Current public sentiment towards the housing market?

[camel44]

Check out the fact that AIB is selling or has sold a large part of its property portfolio and then leased it back.

It would only do this if it thought the property market was at the top or close to the top. And the banks know a lot more than we do. I believe it has sold one building for 350m and is leasing it at 11m per year. That is a 3% lease cost. 10 years ago lease costs were 12.5% of the retail value of the property i.e. got the value of the property back in 8 years. The AIB deal gets it back in 33 years - which is a good deal for the bank.

 

[kerrybull]

This is more evidence of the reality of our property boom. The smart money does not get caught.

 

[extopia]

the banks know a lot more than we do.

You're giving them too much credit. They don't really know what's going to happen, but they have a lot of skin in the game and nobody makes a profit till they sell. So they're cashing in some chips, fair enough.

 

[Maine]

What appears beyond doubt to me is that there has in the past 3 months been a shift in sentiment and that it is now being far more widely reported in the media. The tribune was quite specific about it yesterday.

Supply and rising interest rates are impacting. Trading uppers are no longer keeping but selling and those that did this over past few years are now also selling.

Credit Suisse reports will worry the banks....they need to keep getting access to cheap funds.

 

[blindjustice]

By the same token, the insane property value inflation shouldn't have been a cause for celebration either because it is highly unlikely that it could continue. But if you said that to any interested parties, they did in fact pooh pooh you for it.

Economically, a correction is pretty much necessary - the future economic health of the country probably depends on it this stage because we cannot continue borrowing money to the extent that we are presently doing. We need to stop mortgaging future earnings for current operating costs (ie we need to stop remortgaging to pay for cars and holidays). I won't celebrate to see people suffer, but I cannot abdicate them of responsibility for bringing themselves to that point either. The crash was foreseeable, has been foreseeable for years. Claiming it won't happen because it hasn't happened yet is ostrich mentality and it's what we've had for the past three or four years. The unhappiness caused by a crash has to be seen in the context of people making their own decisions. The only proviso I have is that I'm not entirely sure that the pre-crash period of feeling wealthy was matched by a corresponding rise in happiness either.

good post, i said before that a crash wont be a cause for celebration, reading through the last few threads about some of the prices asked for really unspectacular houses even with the drops mentioned I couldnt bring myself to pay that much for them (provided I was rich enough) even if I was a MILLIONAIRE! Its hard to have sympathy for some the architects of this situation. (before you all go blah blah blah about blaming other people I state I KNOW its not just OTHER peoples fault!) but I AM a Vampire and I do enjoy some blood once in a while.

Political efforts to intervene in the market could well cause the market to falter as public confidence may view this as an artificial attempt to talk up the market. Our economic system is based on confidence it is a house of sand and the real danger is the rising tide of debt.

Debt will do for Ireland, as sure as the astroids did for the dinasours.

These Bungling politicians! Do they have a clue!
Some people on this website could run the country ALOT better!
You bunch seem to be alot more tuned in!

 

[dochasach]

I happened to be flicking through the 1992 Guinness book of records over the weekend and in 1992 somewhere in Tokyo had the worlds most expensive real estate prices. I wouldn't be suprised if the price in the same place today is less than it was in 1992. Nor would I be suprised if somebody told me that Dublin has the worlds highest real estate prices in 2006........

Jister, my back of the envelope calculation says we're close:

Let's sell up the entire country!

During the peak of Japan's property bubble, the land under Tokyo's imperial palace was worth more than California and it would have been theoretically possible to "sell up" the island of Japan and buy the entire United States. Who could fault the Japanese from buying up California golf courses and large chunks of Hawaii and Manhattan They could've bought the whole country!

Land in Ireland has gone for as much as 20m/acre. Swaths of America can be had for well under 100,000 euro/acre, so shouldn't we consider selling Ireland? At 20%/year appreciation, it's only a matter of time before all land here is worth 20m/acre. So selling the entire 17 million acre Irish republic would put 340 trillion Euros in our pockets. With that, we should be able to buy 3.4 billion acres of the U.S. Let's go shopping. Well look at that, the entire U.S. is only 2.26 billion acres, we could buy the whole lot and we'd have money left over to buy something else, maybe throw in Germany or England.

Note: When buying the U.S., frugal buyers should either avoid big cities in California, the Northeast and Florida or wait until the property there has depreciated sufficiently.

Just a tiny place, how about the land my cloak will cover?
-- Saint Bridgid

[broken link removed]

 

[kerrybull]

I do not want to bore anyone or scare them but there is a new book out by Adam Tooze " The wages of Destruction" it is an excellent economic history of Nazi Germany.~

We all know that history has a habit of repeating itself and one of the few lessons of history that we humans have seemed to grasp is that we do not learn anything from history.

Well what is frightening in this book is to learn the relationship between government and inflation and the deadly consequences that follow.

We may well be living in 1928 again, living it up before the bubble really bursts.

One does not have to be a student of history to understand how fragile the democratic system is. Hitler was voted into power, to bring order for the middle class.

War is the close cousin of inflation, and Uncle Sam may well find itself in a situation where a strike on Iran may make as much sense as invading Poland did way back in September 1939.

We in Ireland spend so much time looking at ourselves when our fate both economic and possibly even more will be decided by the suits in the White House.

 

[blindjustice]

Well what is frightening in this book is to learn the relationship between government and inflation and the deadly consequences that follow.

We may well be living in 1928 again, living it up before the bubble really bursts.

One does not have to be a student of history to understand how fragile the democratic system is.

How VERY TRUE
I think people think your off the wall when things like this are brought up
HOWEVER did ye all hear about BUDAPEST TODAY??????????????

RIOTS BECAUSE THE GOVERNMENT LIED ABOUT THE ECONOMY PEOPLE TRYING TO STORM GOVT BUILDINGS ETC (how would Bertie feel about that?)

 

[tententwenty]

I
War is the close cousin of inflation, and Uncle Sam may well find itself in a situation where a strike on Iran may make as much sense as invading Poland did way back in September 1939.

Settle down, relax. Its not quite as bad as it seems. Yes, a lot of people will be badly struck by a property downturn. Not, however, the majority. The job situation isn't so bad either. The smart money (pharmas) export their produce to Mexico first, then ship it north. They aren't going to get nabbed by the IRS for taking advantage of the Irish corporate tax system. There will be severe effects, but nothing apocalyptic. The Irish economy may not export a great deal, but it is sufficiently diversified to withstand any single sector knock on the head.

 

[thewatcher]

Ah here,it's not the end of the world now.
Those that have prepared for the downturn will be fine,those that have their ppr may not be able to move as quickly as they thought,those that have been down the pub or at the dinner party boasting about their recently acquired investment property especially if they have released equity to buy it are going to get burned bigtime.
But in the long run a correction is the best thing that can happen because ireland is simply on an unsustainable path at present it simply cannot be put any better than

We need to stop mortgaging future earnings for current operating costs (ie we need to stop remortgaging to pay for cars and holidays). I won't celebrate to see people suffer, but I cannot abdicate them of responsibility for bringing themselves to that point either. The crash was foreseeable, has been foreseeable for years.

Also,FTB's need to stop mortgaging on the expectation of future earnings that simply will not materalise in my opinion.Their dept will not be eaten into over the next few years like their parents was,their is too much competition in the global market for this to happen,wage inflation is over for the foreseeable future !.

 

[Jister]

By 2004, prime "A" property in Tokyo's financial districts were less than 1/100th of their peak, and Tokyo's residential homes were 1/10th of their peak,

 

[StoppedClock]

I agree. I assume that McDowell knows something about stamp duty changes in the budget and is angling to have the PD's take credit but it could well have the effect of making people hold off on buying until then.

If buyers do hold off it shows how little they understand the market at the moment, IMO the prices are not set by the sellers but by the competing buyers, if stamp duty is removed then they will simply outbid each other to new heights negating the removal of stamp duty. The only change will be that the developers will get the money rather than the guberment. Another smart move by our wise leaders.

 

[Duplex]

If buyers do hold off it shows how little they understand the market at the moment, IMO the prices are not set by the sellers but by the competing buyers, if stamp duty is removed then they will simply outbid each other to new heights negating the removal of stamp duty. The only change will be that the developers will get the money rather than the guberment. Another smart move by our wise leaders.

True the money 'saved' by FTB's on stamp duty would find its way back into the housing market and the pockets of developers Mc Dowell knows this. But this move is not unprecedented the Tories removed Stamp Duty for FTB in the UK in 1992 two years after the housing bust started, but prices continued to fall (as did interest rates btw) for the next four years. Mc Dowell might be better employed in considering ways in which we can build our productive capacity to allow us meet the challenges of the global economy, how about.... ahhh..... infrastructure for starters.

 

[Howitzer]

If buyers do hold off it shows how little they understand the market at the moment, IMO the prices are not set by the sellers but by the competing buyers, if stamp duty is removed then they will simply outbid each other to new heights negating the removal of stamp duty. The only change will be that the developers will get the money rather than the guberment. Another smart move by our wise leaders.

Ok, just to be pedantic but this is incorrect.

"The only change will be that the developers will get the money rather than the guberment." Developers don't currently charge stamp duty (unless it's a super big property) so it's not the developers who'll net the proceeds but average joes selling their current properties, including investors.

Another point is that currently the stamp duty bands aren't acting as brakes but are seen as targets when people get into bidding wars. As soon as 2 people start bidding on a property there appears to be a race to get to the nearest stamp band, bidding in 10s of thousands as opposed to 1s. Remove the bands and what will happen? Well I think bidding will no longer have a target and will instead bid up the actual value of the property in a more measured way. There may still be an increase but by the sounds of people you'd think the removal of the bands would result in prices going on to infinity.

I know people who bid on properties when the 317.5 band was brought in. They were bidding on properties asking 270 / 280. Immediately they bid 317.5, 16% over the asking price, even though there was no other bidders! If the band had been removed altogether they would simply have bid the asking price and up their bidding in 1s and 2s in response to counter bids.

 

[SHARP]

I doubt that it will take that long. They are currently sending over Irish staff to oversee the setting up of the polish plant. IMO despite protestations to the contrary they will close Dell Hell in Stabcity as soon as it is up and running. They don't even own the building in Limerick. They just lease it, which shows their commitment. And the polish govt is so desperate for jobs that they will throw loads of grants at them, hust as the Irish government did when they came here. It also makes more sense logistically to relocate to Poland

For gods sake - you should be banned for a comment like that! Dellhell in Stabcity???

You should be ashamed of yourself

 

[ninsaga]

For gods sake - you should be banned for a comment like that! Dellhell in Stabcity???

You should be ashamed of yourself

Well is is know as Dellhell locally in Limerick anyway - so whats wrong with that.

 

[Art]

Do any of the bears on this post not wonder why builders are still paying record prices for land?? - the purchase of Dalymount park for €65 million as well of tens of millions for small parcels of land in Ballsbridge are just two recent examples. Surely these people and their coterie of highly paid advisers are clued into what is happening in the property market?

It would seem to me that much of the excellent analysis on this post is on why property should collapse. There is virtually no evidence of a collapse however apart from a few small price adjustments of properties that were probably overvalued in the first place anyway.

 

[kerrybull]

Ireland's property market is like no other property market. Professional investors are what they are. Our market will turn on Mr. Joe Teacher and Miss. Mary Nurse making a decision to sell the house they bought for €180,000 and now valued at €320,000, their decision will be based on the high levels of real debt that they have build up in lifestyle costs. The real danger is that in Ireland we have so many Joe's and Mary's and so much debt.

When property slides there is very little that can be done as the very same factors that drove the market will also cause it to crash. Human nature is human nature no one could make real sense of the rise, and the same will be for the fall.

 

[whizzbang]

Do any of the bears on this post not wonder why builders are still paying record prices for land?? - the purchase of Dalymount park for €65 million as well of tens of millions for small parcels of land in Ballsbridge are just two recent examples. Surely these people and their coterie of highly paid advisers are clued into what is happening in the property market?

It would seem to me that much of the excellent analysis on this post is on why property should collapse. There is virtually no evidence of a collapse however apart from a few small price adjustments of properties that were probably overvalued in the first place anyway.

Who knows why they are doing this? Greed? Refusing to read the signs? You could also suggest that these are ploys to push positive news into the market place. Have they handed over the money for this land? Could they pull out? Perhaps this is to helpt hem sell the last few units off their last development (stretching it but you never know?)

It is also well accepted that some developer is going to get stuck with land when the turn comes. Maybe these guys think they are not Paddy last to use a DaveMcwilliamsism.

 

[StoppedClock]

Do any of the bears on this post not wonder why builders are still paying record prices for land?? - the purchase of Dalymount park for €65 million as well of tens of millions for small parcels of land in Ballsbridge are just two recent examples. Surely these people and their coterie of highly paid advisers are clued into what is happening in the property market?

It would seem to me that much of the excellent analysis on this post is on why property should collapse. There is virtually no evidence of a collapse however apart from a few small price adjustments of properties that were probably overvalued in the first place anyway.

I had often wondered just this and so asked around a bit in some reasonably clued in circles (i.e. the people lending them the money) the response I got was that it hasn't taken much genius to make a lot of money in develpoment in the last 10 years so don't over estimate their business acumen. As regards their coterie of highly paid advisers methinks that any highly paid adviser knows that to talk a businessman out of doing more business does not lead to more requests for highly paid advice, just keep telling them to keep going till it does pop then blame some unforseen external factor.

As an aside it is interesting to note that the usual lenders have not been behind a lot of the Ballsbridge acquisitions as they were deemed to hot. Furthermore the banks that initially loaned the money sold on all the loans immedietly locking in a tidy profit with no risk.