P
phoenix_n
Guest
I say potayto. You say potaato.
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CelloPoint
Registered User
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Regarding potatoes, it seems the Irish haven't learned from the famine (putting all of ones eggs in the one basket etc.)
While I can't speak for him, I think what he means is that you should admit that you want to sell at the top of the market, not in the falling market.
It won't necessarily be impossible to sell as the market falls. It will almost certainly be difficult to get the price you want for it. There is actually a difference there.
Exactly. It is easier to sell before the peak than after, even if the price you realise is ultimately the same.
P
phoenix_n
Guest
Room305. I think you are making a wise decision.
Realise your gains. Rent somewhere where you could never afford to buy. Relax and watch market.
Realise your gains. Rent somewhere where you could never afford to buy. Relax and watch market.
It is a 50% increase.
No they're not. The owners might quickly decide to sell but that doesn't mean they'll quickly find a buyer.
I'm selling now.
I don't disagree but nothing I've seen or heard would lead me to the conclusion that there will be a rush to exit doors before the end of the year. What will cause this?
Spot on. I was in a similar situation and came to the same conclusion. It will be your property, not your parents/friends/TV Pundit/bloke who was mouthing off in the pub...
Regarding sentiment, I know a few other people thinking the same way. When I told a good friend, who is a bank manager, that I don't intend purchasing at present, and will rent for the next while, he said "you may be right" and also mentioned rising rates, huge supply coming on stream and predicted "soft landing". When I told other people I know, their reactions were not of shock, but understanding. Also I know someone who was trying to sell one of those section XX holiday homes in Clare. She had it advertised all spring, got a few viewers but no bids at all. Dunno if she was looking to sell it at a very high price, but I doubt it.
In more casual conversations on property in general, more people are saying that they've heard that property prices won't continue to rise and may even fall. Still, as others have pointed out it's not what the average person thinks, but rather the marginal buyer. If you get two people at a viewing who remain confident re the economy in general and the worth of the property in particular, then they will bid on the property and its price will rise. IMHO there are still enough people out there who do believe that the economy will continue to perform and properties will continue to rise in price. It will take a fair bit of media coverage about nominal price drops before these people become bearish. And I don't see widespread nominal price drops for another 12 months or so. My gut feeling is that the show will role on (though at a reduced rate) this Autumn and next Spring. But it'll be a different world by Autumn 2007
Good point RiceCakes. I've said on other threads that German property prices have been more or less static in nominal terms for the last 12 or so years. One of the reasons is their demographics. Most people in Ireland in their 30s come from families with four or five children, but are themselves only having on average 2 children. The same could be said of people in their 50s and 60s in Germany. Their demographic structure is about 20 years ahead of ours, but I can see the same thing happening here in 20 years time. The Chinese, who can't afford to buy at home, may look at the Limerick property market in 20 years time in the same way that we look at the Berlin property market now ("wow, you can get 1 bed appartments in Berlin for €50,000").
Re: Tight Margin Of Error For SubPrimers.
What can also happen these types of borrowers is that they, for example, get into some more financial difficulty and need to raise 5-10k. It is not unreasonable to to assume that the subprime lenders will sell their house to get this money owed.
I don't think prices will drop in the short term. In the long term they will drop but the correction will be in real terms due to the fundamental illiquidity of the market.
House owners won't drop their prices. They would prefer not to sell. Sounds stupid but that is how it has proved in the past.
CelloPoint
Registered User
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Tis, and the cost of rennovation is ignored. So a hypothetical 50% increase according to ESRI is not actually a 50% increase when you consider the economic cost of rennovating.
They are liquid until the fools run out. There will be plenty of fools willing to buy in at 'knock-down' prices after the initial spill.
That's interesting. The impression I got from you was that there's still blood left to be squeezed out of the stone?
I've made this point before. You asked 'what will cause this [rush]?' My answer is one-worded: sentiment
G
Gab24
Guest
Hi All,
A while ago I posted a message about how I see the irish house prices as a foreginer in this country (by the way, thanks for the replies to that post).
I stick with my belief that the future will be dictated by economical facts rather than peoples sentiments. If the monthly payments will rise above a certain level or if your tenants are leaving from your house you will have to sell it and that's it. Unless the government comes with some more tricks to divert money into housing industry.
You might want to have a look at this article from Limerick:
[broken link removed]
Some people are starting to feel already some pain because of spiralling cost of living. Of course, it can be just a singular event, but still ... it was suprising to read about it when every media tells you that Ireland is so rich and economy is in such good shape. How many people have streched themself hoping to sell in 1-2 years for a nice profit ? This cannot go forever, it's pure maths.
Keep in mind that there will be cost increases for electricity and gas in a few months and they will affect again all the house holders.
The fractional banking system allows money to be created at the expense of debt for future generations. Since euro area became reality a few years ago, there was a flood of credits in many EU countries. Banks and financial institutions are the most happy ones to give money now because they know for sure interest rates will be higher in future, giving them nice profits.
What you see in now in Ireland is a good party because of the continuous borrowing of money. And the goverment is also happy to sustain this. Someone said that politicians should be regarded as people thinking in 4-years time frames. And I incline to believe it. Very few are really thinking about their country and willing to lose elections for the better future. They want to be in power now.
Just a quick example: about 1/3 from the price of a house goes to goverment through taxes imposed on the builder and the buyer. For every 300.000euro paid by a person that borrowed this money, the government takes about 100.000 (IN CASH). So, they can still sustain these nice salaries of people working in public sector.
These money also sustain a lot of SERVICES in the economy, but a clever country should invest in production and research. Where are most of the foreigners working ? In restaurants, hotels, pubs ...
A house is a necesity, but in the end it will never produce food, steel, or microchips. Putting so much money in houses seems crazy. And if this figure of about 270.000 houses being empty in Ireland is true, then again, it's very crazy.
The so called shortage of land for construction was artificially mainained by the government through excessive construction regulation.
The result ? Irish young people borrow like mad to have a roof. Don't you think that the standard ratio for a price of a house being 3-4 times your salary had some reason ? Once you start putting more money into a house, there will be an imbalance in the economy. There will be less money to do other economic activities that can bring real profits from real production.
Here you can see the external debt of Ireland rising in the last few years:
[broken link removed]
If Ireland was borrowing so much money when the economy was booming, I'm wondering what it will do when the economy will not be so strong ?
I did some research myself and I found that Ireland has the biggest External debt / GDP in the world : 500% !!! The nex is UK with 330%, Holland with 260% and Belgium with 260%.
By the way, the irish external debt is over 1000 billions $ and the GDP is 200 billions $ (I wonder how much from this is made from housing industry).
USA has a hige external debt, but they also have a huge GDP, so the ratio comes at 72%
China has an external debt/GDP ratio of 11% (very interesting).
Ok, you might say that the key element for a successful capitalist system is borrowing money from the banks, but still I think it's too much for Ireland.
Unless, the world will witness a new ecnomical situation where every country will start borrowing at ratios of 5-10 times their GDP, I don't see a party keep going in Ireland
The pharmaceutical companies in Ireland have warned already that cost of energy is becoming too high in this country. On the other side, you can't tell to people working in ESB that have huge mortgages that they might have to take some salary cuts or do some restructuration to lower the costs. And this is how imbalances will create in the economy, the pharmaceutical companies might start moving and so on ...
See here one example:
MUMBAI, Aug 10 (Reuters) - India's Ranbaxy Laboratories Ltd. (RANB.BO: Quote, Profile, Research) said on Thursday it would sell a manufacturing facility in the Republic of Ireland as it moved to consolidate its European operations in Romania.
"Ranbaxy has decided to divest the manufacturing facility of Ranbaxy Ireland Ltd., located in Cashel, Ireland, as a going concern," it said in a statement.
In June, Ranbaxy completed the acquisition of Romania's Terapia S.A. for $324 million, and said this would boost its presence in the fast-growing CIS markets.
"Following the recent acquisition of Terapia in Romania, there are significant operational efficiencies to be gained from consolidating the company's European manufacturing operations in Romania," it said.
To conclude again, it will be down to economical realities rather than what people feel. Many people are saying now: "I'm not going to sell that house for a loss" and the EA will use these arguments about the mentality of people that keeps these high prices.
But, they might be forced to sell or become bankrupt.
All the best
A while ago I posted a message about how I see the irish house prices as a foreginer in this country (by the way, thanks for the replies to that post).
I stick with my belief that the future will be dictated by economical facts rather than peoples sentiments. If the monthly payments will rise above a certain level or if your tenants are leaving from your house you will have to sell it and that's it. Unless the government comes with some more tricks to divert money into housing industry.
You might want to have a look at this article from Limerick:
[broken link removed]
Some people are starting to feel already some pain because of spiralling cost of living. Of course, it can be just a singular event, but still ... it was suprising to read about it when every media tells you that Ireland is so rich and economy is in such good shape. How many people have streched themself hoping to sell in 1-2 years for a nice profit ? This cannot go forever, it's pure maths.
Keep in mind that there will be cost increases for electricity and gas in a few months and they will affect again all the house holders.
The fractional banking system allows money to be created at the expense of debt for future generations. Since euro area became reality a few years ago, there was a flood of credits in many EU countries. Banks and financial institutions are the most happy ones to give money now because they know for sure interest rates will be higher in future, giving them nice profits.
What you see in now in Ireland is a good party because of the continuous borrowing of money. And the goverment is also happy to sustain this. Someone said that politicians should be regarded as people thinking in 4-years time frames. And I incline to believe it. Very few are really thinking about their country and willing to lose elections for the better future. They want to be in power now.
Just a quick example: about 1/3 from the price of a house goes to goverment through taxes imposed on the builder and the buyer. For every 300.000euro paid by a person that borrowed this money, the government takes about 100.000 (IN CASH). So, they can still sustain these nice salaries of people working in public sector.
These money also sustain a lot of SERVICES in the economy, but a clever country should invest in production and research. Where are most of the foreigners working ? In restaurants, hotels, pubs ...
A house is a necesity, but in the end it will never produce food, steel, or microchips. Putting so much money in houses seems crazy. And if this figure of about 270.000 houses being empty in Ireland is true, then again, it's very crazy.
The so called shortage of land for construction was artificially mainained by the government through excessive construction regulation.
The result ? Irish young people borrow like mad to have a roof. Don't you think that the standard ratio for a price of a house being 3-4 times your salary had some reason ? Once you start putting more money into a house, there will be an imbalance in the economy. There will be less money to do other economic activities that can bring real profits from real production.
Here you can see the external debt of Ireland rising in the last few years:
[broken link removed]
If Ireland was borrowing so much money when the economy was booming, I'm wondering what it will do when the economy will not be so strong ?
I did some research myself and I found that Ireland has the biggest External debt / GDP in the world : 500% !!! The nex is UK with 330%, Holland with 260% and Belgium with 260%.
By the way, the irish external debt is over 1000 billions $ and the GDP is 200 billions $ (I wonder how much from this is made from housing industry).
USA has a hige external debt, but they also have a huge GDP, so the ratio comes at 72%
China has an external debt/GDP ratio of 11% (very interesting).
Ok, you might say that the key element for a successful capitalist system is borrowing money from the banks, but still I think it's too much for Ireland.
Unless, the world will witness a new ecnomical situation where every country will start borrowing at ratios of 5-10 times their GDP, I don't see a party keep going in Ireland
The pharmaceutical companies in Ireland have warned already that cost of energy is becoming too high in this country. On the other side, you can't tell to people working in ESB that have huge mortgages that they might have to take some salary cuts or do some restructuration to lower the costs. And this is how imbalances will create in the economy, the pharmaceutical companies might start moving and so on ...
See here one example:
MUMBAI, Aug 10 (Reuters) - India's Ranbaxy Laboratories Ltd. (RANB.BO: Quote, Profile, Research) said on Thursday it would sell a manufacturing facility in the Republic of Ireland as it moved to consolidate its European operations in Romania.
"Ranbaxy has decided to divest the manufacturing facility of Ranbaxy Ireland Ltd., located in Cashel, Ireland, as a going concern," it said in a statement.
In June, Ranbaxy completed the acquisition of Romania's Terapia S.A. for $324 million, and said this would boost its presence in the fast-growing CIS markets.
"Following the recent acquisition of Terapia in Romania, there are significant operational efficiencies to be gained from consolidating the company's European manufacturing operations in Romania," it said.
To conclude again, it will be down to economical realities rather than what people feel. Many people are saying now: "I'm not going to sell that house for a loss" and the EA will use these arguments about the mentality of people that keeps these high prices.
But, they might be forced to sell or become bankrupt.
All the best
W
walk2dewater
Guest
1840 Irish peasant: "Ah sure, planting those cabbages is dead money, potatoes are a sure thing, and sure isnt it time you got over your fear of potatoe committment... if there's crop failure sure it'll be a soft-landing.... sure don't people have to eat SOMETHING...."
I agree with this, it very quickly becomes a buyers market. That doesn't mean that the bottom falls out of it but it operates in a very different way to a sellers market. Suddenly buyers realise that they have power in the deal, this hasn't been the case for years but is rapidly heading that way. I'm a buyer and I'm feeling much more confident about getting a good deal - as a seller I'm praying that my 2 deals go through!
I doubt it is happening on a wide enough scale to skew the ESRI/TSB index.
So the sentiment changes and everybody is jumping out of the pool. Happy to accept 50% drops from current market value. Anything, they don't care, they just need to offload their property. Luckily, at the same time a horde is charging the other way, looking for bargains. Snapping up any discounted property that comes on stream.
I'm not a property speculator. Nor am I that risk averse.
fatmanknows
Registered User
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[FONT=verdana,arial]'Inflation ease shouldn't deter ECB'[/FONT][broken link removed][FONT=verdana,arial]Thursday, 17th August 2006 12.29pm[/FONT][broken link removed][broken link removed][broken link removed][FONT=verdana,arial]The surprise easing of euro zone inflation and slightly softer-than-expected industrial output figures should not deter the European Central Bank from raising interest rates by at least 50 basis points by the end of the year, economists said.
'Today's data should have no impact on the ECB,' Bank of America economist Holger Schmieding said.
'With growth above trend and headline inflation above target, the ECB will want to reduce its monetary stimulus further, most likely by 25 basis point rate hikes in October and December,' Schieding said.
[/FONT]
Crank up the Heat, I say. Lets see how strong this market really is.
'Today's data should have no impact on the ECB,' Bank of America economist Holger Schmieding said.
'With growth above trend and headline inflation above target, the ECB will want to reduce its monetary stimulus further, most likely by 25 basis point rate hikes in October and December,' Schieding said.
[/FONT]
Crank up the Heat, I say. Lets see how strong this market really is.
T
tententwenty
Guest
Fergal: Anyone see a problem here with tententwenty's literacy?
www.dictionary.com. For you.
Fergal: Have you actually looked up the long term fixed rate? E.g. can you find 20 yr fixed at 5.6% ?
No I can't. That was my point. What was your point?
Fergal: [broken link removed] It predicts that a soft landing is the most likely outcome.
I'm trying to find the icon for "weeps while tearing my hair out". Did you even read the article you linked?
An "abrupt correction" to the property market cannot be ruled out, it says, although the contraction of the construction sector is likely to be smooth.
O RLY?
Fergal: No point having credit available if you have no job. Lots of jobs in Ireland.
So you're saying its all fine and dandy that these jobs (thats a couple working their entire lives) are not sufficient to pay off the loans within 35 years, based purely on speculation and market sentiment in the few years when there were low interest rates available? Irresponsible lending practices more worthy of loan sharks that the banks have been indulging in are responsible for the bubble, and will be responsible for the enormous amount of damage caused to the economy when it collapses.
Fergal: So after almost a century, you are saying it is still not possible to detect long term habits.
Considering there has only been significant wealth in the country for the last ten years, I would say it reflects the attitude of the previous generation more than anything else. And in any case, since when is "always" a hundred years?
Fergal: Do I detect a measure of ill-will here?
Whatever emotional subtext you read into my replies is your business, not mine. Tell us Fergal, how many properties do you own?
www.dictionary.com. For you.
Fergal: Have you actually looked up the long term fixed rate? E.g. can you find 20 yr fixed at 5.6% ?
No I can't. That was my point. What was your point?
Fergal: [broken link removed] It predicts that a soft landing is the most likely outcome.
I'm trying to find the icon for "weeps while tearing my hair out". Did you even read the article you linked?
An "abrupt correction" to the property market cannot be ruled out, it says, although the contraction of the construction sector is likely to be smooth.
O RLY?
Fergal: No point having credit available if you have no job. Lots of jobs in Ireland.
So you're saying its all fine and dandy that these jobs (thats a couple working their entire lives) are not sufficient to pay off the loans within 35 years, based purely on speculation and market sentiment in the few years when there were low interest rates available? Irresponsible lending practices more worthy of loan sharks that the banks have been indulging in are responsible for the bubble, and will be responsible for the enormous amount of damage caused to the economy when it collapses.
Fergal: So after almost a century, you are saying it is still not possible to detect long term habits.
Considering there has only been significant wealth in the country for the last ten years, I would say it reflects the attitude of the previous generation more than anything else. And in any case, since when is "always" a hundred years?
Fergal: Do I detect a measure of ill-will here?
Whatever emotional subtext you read into my replies is your business, not mine. Tell us Fergal, how many properties do you own?
S
StoppedClock
Guest
I think so but would anyone be prepared to sum it up and offer a conclusion?
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