# Why (the state) bailing out housing market is a  bad idea..mcwilliams indo article



## Jethro Tull

Good article in the indo from David McWilliams


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## shergars

*Re: [Article] Why bailing out housing market is a very bad idea*

I take what he says with a pinch of salt


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## cancan

*Re: Why bailing out housing market is a very bad idea*

Perhaps he would like to enlighten us as to his "game changing idea" instead of playing the same old record every week. 

Still, he earns money from the indo, for the same speech every week for years, so can't be that thick i suppose.


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## charliemacck

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> Good article in the indo from David McWilliams


 
More of the usual from a lad who has been wrong loads. He says "Ridiculously, any questioning of the wisdom of more and more houses and higher and higher prices was labelled "unpatriotic". Well, I for one think it was unpatriotic and I don't think it's too much to say it was also the view of the vast majority of thoe on ask about money. But after whinging for years his prophecies have been fulfilled am I'm sure he'll be delighted taking all his money to the bank along with the rest of the liberal media. In the meantime the real heroes of Ireland, the wheelers and dealers who took a punt when people like Williams were telling them doom and gloom nonsense, now need our help and we should offer it.


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## rmelly

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> In the meantime the real heroes of Ireland, the wheelers and dealers who took a punt when people like Williams were telling them doom and gloom nonsense, now need our help and we should offer it.


 
In that case they didn't really take a punt...it's not a risk if someone is there to bail you out.


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## outspann

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> In the meantime the real heroes of Ireland, the wheelers and dealers who took a punt when people like Williams were telling them doom and gloom nonsense, now need our help and we should offer it.


 
I'm guessing that this is a joke? 

None of these great patriotic heroes invented a new product or service that benefitted the country. There are no Nokia's or Apple's generating cash revenue from abroad for Ireland Inc. All that happened is that one group of Irish people made a lot of money from another group of Irish people, who are now in debt up to their necks. Wheeling-dealing? Correct. Taking a risk? Hmm, maybe. But if you can let me know where you see the patriotism, I'd be interested to hear.


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## starlite68

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> now need our help and we should offer it.


 
why?? nobody asked them to take a punt, as you call it!


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## cancan

*Re: Why bailing out housing market is a very bad idea*

I just can't see my local brickie/auctioneer/solicitor having the brains to create the next apple btw, so what went on was no loss to our position in technology in the world.

If technology workers demonstrated some entrepeneural spirit that some of the building workers did, rather than happily being contractors or doing menial work for some multinational, we might have had some more breakthroughs. The "backpack" culture has done more to damage our standing than any building boom.

At present, irish tecnology graduates have too narrow a skill set to do anything of impact on the international stage, or the know how /willingness to implement it.(there may be a few exceptions out there, I know)

And lets be fair, none of you guys could name a second finish company without google, so ryanair cancels that one....


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## rmelly

*Re: Why bailing out housing market is a very bad idea*



cancan said:


> And lets be fair, none of you guys could name a second finish company without google, so ryanair cancels that one....


 
Finnair
Finlandia Vodka


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## cancan

*Re: Why bailing out housing market is a very bad idea*

aerlingus is bigger
and finlandia is owned by Brown-Forman Corp - yanks.

But don't tell the finns, or we'll be overrun by them!


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## outspann

*Re: Why bailing out housing market is a very bad idea*

Only one problem - speculation on house prices is a zero sum gain. It's just transferring significant sums of money from Irish Person A to Irish Person B. Net gain by the country, by irish society = nothing. If we wanted to be patriotic then we would have been investing in venture capital, start-ups and the like. What actually happened was that for every Euro that we invested into  R+D and company start-ups, we invested ten into bricks and mortar.

Answer this: if the economy had boomed WITHOUT house prices having gone up so dramatically, do you think both as a country and as individuals we'd be in a better position now then we actually are?


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## cancan

*Re: Why bailing out housing market is a very bad idea*

Enterprise Ireland were running around all this time practically begging people to take money and start a company - there were very few takers.

There just isn't that level of entrepreneurship inherent to the graduates in Ireland now, as opposed to other countries.

Third level lecturer types are normally academics who have no idea how to grow this kind of desire in young people.

It’s not like there are a ton of people out there with the brains, desire and knowhow to justify a huge injection of venture capital.

Having said that, we still have a huge multinational presence, which was doing fine along side the building boom, and is still doing fine, and is the envy of many other countries.
While it's not the ideal, be glad that it's there.


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## cromulent

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> In the meantime the real heroes of Ireland, the wheelers and dealers who took a punt when people like Williams were telling them doom and gloom nonsense, now need our help and we should offer it.


 
Ah shure it's great to have an economy based on wheelers and dealers taking a punt.

The point of having a punt Charlie, is that you're taking a risk which may not pay off. And if you do lose, it might be best to suck it up and get on with it rather than crying about it in the bookie's office and hoping someone will take pity and give you a lollipop.


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## television

*Re: Why bailing out housing market is a very bad idea*

I remember McWilliams probably 12 years ago sayign that house prices in Dublin are grossly overvalued. I did nt listen to him then, thank God. He had to get it right at some stage if he kept banging on. And just to be clear, im listening to David now, and so should everyone else.


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## ClubMan

*Re: Why bailing out housing market is a very bad idea*



cancan said:


> I just can't see my local brickie/auctioneer/solicitor having the brains to create the next apple


They might be able to use capitalisation and spell "Finnish" properly though:


> And lets be fair, none of you guys could name a second finish company without google, so ryanair cancels that one....


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## ccbkd

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> In the meantime the real heroes of Ireland, the wheelers and dealers who took a punt when people like Williams were telling them doom and gloom nonsense, now need our help and we should offer it.


 
I have worked under Developers, I know Developers, Developers are friends of mine, and I can confirm these guys are no heroes!

Some actually remind me of Horse dealers at the ballinasloe annual fair!


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## VOR

*Re: Why bailing out housing market is a very bad idea*

_"Irish investment of €13.9 billion was put into European property deals last year (2007). In contrast, the Irish business sector does not even get a total of €200 million in venture capital investment." _Finfacts Mar 3 2008.

Innovators never got a sniff at the money to make a difference.
Ryanair is a copy of Southwest in the states, not an innovator. Take a good look at Herb Kelleher.

We should not bail out the property sector or any other sector for that matter. This talk of taking a patriotic punt is nonsense. As as a country we should just let the market correct itself and get rid of some of the dead wood.
What doesn't kill you makes you stronger, right?​


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## ubiquitous

*Re: Why bailing out housing market is a very bad idea*



VOR said:


> Ryanair is a copy of Southwest in the states, not an innovator. Take a good look at Herb Kelleher.



Nonsense. On that score, it is impossible presumably to be a software innovator as Steve Jobs and Bill Gates have done it already? It is possible for someone to be an innovator even if they don't invent the wheel themselves. Ray Croc of McDonalds is one prominent example. On the Irish stage Michael Smurfit is another



cancan said:


> There just isn't that level of entrepreneurship inherent to the graduates in Ireland now, as opposed to other countries.



How could it be otherwise when, for the last decade enterprise was seen in Ireland as a very poor second to property speculation as a means of personal enrichment and success.


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## csirl

*Re: Why bailing out housing market is a very bad idea*



> Nonsense. On that score, it is impossible presumably to be a software innovator as Steve Jobs and Bill Gates have done it already? It is possible for someone to be an innovator even if they don't invent the wheel themselves. Ray Croc of McDonalds is one prominent example. On the Irish stage Michael Smurfit is another


 
Good point. Incidently Gates & Jobs were not the innovators - they copied what they saw on a visit to the Xerox owned Palo Alto Reseach Center (PARC). Xerox management did not have the forsight to protect their inventions and foolishly let a bunch of "college students" tour the facility. Xerox are the company who invented the desktop PC, mouse, windows and desktop printer and didnt protect any of them. Probably the biggest mistake in business history.


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## shnaek

*Re: Why bailing out housing market is a very bad idea*

I think anyone who took a patriotic punt on Irish companies by investing in the ISEQ should also be compensated. And eircom too. And taxi drivers.


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## ubiquitous

*Re: Why bailing out housing market is a very bad idea*



television said:


> I remember McWilliams probably 12 years ago sayign that house prices in Dublin are grossly overvalued. I did nt listen to him then, thank God. He had to get it right at some stage if he kept banging on. And just to be clear, im listening to David now, and so should everyone else.



By the way, iirc McWilliams was not even living in Ireland 12 years ago let alone featuring in the media. He did say around 1998 that property in Ireland was overvalued at the time relative to other economies. He was correct in saying so. The fact that the irrational exuberance continued for another decade afterwards does not necessarily alter that fact.


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## television

*Re: Why bailing out housing market is a very bad idea*



ubiquitous said:


> By the way, iirc McWilliams was not even living in Ireland 12 years ago let alone featuring in the media. He did say around 1998 that property in Ireland was overvalued at the time relative to other economies. He was correct in saying so. The fact that the irrational exuberance continued for another decade afterwards does not necessarily alter that fact.


 
Have you ever heard of air travel. I am telling you I saw him on the late late. He was comparing the Irish housing market to that of Isreal and saying a crash was coming and advising people not to buy. Ok so it may have been ten years ago. Point is if you keep banging away at something for long enough it eventually will come true. Does nto make him an economic guru however, and I would take his advice with a pinch of salt.  Of course he is right now about the housing market. But this crash has alot to do with huge rise in oil, american credit crunch, gradual increase in european interest rates, none of which mcwilliams forsaw, hes now happy to sit back and say he told you so.


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## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*

I think it was keynes that said 'Markets can remain irrational far longer than you can remain solvent'.

Basically the Irish property market has been irrational for a very long time. Someone pointing out that it was overvalued relevant to other ecopnomies were probably correct. However as the speculative bubble gained pace it became nmore and more irrational. If 'shorting' the Irish property market had been possible they'd have lost a great deal of money. In the long run the bet may well have paid off but margin calls etc could have bankrupted the bettor in the mean time.


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## ubiquitous

*Re: Why bailing out housing market is a very bad idea*



television said:


> But this crash has alot to do with huge rise in oil, american credit crunch, gradual increase in european interest rates, none of which mcwilliams forsaw, hes now happy to sit back and say he told you so.



Not correct. McWilliams repeatedly warned over the years about the dangers faced by Ireland by losing control of our interest rate policies and being tied into interest rates set by the Germans and French, whose economic cycle is radically different to ours. When we joined the Eurozone he predicted that our interest rates would be too low in boom times and too high in recession times. He also repeatedly predicted the credit crunch by saying that the global rises in property values were unsustainable and would eventually cause serious problems for the banking system.


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## television

*Re: Why bailing out housing market is a very bad idea*



ubiquitous said:


> Not correct. McWilliams repeatedly warned over the years about the dangers faced by Ireland by losing control of our interest rate policies and being tied into interest rates set by the Germans and French, whose economic cycle is radically different to ours.


 
Aggreed I stand corrected.


When we joined the Eurozone he predicted that our interest rates would be too low in boom times and too high in recession times. He also repeatedly predicted the credit crunch by saying that the global rises in property values were unsustainable and would eventually cause serious problems for the banking system.[/quote]

Wheres your proof for this.


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## television

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> I think it was keynes that said 'Markets can remain irrational far longer than you can remain solvent'.


 
In the long run property is a pretty safe bet. I think it was me who said that. The doom and gloom merchants are having their day now but in ten years time if you can afford to hold on property in Ireland is as safe as houses. Not saying that gives much support to the people who bought at the top of the market, but its a fact.


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## ubiquitous

*Re: Why bailing out housing market is a very bad idea*

I'm sure you will find plenty of proof of this if you have the time and inclination to trawl through his SBP column archive online.  McWilliams repeatedly made a point of citing the Japanese boom/bust as an example of how debt and and inflated property market could do serious harm to the Irish economy and its banks.


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## Thomas22

*Re: Why bailing out housing market is a very bad idea*



television said:


> In the long run property is a pretty safe bet. I think it was me who said that. The doom and gloom merchants are having their day now but in ten years time if you can afford to hold on property in Ireland is as safe as houses. Not saying that gives much support to the people who bought at the top of the market, but its a fact.



It isn't a fact it is an opinion.
There have plenty of examples around the world where over a 10 year period property has been a terrible investment.

I would say after the largest property bubble the world has ever seen the next 10 maybe even 15 years will be worse than any other 10 year period.
My bet is that nominal prices will not return to 2006 until after 2016. 
I think it will be the worst performing asset class over over that period.


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## ubiquitous

*Re: Why bailing out housing market is a very bad idea*



television said:


> Wheres your proof for this.


[broken link removed]

Ireland looks like Japan before the bubble burst
Sunday, October 29, 2000
David McWilliams 



> Can a highly competitive economy with record export growth and growing international market share go into a slump? It certainly can. Japan is now in its tenth year of economic stagnation, banks are still filing for bankruptcy and, throughout the economy, bad debts continue to rise.
> ....
> 
> Japan of the late 1980s was experiencing a huge asset price boom and stocks were going through the roof, allowing Japanese companies to buy trophy assets abroad such as the Rockefeller Centre and MGM. Bulging Japanese banks dwarfed their European and US counterparts and threatened to dominate in the City and Wall Street. Most spectacular of all was the Tokyo property market. In 1990, the land upon which the imperial palace in Tokyo was built was valued at more than the entire real estate of Canada, the second largest country in the world.
> 
> So what went wrong? Why is Japan down in the dumps and why did the world's most awesome economic power crumble in a matter of a few years? More interestingly, if global competitiveness is so important, how come Japan continued to have the world's largest trade surplus, never dropping a notch in competitiveness throughout the 1990s, and still manage to experience a domestic depression? Finally, should we therefore entertain the prospect of a "competitive recession"?
> 
> There are three broad reasons put forward to explain the persistent Japanese slump despite huge government spending, a collapsed currency and low interest rates. *The first focuses on the banks. It is argued that because the banks lent hand over fist to finance property and share transactions, they were left with huge bad loans and are practically bankrupt. They are now in no position to lend new cash. Thus the supply of credit is a problem.*
> 
> ....
> In Japan, two economies operated side by side. Alongside the high-productivity, high-tech exporting sector was a slow, corrupt, uncompetitive domestic services economy. Unfortunately, this latter sector and its employees believed the miracle story and spent as if they were all working for Sony, Hitachi or Mitsubishi. The banks lent huge amounts to the property market and commercial developers were seen as the best bet.
> 
> Things started to go pear-shaped with the mini US recession of the Bush years. Sadly, when the bubble finally burst, people in the low-productivity services sector who had seen their wages rise steadily, realised too late that their houses were built of sand. When hard times hit, the domestic economy was neither solvent nor sufficiently innovative to recover. Japan's exporting sector continued to be a world beater, notching up a trade surplus of $125 billion this year alone. But the tired, indebted, domestic economy -- which employs the vast majority of people -- has never recovered and remains insecure and depressed.
> 
> Therefore, economic statistics on things such as export growth are "virtual" in that they are of no relevance whatsoever to the life of a man facing 20 years of negative equity. *What scares me is that the Japanese model of two economies fits Ireland. *This week I visited IBM, one of the world's leading high-tech companies and one of the biggest employers in North West Dublin. Getting to IBM's futuristic campus by 9am demanded an arduous journey across Dublin at peak traffic hours.
> 
> The journey was like passing through one world to arrive at another. My taxi, which arrived one hour late and took over an hour and a half to get to Mulhuddart, sneaked its way through a rainy city reminiscent of Caracas with little public transport and full of traffic, fumes, beggars and stressed drivers fit to be tied. I arrived in a tranquil, clean, modern world -- more Southern Ontario than South America. Here the productivity miracle can be seen in operation where educated workers are doing their stuff.
> 
> However, in the evening these workers return, as if through some invisible border, to the overpriced, uncompetitive, rip-off economy where people are borrowing like there's no tomorrow, the infrastructure is creaking and industrial unrest is the order of the day.
> 
> Today's Ireland looks, smells and feels like Japan in the late 1980s Japan. Every time I see the excellent "Take five @ £200,000" piece in the Irish Times property section, in which a two up, two down in Stoneybatter costs as much as a chateau in Provence, I think of Tokyo's imperial palace and Canada around 1990.


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## television

*Re: Why bailing out housing market is a very bad idea*



Thomas22 said:


> It isn't a fact it is an opinion.
> There have plenty of examples around the world where over a 10 year period property has been a terrible investment.
> 
> I would say after the largest property bubble the world has ever seen the next 10 maybe even 15 years will be worse than any other 10 year period.
> My bet is that nominal prices will not return to 2006 until after 2016.
> I think it will be the worst performing asset class over over that period.


 
Your forgetting one simple thing. The law of supply and demand. Population of ireland set to double in 30 years. Need I say more. 3 more years of stagnation followed by decent growth.


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## Thomas22

*Re: Why bailing out housing market is a very bad idea*



television said:


> Your forgetting one simple thing. The law of supply and demand. Population of ireland set to double in 30 years. Need I say more. 3 more years of stagnation followed by decent growth.



I understand the law of supply and demand.
But I don't see how a doubling of the population leads to increased prices for houses.
Yes, demand will rises as the population increases but why are you assuming that the supply won't increase in line with this? So yur are using the law of demand. It's not as if we have no land to build on?

What is your source for this dramatic population increase? Is it based on huge inward immigration?
 Have you considered the availability of credit over the next 5 years in your estimates?

IMO Property prices will NOT beat inflation over the next 15 years because if they do very few will be able to afford a property.
We binged on credit for too long and now we have to face the consequences


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## Sunny

*Re: Why bailing out housing market is a very bad idea*



television said:


> Your forgetting one simple thing. The law of supply and demand. Population of ireland set to double in 30 years. Need I say more. 3 more years of stagnation followed by decent growth.


 
Demographics was one of the reasons put forward to explain house price increases and why prices would never fall dramatically in this country. You can't just look at population numbers by themselves without taking into account factors like mobility and employment etc.


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## television

*Re: Why bailing out housing market is a very bad idea*



Thomas22 said:


> IMO Property prices will NOT beat inflation over the next 15 years because if they do very few will be able to afford a property.
> We binged on credit for too long and now we have to face the consequences


 
If you bought at the top of the market then perhaps.  Another thing is that yes supply will increase but land amounts are finate. especially in cities. And even if we build up which I doubt, there will always be a market for houses with a guarden in the future. Maybe I am being nieve but I am pretty sure I will be right in the long run. 

rule for me is, 
Houses near good transport with garden close to city centre are a winner in long run and in three years, this is what i will be buying ( I was goingt o buy in a year)


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## z109

*Re: Why bailing out housing market is a very bad idea*



television said:


> In the long run property is a pretty safe bet. I think it was me who said that. The doom and gloom merchants are having their day now but in ten years time if you can afford to hold on property in Ireland is as safe as houses. Not saying that gives much support to the people who bought at the top of the market, but its a fact.


Tell that to the Japanese, where there are into their 19th year of house price deflation (depsite a few upward bumps along the way). All the signs now are of another downturn in Japan.


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## Bronte

*Re: Why bailing out housing market is a very bad idea*

It's not only the people who bought at the top of the market that are in trouble, plenty of people kept releasing equity in their houses to fund their lifestyle and now have high mortgages relative to the value of their homes, increasing mortgage interest rates, commuting costs (petrol) going through the roof and job losses looming.


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## Thomas22

*Re: Why bailing out housing market is a very bad idea*



television said:


> If you bought at the top of the market then perhaps.  Another thing is that yes supply will increase but land amounts are finate. especially in cities. And even if we build up which I doubt, there will always be a market for houses with a guarden in the future. Maybe I am being nieve but I am pretty sure I will be right in the long run.
> 
> rule for me is,
> Houses near good transport with garden close to city centre are a winner in long run and in three years, this is what i will be buying ( I was goingt o buy in a year)



Depends on your definition of winner.
I would say over the "next" long 10-15 years property will be a very poor investment and most alternatives will comfortably outperform it.
As I've said previously I don't think it will match inflation, which for long-term investments should be the minimum requirement.

Over 3 years anyone property now or next year will be looking at significant capital loses.


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## z109

*Re: Why bailing out housing market is a very bad idea*



television said:


> Your forgetting one simple thing. The law of supply and demand. Population of ireland set to double in 30 years. Need I say more. 3 more years of stagnation followed by decent growth.


With a population growth rate of less than long-term replacement (1.9 births per woman), you are largely relying on immigration to achieve this figure. This would be of the order of 2 some percent of the population every year until 2030. Do you really see this as sustainable?


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## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



television said:


> In the long run property is a pretty safe bet. I think it was me who said that. The doom and gloom merchants are having their day now but in ten years time if you can afford to hold on property in Ireland is as safe as houses.


 
I'm sure that had been said by many in japan over the years since their own property bubble. Property is a as safe as houses? As someone else said there are plenty of examples where over 10 year periods property has not beaten inflation. In terms of the apartment market, for example, many blocks that were built over the past 5-10 years no longer conform to minimum standards that were introduced lately (may well have been locking the gate after the horse had bolted but thats another debate). Do you see these as safe investments? 

I'm not a doom and gloom merchant, I'm a realist.



yoganmahew said:


> Tell that to the Japanese, where there are into their 19th year of house price deflation (depsite a few upward bumps along the way). All the signs now are of another downturn in Japan.


 
Must say I knew the japanese market had struggled after their own bubble but didn't realise it was this bad. Wow!


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## television

*Re: Why bailing out housing market is a very bad idea*

population growth is not just about births, its also about people not dying. Im no expert however, but i read recently that population in ireland is set to double in 20 years. I stand to be corrected.


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## television

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> I'm sure that had been said by many in japan over the years since their own property bubble. Property is a as safe as houses? As someone sle said there are plenty of examples where over 10 year periods property has not beaten inflation. In terms of the apartment market, for example, many blocks that were built over the past 5-10 years no longer conform to minimum standards that were introduced lately (may well have been locking the gate after the horse had bolted but thats another debate). Do you see these as safe investments?
> 
> I'm not a doom and gloom merchant, I'm a realist.


 
Poople have to live somewhere. That is a fact. Also this comparison with the worst property bubble i.e japan may or may not be valid. I am not sure that all the factors in the japenees housing market can be applied to the Irish market. Again I may be wrong.


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## Berni

*Re: Why bailing out housing market is a very bad idea*



television said:


> Your forgetting one simple thing. The law of supply and demand. Population of ireland set to double in 30 years. Need I say more. 3 more years of stagnation followed by decent growth.


 
You might not want to place too much faith in that doubling of population.
The most recent population and labour force projections are here [broken link removed]

If you look at page 33, you will see that there are actually a range of possible values, depending on the levels of migration and fertility. For 2041 it ranges from 4,893,000 to 7,072,200. And given that we currently have 4,232,900, you could be looking at very little increase at all.


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## television

*Re: Why bailing out housing market is a very bad idea*

let say its somewhere in beween for argument sake, thatas a population of 6.5million. Substantial in any case. And centered around main urban centers in my guess. Which will have an impact.


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## Bronte

*Re: Why bailing out housing market is a very bad idea*



television said:


> let say its somewhere in beween for argument sake, thatas a population of 6.5million. Substantial in any case. And centered around main urban centers in my guess. Which will have an impact.


  Unless the opposite happens and everyone heads off looking for work for the UK/Australia/USA


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## Berni

*Re: Why bailing out housing market is a very bad idea*



television said:


> let say its somewhere in beween for argument sake, thatas a population of 6.5million. Substantial in any case. And centered around main urban centers in my guess. Which will have an impact.


 
I like how your somewhere in between is still almost the max figure 
Only two out of the six projections get you anywhere near that, and they require continued high immigration:


*M1: *
Immigration continuing at a high level and then moderating

• +60,000 per annum in 2006/2011​
• +50,000 per annum in 2011/2016

• +40,000 per annum in 2016/2021

• +30,000 per annum in 2021/2026

• +30,000 per annum in 2026/2031

• +30,000 per annum in 2031/2036

• +30,000 per annum in 2036/2041​




Do you honestly see us continuing to have a net immigration of 50 - 60K people with the This post will be deleted if not edited to remove bad language falling out of our economy?​


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## charliemacck

*Re: Why bailing out housing market is a very bad idea*

Why do people keep mentioning the Japanese. We are nothing like the Japanese, you might as well say that Ireland is going to become an imperial naval power and invade Manchuria. Please stop talking up the ginger media darling, I'm sure his salary gets an increase every time someone mentions him. He's been banging on the same old drum for what must be 15 years now. It's only unfortunately that people started beleving him and his prophecies became self-fulfilling. As I've said before we need to support those who are in crisis now, perhaps through extra tax and mortgage measures, cutting stamp duty altogether. I would hope that the media play its part by also cutting out unecessary pessismism - they could take a lead from askaboutmoney where negative speculation is banned. I think it's selfish that those here would throw them to the wolves. No doubt many of those don't own property and are just gloating at the situation that the ordinary people of Ireland now find themselves in.


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## Kemo_Sabe

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> Why do people keep mentioning the Japanese. We are nothing like the Japanese, you might as well say that Ireland is going to become an imperial naval power and invade Manchuria. Please stop talking up the ginger media darling, I'm sure his salary gets an increase every time someone mentions him. He's been banging on the same old drum for what must be 15 years now. It's only unfortunately that people started beleving him and his prophecies became self-fulfilling. As I've said before we need to support those who are in crisis now, perhaps through extra tax and mortgage measures, cutting stamp duty altogether. I would hope that the media play its part by also cutting out unecessary pessismism - they could take a lead from askaboutmoney where negative speculation is banned. I think it's selfish that those here would throw them to the wolves. No doubt many of those don't own property and are just gloating at the situation that the ordinary people of Ireland now find themselves in.


 
what a load of pure baloney, we are exactly like the Japanese. Property bubble fuelled to insane heights by cheap credit and unfettered greed, aligned to spineless political class - tick for both

David McWilliams caused the recession? 

grredy, self-serving, politican-bribing developers are 'patriots' and should be bailed out by the taxpayer? 

you're off your trolley, give me a break


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Berni said:


> Do you honestly see us continuing to have a net immigration of 50 - 60K people with the This post will be deleted if not edited to remove bad language falling out of our economy?​


 
Yes, as global population increases rapidly I do see this.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> Why do people keep mentioning the Japanese. We are nothing like the Japanese, you might as well say that Ireland is going to become an imperial naval power and invade Manchuria. Please stop talking up the ginger media darling, I'm sure his salary gets an increase every time someone mentions him. He's been banging on the same old drum for what must be 15 years now. It's only unfortunately that people started beleving him and his prophecies became self-fulfilling. As I've said before we need to support those who are in crisis now, perhaps through extra tax and mortgage measures, cutting stamp duty altogether. I would hope that the media play its part by also cutting out unecessary pessismism - they could take a lead from askaboutmoney where negative speculation is banned. I think it's selfish that those here would throw them to the wolves. No doubt many of those don't own property and are just gloating at the situation that the ordinary people of Ireland now find themselves in.


 
Agree with your point on Japan, but we should not prop up the housing market any longer, let it take its natural slide downward.  Those who were stupid enough to buy in the last 4 years, its a harsh lesson, but if you are bought to have a home ur not really effected.


----------



## Yosser

*Re: Why bailing out housing market is a very bad idea*



television said:


> Yes, as global population increases rapidly I do see this.


Then you're deluded. Wishful thinking is not the same as analysis. So, with a struggling economy what will 60 thousands immigrants work at? I'll say it again you are deluding yourself mate.


----------



## charliemacck

*Re: Why bailing out housing market is a very bad idea*



television said:


> Agree with your point on Japan, but we should not prop up the housing market any longer, let it take its natural slide downward. Those who were stupid enough to buy in the last 4 years, its a harsh lesson, but if you are bought to have a home ur not really effected.


 
Now I think that's unfair, it was not stupid at all. if it was stupid, then why were people on this forum not warned by the experts? you can't blame the ordinary decent people of Ireland for trusting experts.


----------



## benji2006

*Re: Why bailing out housing market is a very bad idea*



television said:


> Yes, as global population increases rapidly I do see this.


 

Global population was also increaing rapidly back in the 80's but that didn't lead to immigration


----------



## Yosser

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> Now I think that's unfair, it was not stupid at all. if it was stupid, then why were people on this forum not warned by the experts? you can't blame the ordinary decent people of Ireland for trusting experts.


Who were the experts you are talking about? Dan McLoughlin? Austin Hughes? Tom Parlon? Dare I say it Brendan Burgess?


----------



## benji2006

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> Now I think that's unfair, it was not stupid at all. if it was stupid, then *why were people on this forum not warned* by the experts? you can't blame the ordinary decent people of Ireland for trusting experts.


 

people hear what they want to hear and disregard the rest.....


----------



## z109

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> Now I think that's unfair, it was not stupid at all. if it was stupid, then why were people on this forum not warned by the experts? you can't blame the ordinary decent people of Ireland for trusting experts.


Because discussion of the possibility of downside risk to housing prices was temporarily suspended. Only the possibility of prices rising, for investment purposes, was allowed. This was not just on this forum, but through the nation.


----------



## charliemacck

*Re: Why bailing out housing market is a very bad idea*



Yosser said:


> Who were the experts you are talking about? Dan McLoughlin? Austin Hughes? Tom Parlon? Dare I say it Brendan Burgess?


 
Don't know some of those names, but yes, if they are experts in the media and did not tell ordinary Joe Soaps they should not buy property in the last four years, then it is their moral duty to support measures to help the ordinary people out. It would terrible if these people did not support my measures. I feel very strongly about this and if there are any plans to set up an askaboutmoney pro-property lobby group I would welcome any invite to support it.


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> Now I think that's unfair, it was not stupid at all. if it was stupid, then why were people on this forum not warned by the experts? you can't blame the ordinary decent people of Ireland for trusting experts.


 


charliemacck said:


> Please stop talking up the ginger media darling, I'm sure his salary gets an increase every time someone mentions him. He's been banging on the same old drum for what must be 15 years now. It's only unfortunately that people started beleving him and his prophecies became self-fulfilling.


----------



## z109

*Re: Why bailing out housing market is a very bad idea*

Besides, DmcWilliams, Alan Ahearne, Morgan Kelly and others, including the Central Bank of Ireland, the IMF, the economist magazine did warn. They were dismissed as begrudgers then and now they are dismissed as stopped clocks. Who wants to be told that they have just wee'd away all their equity or locked themselves into an investment apartment that may pay its way in 10 years if they throw enough money at it in the meantime?


----------



## Yosser

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> Don't know some of those names, but yes, if they are experts in the media and did not tell ordinary Joe Soaps they should not buy property in the last four years, then it is their moral duty to support measures to help the ordinary people out. It would terrible if these people did not support my measures. I feel very strongly about this and if there are any plans to set up an askaboutmoney pro-property lobby group I would welcome any invite to support it.


You are joking aren't you? If you're not joking then I would suggest anyone reading this should ignore you as you are a long way off having any understanding of economics. You are so off beam it is actually funny.


----------



## DerUnkle

*Re: Why bailing out housing market is a very bad idea*

Quote:Television


Poople have to live somewhere. That is a fact.




Yes, so they could rent for half the price of owning........


----------



## Yosser

*Re: Why bailing out housing market is a very bad idea*



ClubMan said:


> They might be able to use capitalisation and spell "Finnish" properly though:


Congratulations! Full marks for pedantry! Any more wonderful contributions to the debate?


----------



## becky

*Re: Why bailing out housing market is a very bad idea*

Have to say I do find charliemacck comments strange no matter how strongly he feels.

I didn't buy a house during the boom despite many people telling me to.  I now might be in a position to buy next year at a price I see as reasonable.  This was my choice.  I don't see why I need to support people who bought at the peak...that was their choice.


----------



## GalwayGuy

*Re: Why bailing out housing market is a very bad idea*

I my eyes McWilliams is *bang on* the Money with this article. The 'Morket' should be allowed correct naturally. If that means absolute implosion then all the better! The cheaper housing becomes the better for the country in the long run. 

Housing just plainly got TOO expensive in this country. Bog standard 40 year old semi-ds supposedly worth 400+k in Galway. No wonder the country is uncompetitive.

Whomever bails out the housing market loses two votes in this house come next election!


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



television said:


> Poople have to live somewhere. That is a fact. Also this comparison with the worst property bubble i.e japan may or may not be valid. I am not sure that all the factors in the japenees housing market can be applied to the Irish market. Again I may be wrong.


 
at one stage average house prices in ireland were almost 10x average industrial wages. From what i can tell the international norm is somewhere between 3 and 4x. I read an article not so long ago from an english journalist horrified that average house prices ahd broken the 5x barrier. If this doesn't constitute irrational house prices then i don't know what does.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



becky said:


> Have to say I do find charliemacck comments strange no matter how strongly he feels.


 
I think he's a troll. look at some of his other posts. He just seems to take the mickey in all threads he becomes involved in


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*

Housing should go through its own natural cycle and we should all now just ignore mcwilliams and his polar opposites and make up our own minds for once. nobody here can properly predict the rise or fall and saying things like the return of prices to 2006 levels will only happen in 2016 makes no sense and has no actual facts to back it up, reason being are facts are hard to find when crystal ball gazing.


----------



## ubiquitous

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> I think he's a troll. look at some of his other posts. He just seems to take the mickey in all threads he becomes involved in



Troll or irony specialist. I've yet to decide myself.


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> Housing should go through its own natural cycle and we should all now just ignore mcwilliams and his polar opposites and make up our own minds for once. nobody here can properly predict the rise or fall and saying things like the return of prices to 2006 levels will only happen in 2016 makes no sense and has no actual facts to back it up, reason being are facts are hard to find when crystal ball gazing.



Thats my opinion and it is based on the facts as I see them.

Zero nominal increases from 2006 to 2016 would allow prices to return to what would be considered normal. I think a salary to house multiple of 4-5 is normal. In Ireland it is closer to 10 at the moment


----------



## charliemacck

*Re: Why bailing out housing market is a very bad idea*



Yosser said:


> You are joking aren't you? If you're not joking then I would suggest anyone reading this should ignore you as you are a long way off having any understanding of economics. You are so off beam it is actually funny.


 
I'm not sure why you think I'm being funny. You mentioned several well-known experts who didn't warn ordinary people about difficult times ahead. People have mentioned McWilliams, but he's been warning people now for 15 years and doesn't count, like the ginger boy who cried wolf. What I am referring to are those experts who had a reasonable view of the property market - why did those fellas not warn the ordinary people? That's all I'm saying. And if these experts didn't warn people then people have a right to some comeback. If medical experts did not warn people of a virus and then the people caught it, would you not think that the people deserve some compensation? I'm not sure why my opinions are being mocked, I'm sure my opinions are fairly mainstream I'm sure. If I set up a political party will my proposals I'm fairly certain we'd get a few votes. I'm willing to admit that I am open to changing my mind and perhaps people should not have been talking up the property markets so much and there should have been more open debate especially in the likes of this forum.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



DerUnkle said:


> Quote:Television
> 
> 
> Poople have to live somewhere. That is a fact.
> 
> 
> 
> 
> Yes, so they could rent for half the price of owning........


 
Increase in renters increases rents, brings investors into the market increasing the demand for houses etc etc


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> I'm not sure why you think I'm being funny. You mentioned several well-known experts who didn't warn ordinary people about difficult times ahead. People have mentioned McWilliams, but he's been warning people now for 15 years and doesn't count, like the ginger boy who cried wolf. What I am referring to are those experts who had a reasonable view of the property market - why did those fellas not warn the ordinary people? That's all I'm saying. And if these experts didn't warn people then people have a right to some comeback. If medical experts did not warn people of a virus and then the people caught it, would you not think that the people deserve some compensation? I'm not sure why my opinions are being mocked, I'm sure my opinions are fairly mainstream I'm sure. If I set up a political party will my proposals I'm fairly certain we'd get a few votes. I'm willing to admit that I am open to changing my mind and perhaps people should not have been talking up the property markets so much and there should have been more open debate especially in the likes of this forum.



But McWilliams has only be warning people for the last 8-9 years and he has been right all along. The fact that it has taken this long for him to be proven right is irrelevant IMO.

The fact that people choose to ignore him over this period just goes to show how hard it is to get the message across through all the media hype.

There has been very little open and honest discussion on the negative effects of excessive house price inflation in Ireland, so yes alot of people will have bought when they shouldn't have.

But who should they have comeback to?
The government?
The banks?
The economists?
The Estate Agents?
Maybe even sites like this one?

IMO they only have themselves to blame


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> at one stage average house prices in ireland were almost 10x average industrial wages. From what i can tell the international norm is somewhere between 3 and 4x. I read an article not so long ago from an english journalist horrified that average house prices ahd broken the 5x barrier. If this doesn't constitute irrational house prices then i don't know what does.


 
Yes but look at aforability levels, that is a key also, remember in the dark old days when interest rates were 17%  and houses were going for 20-30 grand people still struggled with afordability. That is a key measure.


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*

Once the work dries up, the population won't increase anything likes been suggested here. Thats a fantasy. Ditto the easy credit. Which started this madness.


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*



television said:


> Increase in renters increases rents, brings investors into the market increasing the demand for houses etc etc



There has been very little increase in rent in the last few months


From http://www.irishpropertywatch.com/
From the 30th of July to the 13th of August 2008 there were 1,313 rent reductions. The average reduction was €105 per month. 
 There were 263 rent increases over the same period, the average increase was €128.
 The number of properties for rent in Ireland dropped to 15,823 from 15,941  the previous week

 Please click here for the full report.
Time on the Market


4 Months+ 1,922 Properties, Average Rent = €1,295
3-4 Months 840 Properties, Average Rent = €1,322
2-3 Months 1,325 Properties, Average Rent= €1,218
1-2 months 2,873 Properties, Average Rent=€1,256
0-1 Months 8,863 Properties, Average Rent= €1,182


We built far too many houses for in this country over the last few years.


----------



## groom

*Re: Why bailing out housing market is a very bad idea*



television said:


> Increase in renters increases rents...


...cancelled out by much greater supply which is forcing down rents in reality



television said:


> brings investors into the market increasing the demand for houses etc etc


...where would these investors get mortgages if they were still to persue a purchase even though returns are pathetic at 2-3% and suffering capital depreciation


----------



## television

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> I'm not sure why you think I'm being funny. You mentioned several well-known experts who didn't warn ordinary people about difficult times ahead. People have mentioned McWilliams, but he's been warning people now for 15 years and doesn't count, like the ginger boy who cried wolf. What I am referring to are those experts who had a reasonable view of the property market - why did those fellas not warn the ordinary people? That's all I'm saying. And if these experts didn't warn people then people have a right to some comeback. If medical experts did not warn people of a virus and then the people caught it, would you not think that the people deserve some compensation? I'm not sure why my opinions are being mocked, I'm sure my opinions are fairly mainstream I'm sure. If I set up a political party will my proposals I'm fairly certain we'd get a few votes. I'm willing to admit that I am open to changing my mind and perhaps people should not have been talking up the property markets so much and there should have been more open debate especially in the likes of this forum.


 
I respect your strong feelings, but the decision to buy property is a personal one. Any person making an investment should be aware of the risks or make sure they inform themselves before buying, regardless of what vested interested so called experts were saying. So while having sympathy for those who bought recently, they are responcible for thier actions no one else.


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*



television said:


> Yes but look at aforability levels, that is a key also, remember in the dark old days when interest rates were 17%  and houses were going for 20-30 grand people still struggled with afordability. That is a key measure.




They struggled with it, BUT

1) They still only needed 1 wage.
2) Higher inflation made repayments manageable after a few years.
3) They only needed a 20 year mortgage
4) Very few people had to take a "step onto the property ladder" they usually bought the house they intended to buy 1 maybe 2 homes in their lifetime


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*



cancan said:


> ....If technology workers demonstrated some entrepeneural spirit that some of the building workers did, rather than happily being contractors or doing menial work for some multinational, we might have had some more breakthroughs. The "backpack" culture has done more to damage our standing than any building boom.
> 
> At present, irish tecnology graduates have too narrow a skill set to do anything of impact on the international stage, or the know how /willingness to implement it.(there may be a few exceptions out there, I know)
> 
> And lets be fair, none of you guys could name a second finish company without google, so ryanair cancels that one....


 
If technology inovation was that easy everyone would do it. 

That so many piled into construction/property just illustrates how much easier that is, and also how much easy money was available to these people. People are far more wary at getting involved with a technology  start up.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



groom said:


> ...cancelled out by much greater supply which is forcing down rents in reality
> 
> 
> ...where would these investors get mortgages if they were still to persue a purchase even though returns are pathetic at 2-3% and suffering capital depreciation


 
So are you telling me that the existing stock of houses are enough to solve the increased demands for rental property brough about by a housing crash?


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*



television said:


> So are you telling me that the existing stock of houses are enough to solve the increased demands for rental property brough about by a housing crash?



Over the last 3 years of the boom we built around 250k properties. Enough to house nearly 750k people. I'm sure we have enough to keep us going for a while


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*

What increase in demand for rental property?


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*

[broken link removed]


----------



## groom

*Re: Why bailing out housing market is a very bad idea*



television said:


> So are you telling me that the existing stock of houses are enough to solve the increased demands for rental property brough about by a housing crash?


yes [broken link removed]


----------



## groom

*Re: Why bailing out housing market is a very bad idea*

[broken link removed]

[broken link removed]


----------



## sandymount

*Re: Why bailing out housing market is a very bad idea*



shnaek said:


> I think anyone who took a patriotic punt on Irish companies by investing in the ISEQ should also be compensated. And eircom too. And taxi drivers.



and anyone who invested in a PRSA.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Thomas22 said:


> They struggled with it, BUT
> 
> 1) They still only needed 1 wage.
> 2) Higher inflation made repayments manageable after a few years.
> 3) They only needed a 20 year mortgage
> 4) Very few people had to take a "step onto the property ladder" they usually bought the house they intended to buy 1 maybe 2 homes in their lifetime


 
You make fair points but I still say overall affordability is the key taking into account the fact that there is usually a two income household today.


----------



## Howitzer

*Re: Why bailing out housing market is a very bad idea*



television said:


> You make fair points but I still say overall affordability is the key taking into account the fact that there is usually a two income household today.


Because people work more and tend to have fewer kids later in life right? How does the correlate with your exponential population growth theory?


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Thomas22 said:


> Over the last 3 years of the boom we built around 250k properties. Enough to house nearly 750k people. I'm sure we have enough to keep us going for a while


 
even is this is the case, as this existing stock of house is being habitated in stands to reason that the remaining stock of property as it gets smaller and smaller must move up in price, perhaps after a low but the movement must be upwards.


----------



## cancan

*Re: Why bailing out housing market is a very bad idea*

I don't quite understand this reverence for mcwilliams - economies are cyclical, and after a period of growth lasting 15 years, we were due a slowdown.

The fact that he was wrong about the slowdown by about 8 years doesn't really say much for his timing. But since some of our economists on the other side were apes as well in pulling predictions out of their rears, they all balance each other out.

It's not the first time it happened, it won't be the last time it happens.
Granted there were people who assumed things would stay as they were forever - due to the fact that they had never seen a recession.

The sky isn't going to fall down, life will go on.
There's money to be made in a slowdown too - just takes a bit more effort.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Howitzer said:


> Because people work more and tend to have fewer kids later in life right? How does the correlate with your exponential population growth theory?


 
Population in ireland is set to increase even by the lowest estimate by a million in the next twenty years. I am no expert in population, but everythin I read says dublins population will increase hugly in the next ten to 15 years. And for the record people are living longer which is addign to the population, global population is set to double over the next 50 years thats 14 billion poeple, mark my words a lot will end up in ireland.


----------



## becky

*Re: Why bailing out housing market is a very bad idea*



television said:


> I respect your strong feelings, but the decision to buy property is a personal one. Any person making an investment should be aware of the risks or make sure they inform themselves before buying, regardless of what vested interested so called experts were saying. So while having sympathy for those who bought recently, they are responcible for thier actions no one else.


 
I agree with most of this except respecting his strong feeling. I can't respect this particular one.

I made my own decision not to buy based on reading many articles including DMcW. He is right now but he was bound to be in my opinion. At least he gave an opioion.


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*



television said:


> You make fair points but I still say overall affordability is the key taking into account the fact that there is usually a two income household today.


 
Is that through choice or because they need to?


----------



## Sunny

*Re: Why bailing out housing market is a very bad idea*



cancan said:


> I don't quite understand this reverence for mcwilliams - economies are cyclical, and after a period of growth lasting 15 years, we were due a slowdown.


 
I don't think many people on this forum have a reverence for McWilliams but at the same time, they don't have much reverence for people who refuse to accept the economical reality that we now face and continue to think that if we refuse to acknowledge our problems, they will go away.


----------



## Howitzer

*Re: Why bailing out housing market is a very bad idea*



aircobra19 said:


> Is that through choice or because they need to?


I for one am waiting for polygamy to be legalised as a support to the housing market. I'll then be able to accumulate the 5 wives necessary to afford a 2 bed apartment in Stepaside. This property price boom may have some benefits after all.


----------



## ubiquitous

*Re: Why bailing out housing market is a very bad idea*



cancan said:


> I don't quite understand this reverence for mcwilliams - economies are cyclical, and after a period of growth lasting 15 years, we were due a slowdown.
> 
> The fact that he was wrong about the slowdown by about 8 years doesn't really say much for his timing. But since some of our economists on the other side were apes as well in pulling predictions out of their rears, they all balance each other out.



McWilliams never predicted that the housing boom would collapse on a particular date in 200X. All he said was that the boom was unsustainable. Most other commentators were claiming that it would last pretty much forever and that property prices would in the meantime grow ad infinitum. Hence it was fine for young people to get themselves further and further into debt in order to buy a home. Anyone remember the famous Prime Time debate of Sept/Oct 2003 between McWilliams & Austin Hughes?


----------



## Welfarite

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> at one stage average house prices in ireland were almost 10x average industrial wages. From what i can tell the international norm is somewhere between 3 and 4x....


 

...which would make the correction level for average house prices @ €145,000. Long way to go yet, folks......


----------



## DerUnkle

*Re: Why bailing out housing market is a very bad idea*



> Television 	Quote:
> Originally Posted by *Thomas22* http://www.askaboutmoney.com/showthread.php?p=687914#post687914
> _Over the last 3 years of the boom we built around 250k properties. Enough to house nearly 750k people. I'm sure we have enough to keep us going for a while_
> 
> even is this is the case, as this existing stock of house is being habitated in stands to reason that the remaining stock of property as it gets smaller and smaller must move up in price, perhaps after a low but the movement must be upwards.




250K of Houseing Stock is currently empty , that means 750K of housing needs to be filled before we need to build anything more - how long on your projected figures do you think this will take to fill - from your data you say 1m population growth over the next 20 years - so it will take 15 years to fill this housing stock based on your numbers ( and that is with no new builds) - how does that lead to rising prices????????


----------



## Howitzer

*Re: Why bailing out housing market is a very bad idea*



Welfarite said:


> ...which would make the correction level for average house prices @ €145,000. Long way to go yet, folks......


Better get those supports in place so. Polygamy, polygamy, polygamy. It's the only viable solution.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



Thomas22 said:


> Thats my opinion and it is based on the facts as I see them.
> 
> Zero nominal increases from 2006 to 2016 would allow prices to return to what would be considered normal. I think a salary to house multiple of 4-5 is normal. In Ireland it is closer to 10 at the moment



My point is that it is a bit of a stretch to use 'fact' to pinpoint a year for a recovery.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



DerUnkle said:


> 250K of Houseing Stock is currently empty , that means 750K of housing needs to be filled before we need to build anything more - how long on your projected figures do you think this will take to fill - from your data you say 1m population growth over the next 20 years - so it will take 15 years to fill this housing stock based on your numbers ( and that is with no new builds) - how does that lead to rising prices????????



250,000 houses on daft etc is not generally 250,000 differnet houses. Many houses are represented several times so the figure could be halved I would think.


----------



## cancan

*Re: Why bailing out housing market is a very bad idea*



Sunny said:


> I don't think many people on this forum have a reverence for McWilliams but at the same time, they don't have much reverence for people who refuse to accept the economical reality that we now face and continue to think that if we refuse to acknowledge our problems, they will go away.


 
But he also advocated the government not stepping in in any form.
The fact that he suggests nothing concrete (no pun intended), and the fact that our government is doing absolutely nothing, is probably also not a good thing. (Summer holidays in a time of crisis?)

Actions can be taken that would help in some degree. We are not talking about a mass bailout, but steps to alleviate some of the credit problems out there would be a start.

If the banks want a bailout the gov/people of ireland should receive stock or a % of future profits from any institution it helps out.
If the banks feel this is a necessary step to impose on developers, they should be willing to have the same happen to them.

There are steps that can be done to avoid a mass panic of people who only know up/ and don't understand down.
Stability of some form is key, as people tend to over react in situations like this, making things worse.

 If doing nothing is what our leaders are doing, why bother having them in the first place.


----------



## Howitzer

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> 250,000 houses on daft etc is not generally 250,000 differnet houses. Many houses are represented several times so the figure could be halved I would think.


I suspect the number referred to comes from the CSO census of 2006 (which explicitly excluded holiday homes) rather than Daft figures which currently indicate 70K for sale units.


----------



## Flax

*Re: Why bailing out housing market is a very bad idea*



cancan said:


> Enterprise Ireland were running around all this time practically begging people to take money and start a company - there were very few takers.


 
Not true.

I started a tech company and they weren't interested.

The referred me to my local county council who said they only have money for me if I'm starting a creche.

As a result, I've had to fund everything myself. It's been alive for 5 years now.


----------



## cancan

*Re: Why bailing out housing market is a very bad idea*



Flax said:


> Not true.
> 
> I started a tech company and they weren't interested.
> 
> The referred me to my local county council who said they only have money for me if I'm starting a creche.
> 
> As a result, I've had to fund everything myself. It's been alive for 5 years now.


 
Was there an export angle to the business - I am based in the us and they have and had tons of meetings begging irish people to come home and start and export business, with money available.
If it's a local service business, I don't think that is their area, as their mandate is mainly focused on bring in export money.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



television said:


> Yes but look at aforability levels, that is a key also, remember in the dark old days when interest rates were 17% and houses were going for 20-30 grand people still struggled with afordability. That is a key measure.


 
affordability is one of the greatest misuse of words throughout the last 2 years. I can afford a shoebox in the middle of nowhere. Doesn't say I'm going to buy one. In fact I can afford a quite decent house in a reasonable location. I don't want to buy one tho as I think they are still very poor value and I can rent a similar property for less than the interest on a mortgage.

I bet you could afford to pay €50 for a pint of guinness, are you ever likely to actually do that any time soon tho (assuming the price of a pint rises to €50)?



aircobra19 said:


> Once the work dries up, the population won't increase anything likes been suggested here. Thats a fantasy. Ditto the easy credit. Which started this madness.


 
Agreed



cancan said:


> I don't quite understand this reverence for mcwilliams


 
I don't rever McWilliams, however i respect his judgement and his ability to stand up to the sheep in the 'so called' media we have in this country. He is still being dismissed as a crank while clowns like Austin hughes still get to peddle their wares on RTE and elsewhere without question to their dubious assumptions or mentioning the caveat that he has been constantly wrong over the last 18-24 months (especially in relation to interest rate predictions)



Howitzer said:


> Better get those supports in place so. Polygamy, polygamy, polygamy. It's the only viable solution.


 
LOL, you've got my vote


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



> I don't rever McWilliams, however i respect his judgement and his ability to stand up to the sheep in the 'so called' media we have in this country. He is still being dismissed as a crank while clowns like Austin hughes still get to peddle their wares on RTE and elsewhere without question to their dubious assumptions or mentioning the caveat that he has been constantly wrong over the last 18-24 months



Some could just as easily say that he is leading the sheep today.


----------



## cancan

*Re: Why bailing out housing market is a very bad idea*

The sheep just found a new shepard.
The gave up coke, and are gulping down pepsi now, not realising that they both are bad for you.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> Some could just as easily say that he is leading the sheep today.


 
I disagree, property bears are still in the minority in Irealnd IMO.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> affordability is one of the greatest misuse of words throughout the last 2 years. I can afford a shoebox in the middle of nowhere. Doesn't say I'm going to buy one. In fact I can afford a quite decent house in a reasonable location. I don't want to buy one tho as I think they are still very poor value and I can rent a similar property for less than the interest on a mortgage.
> 
> I bet you could afford to pay €50 for a pint of guinness, are you ever likely to actually do that any time soon tho (assuming the price of a pint rises to €50)?
> 
> 
> 
> Agreed
> 
> 
> 
> I don't rever McWilliams, however i respect his judgement and his ability to stand up to the sheep in the 'so called' media we have in this country. He is still being dismissed as a crank while clowns like Austin hughes still get to peddle their wares on RTE and elsewhere without question to their dubious assumptions or mentioning the caveat that he has been constantly wrong over the last 18-24 months (especially in relation to interest rate predictions)
> 
> 
> 
> LOL, you've got my vote


 
So lets get this right, in the long term you expect high unemployment, most people renting, stagnent population, low house prices. Where even if houses are affordable in terms of people incomes they are going to rent

A tad gloomy. And not very balanced.


----------



## Sunny

*Re: Why bailing out housing market is a very bad idea*



cancan said:


> There are steps that can be done to avoid a mass panic of people who only know up/ and don't understand down.
> Stability of some form is key, as people tend to over react in situations like this, making things worse.
> 
> .


 
What steps would you take?


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



television said:


> So lets get this right, in the long term you expect high unemployment, most people renting, stagnent population, low house prices. Where even if houses are affordable in terms of people incomes they are going to rent
> 
> A tad gloomy. And not very balanced.


 
where did I say that?

I said that the term 'affordibilty' is a myth. Buyers will not return to the market in their droves until the difference between servicing a mortgage and the cost of renting narrows.

I expect house prices to lower (from historic highs), unemployment to rise (from historic lows), possibly gloomy but realistic. 

Sorry if its unpatriotic to criticise Ireland inc. but thats the way i see it


----------



## sandymount

*Re: Why bailing out housing market is a very bad idea*

Dear Brian,

I am a FF supporting developer. I have made loads of money in the last ten years but spent most of it at the Galway races, and on a helicopter. I have built 100 house and apartments and a Spar in Ballygobackwards and there not sellin' eventhough they a priced to sell at 250k for a one bedroom with one small window facing north. It is only a 2 hour commute to Longford.

Send me some money. 

Thanks 

Sean


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> where did I say that?
> 
> I said that the term 'affordibilty' is a myth. Buyers will not return to the market in their droves while the difference between servicing a mortgage and the cost of renting narrows.
> 
> I expect house prices to lower (from historic highs), unemployment to rise (from historic lows), possibly gloomy but realistic.
> 
> Sorry if its unpatriotic to criticise Ireland inc. but thats the way i see it


 

Your forgetting your aggrement with Aircobra where he said population to remain stagnent.


----------



## cancan

*Re: Why bailing out housing market is a very bad idea*



Sunny said:


> What steps would you take?


 
Prevent/encourage banks from over tightening their credit strings for starters.
If the banks ain't giving out money, people can't do much - it's not just the mortgage market that gets hit, all business day to day, all consumer spending, enterprise etc
There are a lot of people who were not irresponsible with their spending, yet they are getting punished for others mistakes.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



television said:


> Your forgetting your aggrement with Aircobra where he said population to remain stagnent.


 
I agreed that a population explosion is unlikely with the shadow of an impending recession ahead. Who the hell would come here looking for work at the moment?


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



cancan said:


> There are a lot of people who were not irresponsible with their spending, yet they are getting punished for others mistakes.


 
Banks will still lend, however they are finally becoming more prudent in how much they lend and who they will lend to. People who want to borrow responsibly will still be accomodated.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> where did I say that?
> 
> I said that the term 'affordibilty' is a myth. Buyers will not return to the market in their droves while the difference between servicing a mortgage and the cost of renting narrows.
> 
> Btw I'm still searching for where i speculated on population trends.
> 
> I expect house prices to lower (from historic highs), unemployment to rise (from historic lows), possibly gloomy but realistic.
> 
> Sorry if its unpatriotic to criticise Ireland inc. but thats the way i see it


 
maybe you should look at some other factors, like oil prices being at a historic high, the credit crunch which will end, europan interest rates not set to rise by much more, A new president in the US, a thriving China and India that will stimulate global demand not just take away jobs.  All these things have potential to positivaly effect the irish economy. Its not all doom and gloom. In the long run there is oppurtunity. I dont mind if people keep renting in the long term, I am all for it in fact, brecause in the long run that will have to mean there is income in owning property.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



> I agreed that a population explosion is unlikely with the shadow of an impending recession ahead. Who the hell would come here looking for work at the moment?


 
3 Things

1. Long term population increase is not as determined by short term immigration.
2. We still have low unemployment in ireland at 6%
3. Around 25000 people at a guess will come this year looking for work


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> I disagree, property bears are still in the minority in Irealnd IMO.



Not on AAM though.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



> I am all for it in fact, brecause in the long run that will have to mean there is income in owning property.


 
Only if the potential rent at least covers the interest and capital repayments. Not happening at todays prices. Add in the very real prospect of further price falls and very little prospect of price increases in the short to medium term and I'm afraid we'll have to agree to disagree on whether property investment is a good investment at present



> 1. Long term population increase is not as determined by short term immigration.


 
agreed



> 2. We still have low unemployment in ireland at 6%


 
this is rising on a monthly basis, nearly every month seems to bring a new record increase to the live register.



> 3. Around 25000 people at a guess will come this year looking for work


 
we'll know this at the end of the year. Looking for work and finding work are 2 seperate things.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> Not on AAM though.


 
I disagree, most of them were banned or simply walked away to the property pin


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> I'm afraid we'll have to agree to disagree on whether property investment is a good investment at present.


 
No, we are in aggreement that it is certainly a pretty stupid investment now. But this will change as more people enter the rental market and the stock of houses avalible decreases.  especially in the Dublin area this will have to mean increased rents, which will do two things tempt people abck into the buying market or temps investors into the market to take advantage of a reluctance of others to buy.


----------



## Sunny

*Re: Why bailing out housing market is a very bad idea*



cancan said:


> Prevent/encourage banks from over tightening their credit strings for starters.
> If the banks ain't giving out money, people can't do much - it's not just the mortgage market that gets hit, all business day to day, all consumer spending, enterprise etc
> There are a lot of people who were not irresponsible with their spending, yet they are getting punished for others mistakes.


 
I work for an investment bank. I would love for the governement to come to in and get the credit markets going again. Do I think they should? Absolutely not. Recipie for disaster. The world has been operating in a credit bubble for decades. Now the bill has been delivered and it is time to pay. There is no bail out, there is no easy solution and there is going to be alot of pain all over the world. Do not underestimate how bad things are still going to get. We are no where near through the current so called credit crisis.


----------



## DerUnkle

*Re: Why bailing out housing market is a very bad idea*



> Banks will still lend, however they are finally becoming more prudent in how much they lend and who they will lend to. People who want to borrow responsibly will still be accomodated.




+1 

exactly - Bank lending is only at present reaching what is normality i.e. no 100% mortgages - having to have a substantial deposit and interest rates which are "normal" as opposed to the historically low ones we had which did not suit our economic cycle thus infating the bubble even further. Bank lending and ease of credit was TOO loose


----------



## tkc

*Re: Why bailing out housing market is a very bad idea*

I moved back to Ireland in mid 2001, after being abroad for 11 years and was hesitating about buying a house. I distinctly remember David McWilliams saying on the radio at the time that houses were now overpriced, it might not be the best time to buy, and that at some stage there would have to be a correction. Then came 9/11 and in it's immediate aftermath and uncertainty there were price falls and I bought my house at 8% lower than a neigbour who had bought in June 2001.

Then interest rates fell to nothing, the VI's went into overdrive with the spinning (take a bow estate agents, newspapers, builders/developers, banks,Austin, Dan, Bertie, etc), the banks went crazy with the 100% mortgages and the liar loans, and what resulted can only be described as mass hysteria, where there was a massive transfer of wealth to the VI's and the government, all funded by 30-35 loans taken out by the gullible financially illiterate young people of Ireland. 

This pyramid scheme continued until the people at the bottom simply could not afford to get on the ladder, even with 100% loans, credit union loans, parental loans, rent a room, friends buying house together, etc. (only then did the SI start it's stamp duty campaign, as if this was the sole cause of all the problems). And so the pyramid collapses.

1) I know D McW said there was a problem in 2001, 7 years ago. Can anyone back up claims that he said this 15 or 12 years ago.
2) Prices are nearly back to 2004 levels and will fall further. McWilliams was right day one, he couldn't predict that the mania would last so long. Inflation adjusted prices could easily fall to 2001 levels if not further. This isn't a case of "he had to be right sometime", he was right, full stop. He knew the real fundamentals were out of whack, while Dan, Austin, Bertie etc. continually maintained the false illusion of the fabled soft landing. (funny how none of the bulls mention that these days)
3) Government finances are shot due almost entirely to the decline in construction. They keep telling us the real economy is fine. On that basis, this state's short term budget surplus's have been funded, not by manufacturing/services profits, but by the long term borrowings of young people - way to go Bertie, Biffo, etc, you must be very proud. 
4) As for helping out the execrable "risk takers", I wouldn't put it beyond FF, but there won't be anything in the kitty to fund this. 

The sad thing is there will never be accountability for this mess. The politicians have the fig leaves of the global credit crunch and rising oil prices to hide behind. I place the majority of blame with the govt. Their role in society should be to protect people from the excesses of unchecked capitalism, instead of which they actively colluded with the VI's for the short term benefit it brought them.

The bottom line is that house prices are way too expensive due to the nauseating greed of the "risk takers". *We don't need a recovery in the market, we need prices to come down to a sensible sustainable level, where houses are for living in and not a commodity.* People are now realising this, and prices will continue to fall, and maybe even overshoot at the bottom, helped by the massive oversupply out there. This will cause a huge amount of hardship for a lot of people, which is unavoidable, however it should save the next few generations from becoming debt slaves to the banks for 35 years for a shoebox in the middle of nowhere. 

We have gotten ourselves into an awful situation, payback is going to be a b itch.


----------



## Sunny

*Re: Why bailing out housing market is a very bad idea*



DerUnkle said:


> +1
> 
> exactly - Bank lending is only at present reaching what is normality i.e. no 100% mortgages - having to have a substantial deposit and interest rates which are "normal" as opposed to the historically low ones we had which did not suit our economic cycle thus infating the bubble even further. Bank lending and ease of credit was TOO loose


 
Just be grateful that the bubble burst before 125% mortgages came into fashion like in the UK!!


----------



## DerUnkle

*Re: Why bailing out housing market is a very bad idea*



> No, we are in aggreement that it is certainly a pretty stupid investment now. But this will change as more people enter the rental market and the stock of houses avalible decreases. especially in the Dublin area this will have to mean increased rents, which will do two things tempt people abck into the buying market or temps investors into the market to take advantage of a reluctance of others to buy.



rents will have to increase by 1.5 times before it will tempt people back into buying



http://www.daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[search_type]=rental&s[a_id]=ga1&s[furn]=&s[refreshmap]=1&limit=10&search_type=rental&id=597445



http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[search_type]=sale&s[a_id]=ga1&s[furn]=&s[refreshmap]=1&limit=10&search_type=sale&id=389513



2,300 per month to rent , 3,100 to buy, go figure


----------



## television

*Re: Why bailing out housing market is a very bad idea*



tkc said:


> 1) I know D McW said there was a problem in 2001, 7 years ago. Can anyone back up claims that he said this 15 or 12 years ago.
> 2) Prices are nearly back to 2004 levels and will fall further. McWilliams was right day one, he couldn't predict that the mania would last so long. Inflation adjusted prices could easily fall to 2001 levels if not further. This isn't a case of "he had to be right sometime", he was right, full stop. He knew the real fundamentals were out of whack, while Dan, Austin, Bertie etc. continually maintained the false illusion of the fabled soft landing. (funny how none of the bulls mention that these days)
> .


 
He said it long before Gaybo left office I remember it well it must have been 10 years ago minimum


----------



## television

*Re: Why bailing out housing market is a very bad idea*



DerUnkle said:


> rents will have to increase by 1.5 times before it will tempt people back into buying
> 
> 
> 
> http://www.daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[search_type]=rental&s[a_id]=ga1&s[furn]=&s[refreshmap]=1&limit=10&search_type=rental&id=597445
> 
> 
> 
> http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[search_type]=sale&s[a_id]=ga1&s[furn]=&s[refreshmap]=1&limit=10&search_type=sale&id=389513
> 
> 
> 
> 2,300 per month to rent , 3,100 to buy, go figure


 
Not sure I get your two examples above


----------



## television

*Re: Why bailing out housing market is a very bad idea*



tkc said:


> I4)
> The bottom line is that house prices are way too expensive due to the nauseating greed of the "risk takers". We have gotten ourselves into an awful situation, payback is going to be a b itch.


 
Excellent post not. If house prices are expencive everyone shoulders the balme


----------



## Clown

*Re: Why bailing out housing market is a very bad idea*



tkc said:


> I moved back to Ireland in mid 2001, ....etc.


 
A wonderful piece of honest and open writing written by what could be described as a vested interest having purchased before the massive boom yet is still able to speak honestly about the market and the mess that has been created. Well done tkc, an excellent post


----------



## tkc

*Re: Why bailing out housing market is a very bad idea*



television said:


> He said it long before Gaybo left office I remember it well it must have been 10 years ago minimum


 
Gaybo left in 1999 which is 9 years ago now. I'd be interested if anyone could specifically remember a year when DMcW offered an opinion and what he said. 

The Bacon reports came out in 1998 and 1999 so there were major concerns even back then about house prices. We could potentially get back to those inflation adjusted levels if we have a Japanese style meltdown. People have no problem with prices going up several hundred per cent, but cannot envisage a 50% or 70% fall.

I suppose my point on McWilliams and the bear economists would be that they said there would be a correction at some stage because prices were out of whack, and that they're saying now the correction could be massive because the mania went on for much longer than they thought possible. 
The bull economists maintained right to the end that due to strong "fundamentals" the worst case scenario was a soft landing where prices would level off and increase at the rate of inflation. They then modified this to be flat prices for a while followed by increases in line wth inflation. Now they're saying that there would always have been a correction (using that as a way to diss McW), but that it won't last long. 

I know which economist has the most credibility in my eyes.

Ironically having said that, if McW advocated not buying in 98/99 that would probably not have been a wise move. I reckon he saw a crash coming within three years or so, he didn't foresee the mania going on this long.


----------



## Yosser

*Re: Why bailing out housing market is a very bad idea*



television said:


> Excellent post not. If house prices are expencive everyone shoulders the balme


I'm laughing out loud at your posts. You really are one of those smart ballsy guys aren't you? What a hero


----------



## charliemacck

*Re: Why bailing out housing market is a very bad idea*



Clown said:


> A wonderful piece of honest and open writing written by what could be described as a vested interest having purchased before the massive boom yet is still able to speak honestly about the market and the mess that has been created. Well done tkc, an excellent post


 
It's all very well and brave to say that "prices must come down" if you don't have a house or you bought one years ago. Not so good if you are a poor young couple who scraped together some money to buy an investment property as a nest egg in the last few years based on the advice of the experts. If it seems there will be negative growth in property crash - and yes, I still do believe it can be avoided and we can pull back form the brink if the media row back on the negative talk and this nation pulls together and helps each other - then perhaps these experts should be made to account for themselves in front of a tribunal. However, that does not mean praising those such as McWilliams who were unrealistically negative about the property market for years and years. And I still think we should avoid overly negative comments that might frighten the horses. We need some balance here, folks. I for one will vote for whichever political party puts those at danger of negative equity first in their election manifesto. I can see it as an issue that the PDs could make a comeback on.


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*



charliemacck said:


> It's all very well and brave to say that "prices must come down" if you don't have a house or you bought one years ago. Not so good if you are a poor young couple who scraped together some money to buy an investment property as a nest egg in the last few years based on the advice of the experts. If it seems there will be negative growth in property crash - and yes, I still do believe it can be avoided and we can pull back form the brink if the media row back on the negative talk and this nation pulls together and helps each other - then perhaps these experts should be made to account for themselves in front of a tribunal. However, that does not mean praising those such as McWilliams who were unrealistically negative about the property market for years and years. And I still think we should avoid overly negative comments that might frighten the horses. We need some balance here, folks. I for one will vote for whichever political party puts those at danger of negative equity first in their election manifesto. I can see it as an issue that the PDs could make a comeback on.



But I don't think the property crash should be avoided. I think it is the best thing for the country and under no circumstances should the government use tax players money to do anything about it. 

The simple fact is that house prices are way way over valued in this country and no amount of sticking our heads in the sand pretending it is only media negativity coverage that is causing them to fall. Average house prices are 10 times average salaries! In the UK and USA it is around 5 and think they have a property bubble.

For this country to become competitive again house prices need to fall by another 30-40%.


----------



## Clown

*Re: Why bailing out housing market is a very bad idea*

Ill be sure not to follow your advice anyway Charlie Macck. A comeback on the cards for the PD's and house prices to follow suit?? Are you having a laugh? 

How can I have sympathy for a young couple taking on a second mortgage on an investment property as a nest egg? Should I stand outside Paddy powers handing out bail outs to people losing their money that way? What about somebody who bought shares in bank stocks last year? Should we bail them out aswell? What about a refund for lotto players who didnt get any numbers up in last nights lotto draws? Like the old saying 'one woman is enough for any man' I apply the same principle to housing 'one house is enough for any person' The 34% of property purchased in 2007 was purely investment properties bought on the back of greed and the quick buck. Like the pyramid scheme before the level of entrants on the bottom rung ran out and the next level are left counting the cost of their greed.

A lot more transparency and honesty about the state of the housing market in Ireland would be to the benefit of all (except the vi's) rather than a push for the cementing over of the ever increasing cracks.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Yosser said:


> I'm laughing out loud at your posts. You really are one of those smart ballsy guys aren't you? What a hero


 
I take you are being ironic. I was simply making the point that the blame for the property bubble should not be shouldered on property developers alone.  Eveyone wanted a piece of the pie, we are in fact all to blame. Because most of us benifited from the rise in house prices. It made millionnaires out of people with modest homes in Dundrum Templeogue and allowed people from Cabra etc to sell up and move out to navan with a nice 100gs sittign in the bank.  Now its payback time, so lets not blame the big bad guys in the property business. They did what speculators will do and good luck to them.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



tkc said:


> Gaybo left in 1999 which is 9 years ago now. I'd be interested if anyone could specifically remember a year when DMcW offered an opinion and what he said.
> 
> The Bacon reports came out in 1998 and 1999 so there were major concerns even back then about house prices. We could potentially get back to those inflation adjusted levels if we have a Japanese style meltdown. People have no problem with prices going up several hundred per cent, but cannot envisage a 50% or 70% fall.
> 
> I suppose my point on McWilliams and the bear economists would be that they said there would be a correction at some stage because prices were out of whack, and that they're saying now the correction could be massive because the mania went on for much longer than they thought possible.
> The bull economists maintained right to the end that due to strong "fundamentals" the worst case scenario was a soft landing where prices would level off and increase at the rate of inflation. They then modified this to be flat prices for a while followed by increases in line wth inflation. Now they're saying that there would always have been a correction (using that as a way to diss McW), but that it won't last long.
> 
> I know which economist has the most credibility in my eyes.
> 
> Ironically having said that, if McW advocated not buying in 98/99 that would probably not have been a wise move. I reckon he saw a crash coming within three years or so, he didn't foresee the mania going on this long.


 
Good economists do not just predict house prices. They look at all the fundementals in the economy and make judgements about future trends (among other things obviously).  McWilliams got the medium term completly wrong. Ten years ago if you followed his advice and rented, think about how absolutly sickened you would be today. He was always going to be eventually right as most economics have boom bust cycles to on extent or another.


----------



## Senna

*Re: Why bailing out housing market is a very bad idea*



television said:


> Good economists do not just predict house prices. They look at all the fundementals in the economy and make judgements about future trends (among other things obviously).  McWilliams got the medium term completly wrong. Ten years ago if you followed his advice and rented, think about how absolutly sickened you would be today.



DMcW said house prices were over inflated in 1999/2000 and they have continued to be inflated and still are today.  This does not mean he was wrong in the medium term, it just means that the Irish public didn't listen and prices were let run wild.

The question is, should we have listened to him then and not let the market grow to such an unsustainable level?
My feeling is, if the irish public had of listened to him at any point in the last 10 years, we'd be in a better situation than we are now.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Senna said:


> DMcW said house prices were over inflated in 1999/2000 and they have continued to be inflated and still are today. This does not mean he was wrong in the medium term, it just means that the Irish public didn't listen and prices were let run wild.
> 
> The question is, should we have listened to him then and not let the market grow to such an unsustainable level?
> My feeling is, if the irish public had of listened to him at any point in the last 10 years, we'd be in a better situation than we are now.


 
House prices were undervalued in 1999 in Ireland in comparison to Europe. McWilliams got it wrong and house prices shot up. end of story. 

He is full of hyperbol.  Yes now he can say he was right, but then it does not take an economic genious to look around and see what happening and say prices are going to fall.


----------



## z109

*Re: Why bailing out housing market is a very bad idea*



television said:


> House prices were undervalued in 1999 in Ireland in comparison to Europe. McWilliams got it wrong and house prices shot up. end of story.
> 
> He is full of hyperbol.  Yes now he can say he was right, but then it does not take an economic genious to look around and see what happening and say prices are going to fall.


House prices were low in Ireland compared to europe, not undervalued. House prices were low because wages were low. 

Look at Bulgaria - are you going to tell me that house prices in Sofia are undervalued because they are not similar to those in Dublin?


----------



## television

*Re: Why bailing out housing market is a very bad idea*



yoganmahew said:


> House prices were low in Ireland compared to europe, not undervalued. House prices were low because wages were low.
> 
> Look at Bulgaria - are you going to tell me that house prices in Sofia are undervalued because they are not similar to those in Dublin?


 
Fair point.


----------



## Senna

*Re: Why bailing out housing market is a very bad idea*



television said:


> House prices were undervalued in 1999 in Ireland in comparison to Europe. McWilliams got it wrong and house prices shot up. end of story.



House prices may have been low, but where's the evidence (source) they were undervalued? Value and price are two completely different things.



television said:


> He is full of hyperbol.  Yes now he can say* he was right*, but then it does not take an economic genious to look around and see what happening and say prices are going to fall.



so if a 'not a economic genius' like DMcW was saying their going to drop but every other economist was predicting continued growth, what does that make the other economists? VI backed, or maybe just Morons perhaps??  
And dont think i'm talking about 1999, in 2005 there was no predictions correct, except guess who....


if *so* many people knew, and all the economists were telling us, then why did so many people buy in 2005/6/7?
The reason, all the VI's were ripping the **** out of it and wanted the gravy train to never stop, if that meant shafting the general public with miss-information, so be it.


----------



## DerUnkle

*Re: Why bailing out housing market is a very bad idea*



> Not sure I get your two examples above



the 2 examples - the first in the list off daft (dublin city centre) are the same property, one you can buy for 3,150 per month, the other you can rent for 2,300 per month 



> especially in the Dublin area this will have to mean increased rents, which will do two things tempt people abck into the buying market or temps investors into the market to take advantage of a reluctance of others to buy.



so rents would need to increase by 36% for a person to consider buying this property instead of renting it - how do you see that happening with such a glut of similar properties on the market? This sample shows that it is not worth an investor investing in it and, so financially renting is much better instead then buying. Can you see rents increasing this much in 1 year . 2 years etc, i think not - this property is also 19 times the average industrial wage - Prices have a long way to fall before the reach normality. Even your massive infulx of people/population growth cannot raise rents that high or sustain those prices



DWM has been calling overpriced housing for the last 6 to 8 years. We are curently at 2005 prices. So if we fall to 2001 prices (the start of the easy credit) then he will have been proved right in calling a bubble since 2001.


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*



television said:


> House prices were undervalued in 1999 in Ireland in comparison to Europe. McWilliams got it wrong and house prices shot up. end of story.
> 
> He is full of hyperbol.  Yes now he can say he was right, but then it does not take an economic genious to look around and see what happening and say prices are going to fall.



Why do you think houses were undervalued?

Spotted this some else before


----------



## Senna

*Re: Why bailing out housing market is a very bad idea*

Interesting to see that even in 2001, house prices were 100/150% above the CPI.
would be interesting to see a similar graft for Germany or another EU country that didn't fall for cheap credit.


----------



## recursive

*Re: Why bailing out housing market is a very bad idea*



Senna said:


> Interesting to see that even in 2001, house prices were 100/150% above the CPI.
> would be interesting to see a similar graft for Germany or another EU country that didn't fall for cheap credit.



here ya go. inflation adjusted house prices. 1995 = 100. some bubble. would have burst in 2001 if not for 9/11. kinda funny that.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Senna said:


> House prices may have been low, but where's the evidence (source) they were undervalued? Value and price are two completely different things.
> 
> 
> 
> so if a 'not a economic genius' like DMcW was saying their going to drop but every other economist was predicting continued growth, what does that make the other economists? VI backed, or maybe just Morons perhaps??
> And dont think i'm talking about 1999, in 2005 there was no predictions correct, except guess who....
> 
> 
> if *so* many people knew, and all the economists were telling us, then why did so many people buy in 2005/6/7?
> The reason, all the VI's were ripping the **** out of it and wanted the gravy train to never stop, if that meant shafting the general public with miss-information, so be it.


 
sorry i dont think it was only Mcwilliams who was saying the market was overvalued in 2005. others were saying this.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



recursive said:


> here ya go. inflation adjusted house prices. 1995 = 100. some bubble. would have burst in 2001 if not for 9/11. kinda funny that.


 
Thats a pretty confident prediction.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



DerUnkle said:


> the 2 examples - the first in the list off daft (dublin city centre) are the same property, one you can buy for 3,150 per month, the other you can rent for 2,300 per month
> 
> 
> 
> so rents would need to increase by 36% for a person to consider buying this property instead of renting it - how do you see that happening with such a glut of similar properties on the market? This sample shows that it is not worth an investor investing in it and, so financially renting is much better instead then buying. Can you see rents increasing this much in 1 year . 2 years etc, i think not - this property is also 19 times the average industrial wage - Prices have a long way to fall before the reach normality. Even your massive infulx of people/population growth cannot raise rents that high or sustain those prices
> 
> 
> 
> DWM has been calling overpriced housing for the last 6 to 8 years. We are curently at 2005 prices. So if we fall to 2001 prices (the start of the easy credit) then he will have been proved right in calling a bubble since 2001.


 

 I am not saying house prices are going to be maintained at current prices, what I am saying is more people renting will mean eventually increased rents and if this is the case then there will come a point where it will become reasonable again to want to buy rather than rent.


----------



## z106

*Re: Why bailing out housing market is a very bad idea*



Senna said:


> DMcW said house prices were over inflated in 1999/2000 and they have continued to be inflated and still are today. This does not mean he was wrong in the medium term, it just means that the Irish public didn't listen and prices were let run wild.


 
That point makes no sense whatsoever.

DmcW audience at the time when he made those statements was the lay man on the street. And that's the crucial point.

When he said back in 1999 (or whenever) that house prices were overvalued, what the layman heard was that they will drop in the near term.
That is how people interpreted that statement - and Mcwilliams well knows it !

In short - with such statements, Mcwilliams was essentrially predicting a drop in house prices in the short term.
That was basically his message given his audience.

And you can try to dress up his statements any other way you want.
You can argue all you want saying the fundamentals of the day justified his point - and that with each passing year his opinion on fundamentals versus house prices continued to more than justify his point.

But the botton line is he got it wrong - and not only that, he got it badly wrong - irrespective of what the fundamentals were !
And not only did he get it badly wrong, he got it badly wrong on teh most important financial topic of the day. 

Prices rose significantly in the medium term.

In my book - that mistake was too big to give him any furher real credibility as an economist preaching to the nation.

For an economist, being aware of the fundamentals is only half the battle - predicting human behavious is the other half.

Had he said,for example, that the fundamentals didn't justify the current prices yet he felt that prices would continue to rise due to the irrational behavious of humans, then I would give him the kudos.
Focussing only on the fundamentals and assuming that prices/human behaviour would be dictated by fundamentals in the short to medium term is folly.

The very nature of a bubble is that in the short to medium term it ignores fundamentals.
McWilliams - to my knowledge - failed to include that point.


----------



## Senna

*Re: Why bailing out housing market is a very bad idea*

I hear your point and agree that the lay man on the street paid no attention.  But to right off an economist, one of the only people to question the bubble, because he only got it half right (your sentiments), when the rest got it completely wrong is hardly fair.  Now the reason i think other economist were wrong was because of who they were making the comments on behalf off, banks, EA's, builders etc, so it was not in their interest to say prices were over inflated.

If on the other hand you said i wouldn't listen to any economist, then fair enough i'd probably agree.  If anyone can point to another economist that predicted it better, then please post it up.


----------



## mainasia

*Re: Why bailing out housing market is a very bad idea*

I too ran a business outside Ireland and didn't even bother contacting friends back home to tap them for funds (and I needed funds) because I knew 
1) They were obsessed with property and only interested in that
2) Most of them had already commited all their liquid funds to property

This has a big knock-on effect, people focused on local environment too much, not upgrading skills because no extra money and no need as you make money from property not wages, no interest in starting business because they need to maintain payments every month and to them it was too risky. So of all the young people who stayed in Ireland not one of them started anything on their own. This is a small subset but it illustrates the point I am making.... 
Now some of them have huge mortgages and they'll probably never get a chance to do something else due to the heavy monthly payments, not able to get capital together or risk loss of income for certain period. It makes people risk averse and that's a pity.

Lack of extra cash to put into the stock market or investment will exacerbate earnings stagflation as it reduces the opportunities for employment and competition to fill jobs. 

I'd be an optimist more than anything as Ireland but I'd say it will take 5-10 years to reach a bottom. BTW the Irish birth rate will continue to decrease as people won't have money for kids and there will be competition for jobs so parents will have to pay a lot more for their offspring's education and young people these days want more freedom.


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



Thomas22 said:


> Why do you think houses were undervalued?
> 
> Spotted this some else before


 
That graph is more useful than thousands of words written trying to predict house prices. Any of the VI's trying to push up house prices over the last ten years should have been shown it and asked to explain why economics no longer applies.

Housing prices are no different to any other prices and the only reason they can rise faster is due to irrational emotional attachment, like the time of tulip mania (I'm sure there were people criticising DmcW's equivalent at that time for being a pessimist who got his timing wrong!).
For anyone interested in a longer-term trend, research of the US housing market from 1890 indicates that housing rises on average 0.4% per year above inflation - Ireland still has quite an adjustment to go through:
http://www.businessweek.com/magazine/content/08_06/b4070044774504.htm

Thomas, where is the graph sourced from?


----------



## recursive

*Re: Why bailing out housing market is a very bad idea*



television said:


> Thats a pretty confident prediction.



Not really. The cost of servicing the interest element of an average house purchase (per the ESRI/PTSB index) went from 26% of average net income in 1998 and 1999 to 42% in 2000.  The rate cuts post 9/11 reduced this to under 30% again. (Dan McLoughlan estimated the long term average at 28%). The increases in values and rates have pushed this up above 40% again. 

If prices revert to the mean (as opposed to income inflation) then assuming long term borrowing costs of 5% (Which is positive) then prices will have to fall from between 25% to 40% from their peak to revert to a more normal % of income. 

40% seems a widely accepted number nowadays and not just from property pinners, AIB are talking about that number. Dan McLoughlan and Austin Hughes views are becoming marginalised although like David McWilliams they will eventually be proved right. Will take a while though. Perhaps 10 years if the UK model is followed and banks have the cash to push lending.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*

How as a mature progressive nation are we looking over the last 10/15 years and blaming/crediting economists, govts, EAs, banks etc for the actions of individuals? This talk of McW being right all along or being totally wrong means nothing and doesn't point to where we are going. Do those who think he is now an economic God think that we should now base our economic decisions on his next book for the next 10 years? The blame game is always in play but maybe its time that we just shoulder our individual reponsibilities and in by doing that I definitely mean the govt should not intervene and I don't think the prices will fall another 40% nor do they have to (at least outside of the capital). you can buy a large 4 bed semi in a good area down here (limerick) for under 300k so not everywhere is unaffordable or overpriced.


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*

Would dropping 40% approach the original lending criteria of 2x one salary and 1x the the other.


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## MrMan

*Re: Why bailing out housing market is a very bad idea*

All depends on the area dropping it in some places by 40% would require less than 2 x one salary and 1 x other.


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## webtax

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> How as a mature progressive nation are we looking over the last 10/15 years and blaming/crediting economists, govts, EAs, banks etc for the actions of individuals?


 
I would say the blame lies squarely at the foot of the government. They reduced tax rates & brought in tax incentives to push property development (not to mention corruption). They let the central bank turn a blind eye to accepted lending practices (10% deposit saved, 3 times salary) and allowed very poor qualify housing to be built in locations with no community facilities. They were happy to go along for the ride as long as it meant extra money in the government coffers.

They can't argue that they were unable to intervene - not too long ago, they were able to bring in price controls for the price of a pint!


----------



## tkc

*Re: Why bailing out housing market is a very bad idea*

In short - with such statements, Mcwilliams was essentrially predicting a drop in house prices in the short term.
That was basically his message given his audience.

But the botton line is he got it wrong - and not only that, he got it badly wrong - irrespective of what the fundamentals were !
And not only did he get it badly wrong, he got it badly wrong on teh most important financial topic of the day. 

Prices rose significantly in the medium term.

In my book - that mistake was too big to give him any furher real credibility as an economist preaching to the nation.

For an economist, being aware of the fundamentals is only half the battle - predicting human behavious is the other half.

Had he said,for example, that the fundamentals didn't justify the current prices yet he felt that prices would continue to rise due to the irrational behavious of humans, then I would give him the kudos.
Focussing only on the fundamentals and assuming that prices/human behaviour would be dictated by fundamentals in the short to medium term is folly.

The very nature of a bubble is that in the short to medium term it ignores fundamentals.
McWilliams - to my knowledge - failed to include that point.[/quote]


1) In order to give a fair assessment of McW's statements at the time we really need actual quotes. I don't know if he ever expicitly said when the bust would happen, but I agree that it was at least implied in his statements in 2001 that he thought it would be within a few years. You say you would have given him kudos if he said prices would continue to rise due to the irrational behaviour of humans, but to be honest you would have wanted him to say for how long and unless he got the date right he wouldn't have credibility. The fact that he was saying there was a bubble in '99 and still in '01, and that it would peak at some stage indicates his acknowledgement there was irrationality in the market, as that defines a bubble. 
2) The bubble lasted longer than anyone expected or predicted for a number of reasons - no arguements there. That's why the fall out is potentially so scary, we have so very very far to fall, maybe back to the 90's.
3) McW's warnings and those of others (Central Bank, Economist, etc.) were also to those in power who should taken the air out of the bubble at the time; they buried their heads in the sand, and basically added fuel to the fire for their short term benefit. Had they acted responsibly the bubble could have been deflated earlier and McW would have been spot on with his timing.
4) At no stage - to my recollection - did the "Establishment" i.e. Dan, Austin, Marion, Bertie, Biffo, Sunday Independent, Estate Agents, Builders, Banks, etc. ever predict an eventual bust, only a soft landing as "the fundamentals were sound and we were only playing catch up with Europe". 
5) McW couldn't predict when the bubble would burst, the others never acknowledged that one existed or could exist, until it was staring them in the face, and how many tens if not hundreds of thousands are going to suffer for this, way more than may have deferred buying a house in 1999 based on McW's opinions. 
5) For those who favour getting house prices back up to their old levels to help those in negative equity, while in theory it sounds noble, is it really desirable that the teenagers and young children of today and tomorrow should face into ludicrous house prices in the future. I have no problem with my house falling massively in value if it means my children can afford decent housing when they are adults, without mortgaging away their lives and happiness.
6) There is no win win or happy ending situation here. If prices continue to fall steeply as is probable, there will be terrible suffering; if somehow they were to recover, then future generations would continue to be saddled with ridiculous levels of debt in order to enrich the few.

Economics is the dismal science, McW and his ilk over estimated the competence of the government and the banks, could not foresee 9/11 and the effect on interest rates and got the timing wrong, the others being trained economists *must, must, must* have known in their hearts and minds that there was a bubble, and they willfully continued to hype and inflate it in the name of greed, and that's what makes them scoundrels rather than idiots.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*

[broken link removed]

This but might interest television



> With prolonged recession, emigration will resume, further reducing housing demand. In fact, as Brendan Walsh has pointed out, the collapse in the birth rate during the 1980s means that, even with zero net emigration, the prime housebuying population of 20 to 40-year-olds will fall by 10 per cent in the next decade.


 
EDIT: Link fixed


----------



## raven

*Re: Why bailing out housing market is a very bad idea*

The blame lies with one thing only and one thing only:

- Not having control over our interest rates.

That is it.

There are always a myriad of factors driving and swaying the market.
One device has stood the test of time in rationalizing inflation and the market  against such factors. If we had had control of interest rates, the market could have been cooled and managed for more sustained growth for the benefit of all. 
Acceding control of our interest rates to the ECB is the reason for the boom/bust situation that arose. All the other factors swaying the market could have been countered to a large extent if we had control over our interest rates.

I do believe DmcW did point this out very early on.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> I would say the blame lies squarely at the foot of the government. They reduced tax rates & brought in tax incentives to push property development (not to mention corruption). They let the central bank turn a blind eye to accepted lending practices (10% deposit saved, 3 times salary) and allowed very poor qualify housing to be built in locations with no community facilities. They were happy to go along for the ride as long as it meant extra money in the government coffers.
> 
> They can't argue that they were unable to intervene - not too long ago, they were able to bring in price controls for the price of a pint!



You still have to make a choice as a responsible adult to enter into a large debt or not, the country isn't in ruins as you might think from this thread.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> You still have to make a choice as a responsible adult to enter into a large debt or not, the country isn't in ruins as you might think from this thread.


 
agreed, but one of the principle aims of financial regulation is to ensure consumers make informed, rational decisons and to attempt to solve informational assymetries. The central bank failed miserably in this instance, despite having the highest paid central banker in europe at the helm

People are not all singing all dabncing rational beings, especially when emotions are involved. Add in the financial scale of a house purchase and there is a need for far more regulation in personal lending that in most other consumer areas


----------



## z109

*Re: Why bailing out housing market is a very bad idea*

People give the same thought to buying a house that they do to buying a bag of chips - I want it. Greed and stupidity. Developers, bankers, estate agents - the same two factors apply.


----------



## raven

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> I would say the blame lies squarely at the foot of the government. They reduced tax rates & brought in tax incentives to push property development (not to mention corruption). They let the central bank turn a blind eye to accepted lending practices (10% deposit saved, 3 times salary) and allowed very poor qualify housing to be built in locations with no community facilities. They were happy to go along for the ride as long as it meant extra money in the government coffers.
> 
> They can't argue that they were unable to intervene - not too long ago, they were able to bring in price controls for the price of a pint!



I agree.

Generally people will stretch themselves to buy property, and a lot of people do well out of doing so. This is reality. Perhaps they are to blame themselves, perhaps they aren't, but it is generally what happens the world over. 

The mess arises when they stretch themselves during times of cheap money. Markets will overheat, - this is economics 101 and history has shown this time and time again. It is the governments role to strive for sustainable growth not boom/bust cycles. 

In the absence of having control over interest rates they should have regulated or used tax devices to try and cool the market. Of course this wouldn't have been popular given who they represent, but there you go, thats what you get with a spineless political party.

Instead, what did they do? - 
They did the worst thing possible. They talked up the market, - they talked it up and up and up, when they should have been taking measures to cool the market.
Why? because they (Fianna Fail)  place more importance on pleasing the Vested Interests (themselves in many cases) than the best interest of its citizens.

Anyone who votes them back in should hang their heads in shame. They stink and caused the mess we are in.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



yoganmahew said:


> People give the same thought to buying a house that they do to buying a bag of chips - I want it. Greed and stupidity. Developers, bankers, estate agents - the same two factors apply.



I understand your first point you think people in general are stupid, whats the developers, bankers, ea's bit about?


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



raven said:


> The blame lies with one thing only and one thing only:
> - Not having control over our interest rates.
> That is it.


 
You sure that's it? How do you explain the bubbles in the uk, us and japan?



MrMan said:


> You still have to make a choice as a responsible adult to enter into a large debt or not


 
People don't have free choice when it comes to housing - it's a basic essential. You may as well say people have a choice whether to pay the going price for food.
Take any young couple in the last 10 years wanting to start a family. They want to live near town, but the prices are sky high, and so is the rent so that the landlords can pay the mortgage. Governments failure to take any steps to control lending means they have no choice but to buy at inflated prices in a substandard location or wait for the affordable housing lottery.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*

Regards FF hanging their heads, I don't recall any great calls from opposition to cool the market quite the opposite with Kenny calling for Cowen to change stamp duty rates and then saying he didn't do it in time. It would take great leadership to do whats in the interests of the people against the peoples wishes but the catch would be then they would no longer be the leaders.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> People don't have free choice when it comes to housing - it's a basic essential. You may as well say people have a choice whether to pay the going price for food.
> Take any young couple in the last 10 years wanting to start a family. They want to live near town, but the prices are sky high, and so is the rent so that the landlords can pay the mortgage. Governments failure to take any steps to control lending means they have no choice but to buy at inflated prices in a substandard location or wait for the affordable housing lottery.



Of course you have a free choice. That young couple decide they want to live in the capital and every capital tends to be the most expensive place in a country to live. We can't always have what we want and what I would say that this and every other govt should be blamed for is developing such a small county into the hub of our national economy. Industry should be developed in the other gateways and spread the load.


----------



## ubiquitous

*Re: Why bailing out housing market is a very bad idea*



television said:


> House prices were undervalued in 1999 in Ireland in comparison to Europe.



Most certainly untrue. I know 2 friends who bought homes for themselves in London in1999,, both in reasonable locations near tube stations, and both of whom paid Stg £70,000-£75,000 for their apartments. This sort of value was not available in Dublin in 1999. Yesterday I quoted and linked to a McWilliams article written in 2000 which cited the Irish Times "Take 5 at £XXX,000" feature which every week highlighted ordinary Irish properties at the same or dearer prices than superior Continental or British properties.


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> Of course you have a free choice. That young couple decide they want to live in the capital and every capital tends to be the most expensive place in a country to live.


 
If they are working in the capital (or cork/galway) and in jobs that are not available in other areas they have to live near the capital. What free choice are you referring to - live in a tent instead?


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*

If your job is specialised that it is only available in 3 areas in the country then hopefully it is well paid otherwise the choice is there to change. Renting has been affordable for a long time and if you can't afford a premium area then you simply walk backwards until the area meets your pay bracket. My point is just because you want to live somwhere doesn't mean that you should be able to afford to.


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## ubiquitous

*Re: Why bailing out housing market is a very bad idea*

Many people, including Gardai, Civil Servants and bank staff have limited flexibility in where they can work, and many in junior levels in such employments find that moving out of Dublin is not suitable for their career progression.


----------



## raven

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> You sure that's it? How do you explain the bubbles in the uk, us and japan?



Low interest rates. Set low for other reasons, - ie. trying to stimulate their ailing economies. The US and Japan were almost giving away free money to incite people to borrow to invest. Ireland on the other hand has had a strong economy.


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> If your job is specialised that it is only available in 3 areas in the country then hopefully it is well paid otherwise the choice is there to change. Renting has been affordable for a long time and if you can't afford a premium area then you simply walk backwards until the area meets your pay bracket. My point is just because you want to live somwhere doesn't mean that you should be able to afford to.


 
Plenty of jobs are specific to one location - pharmaceuticals to cork, ifsc to dublin etc. and people develop specialised skills in these areas which can mean they are unable to find employment in other parts of the country. Renting is not much cheaper than a mortgage (and a long way from being affordable) and is too insecure for most families with young children. So ftb's should all walk backwards to mullingar and have a two hours commute to their work/family/friends - some choice!

And since you think that young people have only themselves to blame take a look at the title of the thread again - proposals for the government to bail out the banks & property developers by stitching up ftb's again.


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*



raven said:


> Low interest rates. Set low for other reasons, - ie. trying to stimulate their ailing economies. The US and Japan were almost giving away free money to incite people to borrow to invest. Ireland on the other hand has had a strong economy.



But our interest rates were far too low for our economy


----------



## raven

*Re: Why bailing out housing market is a very bad idea*



Thomas22 said:


> But our interest rates were far too low for our economy



Yes, that is the point I am making, ie. that too low interest rates were the primary cause of the boom/bust.


----------



## tiger

*Re: Why bailing out housing market is a very bad idea*

I agree that interest rates is probably the biggest single factor driving prices to their previous high, but not the only one.  The government could have removed some of the incentives for the rental investor as well as some of the section XYZ schemes.  The central bank could have insisted on stricter lending criteria, rather than allowing 100% mortgages and ridiculous salary multiples with a wink-nod attitude to loans from parents & credit unions and income from renting a room.


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## webtax

*Re: Why bailing out housing market is a very bad idea*



raven said:


> Low interest rates. Set low for other reasons, - ie. trying to stimulate their ailing economies. The US and Japan were almost giving away free money to incite people to borrow to invest. Ireland on the other hand has had a strong economy.


 
You might want to check up on Japan a bit more - it's housing boom went hand in hand with it's economic boom, same as in Ireland.
Interest rates are an ineffective tool for controlling house prices - look at the uk. Raising them to control house prices damages other areas of the economy, such as manufacturing by raising their costs & pushing of the price of sterling in countries they try to export to.
My argument is that the govt should have taken steps to limit borrowing to prudent levels of 3xearnings & 90% mortgage over 20/25 years max which would have controlled prices without harming the economy.


----------



## z109

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> I understand your first point you think people in general are stupid, whats the developers, bankers, ea's bit about?


They were all bitten by the same desire for a quick buck without considering the longer term implications to their business - greed and stupidity!


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



yoganmahew said:


> They were all bitten by the same desire for a quick buck without considering the longer term implications to their business - greed and stupidity!



Greed did fuel a lot of it and I would say that there are Ea's and developers who would say now that the 15 year boom has worked well for them. I would think a lot of people thought make hay while the sun shines and its hard to argue with that. The banks on the other hand had more reason to look long term.


----------



## Debtwish

*Re: Why bailing out housing market is a very bad idea*



Jethro Tull said:


> [broken link removed]
> 
> This but might interest television
> 
> 
> 
> EDIT: Link fixed


 
Wow! That is scary stuff. The good professor says that house prices are set to halve and that we could see a banking crisis this autumn. Is he over egging it a bit or is it really _that _bad?


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> Plenty of jobs are specific to one location - pharmaceuticals to cork, ifsc to dublin etc. and people develop specialised skills in these areas which can mean they are unable to find employment in other parts of the country. Renting is not much cheaper than a mortgage (and a long way from being affordable) and is too insecure for most families with young children. So ftb's should all walk backwards to mullingar and have a two hours commute to their work/family/friends - some choice!
> 
> And since you think that young people have only themselves to blame take a look at the title of the thread again - proposals for the government to bail out the banks & property developers by stitching up ftb's again.



Your talking a small proportion and surely your choices are made with future employment in mind i.e should I train in an area that only offers employment in one place in the country or am I maximsing my risk to unemployment, high costs etc by doing so. 

I don't recall saying young people have themselves to blame for anything its that they and everyone else have choices to make and have to work around their means, plus i have said all along that there should be no bailing out of anyone.


----------



## raven

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> You might want to check up on Japan a bit more - it's housing boom went hand in hand with it's economic boom, same as in Ireland.
> Interest rates are an ineffective tool for controlling house prices - look at the uk. Raising them to control house prices damages other areas of the economy, such as manufacturing by raising their costs & pushing of the price of sterling in countries they try to export to.
> My argument is that the govt should have taken steps to limit borrowing to prudent levels of 3xearnings & 90% mortgage over 20/25 years max which would have controlled prices without harming the economy.



Control over interest rates is not an ineffective tool for managing the broader economy, and also house prices as part of an overheating economy.  Policy makers generally are agreed that it is the most powerful tool IF used appropriately. The level to which they should be set is not an exact science. However, it is quite obvious that interest rates SHOULD have been higher in Ireland BOTH in the interests of the housing market and the broader economy.

I think we are probably arguing the same point to a large extent.
My point is that if we had control over our interest rates we would have been able to cool the market (and the economy generally) by lowering inflation. This would have promoted more sustainable growth (for house prices and the economy generally) by keeping prices and costs for business down.

In the absence of this control over interest rates, the government SHOULD have used other areas to cool the market: As you say, Eg. limiting borrowing to prudent levels.


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> Your talking a small proportion and surely your choices are made with future employment in mind i.e should I train in an area that only offers employment in one place in the country or am I maximsing my risk to unemployment, high costs etc by doing so.
> 
> I don't recall saying young people have themselves to blame for anything its that they and everyone else have choices to make and have to work around their means, plus i have said all along that there should be no bailing out of anyone.


 
It's not a small proportion given that it applies to tens of thousands of workers in all the big cities in Ireland. And people should not have to base their career choices around overpriced housing - hardly the basis for a competitive economy.

I wasn't trying to suggest that you were in favour of a bail out, I was just making the point that many of the VI's are and who would suffer the consequences if they succeed.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



Debtwish said:


> Wow! That is scary stuff. The good professor says that house prices are set to halve and that we could see a banking crisis this autumn. Is he over egging it a bit or is it really _that _bad?


 
no he's just another doom and gloom merchant. Remember ireland is different and the fundamentals are sound. Vote FF!


----------



## television

*Re: Why bailing out housing market is a very bad idea*

Jetro, article is pretty good I have to say. Particularly gloomy but there is nothing I disagree with it in it, except for population. Maybe its a hunch but I get the feeling population will increase pretty dramatically in dublin over the next 20 years.


----------



## Sunny

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> My argument is that the govt should have taken steps to limit borrowing to prudent levels of 3xearnings & 90% mortgage over 20/25 years max which would have controlled prices without harming the economy.


 
How would that not have harmed the economy?  Do you think they should introduce fixed limits for credit cards as well or maximum amounts for personal loans? It is up to the banks to be responsible lenders. If they haven't been, they will pay the price.


----------



## Howitzer

*Re: Why bailing out housing market is a very bad idea*



television said:


> Jetro, article is pretty good I have to say. Particularly gloomy but there is nothing I disagree with it in it, except for population. Maybe its a hunch but I get the feeling population will increase pretty dramatically in dublin over the next 20 years.


Here are the [broken link removed] that he referes to. Note the dramatic peak in 1980 (74K) and subsequest collapse by 1994 (48K). This peak is often incorrectly referred to in support of boom times becoming boomier, failing to note the consquences of the subsequent collapse in births. Morgan Kellys article finally addresses that issue in print.

Hunches are rarely a substitute for proper research on such things.


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



Sunny said:


> How would that not have harmed the economy?


I don't understand your question - How would [prudent levels of lending] not have harmed the economy?


Sunny said:


> It is up to the banks to be responsible lenders.


And you trust the irish banks to be responsible lenders? Have you forgotten the dirt & overcharging scandals and the fact that while the banks were wheeling out their economists to promote ever higher house prices (& mortgages) they were busy selling off their own branches & headquarters.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



Howitzer said:


> Hunches are rarely a substitute for proper research on such things.


 
Fully aggree with you.  But why do I feel like the population of dublin is going to explode over the next 20 years. Someone got to helpme back that feeling up with some facts. Now I am specifically talkign about dublin here. Applying irish population trends to the greater dublin area may not give a good forcast of the population of dublin in 20 years


----------



## ccbkd

*Re: Why bailing out housing market is a very bad idea*

Please Close this Thread or create separate Forum to discuss Houses - Too much of similar type thread proliferating AAM in last 12 months -Its becoming a Bore


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*

If you're bored then simply don't read it. Since housing is the biggest financial decision people make in their lifetimes why shouldn't it be discussed on an askaboutmoney website?


----------



## ccbkd

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> If you're bored then simply don't read it. Since housing is the biggest financial decision people make in their lifetimes why shouldn't it be discussed on an askaboutmoney website?


 
Hard to argue with a person with a user name like WEBTAX


----------



## raven

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> Greed did fuel a lot of it and I would say that there are Ea's and developers who would say now that the 15 year boom has worked well for them. I would think a lot of people thought make hay while the sun shines and its hard to argue with that. The banks on the other hand had more reason to look long term.



Agreed.

People are always going on about the evil "Greed" that people had. While I have little time for the country solicitors, EAs and builders of this county, you can hardly blame them for making hay. Characterizing others as "greedy" is the language of the downtrodden, - as if they are morally obliged to provide their services for the good of man kind. 
That's life and human nature I'm, afraid.

Greed is the basis of the capitalist model on which the western world is built on. ie. Harnessing greed and the in built human nature to consume and get fat and rich. This is why the capitalist thrives (despite its faults). 

The government (especially) are supposed to moderate for the common good, and try to help out in "lifting all boats".
They failed miserably.


----------



## raven

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> If you're bored then simply don't read it. Since housing is the biggest financial decision people make in their lifetimes why shouldn't it be discussed on an askaboutmoney website?



I agree, plenty of other threads for you to read. You don't need to look beyond the subject if you don't want to.


----------



## Welfarite

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> If you're bored then simply don't read it. Since housing is the biggest financial decision people make in their lifetimes why shouldn't it be discussed on an askaboutmoney website?


 

I think some of us read it because we think it relates to the thread title ..how silly! This is the second thread that has developed into an general housing market discussion, with the same contributors arguing back and forth, with the same type of posts,


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*



raven said:


> I agree, plenty of other threads for you to read. You don't need to look beyond the subject if you don't want to.


 
exactly


----------



## Thomas22

*Re: Why bailing out housing market is a very bad idea*



Welfarite said:


> I think some of us read it because we think it relates to the thread title ..how silly! This is the second thread that has developed into an general housing market discussion, with the same contributors arguing back and forth, with the same type of posts,



Why is it such an issue. Get a mod to change the thread title and let the posters who wish to contribute do so.
Yes some of what is said is repetitive but this is a discussion forum if you cannot discuss things it becomes some what pointless


----------



## ccbkd

*Re: Why bailing out housing market is a very bad idea*



Thomas22 said:


> Why is it such an issue. Get a mod to change the thread title and let the posters who wish to contribute do so.
> Yes some of what is said is repetitive but this is a discussion forum if you cannot discuss things it becomes some what pointless


 
I think a separate forum for Housing Marketing should be set up in AAM, just like Tax , Legal etc, how about housing that way we could dump all the EA's and property classes and let them argue over and back in a separate forum


----------



## television

*Re: Why bailing out housing market is a very bad idea*



ccbkd said:


> I think a separate forum for Housing Marketing should be set up in AAM, just like Tax , Legal etc, how about housing that way we could dump all the EA's and property classes and let them argue over and back in a separate forum


 

My guess is that everyone on here has some interested in what property is doing either in the rental or buying sector


----------



## mainasia

*Re: Why bailing out housing market is a very bad idea*



television said:


> 3 Things
> 
> 1. Long term population increase is not as determined by short term immigration.
> 2. We still have low unemployment in ireland at 6%
> 3. Around 25000 people at a guess will come this year looking for work


 
There is only one direction for birth rate in Ireland and that is down. That's because of inflation, wage stagnation and general competitiveness of society will force people to spend more on their kids all round education. When people are stressed and unsure about economic future they will have less kids, simple as that. Doesn't matter if the people were Irish or immigrants, the birth rates all go down. 

Immigration will slow because of less work for people and emigration will increase. 

Will Dublin's population grow? Yes I think so, how much, hard to tell. People and especially immigrants like to live in cities with good public transport infrastructure and wide range of professional jobs. Only Dublin has even a semblance of this at the moment if you include the plans for the metro.

You also have mentioned a few strange ideas Irish people hold. For instance the idea of affordability equals how much you shoud pay for something. Or the idea that property will always have such high regard as an investment vehicle among Irish people, why would you put so much money in a non-performing or stagnating asset when you could invest in some other market/country. You say Ireland's growth will be linked with India's/China's. How? Perhaps if you said we will open all our 3rd level unis to their students that might be something. However Ireland's growth is still overwhelmingly based on American/EU economy. Asia and Ireland have few real business links.
If India's/China's economy is going to grow so fast why put your money in Irish property rather than there. Plus I personally believe China is due for a correction and from what I've heard about factory closures in Guangdong..it's stock market and property has come down a lot and it's factories are getting more expensive, it's FDI is going to slow down a lot now, what goes up must come down at least temporarily (check America's economic development late 19th early 20th century for an idea..fortunes were lost in the downturns although ultimately it was going to be the world's biggest economy after many decades of ups and downs). China has disadvantages also in that it is resource poor in the vast interior and western region and it's eastern seaboard has already been overdeveloped. 
This whole idea of China going up and up without a major blip or two along the way, it's never been done in any other country or sector.

Finally I don't understand the concept of 'bailing out the housing market'. Surely cheaper house prices are better for Irish people in general and make us more competitive, why does the government need to spend tax money on subsidising people with overpriced assets which people willingly bought? Essentially taking money out of everybodies pockets to prop up an artificial price.


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



mainasia said:


> Finally I don't understand the concept of 'bailing out the housing market'. Surely cheaper house prices are better for Irish people in general and make us more competitive, why does the government need to spend tax money on subsidising people with overpriced assets which people willingly bought? Essentially taking money out of everybodies pockets to prop up an artificial price.


 
Yes, if only common sense prevailed in Ireland. But when you have a nervous government desperate for support and a still too powerful building lobby bad decisions get made.

When you think about it - the banks are willing to lend x amount of money to a borrower based on their valuation of the house and on the borrowers ability to repay (now based on a properly prudent assessment with 80/90% LTV and borrowers actually showing they have the ability to save a deposit). The building lobby want to set this aside and get the government to provide taxpayers funds to encourage FTB's to over-borrow and pay an inflated price for a home which will then place an excessive stain on the FTB's budget in trying to repay it.....madness!


----------



## television

*Re: Why bailing out housing market is a very bad idea*



mainasia said:


> There is only one direction for birth rate in Ireland and that is down. That's because of inflation, wage stagnation and general competitiveness of society will force people to spend more on their kids all round education. When people are stressed and unsure about economic future they will have less kids, simple as that. Doesn't matter if the people were Irish or immigrants, the birth rates all go down.
> 
> Immigration will slow because of less work for people and emigration will increase. .


 
So mucch doom and gloom.  I dont see that in the long term. Economic cycles go in peeks and troughs. Yes we are on the way down but at some point things will get better.




mainasia said:


> You say Ireland's growth will be linked with India's/China's. How? Perhaps if you said we will open all our 3rd level unis to their students that might be something. However Ireland's growth is still overwhelmingly based on American/EU economy. Asia and Ireland have few real business links..


 
POtential for new markets for irish services. 



mainasia said:


> If India's/China's economy is going to grow so fast why put your money in Irish property rather than there. ..


 
Stick with what you know is a motto I have.

Property to fall in the next 3 years then invest in Dublin close to the city. Your on to a winner over the next 10 years.


----------



## badabing

*Re: Why bailing out housing market is a very bad idea*



television said:


> Fully aggree with you.  But why do I feel like the population of dublin is going to explode over the next 20 years. Someone got to helpme back that feeling up with some facts. Now I am specifically talkign about dublin here. Applying irish population trends to the greater dublin area may not give a good forcast of the population of dublin in 20 years



[broken link removed]

There is a blip at the moment due to the relatively better performance of the Eastern European economies, although the Economist says they're heading for the mire also.

Overall though the worlds population will grow more in the next 30 years than ever before in the history of Earth

http://en.wikipedia.org/wiki/World_population

This assumes we avoid mass famine through affordable energy costs.
Alot of these people would come to Ireland (a relatively well administered place with good living standards when compared to some of the wretched places these people come from) if they are allowed. Currently they're largely curtailed.

This unprecedented wave of population growth  will affect Irelands population dramatically and will undermine our lowered fertility rates not withstanding the 2 caveats mentioned above


----------



## mainasia

*Re: Why bailing out housing market is a very bad idea*

@Television

You seem to be working yourself up in anyway possible to justify in investing Dublin City Centre. While I don't agree with most of what you said investing in Dublin wouldn't be a bad idea in my opinion (city living will become more popular for a variety of reasons and there's nowhere even close to Dublin in Ireland).  You should put your 'investment' view to 15-20 years though. Plus you will tie up your capital for most of your life...pretty boring.

@bababing

You use statistics from 2004-2006, peak of Polish immigration to Ireland for building industry....not relevant.


----------



## rjt

*Re: Why bailing out housing market is a very bad idea*

Relevant article by Michael O'Sullivan in today's Irish Times (Sounds a little bit McWilliamish in outlook, relevant all the same)
[broken link removed]


----------



## Howitzer

*Re: Why bailing out housing market is a very bad idea*

Judging by the latest DAFT Rental and House Price reports the market appears to be correcting itself. No need for the govt to do anything.

http://www.daft.ie/report/Daft-Rental-Report-Q2-2008.pdf

http://www.daft.ie/report/Daft-House-Price-Report-Q2-2008.pdf

House prices and rents falling. This will lead directly to lower in inflation which should facilitate the national pay negotiations. I fully expect to hear Govt and Union representatives hailing this and possibly taking credit. This is great news for Irelands competitiveness and cost structures, why would they do anything to reverse this trend?

If housing is a necessity, like food and energy, then falling prices which benefit the consumer should be welcomed by official bodies as they would be for any other necessity.


----------



## JohnBoy

*Re: Why bailing out housing market is a very bad idea*



television said:


> POtential for new markets for irish services.


 
Yes but what can we export that they want? Bear in mind that exports (which were the great economic hope post the property slowdown) are actually falling! 

It is not enough to say that we need to target these markets. European, Japanese and American exporters are already successfully targeting these markets. Ireland does not really have an indigenuous export sector - over 90% of our exports are generated by foreign owned firms. If we wanted to become a genuinely export oriented economy it will take years to achieve. Our costs are too high, or infrastructure not good enough, our workforce lacks the correct skills and we do not invest nearly enough in our industries. The foolish consumption boom masked these problems for too long. We are now looking to the sector that we ignored to rescue the economy - fat chance.


----------



## starlite68

*Re: Why bailing out housing market is a very bad idea*



Howitzer said:


> If housing is a necessity, like food and energy, then falling prices which benefit the consumer should be welcomed by official bodies as they would be for any other necessity.


 
house prices are falling..but lenders are also thightning up big time...so first time buyers are still going to find very hard to get on the property ladder, falling prices or not!


----------



## z109

*Re: Why bailing out housing market is a very bad idea*



starlite68 said:


> house prices are falling..but lenders are also thightning up big time...so first time buyers are still going to find very hard to get on the property ladder, falling prices or not!


Yeah, you're not wrong there. Still, with rents falling and huge over-supply (according to Daft.ie), there's never been a better time to rent.


----------



## sfag

*Re: Why bailing out housing market is a very bad idea*

I tend to agree with the views that a propery crash can only be good. One of the negatives of the housing boom meant that the land underneath any constructed property outstripped the value of all other business that could be placed there. 
That meant that residential property - and the fast buck for the builder - gave a bigger profit that restaurants, hotels, leisure and most retail. 

It stopped most small businesses getting off the ground in the area that I come from as the sheer cost of the premises left it impossible to make a profit. That in turn kills jobs,  except for those who stood to profit from construction. 
Not an indication of good economy.


----------



## Senna

*Re: Why bailing out housing market is a very bad idea*

Seen we're on page 11 of a thread on bailing out the housing market, i think its worth asking; Does anyone think its a good idea for the goverment to bail out the market?

Would it be better if prices stayed at the 2006 levels?
Should FTB's who bought between 2004 and now be given financial support?


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*

What do you think.


----------



## Senna

*Re: Why bailing out housing market is a very bad idea*



aircobra19 said:


> What do you think.



Hell NO, there should be no bail-out.  A bail-out will only shift the problem further down the line. 
Just wondering do anyone think a bail-out will be good for the country?


----------



## diarmuidc

*Re: Why bailing out housing market is a very bad idea*



Senna said:


> Should FTB's who bought between 2004 and now be given financial support?



My investment in the Grand National didn't work out last year either. Can I have some financial support too please?


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*



Senna said:


> Hell NO, there should be no bail-out. ...


 
Well I'd agree with that.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*

absolutely not

I don't get this country's stance on property. 

I lose money on shares => I have to pucker up and take my losses, its my own fault and I have to learn from my mistakes. 

I lose money on property => dear god property's only meant to go up, quick bail me out and those other poor developer lads too. Sure its not their fault its the credit crunch/banks/doom and gloom merchants fault. Get Tom Parlon on the phone, that man talks a lot of sense


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*

I don't think anyone here thinks there should be a bail out so where's the argument for?


----------



## groom

*Re: Why bailing out housing market is a very bad idea*

Where's that Charlie Mc... guy. He's always good for a line about helping out the good old chaps who took a risk and made this country what it is


----------



## sfag

*Re: Why bailing out housing market is a very bad idea*

er... no bail out to encourage further house purchases. 
yes - to assistance aid home owners in financial trouble - mostly not of their own making.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



groom said:


> Where's that Charlie Mc... guy. He's always good for a line about helping out the good old chaps who took a risk and made this country what it is




think he might be trolling elsewhere instead.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> er... no bail out to encourage further house purchases.
> yes - to assistance aid home owners in financial trouble - mostly not of their own making.



No to both, why should anyone get bailed out of a decision they made themselves?


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> ...yes - to assistance aid home owners in financial trouble - mostly not of their own making.


 
How is gambling on property not a problem of their own making?


----------



## Senna

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> I don't think anyone here thinks there should be a bail out so where's the argument for?



There was plenty of talk of a bail-out, mostly by that ****** tom parlon, but it got such an unanimous bad responce that its been blown out of the water. thank god.


----------



## cjh

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> er... no bail out to encourage further house purchases.
> yes - to assistance aid home owners in financial trouble - mostly not of their own making.


 
Did somebody force them to take out huge mortgages?
Or was it their own decision?


----------



## leesider29

*Re: Why bailing out housing market is a very bad idea*

The latest from Tom Parlon is for banks to free up money for the retofitting of homes built pre 1990 so that they adhere to current energy efficiency standards. Their estimate is €10,000 per house and there are 900,000  pre 1990 houses.......so 9 billion euro spend in the construction sector over the next 5 to 10 years!

Of course a lot of houses post 1990 probably need this as well, but this is a story for another day.

What would be your thought on his idea??

IMHO at least he is trying and it is something that people are going to seriously have to look into anyway with the cost of energy going up and of course the environment damage caused by our energy consumption.


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*

How about freeing up some money to install a eco friendly computer and broadband so we can pump some money into the IT sector while your at it. How about a car grant for eco friendly cars so we can pump some money into that too.


----------



## ubiquitous

*Re: Why bailing out housing market is a very bad idea*



leesider29 said:


> The latest from Tom Parlon is for banks to free up money for the retofitting of homes built pre 1990 so that they adhere to current energy efficiency standards. Their estimate is €10,000 per house and there are 900,000  pre 1990 houses.......so 9 billion euro spend in the construction sector over the next 5 to 10 years!



So Parlon wants the government to force people to spend another *€9 billion*  to do up their houses even if they don't want to? How convenient for him and his members


----------



## leesider29

*Re: Why bailing out housing market is a very bad idea*



ubiquitous said:


> So Parlon wants the government to force people to spend another *€9 billion*  to do up their houses even if they don't want to? How convenient for him and his members


 
Come off it, no one is going to do up their house if they don't want to but some incentive should be looked into if people want to do this and in the long run it saves money!


----------



## ubiquitous

*Re: Why bailing out housing market is a very bad idea*

(posted in error)


----------



## Howitzer

*Re: Why bailing out housing market is a very bad idea*



leesider29 said:


> Come off it, no one is going to do up their house if they don't want to but some incentive should be looked into if people want to do this and in the long run it saves money!


 
Any money borrowed in order to renovate a property is eligable for Tax Relief at Source (TRS) so as far as I can see this incentive already exists. 

Have I missed something?

NEWS FLASH! Tom Parlon asks Government to add 21% oxygen into air to allow general populace to breath.


----------



## sfag

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> No to both, why should anyone get bailed out of a decision they made themselves?


 
I suppose it depends on if you consider home buyers had a real choice in the matter. 

I know the dilema young people faced. The felt compelled to buy at ongoing market rates for fear of being priced out of owning their own home forever. Thats a dilema. I bet plenty of people posting on this thread paid over the odds for their houses. 
Lets say you paid 300,000 for something that went up to 600,000. Doesent mean youre the clever one. Doesent meant you avoided the mistake of the person who bought at the top. In my opinion a 50% drop in the market value still leaves your 300,000 house overvalued. 

I met people 7 years ago waiting for the crash which didnt come only to jump in 5 years ago and pay more for their cautiousness. Where was their choice. 

Dont call it charity...
Now who made the most money out of the boom. Theres the landowners, the builder, the banks, the solicitors,.... and most of all there's the Government. Their hand was out at every turn. I've heard it said that when every tax, by what ever name it went under, was included that every third house built goes in tax for the government. Thats 33% of the seling price. 

Heres some of the taxes. .
40% tax on the profit made from rezoning development land.
13.5% Vat on building costs 
Employment taxes whilst building.
9% stamp duty on site costs.
up to 9% stamp duty on house purchase 
tax on the builders profits.
planning application costs.
21% vat on all building services employed (engineers, etc)
local government costs (typically nowadays around 25,000 per house)
State owned monopoly costs (eg 36,000 to reroute three telegraph poles) on a building site.
and so on.



The Government taxed the land owners profits, the builders profits, and the purchaser. But ultimately it is the last link in the chain who pays everyones tax bill - ie is the home owner who pays the entire tax bill for all. 

Since the Government made 33% out of homeowners on the way up I'd say there is strong arguement for putting some of that 33% back to the homeowner if they fall in to trouble.

I wouldnt call it 'bailing out'.


----------



## sfag

*Re: Why bailing out housing market is a very bad idea*



cjh said:


> Did somebody force them to take out huge mortgages?
> Or was it their own decision?


 
Yes - they were forced. Think about it. See my previous reply.


----------



## ccbkd

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> I suppose it depends on if you consider home buyers had a real choice in the matter.
> 
> 
> Heres some of the taxes. .
> 40% tax on the profit made from rezoning development land.
> 
> local government costs (typically nowadays around 25,000 per house
> 
> State owned monopoly costs (eg 36,000 to reroute three telegraph poles) on a building site.
> and so on.
> 
> 
> Please clarify these taxes - contributions??
> 
> 
> I wouldnt call it 'bailing out'.


----------



## shnaek

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> Yes - they were forced. Think about it. See my previous reply.


They might have felt under pressure, just as many people feel under pressure to conform to certain norms in society. But forced? I think not.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



> I know the dilema young people faced. The felt compelled to buy at ongoing market rates for fear of being priced out of owning their own home forever. Thats a dilema. I bet plenty of people posting on this thread paid over the odds for their houses.
> Lets say you paid 300,000 for something that went up to 600,000. Doesent mean youre the clever one. Doesent meant you avoided the mistake of the person who bought at the top. In my opinion a 50% drop in the market value still leaves your 300,000 house overvalued.



First things first, what you have described in the above paragraph is the choices that were open to everyone not just young people and the other choice of course was to not buy at all and rent like they do in many european countries. To say people had to jump in to the market for fear of being priced out in later years doesn't add up.



> I met people 7 years ago waiting for the crash which didnt come only to jump in 5 years ago and pay more for their cautiousness. Where was their choice.


To buy at any time or not to buy at all.



> Heres some of the taxes. .
> 40% tax on the profit made from rezoning development land.
> 13.5% Vat on building costs
> Employment taxes whilst building.
> 9% stamp duty on site costs.
> up to 9% stamp duty on house purchase
> tax on the builders profits.
> planning application costs.
> 21% vat on all building services employed (engineers, etc)
> local government costs (typically nowadays around 25,000 per house)
> State owned monopoly costs (eg 36,000 to reroute three telegraph poles) on a building site.
> and so on.



Your list is long and aimed at making the point that the govt have been reaping the rewards of the boom and they did, but costs such as tax on goods and services is applicable to all industries so should they get some money back, tax on profits is the same thing should the builders not have had to pay tax?
The fact of the matter is the construction industry created a lot of wealth and in doing so created a lot of tax for the govt coffers which has been spent (unwisely or not) on lowering income tax, new roads etc, exactly where do you think the money is that we can now afford to start refunding that tax back to homeowners?


----------



## leesider29

*Re: Why bailing out housing market is a very bad idea*



Howitzer said:


> Any money borrowed in order to renovate a property is eligable for Tax Relief at Source (TRS) so as far as I can see this incentive already exists.
> 
> Have I missed something?
> 
> NEWS FLASH! Tom Parlon asks Government to add 21% oxygen into air to allow general populace to breath.


 

All I am saying is it is not too bad an idea and something that would give the smaller builders a leg up, not the big developers that are so frequently complained about. The other thing is he was talking to the banks not the government so I think it was more about them being more lenient with their lending practices at the moment.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*

I'd say there's a lot more of the 'big' builders that currently need the leg up.


----------



## sandymount

*Re: Why bailing out housing market is a very bad idea*



leesider29 said:


> All I am saying is it is not too bad an idea and something that would give the smaller builders a leg up, not the big developers that are so frequently complained about. The other thing is he was talking to the banks not the government so I think it was more about them being more lenient with their lending practices at the moment.



All big or small builders who didn't put up prices by 10% or more every year between 2002 and 2006 should be bailed out. 

Oh, that's none of them. F88K THEM and F88K Tom Parlon.


----------



## sfag

*Re: Why bailing out housing market is a very bad idea*

quote: "Please clarify these taxes - contributions??"

The less obvious costs - which are ultimately government influenced - went up a lot in the housing bull market. Everyone got greedy especially the state and its agencies. 

The examples I mentioned were ones I encountered when I self built 3 years ago. I was not prepared for the sheer cost of the hidden charges. 
I mean the government gets a fair bit of tax thru the sale and purchase of land etc but after you buy your site the local government wades in for its pound of flesh.
If you buy a site with some telegraphs poles on it would you not be surprised at a 36 grand bill for something that any one else could do for much less. I got a gas leak on my site. Only Bord Gais were allowed to plug it - 10 minutes it took - 1000 euros please. I just got the feeling that anyone connected with the state was fueling the greed and milking the profits. Pretty damm irresponsible if you ask me.


----------



## sfag

*Re: Why bailing out housing market is a very bad idea*

Quote 1. 
"First things first, what you have described in the above paragraph is the choices that were open to everyone not just young people and the other choice of course was to not buy at all and rent like they do in many european countries. "

Quote 2.
"Your list is long and aimed at making the point that the govt have been reaping the rewards of the boom and they did, but costs such as tax on goods and services is applicable to all industries so should they get some money back"

Response to 1.
Any reference to European countries is irrelevant. We are Irish and will never return to rent paying society. We aint gonna do it. Full stop.

Response to 2. 
Cost related taxes on top of something that was rising by 30% per year is not alike any other charge and should be considered in isolation.  

You'd think a simple percentage figure on everyting would be easy to understand but it doesent end there. 
For example the state increased the vat on building by 1% during the boom - not being satisfied with 12.5% of 30% increasing annually. 
They upped the site stamp duty (payable on every new house) from a 3 to 6% range to 9% on everything.  
And these all happened during the boom. 

Greed greed and Greed. How could you blame anyone in this society for sticking their arm in if they can get away with it when the State - which is supposed to have an element of social responsibility - leads by that example. 

A pal of mine living in France reckoned house price inflation didnt happen there due to house purchase tax of 20%, but at our 6 - 9% on a much dearer house were paying more than their 20% of a cheaper house.  

Incredibly as it may seem - I think the housing boom prooves that  it doesent matter how much tax is extracted - as long as the banks extended the credit line we - the citizens have to pay in the end.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



> Response to 1.
> Any reference to European countries is irrelevant. We are Irish and will never return to rent paying society. We aint gonna do it. Full stop.



The refernece was to point out there is a choice, you say irish people wont rent, I say look on daft or the papers even ask a sample of 100 people and you will understand that renting is actually a viable option for many people.



> Response to 2.
> Cost related taxes on top of something that was rising by 30% per year is not alike any other charge and should be considered in isolation.


But do you not think that these taxes were needed to support our growing country. Regardless of how we think about the actual expenditure i would think that most people would agree that they are needed. If the govt were to start giving money back how do you think they would finance it? Should education, health infrastructure be cut back to hand out money to those who feel short changed by the housing boom?



> A pal of mine living in France reckoned house price inflation didnt happen there due to house purchase tax of 20%, but at our 6 - 9% on a much dearer house were paying more than their 20% of a cheaper house.





> Any reference to European countries is irrelevant.


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> Since the Government made 33% out of homeowners on the way up I'd say there is strong arguement for putting some of that 33% back to the homeowner if they fall in to trouble.
> 
> I wouldnt call it 'bailing out'.


 
Bailing out is exactly what it is - how will handing money back to people who were foolish enough to overpay for a house get us out of a recession? What taxes do you want to see raised and what services do you want cut to give you your 33% back?

You made you own decision and have no recourse except your vote in the next election, when you can decide what happens to the government who handed free rein to the building industry in return for a feed at the trough.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



> when you can decide what happens to the government who handed free rein to the building industry in return for a feed at the trough.



do you really think kenny and co would have been able to take on the feel good factor of the economy that was the property boom. I really don't think any of the parties would have changed much of what is happening and any change won't be radical now either.


----------



## webtax

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> do you really think kenny and co would have been able to take on the feel good factor of the economy that was the property boom.


 
No, but it would make any future government think twice about the consequences of handing free rein to the building & banking industries.


----------



## groom

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> Response to 1.
> Any reference to European countries is irrelevant. We are Irish and will never return to rent paying society. We aint gonna do it. Full stop.


I'm paying €1150pm for a lovely apartment.The lowest asking price for a similar apartment is €450k which would cost €2400pm to buy.

I'll be renting for a fair while yet


----------



## shnaek

*Re: Why bailing out housing market is a very bad idea*



groom said:


> I'm paying €1150pm for a lovely apartment.The lowest asking price for a similar apartment is €450k which would cost €2400pm to buy.
> 
> I'll be renting for a fair while yet



Chalk it down, groom. I am in the same boat. Friends thought I was mad to rent and said I could buy for the rent. But if I bought it would have been in the burbs in the middle of nowhere. As it is I live in the city centre and close to everything. I'd love to own, but I'm not in a rush. Location and price will have to be right.


----------



## television

*Re: Why bailing out housing market is a very bad idea*



groom said:


> I'm paying €1150pm for a lovely apartment.The lowest asking price for a similar apartment is €450k which would cost €2400pm to buy.
> 
> I'll be renting for a fair while yet


 
Where are you renting an appartment for that price?? I assume its one bedroom? A two bedroom apartment outside the city centre is not going to be worth 450k


----------



## sfag

*Re: Why bailing out housing market is a very bad idea*



webtax said:


> Bailing out is exactly what it is - how will handing money back to people who were foolish enough to overpay for a house get us out of a recession? What taxes do you want to see raised and what services do you want cut to give you your 33% back?
> 
> You made you own decision and have no recourse except your vote in the next election, when you can decide what happens to the government who handed free rein to the building industry in return for a feed at the trough.


 

Dont you see the Government fueled and fed from the boom. You might say the state benefited for the good of all its people but if people they extracted from now get into trouble then let some of that 'goodness' flow back to them. They deserve it. I think it its a tough call to say people in trouble should sink. It is our government after all and is supposed to be benevelant if its anything. Its not as if were ruled by a foriegn government 'not of the people' any more. 

As regard this 'choice' posters here seem to think existed. As rents followed houses prices up (and there is a correlation) what choices had renters. They had to pay thru the nose for the boom also. 
In fact the aprtment pricing was often sold to prospective purchasers as not being much more of a monthly cost than the cost of renting. 

It wasent a great choice. A real choice is cheap lodgings over expensive lodgings - and there aint any cheap lodging in this country. 

Fustratingly moving to an underpopulated part of the country for cheap land or houses should have meant there was choice to do just that but once the boom started even the cow shed ruins in the back end of nowhere were carrying an inflated pricetag.
There was no escaping the house price inflation and no choice.


----------



## Howitzer

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> You might say the state benefited for the good of all its people but if people they extracted from now get into trouble then let some of that 'goodness' flow back to them. They deserve it.


From where? How many people should receive this money and how much? Multiply A by B and what number do you come up with?


----------



## polaris

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> er... no bail out to encourage further house purchases.
> yes - to assistance aid home owners in financial trouble - mostly not of their own making.



This scheme is available for mortgage holders who are having difficulty in making their payments.

http://www.welfare.ie/foi/swa_rentmort.html#2

*The Health Service Executive must be satisfied in all cases that:

    * the amount of the mortgage interest payable by the claimant does not exceed such amount as the Health Service Executive considers reasonable to meet his or her residential and other needs.



*Although it seems they will not be sympathetic to someone who took out an interest only jumbo mortgage to get a place they could never afford in the first place.


----------



## groom

*Re: Why bailing out housing market is a very bad idea*



television said:


> Where are you renting an appartment for that price?? I assume its one bedroom? A two bedroom apartment outside the city centre is not going to be worth 450k



Definitely not worth 450k but thats the lowest asking price. Its a 2 bed.


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> Dont you see the Government fueled and fed from the boom. You might say the state benefited for the good of all its people but if people they extracted from now get into trouble then let some of that 'goodness' flow back to them. They deserve it. I think it its a tough call to say people in trouble should sink. It is our government after all and is supposed to be benevelant if its anything. Its not as if were ruled by a foriegn government 'not of the people' any more. .


 
benevolent? Have you seen the state of the health service? 



sfag said:


> As regard this 'choice' posters here seem to think existed. As rents followed houses prices up (and there is a correlation) what choices had renters. They had to pay thru the nose for the boom also.
> In fact the aprtment pricing was often sold to prospective purchasers as not being much more of a monthly cost than the cost of renting.


 
It was never cheaper to buy somewhere than rent a room. You also have to consider the cost of maintaining a property, furnishing, cookers, fridges. The cost of credit, the interest on a mortgage over the term. 



sfag said:


> It wasent a great choice. A real choice is cheap lodgings over expensive lodgings - and there aint any cheap lodging in this country.
> 
> Fustratingly moving to an underpopulated part of the country for cheap land or houses should have meant there was choice to do just that but once the boom started even the cow shed ruins in the back end of nowhere were carrying an inflated pricetag.
> There was no escaping the house price inflation and no choice.


 
Buy buy buy. Why why why?


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*



> As regard this 'choice' posters here seem to think existed. As rents followed houses prices up (and there is a correlation) what choices had renters. They had to pay thru the nose for the boom also.
> In fact the aprtment pricing was often sold to prospective purchasers as not being much more of a monthly cost than the cost of renting.



To rent you can deduct the following expenses that buying entails: transaction fees, furnishing, house insurance, life assurance, bin collection, maintenance fees, replacement of goods. On top of expenses renters have more freedom of movement. Buying provides security and a sense of home but it definitely isn't cheaper in the short/medium term, so there definitely always was and still is a choice.


----------



## rabbit

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> Buying provides security and a sense of home but it definitely isn't cheaper in the short/medium term


 
disagree with you there.  Lets say medium term is over 7 to ten years.  Take any 7 to 10 year period in history + house prices have risen.  If you rented for 10 years what do you have at the end of that ?


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*

No negative equity.


----------



## MrMan

*Re: Why bailing out housing market is a very bad idea*

I'm not trying to talk myself out of a job but if someone was to invest the difference in the cost of mortgage versus cost of rent for comparable property over 10 years they might be in a healthy position and they wouldn't be subjected to the possible rises or falls in prices. What I'm trying to highlight is that renting is a viable choice for people.


----------



## Howitzer

*Re: Why bailing out housing market is a very bad idea*



rabbit said:


> disagree with you there. Lets say medium term is over 7 to ten years.


Unless you're Methuselah I don't think 10 years is medium term in terms of where someone lives. I'm in my 30's and have yet to live in any one location for more than 4 years during my student/working life.


rabbit said:


> Take any 7 to 10 year period in history + house prices have risen.


This is incorrect and is borne out by even our own CSO stats which only go back about 40 years - no need to even bring up the ongoing 20 year downcycle in Japan, 10 year down cycle in Germany ...


----------



## z109

*Re: Why bailing out housing market is a very bad idea*



television said:


> Where are you renting an appartment for that price?? I assume its one bedroom? A two bedroom apartment outside the city centre is not going to be worth 450k


Oh, has this become a Dublin only site?


----------



## sfag

*Re: Why bailing out housing market is a very bad idea*



MrMan said:


> To rent you can deduct the following expenses that buying entails: transaction fees, furnishing, house insurance, life assurance, bin collection, maintenance fees, replacement of goods. On top of expenses renters have more freedom of movement. Buying provides security and a sense of home but it definitely isn't cheaper in the short/medium term, so there definitely always was and still is a choice.


 

In the context of discussion I thought it was obvious that renting means renting your home - ,like _forever_ - as opposed to owning your home. Reference to short term renting is something different and does not belong in this discussion.

I do not know any working Irish person who does not aspire to owning their own home.   
Again - Irish people own our homes. We do not rent. 

Nor - controversial as it may sound - is any working Irish person going to  consider an appartment in a block as a suitable place to raise a family. it will never be a home. We are not programmed that way. We do not live in boxes in the sky. We're not made that way. Not gonna happen. 

And This post will be deleted if not edited immediately we have 6 million people (counting the north)  living in a huge country. Space to build should never be an issue. lLnd price should never be an issue. Theres loads of it.


----------



## sfag

*Re: Why bailing out housing market is a very bad idea*



aircobra19 said:


> benevolent? Have you seen the state of the health service?
> 
> 
> 
> It was never cheaper to buy somewhere than rent a room. You also have to consider the cost of maintaining a property, furnishing, cookers, fridges. The cost of credit, the interest on a mortgage over the term.
> 
> 
> 
> Buy buy buy. Why why why?


 
begining to think all the people who think renting is a real choice as opposed to  owning a home, are single. different mindset involved there.


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> begining to think all the people who think renting is a real choice as opposed to owning a home, are single. different mindset involved there.


 
I assume (because you don't explain your point) that your comment is in reference to my "single room" comment. I only mentioned that as an example of a small unit to rent. You might have 2 or 3 people in a room. I know one person, his wife and their toddler who are living in a one roomed bedsit/studio. He choose that over a 3 bed house further out because he didn't want to commute. Hes 5 mins walk from his work. I know someone else who is single who rents a 3 bed house on their own.


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*



sfag said:


> ....Again - Irish people own our homes. We do not rent.
> 
> Nor - controversial as it may sound - is any working Irish person going to consider an appartment in a block as a suitable place to raise a family. it will never be a home. We are not programmed that way. We do not live in boxes in the sky. We're not made that way. Not gonna happen. ...


 
Funny theres lots of Irish people do exactly that in America or London or in other countries.


----------



## Jethro Tull

*Re: Why bailing out housing market is a very bad idea*

[broken link removed]

a work in progress at the mo, basically trying to get a lobby/public awareness group going to protest against this possibility. I think a few people from the pin are behind it

EDIT: LInk fixed


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*

That link doesn't work for me.


----------



## Teabag

*Re: Why bailing out housing market is a very bad idea*



aircobra19 said:


> Funny theres lots of Irish people do exactly that in America or London or in other countries.



Yeah but I am sure they would prefer to live in a house...


----------



## aircobra19

*Re: Why bailing out housing market is a very bad idea*



Teabag said:


> Yeah but I am sure they would prefer to live in a house...


 
They still do it which was the point.


----------



## ccbkd

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*

Tell everyone you know not to buy into Glenkerrin and McNarama deal with 15% interest free loan! The only thing the consumer should accept from Ray Grahan and his Ilk is a slashing of prices end of story -This is just another attempt to prop up a falling market!


----------



## starlite68

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*

i agree....its a cheap con,and people wont fall for it........they will try anything rather than drop their prices!


----------



## Sunny

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



starlite68 said:


> i agree....its a cheap con,and people wont fall for it........they will try anything rather than drop their prices!


 
Did I not read that they had a very good weekend for sales so some people obviously did fall for it!


----------



## ubiquitous

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



Sunny said:


> Did I not read that they had a very good weekend for sales so some people obviously did fall for it!



... only if you assume that their PR company had absolutely nothing to do with the placing of that "story" 

Lou Reed again...



> Don’t believe half of what you see and none of what you hear


----------



## Sunny

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



ubiquitous said:


> ... only if you assume that their PR company had absolutely nothing to do with the placing of that "story"
> 
> Lou Reed again...


 
I assumed that. I also assumed that there are people out there who would fall for this scheme just like they fell for 100% mortgages so it wouldn't surprise me if they did sell more apartments last weekend than they did in the previous 6 months.


----------



## MrMan

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



> just like they fell for 100% mortgages



People didn't fall for 100%, there was no con.


----------



## ubiquitous

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



Sunny said:


> I also assumed that there are people out there who would fall for this scheme just like they fell for 100% mortgages



What bank is going to lend to them?


----------



## Jethro Tull

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



MrMan said:


> People didn't fall for 100%, there was no con.


 
yes there was. People were conned into a mentality of 'don't miss the boat, get on the ladder before its too late' even in late 2006 when average prices were approaching 10x the average wage (against a historical norm pre bubble of 4 or 5x). House prices rose to such idiotic levels that if prudent lending criteria were adherred to the man on the street couldn't get a mortgage. Now comes Mr Banker with a sweet deal. 

No deposit? No problem we'll give you 100%, don't worry about the risk, property prices only ever go up. 

conveniently forgetting to tell the buyer of the massive risk of automatic negative equity, the fact that they needed what was historiclly a 'non normal' mortgage term to afford to pay it back, the fact that this might not turn out to be their starter home but a show box negative equity trap they wouldn't be able to sell (without taking a significant haircut in the process)

Now I fully expect you to come along with your usual 'no one forced them' rubbish, but in reality people felt backed into a corner and took up Mr Banker on his reasonable offer. Amidst a mass frenzy of VI led propaganda, they were led to believe that this was the only way to 'get on the ladder' and eventually find their way to their dream home less than 30 miles from where they actually work.


----------



## MrMan

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



Jethro Tull said:


> yes there was. People were conned into a mentality of 'don't miss the boat, get on the ladder before its too late' even in late 2006 when average prices were approaching 10x the average wage (against a historical norm pre bubble of 4 or 5x). House prices rose to such idiotic levels that if prudent lending criteria were adherred to the man on the street couldn't get a mortgage. Now comes Mr Banker with a sweet deal.
> 
> No deposit? No problem we'll give you 100%, don't worry about the risk property prices only ever go up.
> 
> conveniently forgetting to tell the buyer of the massive risk of automatic negative equity, the fact that they needed what was historiclly a 'non normal' mortgage term to afford to pay it back, the fact that this might not turn out to be their starter home but a show box negative equity trap they wouldn't be able to sell (without taking a significant haircut in the process)



The 100% was offered by banks but there was no hiding of facts. It is up to responsible adults to assess the pros and cons of any deal especially one of the magnitude of purchasing a property. To suggest con is like saying that anyone who took a 100% mortgage was ripped off, but all of the market knowledge available was there for them as much as everyone else.


----------



## Jethro Tull

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



MrMan said:


> The 100% was offered by banks but there was no hiding of facts. It is up to responsible adults to assess the pros and cons of any deal especially one of the magnitude of purchasing a property. To suggest con is like saying that anyone who took a 100% mortgage was ripped off, but all of the market knowledge available was there for them as much as everyone else.


 
we've been through this 'its up to the individual' argument before so I won't comment further


----------



## Sunny

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



MrMan said:


> People didn't fall for 100%, there was no con.


 
Wasn't suggesting 100% mortgages was a con. And neither is this loan offer from developers. Doesn't make either product a good idea though and plenty of people took advantage of 100% mortgages and I would imagine that there will be some people who will take advantage of this as well.


----------



## Sunny

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



ubiquitous said:


> What bank is going to lend to them?


 
Why wouldn't a bank lend to them? Similar products to this have been used in the past by companies and it is also popular in the UK. I know of at least one Irish university that offers or at least did offer the same facility to staff but they did charge interest. The bank still retains first charge on the property and are lending at 70-85% LTV so I don't see the problem for them.


----------



## MrMan

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



Sunny said:


> Wasn't suggesting 100% mortgages was a con. And neither is this loan offer from developers. Doesn't make either product a good idea though and plenty of people took advantage of 100% mortgages and I would imagine that there will be some people who will take advantage of this as well.



I agree, thats why I think people using words like 'con' lose the run of themselves.


----------



## MrMan

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



Jethro Tull said:


> we've been through this 'its up to the individual' argument before so I won't comment further



Every sales technique for every product on the market could be described as a con going by your use of the word.


----------



## Jethro Tull

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



MrMan said:


> Every sales technique for every product on the market could be described as a con going by your use of the word.


 
I know I said I wouldnt comment further but there is no way you can compare a commitment to a 40 year liability and buying your weekly shopping, for example, or most every day products.

This is one of the reason why we (supposedly) have far more regulation of financial services than retail, and thats before we consider the obvious informational asymmetries


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## Bronte

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



MrMan said:


> Every sales technique for every product on the market could be described as a con going by your use of the word.


  It may not have been a con but it was reckless lending?


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## MrMan

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



Bronte said:


> It may not have been a con but it was reckless lending?



Again I agree, I just think people making silly comments like using words like con and fraud to describe business practices that are actually legal brings nothing to any argument or debate.


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## ubiquitous

*Re: Why bailing out housing market is a very bad idea*



television said:


> People have to live somewhere. That is a fact.



That's true. Its also true that people have to eat every day to survive. That does not necessarily mean that the price of food will increase ad infinitum nor remain at unsustainable and unaffordable levels for long periods.


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## aircobra19

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



MrMan said:


> Again I agree, I just think people making silly comments like using words like con and fraud to describe business practices that are actually legal brings nothing to any argument or debate.


 
Considering con can mean simply an abuse of confidence, it could be used here. I would say its more like sharp practise, offering people inappropriate services, loans, knowing its poor advice for certain clients who are very likely to end up in difficulty.


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## Jethro Tull

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



MrMan said:


> Again I agree, I just think people making silly comments like using words like con and fraud to describe business practices that are actually legal brings nothing to any argument or debate.


 
I never used the word fraud and one of my major points has been if there was even a single brain cell among the employees of the central bank then 100% mortgages would never have happened (i.e. would never have been legal)


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## Jethro Tull

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



aircobra19 said:


> Considering con can mean simply an abuse of confidence, it could be used here. I would say its more like sharp practise, offering people inappropriate services, loans, knowing its poor advice for certain clients who are very likely to end up in difficulty.


 
exactly


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## MrMan

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



aircobra19 said:


> Considering con can mean simply an abuse of confidence, it could be used here. I would say its more like sharp practise, offering people inappropriate services, loans, knowing its poor advice for certain clients who are very likely to end up in difficulty.



Well I would consider it to have a meaning of deliberately misleading, I guess its all in the perception.


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## aircobra19

*Re: Why (the state) bailing out housing market is a  bad idea..mcwilliams indo articl*



MrMan said:


> Well I would consider it to have a meaning of deliberately misleading, I guess its all in the perception.


 
Lots of ads are deliberately misleading, and you have to read the small print to see the catch.  But not illegal.


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