get involved earlier. They rush out to buy at any price at which point there are no "greater fools" left to climb onboard and the tipping point has been reached.quote]
> So basically when W2DW announces that he has just bought, it's time to get out??


----------



## room305

Glenbhoy said:
			
		

> So basically when W2DW announces that he has just bought, it's time to get out??



 

Isaac Newton foresaw the South Sea Company crash and sold his shares for £7,000 profit (undoubtedly everyone thought he was mad at the time). 

Later, when the crash never actually materialised and the stock continued to climb to dizzying heights he began to doubt his earlier assertions, finally succumbed to the mania and bought back in only to end up losing £20,000 in the subsequent crash. It led him to say:

 “I can calculate the motions of heavenly bodies, but not the madness of people”.


----------



## ninsaga

So.. 470+ posts later on this topic....and where exactly is this thread going?  Keep saying that the bubble will burst & one of these days you will be right. But at what point does one say 'I told you so!' ?

People have been saying this for quite a while now ... but in the meantime where houseprices have increased about 20% over the last 18mths+ or so & if it subsequently collapses & drops back say 10% ...does that still give those to say they knew it all along & that people were warned?

ninsaga


----------



## room305

ninsaga said:
			
		

> So.. 470+ posts later on this topic....and where exactly is this thread going?  Keep saying that the bubble will burst & one of these days you will be right. But at what point does one say 'I told you so!' ?
> 
> People have been saying this for quite a while now ... but in the meantime where houseprices have increased about 20% over the last 18mths+ or so & if it subsequently collapses & drops back say 10% ...does that still give those to say they knew it all along & that people were warned?
> 
> ninsaga



Possibly components of this thread should have split off into separate threads. It would be good to have a separate thread detailing the many top properties sold by banks and commercial companies recently, for instance.

I think if someone purchases an investment property today and in five years time they don't regret that decision then they can tell me - I told you so!

The impossibility of predicting when a speculative bubble driven by greed will end is well known. The purpose of this thread was to see if there had been any change in sentiment or slowdown in the buying frenzy. Initially I thought there might have been but now I doubt it, the madness may have a year or two to run yet.


----------



## walk2dewater

ninsaga said:
			
		

> in the meantime where houseprices have increased about 20% over the last 18mths+ or so & if it subsequently collapses & drops back say 10% ...does that still give those to say they knew it all along & that people were warned?
> 
> ninsaga


 
I think prices will fall 50% peak to trough minimum, 75% wouldnt be an impossibility.  75% would bring us back to 1996 prices, 50% back to 2002.  Admittedly, this differs slightly from what Irish real estate agents etc. will tell you.

Why?  Nutshell answer in 2 parts:

(1) your house is worth what someone will pay for it
(2) rates are going up, WAAAAAAY up, combined with whats outlined below:

http://www.eecho.ie/news/bstory.asp?j=3984825&p=398484x&n=3984917
Debt levels increasing at fastest rate in six years

30/06/2006 - 12:19:20 PM

The level of debt in Ireland is increasing at its fastest rate in more than six years, according to figures published by the Central Bank today.

The bank said the total amount of money owed by private citizens increased by 29.8% in the 12 months to May of this year, the highest rate since March 2000.

A total of €6.6bn was borrowed during the month of May alone, pushing *total debts up to €282.8bn.*

The amount owed in mortgages increased by around €2.5bn last month, the amount owed in bank loans was up €3.5bn and overdrafts were up €862m.


----------



## ninsaga

walk2dewater said:
			
		

> I think prices will fall 50% peak to trough minimum, 75% wouldnt be an impossibility.  75% would bring us back to 1996 prices, 50% back to 2002.  Admittedly, this differs slightly from what Irish real estate agents etc. will tell you.



...ok so how much more will they advance before houses drop back to the norm of 10 years ago?

I find it difficult to even comprehend this figure..... that would be a total economic collapse.

ninsaga


----------



## walk2dewater

€282.8b... that's €282,800m divided by 4.2m is €67,333 of PERSONAL debt for every single living person in Ireland .  No folks, this is not "normal"...


----------



## walk2dewater

ninsaga said:
			
		

> ...ok so how much more will they advance before houses drop back to the norm of 10 years ago?


 
Doesnt matter whether they advance 1% or 100% from here, it's pure speculative behaviour driving this market. Prices will revert to some economically rational level i.e, based on peoples ability to _actually_ pay for them, that is of course, after we go through a 'bust' period of total pessimism/fear about property.


----------



## bearishbull

walk2dewater said:
			
		

> €282.8b... that's €282,800m divided by 4.2m is €67,333 of PERSONAL debt for every single living person in Ireland . No folks, this is not "normal"...


Its not personal debt its private sector debt but its still huge. But this growth of around 30% means that if it grows at this rate for 8 more years we'd have 2 trillion euro in debt! of which 900billion would be mortgage debt. if houses grow at 10% per annum for those 8 years then mortgage debt would be roughly the same as the value of all property in the country! Obviously this is unlikely to happen as lending will have to slow and this slowing in lending will hit housing market


----------



## walk2dewater

walk2dewater said:
			
		

> The bank said the total amount of money owed by *private citizens* increased by 29.8% in the 12 months to May of this year, the highest rate since March 2000.
> 
> A total of €6.6bn was borrowed during the month of May alone, pushing total debts up to €282.8bn.
> 
> The amount owed in mortgages increased by around €2.5bn last month, the amount owed in bank loans was up €3.5bn and overdrafts were up €862m.


 
Did the reporter get it wrong?


----------



## Duplex

If prices can fall by 70% in Tokyo, then 50% in Ireland seems entirely possible. My own theory is that capital values will reflect a 7% net annual return on rental incomes, though I'm beginning to think that 8% will be nearer the mark. 

Random fact: The inventory of homes for sale in Arizona on 1 July 2005 was 10,761 on the 21 of June 2006 the inventory was 43,500.


----------



## walk2dewater

The slide in the UK is just getting under way, here's a example of 25% off orig asking price.
http://www.housepricecrash.co.uk/forum/index.php?act=Attach&type=post&id=3568

granted this may have been over-priced to begin with.  Nevertheless the anecdotal evidence from the UK is growing daily.


----------



## Duplex

walk2dewater said:
			
		

> The slide in the UK is just getting under way, here's a example of 25% off orig asking price.
> http://www.housepricecrash.co.uk/forum/index.php?act=Attach&type=post&id=3568
> 
> granted this may have been over-priced to begin with. Nevertheless the anecdotal evidence from the UK is growing daily.


 

Easy come easy go.


----------



## ninsaga

So if enough people go around saying that the housing market is going to collase............then the housing market will collapse. Spread gloomy news & it will travel & lead to some effect.... 
The market is built on a high degree of sentiment & emotion.


----------



## walk2dewater

ninsaga said:
			
		

> So if enough people go around saying that the housing market is going to collase............then the housing market will collapse. Spread gloomy news & it will travel & lead to some effect....
> The market is built on a high degree of sentiment & emotion.


 
If enough people go around saying that housing market is booming and prices will only ever go up ..... then housing prices will spiral upwards.... Spread the mania to buy property and it will travel and lead to some effect...

IMO cheap, high-quality, well-serviced housing is a basic human need that should not be prone to boom/bust manias. If the price of food doubled twice in the last 10yrs would we be rejoicing?


----------



## bearishbull

sentiment isnt everything, fundamentals of market count as do credit incomes yields etc. sentiment can be rational as it was for long period in ireland but sentiment can become irrational and exuberrant as it is now and sentiment becomes detached fromt he underlying fundamentals. how many people borrowing 500k now over 35 years realise they are really paying close to one million including interest??


----------



## liteweight

walk2dewater said:
			
		

> I If the price of food went x3 in the last 10yrs would we be rejoicing?



I thought it has!!!!!!


----------



## bearishbull

liteweight said:
			
		

> I thought it has!!!!!!


No,only around 23% according to the CSO.


----------



## walk2dewater

bearishbull said:
			
		

> No,only around 23% according to the CSO.


 
Actually my analogy is flawed. Housing is the means to produce shelter, now and in the future. The price represents the market value of the future stream of shelter it provides. The correct analogy would be with a market in "lifetime food machines"....hmmm


----------



## Guest107

They will fall 30-50% in REAL terms not in absolute terms and with higher falls in back of beyond areas and Courtown and places. 

70% , I think not at all.


----------



## Neffa

walk2dewater said:
			
		

> Did the reporter get it wrong?


 
He or she has included all private sector credit. You should really look at mortgage lending which is now circa €108bn. We have now matched and overtaken the UK on a per capita debt basis, which I imagine makes Ireland the most in debt nation in Europe.


----------



## sonar

Neffa said:
			
		

> ...which I imagine makes Ireland the most in debt nation in Europe.


 

Well, in that case we can expect lots of media coverage as our leaders speak on the issues of responsible lending, over indebtedness and the
unprecedented risks that Irish borrowers now face.

Or...maybe not, wrong country eh ?


----------



## beattie

sonar said:
			
		

> Well, in that case we can expect lots of media coverage as our leaders speak on the issues of responsible lending, over indebtedness and the
> unprecedented risks that Irish borrowers now face.
> 
> Or...maybe not, wrong country eh ?


 
There is a snowballs chance in hell that we will get responsible comments on the state of lending here etc in the near future. Austin Hughes was very annoyed that there are naysayers out there who may be unnecessarily spreading doom & gloom in the debate he had on Newstalk earlier in the week. 
There certainly won't be responsible coverage from the print media as they earn too much from  their property supplements to give impartial comment.
I only hear on this forum of tales where investors are subsidising their investments to the tune of 600 euro or so per month. I believe this to be commonplace and the banks are complicit in this. I don't think there will be any class actions taken here when it goes belly up.


----------



## Marie

From today's _Irish Times:_

*The level of total non-government borrowing now stands at €282.8 billion, and has increased by more than €62 billion, or 29.8 per cent, in the 12 months to May.*
*In May alone, €6.6 billion was added to the level of outstanding private sector credit, which includes business and personal lending. That is the highest monthly increase in a year.*


*The figures show that the recent rising trend in borrowings continues despite repeated warnings from the Central Bank about the danger it poses for the economy.*
*The rate of annual growth in private sector credit has accelerated by levels just under 30 per cent throughout this year from rates of just over 10 per cent in early 2003.*
*Coming in the wake of two rises in euro zone interest rates, in December and March, yesterday's data suggests that monetary tightening by the European Central Bank has so far done nothing to dent appetite for debt. "Despite a background of rising interest rates and high energy prices, the Irish public continues to borrow money as if there were no tomorrow," said Alan McQuaid of Bloxham stockbrokers.*
*IIB chief economist Austin Hughes said that, stripping out business lending, "we reckon that total personal debt in the economy is now just shy of €130 billion, suggesting an average debt burden of around €32,000 for every man, woman and child in the country".*
*For the first time this year, non-mortgage credit increased at a faster rate than mortgage business, jumping by 29.7 per cent year on year - driven by a significant rise in demand for term/revolving loans.*
*Mortgage lending was 29.5 per cent ahead of the levels in May 2005. The level of residential mortgage borrowing now stands at just under €109 billion, up from just under €84 billion in May 2005.*
*Nationally, €2.1 billion was added to outstanding residential mortgage borrowings in the month and the Central Bank said that, if residential mortgage loans were to rise by that amount each month for the rest of the year, the annualised rate of mortgage lending growth would be 24.5 per cent by December.*
*The bank noted that mortgage borrowing has grown at an average rate of 23.4 per cent annually between March 1997 and December 2005 - a period when house prices in the State rose by 14.9 per cent on average each year.*
*According to the latest Permanent TSB/ESRI index of house prices, the rate of annual house price inflation has increased from a rate of 6.6 per cent in May 2005 to a rate of 14.5 per cent last May.*

By the way there are other implications to all this, much much broader than housing and construction.  I know a number of people who are in process of withdrawing their savings from Irish financial institutions; they would have too much to lose as the risk of 'bust' grows.


----------



## room305

Marie said:
			
		

> By the way there are other implications to all this, much much broader than housing and construction.  I know a number of people who are in process of withdrawing their savings from Irish financial institutions; they would have too much to lose as the risk of 'bust' grows.



I doubt a complete collapse of the banking system is on the cards.


----------



## Marie

I know very little about banking and finance which is why I find AAM discussions helpful  .  If banks and financial institutions 'own' - by dint of the mortgages they hold - large amounts of property, how can they survive a bust if the _value_ of those mortgages drops quickly by up to one-third (as can occur with a housing crash) ?  Can anyone explain?


----------



## tiger

The banks don't own the properties per say, but do have alot of outstanding loans backed by these properties falling in value.

If property is falling in value, it is presumably because less people are buying, and more people are selling, in some cases being forced to sell because they can't afford the payments any more (increased interest rates, unemployment...)

Business goes down alot for the banks in terms of new loans, and default rates (bad debts) increase as existing loan holders start to go in arears.  The banks then end up with these properties that are worth less than the outstanding loans.

If the value of the property drops, but people are still paying the mortage, then the bank is ok (but sitting nervous), and would still be suffering from the slow down in new business.


----------



## whizzbang

Marie said:
			
		

> If banks and financial institutions 'own' - by dint of the mortgages they hold - large amounts of property, how can they survive a bust if the _value_ of those mortgages drops quickly by up to one-third


Banks only risk is if prices fall below the initial cost of the house minus whatever the person has paid back in interest and loan repayments.

If someone gets a 300k mortgage and over a few years pays back 100k to the bank then the bank only really is at risk if the property value falls below 200k. 

The only property they really stand to lose on are those bought in the last 3 years is my guess. These would have to fall to the original price 3 years ago and then also fall by the amount of repayments the bank has recieved. I guess that would cover a 30% to 40% drop. This is all speculation but I guess it might be how the banks calculate their exposure.

*edit* this is all based on the assumption that people hand back the keys of prices drop significantly. As the poster above says, if they keep paying the banks are sitting pretty.

It is an interesting question thought, anyone else got any details on how the banks see this?


----------



## room305

whizzbang said:
			
		

> It is an interesting question thought, anyone else got any details on how the banks see this?



Judging by the comments of people I know who are actively doing the lending, it doesn't sound like such a thing has even been contemplated. Maybe at a higher level it has but I wouldn't bet on it. Things have got ruthlessly competitive and the shares of the financial institutions are trading at low p/e ratios across the board. Shareholders would scream blue murder if the banks started to curb their lending despite increasing demands from borrowers.


----------



## conor_mc

Don't banks securitise their loan books occasionally, which is effectively selling on the debts?


----------



## bearishbull

whizzbang said:
			
		

> Banks only risk is if prices fall below the initial cost of the house minus whatever the person has paid back in interest and loan repayments.
> 
> If someone gets a 300k mortgage and over a few years pays back 100k to the bank then the bank only really is at risk if the property value falls below 200k.
> 
> The only property they really stand to lose on are those bought in the last 3 years is my guess. These would have to fall to the original price 3 years ago and then also fall by the amount of repayments the bank has recieved. I guess that would cover a 30% to 40% drop. This is all speculation but I guess it might be how the banks calculate their exposure.
> 
> *edit* this is all based on the assumption that people hand back the keys of prices drop significantly. As the poster above says, if they keep paying the banks are sitting pretty.
> 
> It is an interesting question thought, anyone else got any details on how the banks see this?


Any of the banks mortgage customers who took out their loans a few years back have sufficient equity to prevent the property being worth less than is owed,even if some mortgages taken out in last few years before a correction were worth less than outstanding mortgage most people would continue to pay their mortgage for fear of losing home,its only where incomes drop substantially due to something like mass unemployment that the banks dont get paid.


----------



## bearishbull

basically the vast majority of the customers have sufficient equity to prevent negative equity and once market keeps rising more and more people get sufficent equity to prevent a negative equity scenario. Also they do securitise the loans. Banks cant stop loaning money even if they think prices are gonna fall as the markets would crucify them and they would actually cause a drop in price growth/rises due to tightening of credit and the signals that would said.


----------



## bearishbull

People are so afraid of negative equity but they are actually in negative equity when they buy as the amount they are paying for the house in real terms when including interest can be up to twice the value of the house.

Buying a house for 500k on 100%mortgage over 35 years(assuming an average 5% mortgage rate) is costing you nearly a million euro in todays money, so house has to double after inflation over 35 years to breakeven.


----------



## MugsGame

Banks have to keep capital reserves to cover defaults on their loan books. The reserves required were increased recently, especially for high ratio loans (i.e. 92-100%). Some of the banks have a risk averse lending policy, e.g. AIB who don't offer 100% mortgages and commonly ask FTBs for a guarantor even where other banks would be willing to lend without one.

One way to hedge against (the unlikely event of) a run on the Irish banks is to diversify your savings across multiple institutions, particularly those based outside Ireland (e.g. Northern Rock!).


----------



## room305

bearishbull said:
			
		

> Buying a house for 500k on 100%mortgage over 35 years(assuming an average 5% mortgage rate) is costing you nearly a million euro in todays money, so house has to double after inflation over 35 years to breakeven.



Not necessarily. Your mortgage isn't inflation adjusted so your house only needs to double in price in nominal terms to break even.


----------



## Marie

So effectively the banks and other lenders have neither a financial nor an ethical stake in cooling and steadying the property market.  Presumably the Irish government cannot act unilaterally to put the breaks on.  Though logically the situation seems crazy it appears there won't be any 'weakening' in the foreseeable future as long as people choose to crowd into the market.


----------



## room305

Hmmmm ... this was bugging me so see what you think of these calculations:

Original cost of house: €500k
Avg. interest rate: 5%
Term of loan: 35 years
Total interest: €560k

Inflation rate: 5%
Real interest repaid: €305k

So your house will need to be worth €305k more in real terms in 35 years to break even. Assuming inflation of 5% per-year over 35 years that €305k will have a nominal value of €1.6M.

So since you paid €500k for the house, to get away clean (i.e. to have paid the bank back and still be able to resell your house for €500k in real terms) then your house will need to be nominally worth €4.4M in 35 years.


----------



## Guest107

walk2dewater said:
			
		

> €67,333 of PERSONAL debt for every single living person in Ireland .


Its actually €32,000 of personal debt according to the [broken link removed]and the other €35000 is business debt . 

In the UK (60 million people)the directly equivalent figure for total personal debt is £1.2 Trillion in total or about £20,000 per person . 



> xe.com        Universal Currency Converter* ®*       Results                          *Live* [broken link removed] as of 2006.07.01 16:52:53 UTC.                                                            *
> 
> 20,000.00 GBP* United Kingdom Pounds                =            *28,912.95 EUR*
> Euro                              1 GBP = 1.44565 EUR
> 1 EUR = 0.691732 GBP




*The AVERAGE IRISH PERSON NOW OWES 10% MORE THAN THE AVERAGE BRITISH PERSON *

Thats a recent one


----------



## MugsGame

But wouldn't you expect that? Irish interest rates are (currently) lower. Our population is younger.


----------



## thefisherman

the bottom line is that property is overvalued, i l saw a 4 bed house that was selling for 450000 with sitting tennants paying 1200/month. now there is no way that those figures add up- even on an interest only mortgage the rent would not cover the cost and given that interest rates are rising and rent is static no investor worthy of the name would risk putting money or equity on it.
yet it sold for 475000, which makes me wonder. there must be people out there buying house's with little or no understanding of what 'investing' actually means.
just because the banks will lend you the money to buy property does not make it a good investment.
if/when the interest rates goes up once or twice more, there will be alot of people who will see that their investment is actually a money losing albatross that will drag them down unless they sell them.
prices will come down.
rents will also come down as our guest workers head of to other greener pastures.and more houses become available to rent pushing the rent down even more.

why do we irish think that our property bubble is somehow different from other property bubbles?


----------



## Neffa

> *The AVERAGE IRISH PERSON NOW OWES 10% MORE THAN THE AVERAGE BRITISH PERSON *


 
Maybe what's even more interesting is that residential borrowing increased in one month in Ireland by €2.1bn while the UK increased by £9.1bn (€13.3bn). We are in pole position and racing ahead at over twice the rate of the UK. Scary. I wonder what on earth we would do if interest rates get to circa 4.5-5%.


----------



## bearishbull

room305 said:
			
		

> Not necessarily. Your mortgage isn't inflation adjusted so your house only needs to double in price in nominal terms to break even.


Actually i factored in inflation using the mortage calculator at www.jeacle.ie/mortgage the real interest on 500k for 35 years @ average 5% is 333k in TODAYS money, i dont think this calculator takes inflation into account on principal repayment element of the mortgage repayments,the 500k borrowed is reduced by inflation rate after every principal repayment but im too lazy to work it out!


----------



## Guest107

Neffa said:
			
		

> Maybe what's even more interesting is that residential borrowing increased in one month in Ireland by €2.1bn while the UK increased by £9.1bn (€13.3bn).



They increased debt by over 6x our rate but with 15x the population. We have overtaken them in debt per person and are outstripping them by 2x now ...allowing for population . Our banks must be run by utter morons 

Now see here. 

[broken link removed]

Ireland has a much lower GNP than it has GNP . GNP vs debt is a better measure because it strips out multinationals faffing around for tax reasons. GNP is the measure of what effectively stays in the country while GDP is everything before repatriations of profit although GNP includes what companies like CRH repatriate here . Its growth  rarely ever catches up with GDP growth as you can see here 

MOST COUNTRIES have higher GNP than GDP but not Ireland. 

Ireland has GDP of €30691 per person but GNP of €25704 (2004). The UK has higher GNP but lower GDP than we do but the real indicator of ability to service debt is GNP


----------



## bearishbull

bearishbull said:
			
		

> Actually i factored in inflation using the mortage calculator at www.jeacle.ie/mortgage the real interest on 500k for 35 years @ average 5% is 333k in TODAYS money, i dont think this calculator takes inflation into account on principal repayment element of the mortgage repayments,the 500k borrowed is reduced by inflation rate after every principal repayment but im too lazy to work it out!


i worked out the figure for the mortgage repayments over 35 years in todays money assuming 2% average inflation (this is ECB's target) amounts to 357k so added to the real interest makes 690k in real terms assuming you dont pay off mortgage early etc ,but for illustrative purposes it shows that the 500k house must increase by 40% in real terms (after inflation) to break even,so one percent real increase in prices every year,considering incomes are only growing in real terms by 2% and people spend less than half their income on housing i suppose its possible to get close to one per cent real increase per annum in the long term.


----------



## Calina

Do all these calculations additionally pre-suppose no outlays in ongoing maintenance and upgrade work such as new wallpaper, new kitchens and the occasional conservatory?


----------



## bearishbull

Calina said:
			
		

> Do all these calculations additionally pre-suppose no outlays in ongoing maintenance and upgrade work such as new wallpaper, new kitchens and the occasional conservatory?


yes im just talking about the real cost of the finance for a property not its up keep maintenace insurance etc.


----------



## gearoidmm

Just wondering if there is anywhere that you can get figures in Ireland for the number of properties on the market at any given time.  When you search with myhome.ie you are restricted to 150 results.

One thing that the US has shown us is that inventory starts to mount first before there is any sign of a drop in house prices.

Just because of my OCD, I went through all the localities in Dubin individually to get the total number of houses for sale.  The only one that exceeded the overall limit was Tallaght with >150.  Other than that they were all less than 150 and the total was 3165 properties on the market in Co. Dublin.  That doesn't seem like a lot really but I have no idea how that compares with other cities this size.  I am also presuming that every property in Dublin ends up on myhome.ie.

It would be interesting to follow up on this in a month's time and see if it has changed


----------



## tyoung

Bearishbull
 Houses and property in general are a very good store of value over the longterm.
 I remember reading a report in The Economist that London House prices in 1919 were unchanged from the level after the Great Fire 300 years earlier.  It's food for thought that 300 years of economic growth hardly showed in house prices. That all changed in the 20th century with the advent of central banking.`In the previous the world worked on the gold standard which limited the growth of the money supply. The price fixing operation that is at the heart of central banking can create money effortlessly.           Houses cannot be. They still require imput of a limited resource (land),  materials and  labour. They also have a very longterm utility.
 Having said that there can be periods where prices run up in excess of what is warrented. I would agree that Irish house prices are vunerable to any number of shocks in the short to medium term. Over the longer term, as long as current monetary policy holds, houses will remain a remarkabey good store of value.
 Money supply in the Eurozone is growing in the 8 to 9% range. Already finance ministers are calling for "dialogue" and "policy flexibility", all code for stop raising interest rates!
  The forces for inflation are to great to be resisted. Over the longerterm houses will remain a remarkable store of value.
Regards


----------



## bearishbull

tyoung said:
			
		

> Bearishbull
> Houses and property in general are a very good store of value over the longterm.
> I remember reading a report in The Economist that London House prices in 1919 were unchanged from the level after the Great Fire 300 years earlier. It's food for thought that 300 years of economic growth hardly showed in house prices. That all changed in the 20th century with the advent of central banking.`In the previous the world worked on the gold standard which limited the growth of the money supply. The price fixing operation that is at the heart of central banking can create money effortlessly. Houses cannot be. They still require imput of a limited resource (land), materials and labour. They also have a very longterm utility.
> Having said that there can be periods where prices run up in excess of what is warrented. I would agree that Irish house prices are vunerable to any number of shocks in the short to medium term. Over the longer term, as long as current monetary policy holds, houses will remain a remarkabey good store of value.
> Money supply in the Eurozone is growing in the 8 to 9% range. Already finance ministers are calling for "dialogue" and "policy flexibility", all code for stop raising interest rates!
> The forces for inflation are to great to be resisted. Over the longerterm houses will remain a remarkable store of value.
> Regards


Tell that to residents of japan who bought in years before the crash. Theres no guarantee they will rise with inflation in future,during the 1980's they didnt keep up with inflation for several years. Stores of value dont always keep up with inflation eg:fiat money.


----------



## bearishbull

gearoidmm said:
			
		

> Just wondering if there is anywhere that you can get figures in Ireland for the number of properties on the market at any given time. When you search with myhome.ie you are restricted to 150 results.
> 
> One thing that the US has shown us is that inventory starts to mount first before there is any sign of a drop in house prices.
> 
> Just because of my OCD, I went through all the localities in Dubin individually to get the total number of houses for sale. The only one that exceeded the overall limit was Tallaght with >150. Other than that they were all less than 150 and the total was 3165 properties on the market in Co. Dublin. That doesn't seem like a lot really but I have no idea how that compares with other cities this size. I am also presuming that every property in Dublin ends up on myhome.ie.
> 
> It would be interesting to follow up on this in a month's time and see if it has changed


For future reference you might'nt have to count all of them, just take an approximately representative sample of districts.


----------



## Howitzer

Title of article: End of road for soaring property market. I've got the impression for quite a while that the Indo has been trying to talk the property market down.

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1645649&issue_id=14300

(Free registraion required)


----------



## beattie

Howitzer said:
			
		

> Title of article: End of road for soaring property market. I've got the impression for quite a while that the Indo has been trying to talk the property market down.
> 
> http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1645649&issue_id=14300
> 
> (Free registraion required)


 
Yes it is refreshing to see the Indo give what is a balanced view of the market. I didn't realise that properties in Glasnevin have had to slash the price to garner interest. If ECB hikes on Thursday then it could become more interesting very quickly


----------



## Duplex

> "The soft landing seems to be happening. It won't happen across the entire market in one fell swoop and it won't hit geographically at the same time."


 
So the top has arrived. What happens now, will investors remain interested in a market when prices stop going up? I think that the prospects of  minuscule yields will discourage new entrants into the market. Current participants will begin to realise that without double digit capital growth Irish residential property is not such an attractive proposition. The next sign that the fabled 'soft landing' is a myth, will be a run up in the inventory of unsold homes.

Expect a few stories such as this tale from Tuson, Arizona where the market peaked last summer.

http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1205179&trail=30


----------



## snuffle

I have been observing a slight slowing down in the market in my area for the past few months, properties that were going on at ludicrous prices have been slowly moving back down to more realistic prices, ie back down to the levels of a year ago.  Seeing that headline this morning just brought a big smile to my face! Seems the worm has turned.....


----------



## bearishbull

beattie said:
			
		

> Yes it is refreshing to see the Indo give what is a balanced view of the market. I didn't realise that properties in Glasnevin have had to slash the price to garner interest. If ECB hikes on Thursday then it could become more interesting very quickly


 
I dont see any such slowdown here in Glasnevin, the property mentioned "Addison Park" is a new development of apartments duplexes and small houses and not a standard 3 bed semi/terraced with a garden etc. Else where in glasnevin theres huge interest in period properties and some new builds.


----------



## SteelBlue05

snuffle said:
			
		

> I have been observing a slight slowing down in the market in my area for the past few months, properties that were going on at ludicrous prices have been slowly moving back down to more realistic prices, ie back down to the levels of a year ago. Seeing that headline this morning just brought a big smile to my face! Seems the worm has turned.....


 
Where is your area?


----------



## phoenix_n

Looked at one place in addison. Not sure if its the one mentioned in the newspaper but its price 600,000 for a 3 bed duplex. Now that price is wrong. 600 might scrape you a victorian terrace in glasnevin (more likely phibs though) but for a duplex someone got the price wrong initially.


----------



## room305

What worries me about this article is that it provides no evidence for a "soft landing" other than the words of a few vested interests. This could just easily be the first signs of particularly long and nasty housing price crash.

In the Sunday Independent this week, property editor John O'Keefe opined that:



> [FONT=Verdana, Arial] The housing market may be nearing the end of this particular journey, but it is not a bad thing. Cool heads and calm decisions by us all will ensure a housing market in the near future driven by common sense and respect rather than foolhardiness and greed.




http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1645228&issue_id=14299

In a speculative boom that was driven by greed and self-interest is it not somewhat foolish to assume that altruism on the part of investors will prevent a crash? 

If I had an investment property right now I would sell.
[/FONT]


----------



## Howitzer

phoenix_n said:
			
		

> Looked at one place in addison. Not sure if its the one mentioned in the newspaper but its price 600,000 for a 3 bed duplex. Now that price is wrong. 600 might scrape you a victorian terrace in glasnevin (more likely phibs though) but for a duplex someone got the price wrong initially.


 
I wonder if any "flippers" got burned at the E600K price. These will be the first people collared by a turn in the housing market and, quite frankly, they deserve to be.


----------



## redo

Howitzer said:
			
		

> I wonder if any "flippers" got burned at the E600K price. These will be the first people collared by a turn in the housing market and, quite frankly, they deserve to be.


Agreed, no sympathy for them


----------



## cjh

*[DNG reports slowdown in second-hand Dublin house prices]*

[broken link removed]


----------



## walk2dewater

cjh said:
			
		

> *[DNG reports slowdown in second-hand Dublin house prices]*
> 
> [broken link removed]


 
The very fact that estate agents are on the front of the Independent telling us that everything is not 110% perfect with their get-rich-now scheme is absolute dynamite.  There is something going on.

As for rents falling?  These salemen haven’t a clue.  If the demand to purchase is falling, this will put upward pressure on rents.  Rents should rise, or at least stop falling, if Ireland’s young stop being property fodder.  Dimwits in expensive suits.


----------



## bearishbull

Boundaries of affordability have nearly been reached? terms not able to go much longer,interest only  getting more expensive as are all mortgage rates. Could be just seasonal with world cup etc but im not so sure.


----------



## Howitzer

walk2dewater said:
			
		

> The very fact that estate agents are on the front of the Independent telling us that everything is not 110% perfect with their get-rich-now scheme is absolute dynamite. There is something going on.


 
No dynamite here I'm afraid. The story actually says that the rate of increase was 7% in the 2nd quater as opposed to a whopping 10% in the 1st quarter. These aren't annualised figures either. So that's a 17% increase so far this year (17.7% actually).

If I was a property investor I'd be only delighted to see stories like that every day of the week. A ridiculous increase following an absolutely foolhardy increase does not sound like a property market crashing to me.


----------



## room305

Such conflicting views as well. In the same paper estate agents are moaning that poor planning regulations mean not enough homes will be built to satisfy demand over the next few years. With consequent knock-on effects for prices etc. etc.

People should learn not to confuse "demand" with "requirement".

I would imagine also that there will be an upswing in rental costs but it willl be nothing compared to the downward swing in housing prices over the next few years.


----------



## walk2dewater

Howitzer said:
			
		

> No dynamite here I'm afraid. The story actually says that the rate of increase was 7% in the 2nd quater as opposed to a whopping 10% in the 1st quarter. These aren't annualised figures either. So that's a 17% increase so far this year (17.7% actually).
> 
> If I was a property investor I'd be only delighted to see stories like that every day of the week. A ridiculous increase following an absolutely foolhardy increase does not sound like a property market crashing to me.


 
In La La Land where there's precious little plain-talking about property, the mere hint of something amiss is absolute dynamite.  I thought the Indo had a big property porn Wed edition to sell?

The promise/expectation of a soft-landing is PRECISELY what’s kept prices going up.  Don't they realise this?


----------



## bearishbull

The "demand" in Dublin contains a lot of speculative demand,when price growth slows to low single figures or negative figures for several months a lot of this investor demand will fall off and prices will be further impacted and feed into a negative self perpetuating cycle. Rents may  rise a bit but if there is as mant empty properties lying around as the anecdotal evidence suggests then when these are put on the market rents might not rise while prices of properties fall.


----------



## Remix

I wouldn't rule out a period of falling house prices and falling rents.

falling house prices => falling housing starts => falling construction employment

I can't imagine the armies of foreign construction workers (renters) staying in Ireland with little or no work. Construction based immigration in recent years may also be a reversible bubble.


----------



## SteelBlue05

I would expect to see a rise in rents as Landlords up the rent due to Interest rate increases. I have noticed this on Daft already, rents are 50 euro more on average in Lucan for a typical 3 bed house now....they were at around the 1100-1150 and now 1200-1250....


----------



## bearishbull

SteelBlue05 said:
			
		

> I would expect to see a rise in rents as Landlords up the rent due to Interest rate increases. I have noticed this on Daft already, rents are 50 euro more on average in Lucan for a typical 3 bed house now....they were at around the 1100-1150 and now 1200-1250....


The market decides if landlords can pass on the interest rate rise not the landlord himself.


----------



## jpd

That's asking rents - what are actual rents doing ?


----------



## conor_mc

walk2dewater said:
			
		

> As for rents falling? These salemen haven’t a clue. If the demand to purchase is falling, this will put upward pressure on rents. Rents should rise, or at least stop falling, if Ireland’s young stop being property fodder. Dimwits in expensive suits.


 
Not necessarily. You're assuming that all properties are destined for occupation, either by owner-occupiers or renters.

But of course this warped property bubble of ours means that, for little or no hassle, you can just buy a property and leave it empty for a couple of years and then voila! you've made a killing. This speculative element departing from the market will be the first part of the downturn, in turn making more housing stock available to FTB's at more reasonable prices.

Of course, there will be those who get stuck with their speculative purchases and with the vista of rising interest rates and little or no capital appreciation, they'll be forced to either sell up at a loss or else find a way to make some money out of their property, hence more rental properties become available.

Until the vast overhang of unoccupied property (see census figures of approx 200k units) is cleared into the market, I don't think we'll see much upward pressure on rents generally.


----------



## SteelBlue05

If most\all landlords start increasing asking rents then its quite likely the actual rents will go up too. A lot of tenants dont even try to negotiate on rents....


----------



## Guest107

conor_mc said:
			
		

> Until the vast overhang of unoccupied property (see census figures of approx 200k units) is cleared into the market, I don't think we'll see much upward pressure on rents generally.


You may check the figures by emailing census2006@cso.ie and confirming with them 


1. the number of apparently habitable permanent dwellings in the state in April 2006 from which no form was returned completed 
2. the number of habitable permanent dwellings from which a form was returned complete.


----------



## room305

The "soft landing" scenario is fervently subscribed to by the real estate agents and indeed the government itself. It seems unlikely to me as it appears to rely on investor altruism (essentially asking investors not to all sell their properties at once so the price neither drops nor increases).

Is there are any historic data on the "soft landing" theory - i.e. has it ever actually happened?

At the moment what I'm hearing is fuelled by what vested interest _want_ to happen, rather than any interpretation of what is likely to occur.


----------



## ivuernis

walk2dewater said:
			
		

> The very fact that estate agents are on the front of the Independent telling us that everything is not 110% perfect with their get-rich-now scheme is absolute dynamite. There is something going on.


 
Estate agents will make their money either way. Maybe a drop in prices and a rush of investor sell-off would be welcomed by them.


----------



## Guest107

Herd behaviour in reverse is what I expect . The government/ banks / vested interests want a "soft landing"  but are unlikely to get it .


----------



## Calina

I think that's because rents have been low or lowish for the last while - the lack of negotiation, I mean. If they start to rise in a crazy fashion, then there could be problems...

That being said, I was interested during the weekend to notice the lack of difference between rents in the outlying areas versus rents closer to the city. If you had 1300E to spare, worked somewhere in the north city/county area, are you going to pay 1300E in Swords when you could pay the same in Dublin 9? For me the answer is no. So if rents in towards the city don't go up, I don't expect rents outside the city to stay where they are. 

I don't think that you need to start negotiating really, it's a question of looking at what your money will buy you by way of rental property if you're a renter. Again, 900E for a one bedroomed apartment in D9 versus the same in Swords? If you look around and find better value else where, the market will change. A lack of interest does nasty things to the market 

The other point is, all landlords asking increased rent can only work if there's an excess of tenants over landlords. TBH, I'm not sure there is, even now. I've no trouble finding houses at the moment, but I can have issues finding house-sharers. I think there's more property than tenants at the moment, and I think the ones who are looking to reduce their exposure to subsidising their tenants are in for a nasty shock. 1300E in Dublin 9, because so little of it is new, may well be more than profitable for the landlord because they were bought much longer ago than people buying into new estates, taking rental hits because property values will go up and absorb that. 

IMO, it'll be interesting to see what happens when some investors realise that capital appreciation won't offset their rental losses, particularly those ones who don't bother renting out their property because they thought that capital appreciation was all they needed. They'll either 1) sell fast or 2) start renting. In the latter case, they'll be coming into a market which is already shored up courtesy of the HSE payments and which is already oversupplied with property and undersupplied with tenants. If the number of immigration construction workers takes a hit too the number of tenants will further fall (not fully convinced about the latter courtesy of infrastructure building which continues to go on).

My guess is that sometime shortly a lot of them will sell out, with two effects: 1) drop in some property sales values and 2) drop in rental property availability. I expect rentals to hit equilibrium a bit before property prices do, but frankly, that's based on a gut instinct and could well be wrong. I'm just not convinced about the desirability of those properties as an FTB. I've looked at far too many concrete jungle poorly designed badly laid out estates with less than perfect apartments in them. I'm interested in seeing what's going to happen.


----------



## liteweight

I wonder how accurate the census figures are. Recently a friend told me that his landlord asked him not to fill in the census form and not to answer if they called to the door!! I was flabergasted but it got me thinking...I wonder how many landlords do that and how many other people don't answer the door for various reasons e.g. illegal immigrants have to be living somewhere.


----------



## minion

Its the indo sensationalizing again.  Nothing more.  Its not the asking price of a house that difines its price, its the purchase price.  I could ask €500K for my €300K house and have to drop the price to get it.  But i'm only dropping the price to what people will pay.

Addison Park are asking too much and people arent paying it.  They are chancing their arm and not getting it.  Doesnt mean people arent willing to pay 10% more than the same property sold for last year.

Therefore Property prices have not gone down at all.  The indo are always at this rubbish.  And you can bet that if the EAs are helping them with their story that they expect somthing in it for them too.  EAs have an evil plan in there somewhere or they wouldnt be saying this.


----------



## Remix

liteweight said:
			
		

> I wonder how accurate the census figures are. Recently a friend told me that his landlord asked him not to fill in the census form and not to answer if they called to the door!! I was flabergasted but it got me thinking...I wonder how many landlords do that and how many other people don't answer the door for various reasons e.g. illegal immigrants have to be living somewhere.


 
That would involve quite the conspiracy as it would also require the landlord to ask the tenants to hide from their neighbours for several months prior to the census and have no post delivered to the house etc.

For a house to be classified as vacant, the census gatherers need feedback from neighbours. If neighbours report seeing signs of life the house is classified as 'no answer' and not 'vacant'.


----------



## conor_mc

liteweight said:
			
		

> I wonder how accurate the census figures are. Recently a friend told me that his landlord asked him not to fill in the census form and not to answer if they called to the door!! I was flabergasted but it got me thinking...I wonder how many landlords do that and how many other people don't answer the door for various reasons e.g. illegal immigrants have to be living somewhere.


 
Did your friend realise that he was committing an offence in order to probably protect his landlord from the taxman......


----------



## walk2dewater

Whatever is going on, it's not the same thing that was going on 12 or 24 mths ago.  That headline doesnt _appear_ to benefit EAs, so why are they doing it?  Surely they know the role of marketing the 'soft landing' myth is to pump prices.  And surely they know that when prices stop rising they'll start falling.

Interesting to say the least


----------



## Calina

A simple reason would be to reduce sellers' expectations. If you suggest the market is slowing down, then you've some scope for getting the sellers to pull back on expecting half a million when the top offer in so far is 380K. 

Interestingly enough, it's also been months since an estate agent dropped a begging "Please let us sell your house we've gazillions of people looking for property in your area and we'll even do it for half commission" flyer in the door. Very scientific of course.


----------



## Calina

liteweight said:
			
		

> I wonder how accurate the census figures are. Recently a friend told me that his landlord asked him not to fill in the census form and not to answer if they called to the door!! I was flabergasted but it got me thinking...I wonder how many landlords do that and how many other people don't answer the door for various reasons e.g. illegal immigrants have to be living somewhere.



Ask your friend if he is claiming his rent relief. 

Even if he wasn't legal, I'd be complaining about him daring to suggest I didn't fill out a legally required form.


----------



## Duplex

When the top comes the fools go.  We have relied on unprecedented housing construction to keep our debt driven economy going for five years.  Speculators buying 50%+ of new builds, falling rental yields in the face of rising inflation and house prices and inward migration ?, the possibility that 15% of the housing stock is empty, the unpalatable fact the many Irish investors are credulous beyond ridicule.   Lets not forget what happended in 2001, when prices statrted to fall before 9/11 and the easy credit binge.


----------



## Purple

A soft landing can be produced when interest rates are used to reduce price increases in a property market where demand is based on sound economic factors and not a speculative bubble. By it's nature if you prick a bubble it will burst. I think that the same irrationality and ignorance of basic economics that has fuelled the boom will fuel the bust. No soft landing IMHO.


----------



## Guest107

Duplex said:
			
		

> Lets not forget what happened in 2001, when prices started to fall before 9/11 and the easy credit binge.


A soggy soggy market it were indeed all of 2001 because I was looking around then and not feeling any pressure may I say   .  Semis in good areas of Galway City  were around the £140k-£160k mark , up to €200k in our new currency. These have doubled in price since  .    The house market went off the boil in Galway from   c august 2000 to march 2002, a soft landing I would call that now. 

Then the bloody thing took off again about March 2002 until the present. If all of the recent boom were stripped out in a downturn then prices would correct by 50% of present values.  Rents in those good areas I mentioned are now lower (or the same at best ) as  2001 and these are still the good areas may I add  .

2001 (number 35 page 3 of 5 in PDF ) IR£270k or €330k 

[broken link removed]

They are next door neighbours in a good area . This shows you how out of hand it got in Galway where the least affordable homes in ireland are to be found  .


----------



## phoenix_n

minion said:
			
		

> Its the indo sensationalizing again.


 
Thats quite true. Announce a housing market crash on your front page and you are guaranteed more sales and more press coverage.


----------



## delboy159

It's easy to pick a few situations where prices are "dropping" here and there. I house across the road from me is on the market for 500k (small 2 bed Drumcondra - ex council estate). I predicted that I might - if things went well be going for 470/475k before I checked the price online - I expected the asking to start at 450k - and it might get bidded up the 470's at best.... To see it at 500k was mad beyond belief - they might drop to 480k and people will say the bubble is bursting, but to me there 5/10k over what I thought was max money anyway. 

By the way a house 3 doors down from that one (same size) went for 360k nearly a year ago - so believe me 470/475k is mad money. 500k hs no hope... But the indo could make a sensational story out of it if they wanted to...


----------



## room305

phoenix_n said:
			
		

> Announce a housing market crash on your front page and you are guaranteed more sales and more press coverage.


But how much advertising revenue from angry real estate agents would you lose? 

I still cannot figure out why real estate agents are admitting that property prices have fallen in certain areas (or the asking price has at least). My expectation was that they would deny a crash was occuring right up until it was no longer impossible to deny it at which point they would refer to it as a "temporary correction" or a recalibration and continue recommending full steam-ahead to potential buyers.

I can only imagine that the situation is worse than what they are admitting to. Perhaps there is a glut of unsold property coming onstream and they are trying to talk down seller's price expectations while at the same time hoping to not discourage potential buyers.



> [FONT=Verdana, Arial]  Estate agents said yesterday they had seen the first evidence of a "soft landing" after years of astounding growth.[/FONT]


[FONT=Verdana, Arial]
Falling asking prices could just as easily be the first sign of a coming crash. The article provided no evidence of either but I agree with W2DW - something very significant is occuring. Real estate agents do not talk like this. Ever.
[/FONT]


----------



## hmmm

room305 said:
			
		

> I still cannot figure out why real estate agents are admitting that property prices have fallen in certain areas (or the asking price has at least).[FONT=Verdana, Arial]
> [/FONT]


(speculating) I suppose whether or not prices are going up or down, estate agents need volume - if prices don't sell, they don't get commission. A stalled market with sellers holding out for unrealistic prices is worse than a falling market.


----------



## soma

room305 said:
			
		

> [FONT=Verdana, Arial]something very significant is occuring. Real estate agents do not talk like this. Ever.
> [/FONT]


Agree, I'm very confused as to why the EAs would actually make comments like this. There is *no need* for it - from the man in the street to the specu-vestor, 95% of the Irish public think all is rosey (and always will be) in the property market. Why let them think otherwise in a market where sentiment & conifdence is paramount..?

At a stretch - maybe, just maybe.. they feel the need to "talk ourselves into a soft landing" and are carrying out a pre-emptive strike. But it still makes no sense.. with simple comments like these they could do more damage to the "bull" outlook than 50 threads like this on AAM.


----------



## bearishbull

Maybe when things go bad they dont wanna be accused of not warning etc but if thats the case then they should have warned long ago!


----------



## room305

This is why I can't understand it. I can theorise that sellers expectations are too high and buyers can't match it (or possibly - the banks won't give them enough money to meet the sellers expectations). However, surely it would be better for them to continue with the usual bull story - a few well chosen anecdotes about how the market is holding up well in the face of rising interest rates, fundamentals are sound etc. Get some greed and fear back into the market.

Frankly, I doubt anyone could have predicted estate agents would have adopted this approach ...

The crash was always going to happen but I cannot fathom what the REAs are at trying to precipitate it. Surely, average Joe Investor when he reads that the REAs expect prices to fall or remain static over the next few months will be picking up the phone and putting his house on the market. Who would want a depreciating asset that produces very little yield? If you are a buyer what will be the incentive to buy now?


----------



## Guest107

but an EA who operates generally in a small area, say d11 , and who is squeezed by crazy prices wanted by national operators , would be tempted to break ranks and try to get shifting stuff by introducing reality.

this is an example from the southside _somewhere_


----------



## room305

This is in no way a case of a small REA breaking ranks, Alan Cooke, the CEO of the IAVI and Fintan McNamara, CEO of the IPAV, seem to be both singing from the same hymn sheet.


----------



## Guest107

room305 said:
			
		

> the CEO of the IAVI and Fintan McNamara, CEO of the IPAV, seem to be both singing from the same hymn sheet.



oooooh thats different , sorry ..


----------



## bearishbull

room305 said:
			
		

> This is why I can't understand it. I can theorise that sellers expectations are too high and buyers can't match it (or possibly - the banks won't give them enough money to meet the sellers expectations). However, surely it would be better for them to continue with the usual bull story - a few well chosen anecdotes about how the market is holding up well in the face of rising interest rates, fundamentals are sound etc. Get some greed and fear back into the market.
> 
> Frankly, I doubt anyone could have predicted estate agents would have adopted this approach ...
> 
> The crash was always going to happen but I cannot fathom what the REAs are at trying to precipitate it. Surely, average Joe Investor when he reads that the REAs expect prices to fall or remain static over the next few months will be picking up the phone and putting his house on the market. Who would want a depreciating asset that produces very little yield? If you are a buyer what will be the incentive to buy now?


Ah sure in the long term it will be grand! People who are buying for long term forget we'll have an oversupply due to the massive building rate we currently have and that incomes wont grow by anywhere near as much as they did in last ten years.


----------



## Afuera

I think this is a sign that the estate agents are between a rock and a hard place at the moment.

If they say nothing about a slowing/falling market then they could see a standoff between sellers who feel that their house is worth a lot more than buyers are offering (or able to offer). This standoff could drag out over years with very little selling or buying going on and therefore very little profits being generated by estate agents during this period; they only get paid when the transaction completes after all.

If they alert the market to the fact that sellers are now reducing their asking prices ,then sellers might be willing to place their houses on the market at more resonable levels and some buyers might be willing to bite. The gamble with this move is that buyers could see it as a sign of a turning market and start to hold back and wait for more falls. This could cause a substantial correction in the market; but if you think about it, in the eyes of the estate agents, a quick correction would certainly be better than a long drawn out slowdown.

A ten year slump is the last thing the estate agents want and would pull many of them under altogether.

The next twelve months are going to be very interesting!


----------



## Remix

room305 said:
			
		

> The crash was always going to happen but I cannot fathom what the REAs are at trying to precipitate it.


 
Consumer sentiment has been falling quite rapidly in the face of rising interest rates and runaway prices for even the most basic houses.

Perhaps they are not offering the soft landing story to slow continuing expectations of the boom but instead are trying to raise expectations up from the growing and more widespread fear of a crash ?


----------



## conor_mc

Afuera said:
			
		

> I think this is a sign that the estate agents are between a rock and a hard place at the moment.
> 
> If they say nothing about a slowing/falling market then they could see a standoff between sellers who feel that their house is worth a lot more than buyers are offering (or able to offer). This standoff could drag out over years with very little selling or buying going on and therefore very little profits being generated by estate agents during this period; they only get paid when the transaction completes after all.
> 
> If they alert the market to the fact that sellers are now reducing their asking prices ,then sellers might be willing to place their houses on the market at more resonable levels and some buyers might be willing to bite. The gamble with this move is that buyers could see it as a sign of a turning market and start to hold back and wait for more falls. This could cause a substantial correction in the market; but if you think about it, in the eyes of the estate agents, a quick correction would certainly be better than a long drawn out slowdown.
> 
> A ten year slump is the last thing the estate agents want and would pull many of them under altogether.
> 
> The next twelve months are going to be very interesting!


 
Best hypothesis I've read yet anyway....


----------



## exile

Afuera said:
			
		

> If they alert the market to the fact that sellers are now reducing their asking prices ,then sellers might be willing to place their houses on the market at more resonable levels and some buyers might be willing to bite.


It does look like they're aiming to please both sides.

'Paul Murgatroyd, DNG economist, said: “We do seem to be moving into a period of soft landing. The downturn, everything will be fine scenario we have been hearing about, it looks like it is coming to fruition."'

[broken link removed]

The good old "everything will be fine scenario" !


----------



## room305

Whether this move will delay the inevitable or not only time will tell. 

Even alerting buyers to the fact that house prices are downwardly negotiable might backfire. Up until now, AMVs were regarded as something of a cruel joke and most houses sold for well above this price.

I think you could be right Afuera. One thing is definitely clear - they felt they needed to do something and that in itself is highly significant.


----------



## Afuera

exile said:
			
		

> [broken link removed]
> The good old "everything will be fine scenario" !


That's a hilarious press release! Some obvious messages being aimed directly at the potential buyers and sellers out there.

For the buyer they're being told that it's not getting any easier to buy and they also throw in the cautionary tales of how those buyers who set on their hands in the slowdown in 2001 got punished. In other words "Buy now".

For the seller, they're being told to reduce their expectations, it's becoming a buyers market etc. In other words "Only sell if you have to and don't expect too much for it".

For one thing, the fact that they are ruling out any great future capital appreciation will surely scare the potential investors away. I wonder if there are enough "real" buyers (i.e. owner-occupiers) out there to support the amount of houses being built this year?


----------



## bearishbull

Estate agents would as alluded to earlier prefer a flatish market or short sharp correction and subsequent flat market  to a long drawn out correction where volumes fall slowly over longer period. Dont think they are in a position to manipulate the market in such a way though.


----------



## redo

Afuera said:
			
		

> For one thing, the fact that they are ruling out any great future capital appreciation will surely scare the potential investors away. I wonder if there are enough "real" buyers (i.e. owner-occupiers) out there to support the amount of houses being built this year?



There was a report done by Sherry Fitz (I think) early this year, stating that around 40% of all homes purchased in 2005 were done so by 'canny' or 'savvy' investors.


----------



## redo

redo said:
			
		

> There was a report done by Sherry Fitz (I think) early this year, stating that around 40% of all homes purchased in 2005 were done so by 'canny' or 'savvy' investors.



EDIT Correction, they did not use 'canny' or 'savvy'.

[broken link removed]


----------



## SidTheDweeb

redo said:
			
		

> There was a report done by Sherry Fitz (I think) early this year, stating that around 40% of all homes purchased in 2005 were done so by 'canny' or 'savvy' investors.



41% ... unbelieveable... What now for them?


----------



## sonar

How can they call a soft landing so fast ???



> Sherry Fitzgerald says that for the 12 months to June 2006, second hand house prices in Dublin rose by 33.8%, a level not seen since 1998.


 
http://www.rte.ie/business/2006/0703/houses.html


We go from 33.8% YOY to a safe-soft landing in one month ?


----------



## Duplex

Investor psychology appears to develop through 
a market cycle in a fashion something like this: 

*Investor emotion through a market cycle;*

Optimism 
Excitement 
Thrill 
Euphoria 
Anxiety (we are about here)
Fear 
Denial 
Depression 
Panic 
Capitulation 
Desperation 
Despondency


----------



## thewatcher

sonar said:
			
		

> How can they call a soft landing so fast ???
> 
> 
> 
> http://www.rte.ie/business/2006/0703/houses.html
> 
> 
> We go from 33.8% YOY to a safe-soft landing in one month ?


 
Very strange indeed,could it be that the "vested interests" have shifted all their own investment/commercial property and are now quite happy for a correction to occur at this point.

From the sherryfitz report below it was interesting to note that while 40% of properties were bought by investors,it was other investors that shifted 30% of the properties bought.
To my mind these are the "canny" investors, the rest are just speculators.


----------



## sonar

33+% in 1998 may have been justified with celtic-tiger fundamentals but it smacks of trouble in the debt-fueled fantasy that we currently have.

Perhaps we've just had the final steep segment of our upward parabolic "japanese" phase.


----------



## room305

Last year according to Sherry Fitz, FTBs comprised 36% of purchasers. Even if prices come down I don't think this figure will increase much and it may even decrease. Many of the FTBs bought before they were ready to settle down, for fear of prices increasing, although I'm sure some stayed away because prices had already got too high.

41% of the market were investors and presumably the other 23% were trader-uppers. I do wonder how many of the trader-uppers hung onto their existing houses, thereby becoming de facto investors who wouldn't be included in the existing figures. Based on anecdotal evidence I'm betting its a significant number of them.

So perhaps half of last year's houses are held for investment purposes. Couple this with a 15% overhang of unoccupied houses and an output of 80,000 houses a year and I can see why REAs are worried. I've read we only need 65,000 houses a year but I cannot remember where this figure originated from. If its true though, that means we have enough empty houses to service the market for three years without any new houses coming on stream. Though of course, many of these speculator houses may be in completely undesirable areas.

Posters who rubbished the existence of this thread must surely soon eat their words.


----------



## RiceCakes

room305 said:
			
		

> Last year according to Sherry Fitz, FTBs comprised 36% of purchasers. Even if prices come down I don't think this figure will increase much and it may even decrease. Many of the FTBs bought before they were ready to settle down, for fear of prices increasing, although I'm sure some stayed away because prices had already got too high.
> 
> 41% of the market were investors and presumably the other 23% were trader-uppers.
> 
> Posters who rubbished the existence of this thread must surely soon eat their words.


Being priced out of the FTB market by about 1-2 years in terms of income, I am of course watching this unravel with a keen interest.

I would like to say though from a FTB perspective, no way José would I buy into a market thats only started falling, it seems this fall may be for five years or even longer, so am perfectly happy to continue to save and wait until I feel its starting to bottom out (will be reading here with rapt attention).
Can't help but think many other FTB'rs will be scared out of buying once there is a hint of blood in the water thus increasing the likelyhood of this soft landing fallacy not becoming a reality.


----------



## Eurofan

RiceCakes said:
			
		

> Can't help but think many other FTB'rs will be scared out of buying once there is a hint of blood in the water thus increasing the likelyhood of this soft landing fallacy not becoming a reality.



I love the image here; estate agents/bankers/builders etc. down one end of the pool shouting "the waters fine come on in!" while climbing out slowly, half way down some investors scrambling out while others are staring at them like they're mental and a few boatloads of ftbs at the other end wondering what the hecks going on while loads more on the sidelines saying "no fecking way i'm getting in there"!.


----------



## Neffa

sonar said:
			
		

> How can they call a soft landing so fast ???
> 
> Sherry Fitzgerald says that for the 12 months to June 2006, second hand house prices in Dublin rose by 33.8%, a level not seen since 1998.
> 
> We go from 33.8% YOY to a safe-soft landing in one month ?


 
Not sure I actually believe this 33.8% figure. From what I understand, the way they work this out is that they have a basket of 500 properties which *they* periodically re-value and then tell us that the market has gone up by x. I think it was a year ago when the ESRI figures said about 12-13% and SherryFitz said 30%! The only thing which matters should be a rolling view of prices of properties which are actually sold over a time period.

I have to say it struck me as comical in the extreme coming back to find out that Estate Agents in Ireland employ economists and that the media report their "insights" as being neutral whilst the OECD and others are slated as "doom-mongers".


----------



## Neffa

Afuera said:
			
		

> I think this is a sign that the estate agents are between a rock and a hard place at the moment.
> 
> If they say nothing about a slowing/falling market then they could see a standoff between sellers who feel that their house is worth a lot more than buyers are offering (or able to offer). This standoff could drag out over years with very little selling or buying going on and therefore very little profits being generated by estate agents during this period; they only get paid when the transaction completes after all.
> 
> If they alert the market to the fact that sellers are now reducing their asking prices ,then sellers might be willing to place their houses on the market at more resonable levels and some buyers might be willing to bite. The gamble with this move is that buyers could see it as a sign of a turning market and start to hold back and wait for more falls. This could cause a substantial correction in the market; but if you think about it, in the eyes of the estate agents, a quick correction would certainly be better than a long drawn out slowdown.
> 
> A ten year slump is the last thing the estate agents want and would pull many of them under altogether.
> 
> The next twelve months are going to be very interesting!


 
I think this is probably right, but the extreme cynic in me wonders if the government would like to say "here, see - you got your soft landing" prior to the next election. It would be nice for them if the industry argued that, don't you think?


----------



## bearishbull

Neffa said:
			
		

> Not sure I actually believe this 33.8% figure. From what I understand, the way they work this out is that they have a basket of 500 properties which *they* periodically re-value and then tell us that the market has gone up by x. I think it was a year ago when the ESRI figures said about 12-13% and SherryFitz said 30%! The only thing which matters should be a rolling view of prices of properties which are actually sold over a time period.
> 
> I have to say it struck me as comical in the extreme coming back to find out that Estate Agents in Ireland employ economists and that the media report their "insights" as being neutral whilst the OECD and others are slated as "doom-mongers".


33% was the rate for 2nd hand houses in Dublin  which i 'd well beleive, 2 identical houses in my area sold for 40% more in space of 15 months (jan 05-may06)


----------



## Sunnyboy

Duplex said:
			
		

> Investor psychology appears to develop through
> a market cycle in a fashion something like this:
> Investor emotion through a market cycle;
> 
> Optimism
> Excitement
> Thrill
> Euphoria
> Anxiety (we are about here)
> Fear
> Denial
> Depression
> Panic
> Capitulation
> Hope
> Relief
> Optimism
> Desperation
> Despondency


 

Eircon. Been there, done that.


----------



## Duplex

I should post a link on the stages of investor psychology, which I quoted from.  This is a three page PDF file, the best summary I've ever found on the subject. Required reading that the moderators might consider making a sticky? 



[broken link removed]


----------



## soma

Neffa said:
			
		

> I have to say it struck me as comical in the extreme coming back to find out that Estate Agents in Ireland employ economists and that the media report their "insights" as being neutral


In all fairness, it is a widespread practise in the US. However it doesn't lessen the fact that it's patently ridiculous - a REA Economist saying anything negative would be akin to turkeys voting for xmas.


----------



## Elvis

sonar said:
			
		

> We went sale agreed on a south Dublin house several weeks ago but for various reasons haven't signed yet.
> 
> This can't happen very often but the house a couple of doors away came on the market (different EA) during this time and it is identical in almost every respect.
> 
> There's very little interest in it and the best bid to date on this one is nearly E45,000 below what we went sale agreed on !
> 
> Handbrake ON !!


 
Have gone sale agreed on a property in Lucan (3 bed ,mid terrace, 430k). I am starting to get nervous ;-( Starting to wondering whether to put the brakes on considering all the speculation ? Due to close start of August but have signed nothing yet. Will be stretched when start making the repayments. Anyone recommend waiting it out having got this far? (plan on living there, renting at the moment)


----------



## redo

Elvis said:
			
		

> Have gone sale agreed on a property in Lucan (3 bed ,mid terrace, 430k). I am starting to get nervous ;-( Starting to wondering whether to put the brakes on considering all the speculation ? Due to close start of August but have signed nothing yet. Will be stretched when start making the repayments. Anyone recommend waiting it out having got this far? (plan on living there, renting at the moment)


430k seems very high for a 3bed mid terrace.  There must have been a lot of bidding.  Can you give us the asking price maybe?


----------



## MugsGame

Why are you buying? Do you want the security of a place of your own, and the freedom to redecorate as you please? Are you happy to live there for five or more years? If yes to those, buy if you can afford it.

Alternatively, are you caught up in the mania to get on the "property ladder" (aka property tightrope) at any cost? Is this a starter home that you want to be certain you can move on from in two years? If yes to those, you could continue to rent, take the stamp duty and deposit and invest it along with the difference between rent and mortgage repayments. Then buy when you can say yes to the first set of questions.


----------



## Elvis

redo said:
			
		

> 430k seems very high for a 3bed mid terrace. There must have been a lot of bidding. Can you give us the asking price maybe?


Original asking price was 398k, got into bidding war with one other buyer (I beleive) and it went back and forth for a couple of weeks. It's close to the old village in Lucan (so not in the maze beside Liffey Valley)....was reading front page in Indo last night with disgust. I was planning on renting one room out, if Indo are to be believed, I'll struggle to rent one room in Dublin suburbs!


----------



## room305

Elvis said:
			
		

> Have gone sale agreed on a property in Lucan (3 bed ,mid terrace, 430k). I am starting to get nervous ;-( Starting to wondering whether to put the brakes on considering all the speculation ? Due to close start of August but have signed nothing yet. Will be stretched when start making the repayments. Anyone recommend waiting it out having got this far? (plan on living there, renting at the moment)



If you will be stretching now to make repayments how will you feel in two years if interest rates have gone up another 2% or so?

On a 100% €430k, 35 yr mortgage, if the base rate went up to about 5% and your interest rate was 6.25% then you would be repaying in the region of €2,500 a month (though in reality a little less because you'll have depreciated some of the capital).

If you cannot comfortably afford to buy, don't buy. The days of cheap credit are fast disappearing.


----------



## walk2dewater

Elvis said:
			
		

> Have gone sale agreed on a property in Lucan (3 bed ,mid terrace, 430k). I am starting to get nervous ;-( Starting to wondering whether to put the brakes on considering all the speculation ? Due to close start of August but have signed nothing yet. Will be stretched when start making the repayments. Anyone recommend waiting it out having got this far? (plan on living there, renting at the moment)


 
Negotiate up a 10% rent discount by shopping around and be willing to pay 6 - 12mths in advance. Stick your money in rabobank and preserve your capital via _slowly_ averaging into their mutual fund offerings; gold, metals, real bonds, but mostly cash for next 6mths. Aim to grow your net worth by european M3. Forget about property for now. Stop reading the property sections and listening to well-meaning friends and family.

Educate yourself.

Understand what this means: http://www.bis.org/publ/arpdf/ar2006e4.pdf

Hang on.


----------



## redo

Elvis said:
			
		

> Original asking price was 398k, got into bidding war with one other buyer (I beleive) and it went back and forth for a couple of weeks. It's close to the old village in Lucan (so not in the maze beside Liffey Valley)....was reading front page in Indo last night with disgust. I was planning on renting one room out, if Indo are to be believed, I'll struggle to rent one room in Dublin suburbs!


I know how you feel.  The property market is very depressing.  Especially when you get involved in a bidding war.  Because thats exactly what it is. WAR.  You are determined to win it.

I think you should probably accept that you've missed the boat, pull out and see if the price comes down.   You never know, the mysterious bidder may have gone elsewhere.

I would hate to see what effect half of a percent rise in interest rates would do to your already extended budget


----------



## bearishbull

33,000 hits on this thread and it aint open that long,maybe this is another indicator of increasing nervousness in the market,or maybe its because since brendan has been on radio more theres more people coming to this site. Anyone hear the long discussion on newstalk this morning with gurdiev,moore mc dowell and shane ross? more bearish senitment there today too.


----------



## beattie

Elvis said:
			
		

> Have gone sale agreed on a property in Lucan (3 bed ,mid terrace, 430k). I am starting to get nervous ;-( Starting to wondering whether to put the brakes on considering all the speculation ? Due to close start of August but have signed nothing yet. Will be stretched when start making the repayments. Anyone recommend waiting it out having got this far? (plan on living there, renting at the moment)


 
This is a very hard one to call. I have stopped giving advice to people thinking of buying as I have had too many negative reactions to my negative thoughts on the whole property market. If you didn't catch it this morning listen to the re-run of the Dunphy show tonight where they had three people who have no vested interest in the property market (or so they claim) talk about where they think it will head. I would be very nervous about paying that amount of money. If you are very keen to buy why not offer 20 or 30k less. In that case that will soften the blow when the interest rate rises come along


----------



## cjh

What time is the programme repeated on Newstalk?


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## bearishbull

cjh said:
			
		

> What time is the programme repeated on Newstalk?


 
10pm -12am tonight or can be downloaded now as a podcast from www.newstalk106.ie


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## beattie

cjh said:
			
		

> What time is the programme repeated on Newstalk?


 
10-12, the part was on after 8 this morning, can't remember when exactly, you may be able to get it on podcast though I have never done this.


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## cjh

Thank you!


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## whizzbang

its 35 minutes and 34 seconds into the newstalk podcast.


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## walk2dewater

sonar said:
			
		

> Perhaps we've just had the final steep segment of our upward parabolic "japanese" phase.


 
Why do I suspect that the outcome of this apparent period of “doubt” by buyers will end in prices not falling in any perceptable or meaningful way for buyers a la TSB index and/or stories from EA ‘Economists’. This will provide fuel to the “told you so” crowd; “prices haven’t fallen so they can’t” “you would have saved yourself X by buying in the Spring” etc.

I can see the Indo headlines now, “Estate agent predictions wrong, prices continue up”. We could then have strong price growth heading towards the end of the year.


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## Howitzer

walk2dewater said:
			
		

> Why do I suspect that the outcome of this apparent period of “doubt” by buyers will end in prices not falling in any perceptable or meaningful way for buyers a la TSB index and/or stories from EA ‘Economists’. This will provide fuel to the “told you so” crowd; “prices haven’t fallen so they can’t” “you would have saved yourself X by buying in the Spring” etc.
> 
> I can see the Indo headlines now, “Estate agent predictions wrong, prices continue up”. We could then have strong price growth heading towards the end of the year.


 
I kinda thought this as the point of the DNG statement. In the statement they draw attention to the last "slowdown" in 2001. Then there was a slowdown in the market for about a 6 month period, buyers started sitting on the sidelines, then all of a sudden prices leap up again and potential buyers are left rueing the fact that they didn't jump in as soon as prices slowed. 

This is preemptive of such a slowdown happening in the medium term, making people think that such a slowdown is really a good opportunity to buy rather than sell. The guff regarding 1 or 2 houses dropping in price is nonsense as has been pointed out, but does give the impression that maybe the slowdown has already happened and NOW NOW NOW is the time to buy.

Of course the situation is completely different to 2001. 2001 saw tax breaks reintroduced (Bacon) and interest rates falling (twin towers). Now tax breaks are ending (S23/50) and interest rates are climbing.


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## room305

walk2dewater said:
			
		

> Why do I suspect that the outcome of this apparent period of “doubt” by buyers will end in prices not falling in any perceptable or meaningful way for buyers a la TSB index and/or stories from EA ‘Economists’. This will provide fuel to the “told you so” crowd; “prices haven’t fallen so they can’t” “you would have saved yourself X by buying in the Spring” etc.
> 
> I can see the Indo headlines now, “Estate agent predictions wrong, prices continue up”. We could then have strong price growth heading towards the end of the year.


If houses have risen between 17% and 33% so far this year depending on who or what you are reading then static or dramatically slowed growth could still see houses well up by the end of the year.

However, I think the bearish sentiment will be starting to sink in around then. Going into 2007, with much higher interest rates and the prospect of continued rises, how could anyone buying now not envy their "crazy" friends who continued to rent? While their friends have buckets of disposable income each month they'll have less and less without even a paper gain in their house price to make them feel better.

Perhaps, like with my own house, they'll have a plumbing problem and be staggered by the cost of servicing it (4% inflation - yeah right!). How nice to be able to ring your landlord and demand that he absorbs the cost of repairs ...

No, I think we'll be moving from "anxiety" to "fear" in 2007. As investors see their mortgage costs double and find themselves unable to pass that on to the renter, I think that even a very skillfull REA will find it difficult to talk them out of selling.


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## Elvis

beattie said:
			
		

> This is a very hard one to call. I have stopped giving advice to people thinking of buying as I have had too many negative reactions to my negative thoughts on the whole property market. If you didn't catch it this morning listen to the re-run of the Dunphy show tonight where they had three people who have no vested interest in the property market (or so they claim) talk about where they think it will head. I would be very nervous about paying that amount of money. If you are very keen to buy why not offer 20 or 30k less. In that case that will soften the blow when the interest rate rises come along


Thanks for the replies - will check out Dunphy show and see what they are saying. It is somewhere I am happy to live and it beats the shoebox apartments in the city for 1/2 million....but not sure I could stick it for 5 years!! PS: Is it not too late to go renegotiating the sale? We have paid 6k deposit to EA.


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## room305

Elvis said:
			
		

> Thanks for the replies - will check out Dunphy show and see what they are saying. It is somewhere I am happy to live and it beats the shoebox apartments in the city for 1/2 million....but not sure I could stick it for 5 years!! PS: Is it not too late to go renegotiating the sale? We have paid 6k deposit to EA.



Is the deposit refundable? There is a very realistic prospect of the house being worth a lot less in a few years time and probably very little prospect of it being worth more.


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## Duplex

The possibility that the downturn in the American housing market, might tip deficit burdened Uncle Sam over the edge; is another factor that has to be considered.   Some commentators are predicting a recession beginning as soon as early 2007, coupled with a serious slide in the dollar for added thrills.  If the US economy does falter then all bets are off for the global economy.   Ireland has its balls a’ dangling in the wind and we could catch more than our fair share of ‘collateral damage’.

I think buying in Ireland now is tantamount to playing blind mans bluff on the edge of the cliffs of Moher on a very dark night with a bottle of vodka warming your belly.  But then again some people have different risk tolerances, ya pays your money ya takes your choice.


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## 54-46

Originally Posted by *Elvis*
_Thanks for the replies - will check out Dunphy show and see what they are saying. It is somewhere I am happy to live and it beats the shoebox apartments in the city for 1/2 million....but not sure I could stick it for 5 years!! PS: Is it not too late to go renegotiating the sale? We have paid 6k deposit to EA._

_Hey Elvis, _
_I unfortunately listened to the so called 'experts' and other wannabe 'experts' who said the market couldn't continue the way it was going, and I've been hearing it all the way back from the mid 1990's. If I had of paid no attention to them I'd be laughing now. Ignore the doom and gloom merchants, buy the house and be happy that you've managed to make the leap to homeowner. If it all goes belly up, the entire country will be screwed, the econonmy will implode, massive job losses, massive emigration, make sure you have your ticket ready to get out quickly and leave the rest to sort out the mess. Your new house included._


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## room305

54-46 said:
			
		

> _Hey Elvis, _
> _I unfortunately listened to the so called 'experts' and other wannabe 'experts' who said the market couldn't continue the way it was going, and I've been hearing it all the way back from the mid 1990's. If I had of paid no attention to them I'd be laughing now. Ignore the doom and gloom merchants, buy the house and be happy that you've managed to make the leap to homeowner. If it all goes belly up, the entire country will be screwed, the econonmy will implode, massive job losses, massive emigration, make sure you have your ticket ready to get out quickly and leave the rest to sort out the mess. Your new house included._



Get out to where though. That's the problem with a global recession. It's worldwide.

I don't pretend to any great visionary expertise (nor do many here) so feel free to saddle yourself with debt up to your eyeballs, bury you head in the sand and hope it all works itself out somehow ...


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## conor_mc

54-46 said:
			
		

> _Hey Elvis, _
> _I unfortunately listened to the so called 'experts' and other wannabe 'experts' who said the market couldn't continue the way it was going, and I've been hearing it all the way back from the mid 1990's. If I had of paid no attention to them I'd be laughing now. Ignore the doom and gloom merchants, buy the house and be happy that you've managed to make the leap to homeowner. If it all goes belly up, the entire country will be screwed, the econonmy will implode, massive job losses, massive emigration, make sure you have your ticket ready to get out quickly and leave the rest to sort out the mess. Your new house included._


 
I love that line - "I listened to the experts and ......".

When you're talking about spending 100's of thousands of euro, why on earth don't you take a good look at the available data and draw your own conclusions?

The arguments supporting a crash have been laid out aplenty in this thread:-

1) Census figures of 200k unoccupied houses, suggesting speculators relying on capital appreciation.
2) Rental yields of < 2%, investors subsidising mortgage repayments.
3) Rising interest rates
4) Average house prices at 8-9 times the average wage
5) Out with the old 20-year mortgages, in with the new 40-year, 100% capital and interest-only mortgages - all suggesting the limits of affordability are being stretched.
6) Declining birth-rates from 1980 onwards, so less FTB's coming on stream over the next 10 years
7) Rising living costs making Ireland less attractive for immigrants
8) Citizens of EU accession states currently only allowed work in Sweden and Ireland. What happens when these immigrants are given free access the rest of Europe? Will they keep coming to Ireland in the record numbers we see today?


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## room305

Add ...

9) Possibility of US led global recession
10) Possibility of stagflation

The stagflation warning comes from no less an authority than the Bank of International Settlements. WD2DW already gave a direct link, but here is an article discussing the same:

http://articles.moneycentral.msn.com/Investing/JubaksJournal/StagflationANewPerilForStocks.aspx?page=2


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## walk2dewater

54-46 said:
			
		

> _ the leap to homeowner._


Jumbo mortgage holders own nothing.



			
				54-46 said:
			
		

> _ If it all goes belly up, the entire country will be screwed. _


wrong. people with liquid assets, no debts, and positive cash-flow are NOW in an enviable position.


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## room305

walk2dewater said:
			
		

> wrong. people with liquid assets, no debts, and positive cash-flow are NOW in an enviable position.


Good point. In a deflationary recession your money is worth more (in real terms - purchasing terms) simply by being liquid. The last thing you want to be in a scenario like this is to be highly leveraged (owing money).

I have a question though. In a stagflation scenario, might not the owner of a jumbo mortgage be in a beneficial position? House prices would remain relatively static but decline greatly in real terms. However, inflation would be massively decreasing the amount of money you owed to the bank in real terms also.

With slow economic growth investment opportunities would be limited so there would be few places you could put your money anyway. Gold might be the exception.

Despite being incredibly bearish on property, I have no plans to sell my own house (yet). That said, if I was looking at a choice between buying and renting in Dublin right now I would definitely look at renting first.


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## walk2dewater

room305 said:
			
		

> However, inflation would be massively decreasing the amount of money you owed to the bank in real terms also.


 
Only if your wages were going up too. Inflation in incomes wiped out our parents mortgages for them, inflation in house prices made them rich over time. I wouldnt be so sure about either going forward.

I intend to keep my property also. The personal value to me far outweighs their market value.

As for the deflation vs. inflation debate. This is wrecking my head to be honest. I cannot think of a more difficult investing climate in my life as the one today. As a compromise I am gold, CAN$, CHF, € bonds/cash, energy/metal shares.

BTW leveraging to purchase residential property today is IMHO the single worse investment bet possible. There are going to be a lot of very very disillusioned people.


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## room305

walk2dewater said:
			
		

> Only if your wages were going up too. Inflation in incomes wiped out our parents mortgages for them, inflation in house prices made them rich over time. I wouldnt be so sure about either going forward.


People working in public service could probably be assured of increasing wages. Not sure if they'll increase enough to match inflation but at least they start from a relatively high base. I don't work in the public sector myself but you are right, wages probably won't increase enough in real terms to make it worthwhile.



			
				walk2dewater said:
			
		

> I intend to keep my property also. The personal value to me far outweighs their market value.


My reasons are a little less sentimental I'm afraid. My LTV is about 70% of current market price. Thanks to a very competitive discounted mortgage (for 2 years) my repayments are about half what it would cost to rent the same house. I've calculated that during this period the ECB base rate would need to rise to 7% to bring my mortgage into parity with rent in the area. So if in 2 years the price doesn't slip by much more than 30% and interest rates remain below 7% I'll be happy enough. Meanwhile, the challenge is figuring out what to do with the money I would otherwise be spending on rent.



			
				walk2dewater said:
			
		

> As for the deflation vs. inflation debate. This is wrecking my head to be honest. I cannot think of a more difficult investing climate in my life as the one today. As a compromise I am gold, CAN$, CHF, € bonds/cash, energy/metal shares.


Tricky innit?

I have read your reasons for purchasing CAN$ and they seem sound. What do you think of investment in companies with interests in the Canadian oil sands? I've only recently started investing and feel I may have missed the boat on that one. Apart from some small averaging into commodities and alternative energy companies I've reduced almost all my share positions and currently hold mostly cash. I may look to get more agressively into gold during the coming months.



			
				walk2dewater said:
			
		

> BTW leveraging to purchase residential property today is IMHO the single worse investment bet possible. There are going to be a lot of very very disillusioned people.


I wholeheartedly agree.


----------



## redo

54-46 said:
			
		

> _Hey Elvis, _
> _I unfortunately listened to the so called 'experts' and other wannabe 'experts' who said the market couldn't continue the way it was going, and I've been hearing it all the way back from the mid 1990's. If I had of paid no attention to them I'd be laughing now. Ignore the doom and gloom merchants, buy the house and be happy that you've managed to make the leap to homeowner. If it all goes belly up, the entire country will be screwed, the econonmy will implode, massive job losses, massive emigration, make sure you have your ticket ready to get out quickly and leave the rest to sort out the mess. Your new house included._


I think we just shook the vendor from the lurking grass


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## Guest107

The recent investor maybe ??????


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## room305

walk2dewater said:
			
		

> Look into buying calls/puts rather than long/short positions.


That makes sense I guess. Although for such companies, I'd prefer to hold the actual shares. 

Any recommendations on brokers (I'm aware this is diverging slightly from the main topic) where call/put options are available?

I used to use spreadbetting but in this environment I think it could be an easy way to lose a lot of money.


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## room305

redo said:
			
		

> I think we just shook the vendor from the lurking grass


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## CCOVICH

This thread has gone way off topic.

Locked by CCOVICH.


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