Current public sentiment towards the housing market?

[walk2dewater]

IWhat do you think the ECB interest rate will be in December 2007?

ECB repo will be 5.5% by Dec 07. Was pegging it 6-7% up until a few weeks ago. My view has been downgraded in recent weeks because of the accelerating implosion in the US housing market (can't happen here of course-- it's different here). US recession coupled with groaning noises from France and Italy will slow down the hawks in Frankfurt but eurozone inflation metrics will stay stubbornly above target, hence no end in hikes. The ECB made almost an equal number of 0.5% changes as 0.25% changes on the way down to the 2% level and I don't see why they won't do it on the way up.

The ECB is the easiest to forecast, they've even explicitly said they target asset prices as well as M3. READ THEIR POLICY PAPERS.

Who knows what the Fed will do, I am watching this one with morbid fascination. I'm betting on one long drawn out pause, followed by the Fed being put out to pasture as international US$ bondholders stealthy but effectively take over setting US borrowing costs.

BoE? Well the £ is waaaayyy overvalued. A Soros-type will probably make another billion shorting the £ again. Eventually BoE will succumb to defending the £ and stemming imported inflation with higher rates. Double digit UK rates a la 1990 cannot be ruled out.

 

[bearishbull]

ECB repo will be 5.5% by Dec 07. Was pegging it 6-7% up until a few weeks ago. My view has been downgraded in recent weeks because of the accelerating implosion in the US housing market (can't happen here of course-- it's different here). Weakening US situation coupled with groaning noises from France and Italy will slow down the hawks in Frankfurt but eurozone inflation metrics will stay stubbornly above target, hence no end in hikes. The ECB made almost an equal number of 0.5% changes as 0.25% changes on the way down to the 2% level and I don't see why they won't do it on the way up.

The ECB is the easiest to forecast, they've even explicitly said they target asset prices as well as M3. READ THEIR POLICY PAPERS.

Who knows what the Fed will do, I am watching this one with morbid fascination. I'm betting on one long drawn out pause, followed by the Fed being put out to pasture as international US$ bondholders stealthy but effectively take over setting US borrowing costs.

BoE? Well the £ is waaaayyy overvalued. A Soros-type will probably make another billion shorting the £ again. Eventually BoE will succumb to defending the £ and stemming imported inflation with higher rates. Double digit UK rates a la 1990 cannot be ruled out.

W2dw can we keep interest rate speculation to the relevent thread. If you really beleived rates would be that high when dont you put a large chunk of your assets into it?? I think its only fair to assume rates will be what the market are predicting at this stage and idle speculation however inpspired or genius can be kept on interest rate speculation thread. Currently 10 year rates are forecast at less than 4% and have fallen in recent weeks.
On another note, shall we see many more properties withdrawn at auction in tomorrows papers?

 

[MadPad]

low interest rates have made bugger all difference in stimulating their economy we should not overestimate the impact of higher in surpressing it.

good point

 

[tententwenty]

W2dw can we keep interest rate speculation to the relevent thread.

I'd say interest rates will have a major effect on public sentiment in the housing market, in fairness.

 

[Neffa]

ECB repo will be 5.5% by Dec 07. Was pegging it 6-7% up until a few weeks ago. My view has been downgraded in recent weeks because of the accelerating implosion in the US housing market (can't happen here of course-- it's different here). US recession coupled with groaning noises from France and Italy will slow down the hawks in Frankfurt but eurozone inflation metrics will stay stubbornly above target, hence no end in hikes. The ECB made almost an equal number of 0.5% changes as 0.25% changes on the way down to the 2% level and I don't see why they won't do it on the way up.

The ECB is the easiest to forecast, they've even explicitly said they target asset prices as well as M3. READ THEIR POLICY PAPERS.

5.5% (implying mortgages at 6.5%+) would create carnage in the Irish property market.

Do you really think inflationary pressure is that strong in the Eurozone that the ECB will react that strongly? I've always thought that a US recession would tend to dampen inflationary pressures in the export-oriented European economies (e.g. Germany) so that they would not reach as high as 5.5%. I would have thought 4.0% end of 2007.

 

[solatic]

5.5% (implying mortgages at 6.5%+) would create carnage in the Irish property market.

What's so impossible about 6% rates? Canada, yesterday:

And yet Vancouver and Calgary are still in double-digit growth. I'm not saying that would be the case in Dublin, but people are talking like a 2% increase in the ECB's base rate would signal the end of the world. It's not exactly a doomsday scenario for 90% of europe, and especially not the net contributors.

 

[liteweight]

IO mortgages are relatively harder to get in Ireland due to the pension arrangements being different (personal pensions less common, more people in company schemes). Mostly they are for investors with time-limits applied for IO mortgages for PPR's.

It's possible to get an interest only mortgage in Ireland for an indefinite period on one's PPR. I know a number of people who have done this and they have never been asked about their pensions. It's simply based on the value of their PPR. Interest only mortgages are no longer only for investors. A number of financial institutions offer them, for a couple of years, at the start of the mortgage also.

 

[beattie]

It's possible to get an interest only mortgage in Ireland for an indefinite period on one's PPR. I know a number of people who have done this and they have never been asked about their pensions. It's simply based on the value of their PPR. Interest only mortgages are no longer only for investors. A number of financial institutions offer them, for a couple of years, at the start of the mortgage also.

Yes I can second that, I know of someone who took one out as they could not afford their house otherwise, but that was when the ECB was at 2% and not heading for 3.5% as it is now so their plan of switching went out the window pretty quickly.

 

[Remix]

Irish job losses in September to exceed 2,000.

finfacts

 

[ButtermilkJa]

...
On another note, shall we see many more properties withdrawn at auction in tomorrows papers?

Spot on...
Today's property headline... "Houses fail at auction. Property market gets real."

[broken link removed]

 

[whathome]

[broken link removed]

....very interesting, surprised by some of the IT comment:

70% unsold in washout week for auctions

"The reality is that the market has run out of steam, after record gains in house prices in the first quarter of 2006"

"Sellers will now be under pressure to reduce prices if they are anxious to offload their properties before Christmas. With such a vast choice available, buyers will be able to bargain down, rather than bid up for the home they want."

[broken link removed]

 

[whathome]

Another article in Today's Irish Times:

A slower market will soon test agents' sales skills

[broken link removed]

"While predictions of a slowdown in the market continue - and there's evidence on the ground that it might be happening - it looks as if Irish estate agents might have to brush up on their selling and negotiating skills"

"The market is swimming with second-hand homes"

 

[Duplex]

Spot on...
Today's property headline... "Houses fail at auction. Property market gets real."

[broken link removed]

The cognitive dissonance is palpable in that piece. The agents are scrambling for credible platitudes which don't touch on the truth; i.e. it was a speculative bubble. Negative equity is probably a reality for many buyers who entered the market in the early months of this year.

 

[plaudit]

So if I bought in the Spring for €1.25million what should I do if the house is only worth €1m now?

 

[bren2002]

Some agents are blaming the failure to sell at auction on a greedy vendor syndrome, though in some cases they've created the problem themselves by valuing properties on the high side to get ahead of their competitors.

[broken link removed]

I find this difficult to swallow. The agents are the ones advising on the prices to the vendors.

 

[beattie]

So if I bought in the Spring for €1.25million what should I do if the house is only worth €1m now?

What can you do. Maybe Mr McDowell's proposal will save them but I would doubt it. Just pray that it doesn't go down to 3/4 of a million

 

[walk2dewater]

W2dw can we keep interest rate speculation to the relevent thread. ?

Agreed.

If you really beleived rates would be that high when dont you put a large chunk of your assets into it?? ?

The only thing I “believe” is my ability to be more often right than wrong in my investment calls. If euro int rates and xch rates don’t go the way I expect, yes I will lose money. Risk comes with the territory.

Currently 10 year rates are forecast at less than 4% and have fallen in recent weeks?

Where and whats the track record of the source?

All Im saying is wake up and do your owning thinking! Take a hard look at who's (successfully it seems) ramming down our throats day in day out the view that interest rates can't get higher. Then take a look at what the ECB says, and then come up with an honest, reasoned opinion.

 

[howstrange]

....very interesting, surprised by some of the IT comment:

70% unsold in washout week for auctions

"The reality is that the market has run out of steam, after record gains in house prices in the first quarter of 2006"

"Sellers will now be under pressure to reduce prices if they are anxious to offload their properties before Christmas. With such a vast choice available, buyers will be able to bargain down, rather than bid up for the home they want."

[broken link removed]

Is it possible that a lot of potential home buyers are hoping for some kind of relief in stamp duty in the December budget and are holding out until maybe the new year before they decide to buy?? Cos if there is a chance of a change in stamp duty bands then you be mad to buy now unless you really had to. It may not be just to do with sentiment and interest rates. Am i correct? If thats the case things might pick up again early next year. I am a bear by the way. Was just a thought.

 

[walk2dewater]

The cognitive dissonance is palpable in that piece. The agents are scrambling for credible platitudes which don't touch on the truth; i.e. it was a speculative bubble. Negative equity is probably a reality for many buyers who entered the market in the early months of this year.

Two things are leading me to think Game Over here:
1. The tell-tale build up in inventory, ok it's all anecdotal stuff, but I'll accept it.
2. Sentiment is being stabbed in the heart. cf. Herald's headline earlier this week. And it won't be the last.

So I'd say big price downdraft b/n now and Xmas followed by a bounce in the Spring (ECB pauses or something)?

I do have to admit being surprised by how quickly the market turned in the US. Sentiment there has gone very sour very quickly; switch from greed to fear was almost instantaneous. Now Im thinking why not here?

 

[ajapale]

W2dw can we keep interest rate speculation to the relevent thread.

Interest rate speculation as it relates to "Current public sentiment towards the housing market" is very much "on topic".