Current public sentiment towards the housing market?

Status
Not open for further replies.
tententwenty said:
Well its an ill wind in fairness. Some businesses will do well, others will utterly collapse. How would you go about crash-proofing yourself (if this really is the last gasp)?
Click to expand...

Anyone selling bicycles in the west of Ireland should do very well!

nudge nudge
 
To what extent do people agree with Edo's observation that: not only are we playing out a property bubble, we're also going through an economic bubble?
 
First time posting here but have been following this thread amongst others for some time.

I think Edo has done a great job surmising my sentiment as to the direction things will spin.

Coming from an area where following and pricing interest rates and inflation I can see nothing but increases in rates up to 3.5% with a pause to see if the US can sort out their deficit and what role China will play with regard to their currency.

At the moment the euro has been day on day depreciating against the dollar and pound, pulling surpluses out of eu and into these countries which I can't see being allowed to continue in the short to medium term.

Add to that the fact that Irish Energy regulators are slow to adjust prices as per market views, we will see us paying higher than markets rates for energy which will squeeze margins (be that take home pay or company profits) and further reduce sentiment even further.
 

Brilliant.
 
A downturn might be good news for employers...
Harnessed by the banks, employees up to their neck in mortgage debt will be very eager to please the boss when things get a little tighter.
 
CelloPoint said:
To what extent do people agree with Edo's observation that: not only are we playing out a property bubble, we're also going through an economic bubble?
Click to expand...

I have long since stopped actually caring about/paying attention to house prices and affordability etc - the penny dropped about 10 months ago that what I was looking at was a Paper-Tiger economy, one that will not have a leg to stand on over the next few years IMHO.

So yes I'd subscribe to the theory that we have a 'bubble economy'.
 
I agree we have a bubble economy and not just property.

Our spending is out of control and I don't think people realise how much. Many of my friends are in their 30's and have 300k+ mortgages over 30+ years, credit card bills in the low 1,000's, extra loans for the new plasma/re-done decorating, 2 car loans, credit unions loans.

Not all people in Ireland at the money have "real money" Yes, there are 50year old plus that have real money in the bank as their "meagre" 15-20 years mortgages are now paid off and all their wages can be used for spending.

The people you see in the new BMW's, Merc's, Landrovers in their 30's - you can nearly be right in thinking that a large percentage of them have huges unaffordable loans out on them or even worse - they are re-mortgaged loans on the huge increase on the price of their homes. What happens when jobs are lost and these loans can't be met?

The whole "Keeping up with the Jones" is going to bring this country to its knees (or maybe just the suburban housing estates then) because people are using borrowed money to keep the "Im rich"/"Im loaded" persona up.

I don't know about others - but I have seen signs of Depression rising among family and friends which was not present before. The times of "saving up for something to enjoy" are long gone in Ireland and its going to destroy us all.
 

I'm not sure how prevalent the remortgaging to buy plasmas/BMWs really is - I don't know anyone who has done it. But I do know plenty of people in their 30s with mortgages in excess of 300k - they're not too worried about the paper losses a crash might bring since they're not moving.
The knock-on effect on the economy will be bad but I'm not sure it'll result in wholescale recession a la 80's.
It'll hit the construction (obviously) and its attendant services industries hardest, which have largely been maintained by migrant workers lately. The Banks have already repackaged and sold on most of their debts so there won't be any collapses there.
So overall, it could be a 'hard landing' (i.e. crash) for the property market followed by a 'soft landing' for the economy as a whole.
And then we can get back to 2000 levels when fundamentals actually meant something
 
whathome said:
Anyone selling bicycles in the west of Ireland should do very well!

nudge nudge
Click to expand...
Haha, sadly thats not me, I just enjoy cycling, thats a mates shop. No SUVs over here.

Someone said that those who made out on the property boom will be the rich in the next 6 years, I would debate that. Money easily gotten is easily lost, as our fine government with its large and well paid civil service has amply illustrated. Most of these people have had good fortune and earned from it, but that doesn't imply any particular economic skill on their part. Whether or not they can hold on to that cash, or burn most of it in a splurge of high living and foreign holidays, is anyone's guess. I doubt that most of them will be investing in equities or local businesses, thats for sure.

Edit: actually if I had to place money on it, most of them will put their cash straight back into property on the first dead cat bounce, and take a belated hiding.
 

Something along these lines?
http://flippersintrouble.blogspot.com/

P.S.

Great post Edo.
 
whathome said:
A downturn might be good news for employers...
Harnessed by the banks, employees up to their neck in mortgage debt will be very eager to please the boss when things get a little tighter.
Click to expand...

They'd have to be in a recession-proof industry. The employer mightn't like paying high wages to his employees but he hates it more when he doesn't have customers to buy his products.

Another rather large section of the economy that is going to get spanked in a recession is the debt industry. The home loan, debt consolidation stuff will take a brutal hammering during any period of credit tightening.

Actually so few industries are going to go unscathed that is probably worth trying to identify them. I disagree on the pubs front - your average local may be fine but the superpubs and niteclubs will be in trouble.

- Healthcare and funeral homes generally survive recessions (people never stop getting sick or dying)
- Protected professions by which I mean doctors, solicitors and accountants
- Public service jobs
- Low cost retailers
 
I'd question that about solicitors:
From what I've heard - much of the work in offices outside Dublin was made up of wills, conveyancing and personal injury cases. With personal injuries now taken away there is a significant reliance on conveyancing which will be hit by a downturn.

Also don't forget that they charge percentages on certain transactions which will be squeezed if the value of the assets decrease (wills etc.)
 

Also, there are loads of legal people pouring out of the universities, Blackhall and Kings Inns. There just ain't enough work for all these 580+ points, perfect life, young people with massive expectations.
 
Lipstick sales rise in recessionary periods. My advice, secure that Avon franchise now!


[broken link removed]


Oh, the bolder colours sell better in hard times, apparently.
 
CelloPoint said:
To what extent do people agree with Edo's observation that: not only are we playing out a property bubble, we're also going through an economic bubble?
Click to expand...

What I believe we have is a Property Bubble and a Consumer Spending Bubble driven by said Property Bubble. We don't actaully have an Economic Bubble as out balance of payments is in decline and has been since 1999. Source [broken link removed] Q1 2006 shows up at -2 billion. We're just borrowing to fund this. The Celtic Tiger, which is still bandied about, died in 2001 with the .com crash. That's what makes this all the worse, we well ran off the cliff (ala cartoon character) and as of yet have forgotten to look down.

It has been interesting to see how various factors contributed to this unprecendented bull run for Irish Property, the length of which has never been experienced anywhere before. Relatively low house prices vs wages compared to other countries, .Com Boom/Celtic Tiger, joining low interest rate Euro economy at a time when higher rates where needed/warrented, opening up of East European labour.

It's like the Property Market/Consumer Driven Economy is a pendulum swinging off of a pendulum. Both predulums have swung as far to the right as they can and are stalled. The main pendulum (US Economy) is just starting to swing back. The swing back of the secondary pendulum (Ireland) could be vicious.

The US Property House Price Index (available here http://en.wikipedia.org/wiki/US_property_bubble) looks so moderate compared to the Irish one.

I really think that any Property Price Correction here in Ireland has the potential to be much worse that that in other countries (UK, Austraila, and US) due to the sheer magnitude of the increases, the unprecendented length of the increases and the factors that contibuted to the increases. If even 2 factors, such as US Property Crash, US Recession, Higher Euro Interest Rates (due to recovering Germany, or higher inflation) combine the effect here will be magnified.

Incidently if the US goes into recession that would suggest that money would go into Staple Industries such as Food, Pharma, Heavy Industry and Bluechip companies with low growth and decent P/E, things which Germany have in abudance. Read an article on Yahoo Finance (http://biz.yahoo.com/special/invest091106.html) where one of the things a fund manager in the US is recommending for Recession Proof investment is Europe. So I wouldn't count on a slowing German economy and thus lower interest rates (quite the opposite in fact)
 
CelloPoint said:
Also, there are loads of legal people pouring out of the universities, Blackhall and Kings Inns. There just ain't enough work for all these 580+ points, perfect life, young people with massive expectations.
Click to expand...

Agree, the PIAB should take away a good deal of their work and result in cheaper insurance for the rest of us which might help people in reducing their costs when considering opening up a business.
 

Well would people actually tell you that they have remortgaged to buy the new TV, car, holiday, new furniture - or is it a "loan"???

I was in with my solictor the other week in relation to a personal matter and he mentioned to me that he would be very busy between now and Christmas because of all the re-mortgage's draw downs he has to do. I asked "was everyone still building extensions etc" and his response gave my theory a bit of weight when he said "no, its to pay for the holidays expenses as the credit card bills are in .......and christmas, its the busiest time - very little to do with the property"

I think more and more people have bought houses for e.g. 200k and its now "worth" 300k - they are then taking out 20-50k for Luxuries i.e new car, new decking etc etc. If the property bubble does pop, and their house is now worth 200k again - negatitive equity????

Sure most people on here are either good with money or interested in being good with money - there is an awful lot more people out there borrowing from all cornerrs to live the life of a footballer and using the "equity" in their houses to live it. They do not realize that equity is not real money unless you sell the house.

There are more people involved in this than we all think!

.
 
SHARP said:
Well would people actually tell you that they have remortgaged to buy the new TV, car, holiday, new furniture - or is it a "loan"???
Click to expand...

Could be on to something there. I didn't really believe it because I hadn't heard of many people financing their lifestyle with their housing equity. Then again when people are living the dream they don't want to admit they are behaving like the people you see in "Ocean Finance" ads.

On average, when a mortgage is switched in Ireland, €36k extra debt is taken on. There are approximately 100 mortgages switched every day. I doubt it is all for foreign property and conservatories.
 
Status
Not open for further replies.
Menu
Log in
Register