Current public sentiment towards the housing market?

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BigM said:
Hello all. Fascinating thread – keep it up!

I was pretty bullish on the market up to recently but a few things (including this thread!) have made me reassess my views:
When the banks started using ‘ability to repay’ calculations rather than the traditional salary multiples, the resultant 6-10 time multiples were ‘justified’ by the incredibly low interest rate environment. But the corollary is also true: in a rising rate environment the ‘ability to repay’ calculations must result in lower salary multiples being offered – I would suggest 5x is still generous.

When we bought our 1st house (4/5 years ago) we were on ordinary junior-level salaries (banking and law) and the bank lent us around 4 times our joint income to buy the house. Typical starter home – D8, 2-bed ex-council house 15min walk to town.
These are now selling for 450k which, based on 5x salary, would require an excellent salary for a single person or 2 good salaries. It is not remotely affordable to typical FTBs (junior-level salaries have not doubled in the last 4 years!) and is also not attractive for investors as they rent for only 900-1200pm.

And things don’t get any easier at the other end of the market. My wife and I had to go for a 35yr (I know, I know!) mortgage in order to be able to afford our home (last year). We decided to go for it because it’s the area we always wanted (D6), close to town, Luas, shops, schools etc and we’ll be here for at least 10 years. We could barely afford it, our salaries are at the high end of the scale and the mortgage is still only around 75% of house’s current ‘value’ so who could we sell it to if its ‘value’ keeps on increasing?

So I think the time has come to cash in the profit on our 1st house. It will enable us to reduce our mortgage to 60%, 20 years (saving a fortune in interest) with manageable repayments (even when rates go to 5%).
I know a lot of people who are in the same position and thinking of selling their investment properties (usually their 1st homes) in order to take profits and insulate themselves somewhat from any price correction.
Just hope to get it done before the crash happens!!

Sorry for length of post - 1st time and all that... need to hone my editing skills!!
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You seem to be in a strong position. I would be wary of selling this Autumn/Spring as the market will be flooded with investment apartments and other stock and your D4 place may not attract the attention it should. You may not want the stress either. If you can take the strain of interest rises then i'd hang on until a couple of years when the dust settles.
 
phoenix_n said:
You seem to be in a strong position. I would be wary of selling this Autumn/Spring as the market will be flooded with investment apartments and other stock and your D4 place may not attract the attention it should. You may not want the stress either. If you can take the strain of interest rises then i'd hang on until a couple of years when the dust settles.
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I don't agree - when prices are falling, it's always better to sell sooner rather than later! Also - the first property is in D8, not D4 :)
 
Howitzer said:
Insider information? What stage does this place you (us) on Minsky's bubble thingy?

http://www.askaboutmoney.com/showthread.php?t=24601
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Stage 6? I haven't heard of insiders selling property apart from the banks.

It's a shame there's no spread betting market for the PTSB/ESRI index! Phoenix_n has predicted 0.2% growth in next months report - I'm going for 0.4% growth which will generate more "weakening market" headlines IMO
 
phoenix_n said:
You seem to be in a strong position. I would be wary of selling this Autumn/Spring as the market will be flooded with investment apartments and other stock and your D4 place may not attract the attention it should. You may not want the stress either. If you can take the strain of interest rises then i'd hang on until a couple of years when the dust settles.
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That dust you mention will be;

1. Rising interest rates

2. A US recession

3. A recession in Ireland

4. Rising unemployment

5. A departure of the guest workers for pastures greener.

6. Falling rental incomes (see above)

7. Falling house prices.

8. A budgetary squeeze.

9. Possibly rising taxation (see above)

10. Repossessions, defaults etc.


That's some dust.
 
whathome said:
Stage 6? I haven't heard of insiders selling property apart from the banks.
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Sorry mate, that's just laughable. Unless you're on the inside, you won't necessarily hear about what the insiders are doing until they're done! Otherwise, well it wouldn't really be insider trading, would it?

If it weren't for company law, the banks wouldn't have broadcast their property sales to the general public. As it is, they spun it to sound like a vote of confidence in the Irish property market.
 
I have heard reliable stories of banks reposessing houses - BUT NOT SELLING THEM.... The solution they came up with was genius!

They
a) froze the owners mortgage (while still acrruing interest obviously)
b) took posession of the home
c) rented the house to the owner (at a friendly rate that is much lower than that annoying mortage... I know - friendly rate!)
d) eventually when the owner is back on his/her/their feet, they take posession of the house and start re-paying the mortgage (which is now larger as it has been accruing interest for the past few months/years).

Great solution for the bank as
> The rent they get helps towards the frozen mortgage
> They don't have to dump the house (or numerous houses) onto the open market and create an oversupply and/or lack of confidence.
> If/when the mortgage payments start back up again the bank has made money on the accrued interest

Anyway - would people classify this as insider trading of sorts?
 
conor_mc said:
Sorry mate, that's just laughable. Unless you're on the inside, you won't necessarily hear about what the insiders are doing until they're done! Otherwise, well it wouldn't really be insider trading, would it?
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Insider selling usually relates to public company executives selling shares, they are obliged by law to disclose details of their dealings. Some investors use this as a bearish signal on the stock.

I don't think there's an exact equivalent with property but the closest thing would be estate agents selling their private investment properties?

Maybe you're getting confused between insider trading and insider selling?
 
whathome said:
Insider selling usually relates to public company executives selling shares, they are obliged by law to disclose details of their dealings. Some investors use this as a bearish signal on the stock.

I don't think there's an exact equivalent with property but the closest thing would be estate agents selling their private investment properties?

Maybe you're getting confused between insider trading and insider selling?
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Okay, so lets redefine Minsky's phase 6 as "Open Selling"? Insider is the key word, in that people with access to information not in the public domain can make a profit from how they use that information. The banks selling up several hundred million worth of property is a big hint, and as I said they're obliged to notify the stock market of transaction of that size.

I'm sure there are plenty of private companies/individuals following suit, but they're not about to let everyone else in on their little secret until such time as they've maximised their profit - either through disposing of their over-valued assets and/or maintaining the status-quo upon which their % commissions apply.

Bottom line is that, as far as I'm aware, there aren't too many "insiders" on this thread - most of us are observers trying to read the signs.
 
whathome said:
Stage 6? I haven't heard of insiders selling property apart from the banks.
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We are Late Late 5 early 6 on the Minsky Bubble scale and will be at full stage 6 by the end of October. I reckon all the Euphoria feelings will be gone by end October ( AND that the next general election will take place in Mid October)

There are plenty of euphoric muppets still out there to produce the illlusion of prosperity and stability .

The build up of inventory in the sales channel , including very long term investors dumping out, is VERY noticeable. At least to me.

Not all the sellers are insiders , merely cute hoors. The euphoric muppets will oblige by buying the properties for a while and they will exit with cash in hand .
 
2Pack said:
There are plenty of euphoric muppets still out there to produce the illlusion of prosperity and stability .
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Yep - will take them a little longer to come down from the euphoria, then they'll realise that the DJ has stopped playing, the main lights have come on and most people are leaving.
 
whathome said:
I don't agree - when prices are falling, it's always better to sell sooner rather than later! Also - the first property is in D8, not D4 :)
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If it was D4 I'd definitely sell it as it would probably pay off my entire mortgage and then some!!:D
 
BigM said:
If it was D4 I'd definitely sell it as it would probably pay off my entire mortgage and then some!!:D
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Sorry my mistake. If you are going to sell i'd suggest you do it before others who are thinking of it do it aswell. But what will be important will be the financial status and commitment of the buyer as you will want a quick transaction and not want your sale agreed to fall thru leaving you to put it back on the market when it may languish for months or....
 
conor_mc said:
either through disposing of their over-valued assets and/or maintaining the status-quo upon which their % commissions apply.
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Yes - I didn't say it wasn't happening, just that I hadn't heard of it happening. The point being that it's difficult to say whether we're at stage 6 or not :) Minsky implies that sometimes insider selling information sneaks out:

From stage 6 - "Other times, the outsiders see them as they leave. Whether the outsiders see them leave or not, insider profit taking signals the beginning of the end"
 
whathome said:
Yes - I didn't say it wasn't happening, just that I hadn't heard of it happening. The point being that it's difficult to say whether we're at stage 6 or not :) Minsky implies that sometimes insider selling information sneaks out:

From stage 6 - "Other times, the outsiders see them as they leave. Whether the outsiders see them leave or not, insider profit taking signals the beginning of the end"
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Cool, got ya now.

I think we are seeing those signs sneaking out (with AIB and BoI), just dressed up as a vote of confidence in Irish property. I'm more inclined to see it as a tidy-up of the balance sheet myself.
 
phoenix_n said:
62 rental properties in Castleknock on daft. An increase from last week. But the price expected for some is unrealistic.
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Rental supply in CastleKnock has just increased to 68 from 62 this morning.

Increased supply coming on to the market from completed developments ?
 
whathome said:
Yes - I didn't say it wasn't happening, just that I hadn't heard of it happening. The point being that it's difficult to say whether we're at stage 6 or not :) Minsky implies that sometimes insider selling information sneaks out:

From stage 6 - "Other times, the outsiders see them as they leave. Whether the outsiders see them leave or not, insider profit taking signals the beginning of the end"
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I have a theory, I'm not got going to give it a title, but every commentator from the "inside", that's EAs, bank economists and the like, all seem to be calling the slow down as being 18 months away. This equates to 3 selling seasons, S1 (this autumn), S2 (next spring), S3 (next autumn).

Now if you wanted to off-load your property portfolio at the best possible price the last season you'd want to be selling up in is S3, obviously. Anyone taking this advice will, as a result, look to sell in S2. So if you wanted to get out before the pack S1 is actually when you should be selling up.

So are the banks, et all, telling the punters to hold off selling so that they can all get out in this selling season?

Ahh sod it, "Howitzer's 3 season solution" it is.
 
phoenix_n said:
62 rental properties in Castleknock on daft. An increase from last week. But the price expected for some is unrealistic.
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Howitzer said:
I have a theory, I'm not got going to give it a title, but every commentator from the "inside", that's EAs, bank economists and the like, all seem to be calling the slow down as being 18 months away. This equates to 3 selling seasons, S1 (this autumn), S2 (next spring), S3 (next autumn).

Now if you wanted to off-load your property portfolio at the best possible price the last season you'd want to be selling up in is S3, obviously. Anyone taking this advice will, as a result, look to sell in S2. So if you wanted to get out before the pack S1 is actually when you should be selling up.

So are the banks, et all, telling the punters to hold off selling so that they can all get out in this selling season?

Ahh sod it, "Howitzer's 3 season solution" it is.
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Except, IMO, there is no selling season left.
 
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